Q2 2021 Green Plains Inc and Green Plains Partners LP Earnings Call

Good morning, and welcome to the Green Plains, Inc, and Green Plains Partners second quarter earnings Conference call. Following the company's prepared remarks instructions will be provided for Q&A. At this time all participants are in listen only mode. I will now turn the call over to your host Phil Boggs Senior Vice President Investor really.

Mr. Boggs. Please go ahead.

Thank you and welcome to Green Plains, Inc, and Green Plains Partners second quarter 2021 earnings call participants on today's call are Todd Becker, President and Chief Executive Officer, Patrick Simpkins, Chief Financial Officer, and Leslie Van IMMU, 1 executive Vice President and product marketing and innovation.

And slide presentation available and you can find it on the Investor page under the events and presentations link on both corporate websites.

During this call and making forward looking statements are predictions projections or other statements about future events.

These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could materially differ because of factors discussed in today's press release and as Tom.

And it's made during this conference call and and the risk factors section of our form 10-K form 10-Q, and other reports and filings with the Securities and Exchange Commission.

And not undertaking any duty to update any forward looking statement and now I'd like to turn the call over to Tom Becker.

Thanks, Paul Good morning, and thanks for joining our call today, we've been focusing for some time on developing our organization to deliver on our transformation. The changes to our board of Directors announced last week was another sign and that development and demonstrates that we are fully focused on our mission to lead the transformation into bio refineries.

<unk> sustainable ingredients that matter and follow our shareholders and owners that want our board represent a broad group of diverse members that have the experience and ambition to help our company achieve its goals for all of our stakeholders.

We want to thank Gordon and Jim and Tom for their tireless commitment to our journey and they know and they leave knowing their efforts have contributed to our success. We also want to welcome Mark Martin Salinas to the board. He will also assume the role of audit Committee Chairman Martin and that's been a member of the G. P. P Board and is deeply familiar with Green Plains, Inc.

Allowing him to step in and contribute right away. We have also been enhancing our executive leadership team and have a broad tenured team built for the execution of our plan and our future growth because he bonder mill and was recently promoted to executive Vice President product marketing and innovation as part of our plan to build a high quality organization to support our ingredient marketing and <unk>.

Innovation platform with a deep bench of nutritionists, scientists sales and marketing and quality control.

We did announce this morning that Walter Cronin is transitioning out of Green plains to pursue personal investment opportunities and other and other interest and agriculture. Walter leaves knowing that the team he helped create and mold alongside me he's ready to take on the opportunity to market innovate and produce products around a game changing technology and IP portfolio.

He will remain a real consultant for the company while pursuing his other passions as it remains a true believer and our story.

We expect this transition to be seamless as lovely and Walter had been working side by side for many years.

Lesley continues to build out his team, including a new senior Vice President of global ingredients sales, who has led the sales and marketing organization of the largest producer and distributor of fishmeal and Peru.

He is joining our organization to expand on our success with ultra high protein and helped drive higher inclusion rates and global aquaculture diets and all other animal verticals.

We are very excited about the evolution of this team as we put the pieces together they represent the future of Green Plains, We have 1 billion and organization to deliver on our cultural transformation to ensure we can continue to attract and retain talent or human capital as we execute on the deployment of financial capital to support our transformation, we are hiring and have tremendous growth.

Our opportunities and what we believe is and most exciting AG Tech and innovation platform and all of agriculture globally Green Plains is on a path toward creating sustainable ingredients that matter and we are building an organization of talent around this mission, while we accomplished many key milestones on our total transformation plan and we know much room.

Names with fluid quip fully integrated into our platform. We have now ordered the essential long lead time equipment for all of our upcoming MSC protein projects, which when combined with Big and Inc. Brings greater certainty to cleaning each project and.

And a 9 to 12 month timeframe from groundbreaking.

We also executed on our first shipments of dextrose out of our innovation Center at York, keeping us on track to deploy clean sugar technology, and a larger scale and the coming years I will touch more on that later in the call.

Turning to the quarter, we delivered strong financial results and the second quarter and first half of 2020, 1 and continued to execute on our transformation plan and achieving several key milestones on our path to 2024 and 2025, our consolidated margin was 37 cents per gallon aided by a strong spot market risk <unk>.

And as rent and optimization gains and a mark to market gains on some forward physical positions as well our margins were also aided by record production yields and both ethanol and corn oil as our project 24 initiatives and continued improvement and our MFC facility at Shenandoah are already contributing to our results.

We remain focusing focused on executing on all areas of our business as we continue our transformation to Green Plains 2.0 during the quarter, we produced 191 million gallons of ethanol, which equates to about an 80% utilization rate.

Production has been trending higher as we bring sites online from our project 24 initiative and should continue hire after our Madison, Illinois location starts up. However, we are cautiously watching the current margin structure and in third quarter, which could impact utilization and the nearby months, but longer term, we anticipate operating capacity. Once project 24 is fully completed.

By year end.

We have a line of sight of 100% operating capacity, resulting in sub 24 cents per gallon operating cost we believe when looked at like for like puts our asset base and finally back in line with the best operating plants and the industry while.

And while the second quarter, while the second quarter margins were strong in the industry production ramp this ramped up fast as we outlined on our last call, resulting and ethanol stocks for the industry and a much higher level than last year at this time.

While the spot market is starting to improve but still has a lot of work to do.

To become positive due to continued crop and supply uncertainty on paper, though fourth quarter margins are positive and we will continue to pursue our process of margin maximization subject to industry conditions and that quarter.

We will continue focusing on controlling things that are under our control operating safely innovating around science and technology, while creating sustainable ingredients that matter green.

Green Plains partners recently announced a $60 million 5 year amended credit and credit facility.

Led by Blackrock, allowing us to return to our prior strategy of distributing cash to our unit holders, which includes Green Plains, Inc. The parent well.

And we have great financial partners that helped refinance this line and this showed our commitment to maintaining a financially strong MLP and the partnership continues to be protected by long term minimum volume commitments driving connected stable and continued stable cash flows.

Now I'll turn the call over to Patrick to review, both Green Plains, Inc, and Green Plains Partners Financial performance, then I'll come back on the call just talk more specifically about our ongoing initiatives and how each vertical fits into our transformation plan. Thank.

Thank you Todd and good morning, everyone net income attributable to Green Plains shareholders was $9.7 million or 20 cents per diluted share.

A significant improvement over the $8.2 million loss equal to 24 cents per diluted share reported and the second quarter of 2020.

Our net income was and it was inclusive of a $9.5 million charge recorded in interest income interest expense related to the private settlement of a portion of our 2020 for convertible notes and.

And a $3.8 million loss, primarily related to the sale of our standalone grain elevators.

Plant utilization was 79, 9% compared to 53, 5% and the prior year.

Adjusted EBITDA was $54.8 million and the second quarter $36.9 million better than the $17.9 million, we recorded in the prior year EBITDA.

EBITDA ethanol production improved $53.7 million to $52.1 million for the same period.

For the quarter, our SG&A costs for all segments was $23.4 million compared to $25 million reported and Q2 and 2020, driven mainly by the inclusion of fluid quip SG&A this year and higher insurance expenses.

Interest expense was $9.1 million compared to $9.7 million and the prior year. However, adjusting for the onetime charges and $9.5 million related to the convertible note transaction described earlier interest expense was slightly improved from the prior year.

I want to touch on taxes as well on a normalized basis, we would be at 24 to 25 per cent taxpayer. However, we recorded a $4.8 million tax benefit and the second quarter of 2021 on higher pre tax income due to a partial reversal of our deferred tax asset related to previously reported Nols.

Turning to slide 9 of the deck, we provide a summary of our balance sheet highlights, we had $678.4 million of cash and working capital net of working capital financing and at the end of the second quarter.

At the end of the second quarter compared to $243.4 million for the prior year quarter.

Our liquidity position at the end of the quarter consisted of $615.4 million and cash cash equivalents and restricted cash along with approximately $294.2 million available primarily under our working capital revolvers and delayed draw term loan.

We were pleased with the recent completion of a 5 year 60 million dollar amended term loan facility for the partnership.

Which removes and nearby maturity enables the partnership to return to its prior strategy of paying higher distributions.

And we invested $28.3 million into capital expenditures during the quarter, primarily related to our ongoing high protein initiatives. This included $5.4 million of maintenance Capex.

We are now anticipating total capex could be higher than $225 million guidance for 2021 based on construction schedules maintenance capital for the year is expected to be about $25 million, but may increase slightly as we continue to focus on supporting our project 24 initiative by eliminating unplanned downtime and improving predictive maintenance.

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The partnership reported and adjusted EBITDA of $12.7 million per quarter compared to $13.2 million reported and the prior year, mainly due to the reduction and minimum volume commitments associated with a sales both the Hereford and ord plants offset slightly by 6% increase and throughput rates charged by GPP from.

And for the partnership distributable cash flow was $11.2 million per the quarter compared to $11.3 million for the same quarter of 2020 going forward. The board has announced its intention to return its prior to its prior strategy of maintaining a 1.1 times coverage ratio on normalized trailing 12 month distributable cash flow.

The new financing facility does not have and mandatory principal principal repayment requirement and therefore, the partnership should have ample liquidity to support higher distributions, providing and improved return to unit holders going forward.

Over the last 12 months adjusted EBITDA was $54.1 million distributable cash flow was $45.5 million and declared distributions were $11.4 million resulted and 4.1 times coverage ratio.

Excluding any adjustment for the required principal payments amortized and the past year.

Now I'd like to return the call back over to Todd.

Thanks, Patrick.

So green Plains is focused on 3 things right now execution execution and execution. Our recent accomplishments demonstrate our commitment to execution as we recently announced our protein and build out schedule.

Bringing fagan, Inc. On as our general contractor as a trusted partner to construct and complete these builds with high quality and high surety for a job well done.

We'll build the remainder of our protein platform and we're broke and have broken ground on our central city location.

Mount Vernon and Oh by and are both on track to break ground in the coming weeks as well.

For those that aren't familiar fagan was instrumental and building much of the industry and even built several of our locations. Their name is synonymous with quality and execution and we could not have found a better partner to help execute on multiple projects simultaneously.

They have agreed to work exclusively on our protein projects for the years to come a testament to the quality of our technology and IP portfolio.

We are facing and opportunity unlike any I've witnessed over the past 14 years at Green Plains and the initiatives in front of us that can be accomplished through our ownership of fluid quip are exciting and put it mildly. Our go forward strategy continues to be focused on 5 verticals ultra high protein renewable corn oil specialty alcohols clean sugar and.

And carbon.

And protein we continue to execute on our capital deployment and are nearing the finish line at our Wood River, Nebraska facility.

Central city or buying and Mount Vernon come online next year, we will have completed over 50% of our production capacity and reach an inflection point and our transformation.

And as I have mentioned earlier Green Plains has been developing a full sales and development organization to support our transition from commodities to ingredients. This includes nutritionists sciences quality control specialists and sales and development professionals.

As I said earlier, our team is going to look very different by the end of next year and I can't be more excited about the talent, we are attracting the green plains.

And at this moment, we are in negotiations with several companies from multiple year off takes some of which we anticipate will help us move up the J curve as we produce higher protein concentrations. We remain focused on delivering our 2024 guidance based on the initial investment thesis of 12% to 15 cents per gallon uplift.

Green Plains has focused some of our preliminary scientific efforts around inclusion rates and agriculture, we don't want to get ahead of the early and encouraging results. We continued to see and our own world class Aquaculture laboratory as well as with our partner customers, but our conviction grows and stretching our efforts to the top of the J curve and allow our excellence to Cascade.

And to other protein verticals project.

<unk> is what will define this product vertical over the next few years, along with a vision for our continued innovation around our IP portfolio.

Vegetable oils continue to be and strong demand due to rapid growth and renewable diesel and our low carbon intensity renewable corn oil as a waste oil is highly sought out as a valuable feedstock and maximizing corn oil yields through the deployment of NFC technology and other practices. We are developing is already paying dividends and we expect those yields to.

Continue to increase in future quarters, let me be clear feedstocks are absolutely king the inbound interest is profound but we plan to take a measured approach to using our D. C O platform to maximize the present and long term value of the strategically advantaged feedstock to address renewable diesel markets.

We are focused on partnerships that can extend beyond offtake agreements and can allow us to learn and grow and expand the value that we can create together.

We are defining success and our distillers corn oil development efforts is creating value beyond just the value of oil as we expect to participate and the margin structure that is available from our D and the discussions and negotiations we are having allow for this participation. We believe that the days are coming to you and N. When someone just buys our oil to earn outsized.

Returns because of our low Ci scores and waste oil classification, and we still believe the line and the Santa will be drawn between waste and food oils favoring our company and industry and the long term.

Our York facility is producing high quality alcohol that meets the USP monograph and we are but we are taking a cautious approach to this market and the upcoming season contracting season, which should provide some color and long term values and the space.

While a nice to have component Joseph and it was fantastic and 2020, the significant upside and our business is firmly in the verticals of protein oil sugar and carbon.

We were pleased to deliver our first clean sugar dextrose product and the second quarter from the Innovation Center and York, We have began to identify opportunities to enhance the equipment, there and along with fluid quip. We are beginning engineering reviews for a full scale clean sugar technology design and this remains early days, but I am encouraged by the disruptive potential and creating.

And synthetic biology ecosystem around it and around our innovative clean sugar project product.

Additionally, we are exploring our own ambitions around disruptive yeast and enzyme opportunities to further maximize the value of our bio refinery platform as clean sugar is the fuel for that as well, we hope to be able to share more early next year on how science and technology will advance Green plains further into the future clean sugar is core to our strategy and we have begun several <unk>.

And we have begun several early discussions on co location opportunities at the source for industrial biotech and synthetic biology companies and others to get the over the fence supply of dextrose much like you see today at the most successful wet mill and complexes and the United States. There's still an enormous amount of work to do and we are hiring talented.

Team to help execute on this opportunity as well.

We also believe the potential to use the fermentation capacity, we have for both scale up at York and fuel.

<unk> and full scale elsewhere uniquely positions Green plains, so look at our own capabilities from reduced unique products.

And so we have discussed before our ultra high protein product is 25% east and we have only just begun to look at what we can express from that and what products and characteristics. We can create using synthetic biology and science to create novel ingredients per applications around the world today based on our platform that are needed and.

And demand.

And then last but certainly not least as carbon and we are focused on our own due diligence for our potential investment and the summit carbon solutions Midwest carbon express pipeline.

We have assembled a world class due diligence team and clean experts and engineering right away pipeline construction and carbon policy to make us to aid us and making our decisions.

We believe green plains will be a thought leader and carbon and we are tracking a team of advisers to complement our ambitions investing shareholder capital into the summer carbon solutions project is a significant opportunity for our company and we are reviewing this prospect carefully.

Additionally, Additionally, with our 3 south eastern plants, we are reviewing opportunities for standalone carbon capture systems the opportunities to reduce our ci scores at each of the facilities opens the door to a number of exciting possibilities as we produce low carbon ingredients across our platform.

Green Plains had a very unique opportunity to invest and the development company behind the summit pipeline and I sit on the board of that company disposition offers us an opportunity to be 1 of the largest owners of the pipeline and create value beyond the reduced carbon values that will produce and the future as I said, we are considering 3 of our locations for direct carbon injection opportunities and.

We are exploring the potential returns on those projects, we have embarked on and outside engineering study to determine the locational feasibility from Madison and Mount Vernon and O'brien for direct injections into geological formations on that site and those sites.

If a positive outcome from the study occurs we will move quickly to perform a detailed geological assessment. Please know we are taking a very detailed and diligent approach to all of these opportunities to maximize shareholder value.

Legislation to expand carbon capture and sequester sequestration continues to garner broad bipartisan support support and we are optimistic that this will help ensure the success of our partnership with summit carbon solutions and a direct injection opportunities. We are exploring even the infrastructure bill shows the enthusiasm from both sides of the aisle to help make projects like the scf.

Pipeline.

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Carbon capture is a critical piece of our sustainability goals, which we are expanding as we have begun to show the market that we are a true ESG story, we plan to and via unveil and inaugural sustainability report by the end of the year, but have recently posted data sheets, and environmental social and governments to our website and the result was a significantly improved.

ISS score, we all know ESG is more than just numbers and we believe we are truly a sustainable company that is just starting to build and tell our sustainability story, but the numbers matter and our recent improvement a recent improvement is encouraging.

This is just the beginning and we will continue to help clarify all of the exciting initiatives, we have on the ESG front.

Our key pillars are aligned with macro trends to lower our carbon and everything we do while it may take some time to achieve the aggressive goals. We have laid out we are focused on executing on the key milestones in front of us to get there. We believe we have assembled and innovated innovative AG tech team and combine them with our strategic partnerships to use science and technology to truly developed.

Sustainable ingredients that matter for our growing world our path to 2025 is clear, but we know there'll be obstacles along the way our job is to break them down and deliver deliver on what we believe is the best opportunity and agricultural technology and transformation and the market today. Thank you to our stakeholders for your support and our transformation and thanks for joining our call today and we will start.

The question and answer session.

Please limit your questions to no more than 2 at this time, Inc.

And I wish to ask additional questions. Please rejoin the queue.

To ask a question you will need to press star 1 on your telephone.

John Your question press the pound key please standby, while we compile the Q&A roster.

Our first question comes from the line from Craig Irwin from Roth Capital Partners. Your line is now open.

Hi, Good morning, Congratulations on a solid result, where there was a lot of a lot of progress on a lot of different fronts. This quarter.

Thank you Greg.

Todd I wanted to ask about clean sugar. This is this is 1 of the biggest force you outlined in your prepared remarks.

Your first shipments there can you maybe give us a little color on what you're learning with the shipments either in the process or from the customers and feedback to the market and can you clarify for us.

Need to have the first 55 million gallon plant fully commission to decide if you're going to go to a $1.50.

As you laid out sort of and inner and upside scenario.

Yeah. So we're learning a lot and we're still and a batch process trying to move to the continuous process to make sure. It's a continuous process when we scale it up to much larger sizes and so what we have learned is we can go all the way to a food.

Food grade sugar as well and we're waiting to put that equipment and because I think that's an important market that we want to address but the industrial markets are extremely important as well. The first shipments went to industrial synthetic biology and biotech players. So that we can and we have sent them shipments in the past as well, but we can get and assessment from them on.

And how our product will fit into their future as well and we've seen and interest from industrial biotech biochemical Green Biochemicals.

Bioplastic types as well as food and confectionery businesses as well. So we think this is such a disruptive technology, we want to make sure that we do it right. The quality is there and that it is scalable technology. The interesting thing about what we can do with this is we can actually.

<unk> build a or trend.

<unk> form 1 of our sites to a full clean sugar facility, what's great about this technology as well as it also can be used as a slipstream, where we can also slipstream some of our.

Sugars as well into a different system and just produce partial at a plant as well and so we're looking at all of those opportunities our goal and what we really want to focus on is really <unk>.

<unk> over a traditional book.

And all plant into a modern bio refinery, where you won't make ethanol are there anymore and youll, just make dextrose and Thats, where we believe we will have the capacity down the road upon success of this.

Of this review and as and as technical aspect of what we're accomplishing.

We think we could have some success and a full transformation into a full bio refinery, where you're not really making ethanol anymore. So it's a bit of.

We're very excited about it we're excited of the fact that when we know what we now know that we can make the product. We're excited and the fact that we have customers that want more and more samples of our products and some some or even commercial scale customers not not net.

And that startups and synthetic biology, and so we're learning a lot. We're we think we're on and good path and we think that.

There's 3 ways to look at it you can just flip stream. It you can you can you.

You can retrofit a current and 50 million gallon plant or 60 million per gallon plant on your path to 100, or 150 million gallons or you get a little bit of all of that so what's unique about some of our plants like a wood River. For example is that to basically to 55 million gallon plant side by side. So you could actually.

And transition 1 side, while keeping the other side of the traditional plant or transition both sides ultimately down the road. So very exciting we're very we're very excited about the progress a lot of work to do still and we're starting our <unk> engineering.

Work as well and the fluid quip team has a dedicated team for clean sugar.

Thank you.

My second question is about <unk>.

So you said your heart.

That's pretty good news right investors and we're plotting the fact, you need a cheap chief people officer.

Can you can you talk a little bit about the <unk>.

Hiring needs over the next few quarters.

What do you what do you think it is a focus for the company is it necessary for execution capacity and.

I guess the second part of the question is we all really like Walter we're sad to see him go.

You said real consultant I think you understand underlying real.

And the way you said it and.

Do you have any color you can share on his plans.

And availability to work with you.

And we're hiring as we expand our business and we think about the different needs of the company, we're hiring and we're thinking differently and we have and the past and the past were really about evacuation of low value low margin commodities and in a high.

High production environment. So it's much more of a commodity mindset as you transition and 2 protein oils sugar and carbon you have to change your mindset around.

High value products with higher margin structures that you would need to have the developed relationships at each of those verticals, so and ultra high protein, it's nutritionists to nutritionists at scientist to scientist, it's innovation with your client together and what we can do with that 25% east within the product and we express amino acids for them that.

They need that are needed and there and their own supply chain and we believe we can do all of those things.

And as partners and so you know while sales and while traders and marketers are still a very critical part of what we do salespeople and scientists and nutritionists are also going to be a very important part and part of what we do because.

And when you look at where we sell our products to weather and Aqua culture, or Pat or dairy or poultry or swine, where all where all of our products are going to go to.

The sales person or the trader makes the contact but the nutritionists and a scientist and make the decisions and that's what we've seen a lot of these companies. So.

That's first and foremost is as innovators and technologists and things to look at what can we do with the east component of this product project because it.

This product because if you look at what we have we have used we have fermentation. We have science, we have innovation and theres. So many things to do with a built in east component that other companies with a lot less are worth a lot more today and so we feel like we're just starting path of innovation and around this product and it's not just <unk>.

Be around protein concentrations and I think while we spend a lot of times and if we hit 50 a protein. This is what it's worth but quite frankly, it's not a concentration issue, it's really going to be functional and what we can do for these species and each of these verticals. So those are the type of people that were looking for so it's gonna be salespeople, it's going to be technologists and clean sugar.

We're going to look for people that haven't been involved and dextrose, and glucose and and engineering and technology and sales and development and we're gonna look for people that understand the value of a lower ci product and they can get out of a wet mill and whether the products. They can get out of that and carbon and we're gonna higher carbon specialists through to help us understand not only the fact that we're involved in.

And our carbon project with some and carbon solutions, which we think is very very exciting for our shareholders, but the fact that we can direct inject and start to think about monetizing our own carbon.

Not just by putting it in the ground and getting it to 45, <unk> and the carbon credit by by creating low carbon ingredients that we believe will be very impactful and then obviously the oil market as well. So those are the type of people that were hiring we have hired him I mean, how exciting is it when we have 1 of the largest.

A new VP or SPP from the largest fishmeal producer in Peru, Thats going to come to work for us and bring all of his worldwide contacts and distribution network to help us distribute our product to global Aqua culture company. That's extremely exciting as we believe the anti soy movement will continue within agriculture and our.

Our product is very exciting so all of those things are what were doing and all of those things are needed and if we're going to.

Be trusted with our investor capital, which which they have so.

Elegantly done for US we got to make sure we deliver on making sure we get the most amount of value of all of these products over the next several years on.

On the on the Walter.

Situation and Walter has for many years wanted to pursue ambitions in and other areas of interest and so he came from soy processing and he spent many years and soy processing and his past and trading and and Walter has always kept that interest and in and soy and and trading and he wants it and move on to manage some of us.

And personal investments as well as consult on and the soy.

Processing industry and some of the projects that are going to be coming online and so we we've discussed this at length and what was important is that he leaves us well set up with and organizational structure that we built those built with both side by side and and Leslie has been with the company.

For quite a long time, now and they've been working side by side to help build this organization and and this was just the right time for him to go pursue some interest that he has but he leaves the company and and really good shape and when I say he is going to be a quote unquote real consultant. He that's what he's going to BS. He's so fully bought into our strategy remains a shareholder and as well and so.

He is he helped develop the strategy for us but.

Having him lead the company obviously for US is we're excited for him and I think it's it's a great opportunity for him, but also within our company as you hear we set up many channels of the things that are needed to be successful as well and he'll still be around working with Leslie and making sure you consult with us on all things protein.

And and oils, so he's he's he'll be missed and we thank him for his great contribution but.

And the company's well set up now to move in the future as well.

Thanks, and congratulations on all the progress this quarter. Thanks.

Thanks, Greg appreciate it.

Thank you. Our next question comes from the line of Laurence Alexander from Jefferies. Your line is now and.

Good morning, I guess 2 questions to start.

I guess first off on the.

Protein size can you give a sense for the cadence of shipments and contribution to profitability and the back half of the year.

And secondly on the synthetic biology comments.

Can you flush out a little bit how you're thinking about the.

Houston fermentation platforms, because I think it's been a pretty capital intensive industry for other companies and so it'd be helpful to get a sense for how much you have.

Know how in house versus you need to build out the expertise and those areas.

Yes, so back half of the year, we're going to bring wood river on obviously it is a startup we believe that we should be starting up and wood River.

Sometime in September and so we're excited about that we're on track to do that we're waiting for 1 last key part and that's kind of the only thing that's holding us back right now because of obviously the supply chain constraints, but we know when it's going to be finished and we have a truck weight and therefore it. So we think sometime mid September we're going to we're going to fire that plant up we've already been and <unk>.

<unk> motor ready, but we got to get the we got to get the dryer started and Thats really the last bit of it. So once that comes online we should have 2 to 3 months of production coming out of there, while finishing up the year at Shenandoah. So contribution there and when we look at it is all of the Shenandoah for the full year and and a little bit of contribution from wood river at towards the end.

The year of 'twenty, 1 and it really starts to.

Get a full year of 2020, and 2022 of Wood River and Shenandoah and right now we're in we're in negotiations too.

Nowhere that product will go whether it's and aqua, Pat or dairy and poultry and as well as other areas. So we think a full year of.

And those 2 plants and then we will start to cadence and other plants and 2022, probably central city comes on first.

We will break ground and or buying and Mount Vernon next and so by middle of the next year, we should have the equivalent of half of our platform running.

And that's really when we'll start to see the real contribution to the platform and in mid 2022.

And.

The synthetic biology biology area, and the east and development and I'm Gonna, let Leslie just comment on it real quick and we know we've known that this product has the capability to.

Do very special things, because it's not just around protein, it's around protein and east and so we have been developing a plan to capitalize on that and part of it is don't forget is our relationship with Novozymes as well and we've worked with them to look at debt used component and what they can bring from their biological library and.

We've been working closely on that so the question being can we get are used to express certain.

Certain characteristics, whether on taste or whether it's around amino acids and other things like that and quite frankly, we think.

Number 1 we should in house some of these things because of our innovation centers that we have will also partner with others because of the relationships that we have and we've seen some success and that already and I think our capital intensity because of what we already possess and the sugar the fermentation and the east.

It will be much cheaper and much faster than potentially others will have to get the market I'll, let Leslie just comment a little bit about what work, we've done and on that and and kind of what we're thinking about around specifically and some of our sales channels Leslie.

Thank you Todd, Yes, we have been developing.

Specific applications and east internally, we've done this ever since we took over the York Innovation Center.

And back in 2017. So the question that we saw was how do we leverage our internal and capacity with our partners as Todd mentioned on Novozymes. So that relationship has brought us some great advancements that we're now trying to lift to the higher level. So we can get them into and commercial trials.

But overall the balance that we've struck as Julie and internal and external approach.

Thank you.

Thank you.

Thank you. Our next question comes from the line of Jordan Levy from true with Security. Your line is now open.

Good morning, and nice quarter.

37 cents per gallon margins you guys reported certainly impressive.

Try and see if we can get a sense of how much of that on a high level is attributable to the pricing and those mark to market context, Todd I think you mentioned versus the.

Better yields on the product side and the Opex improvements from project 24 and application.

M a C its and umbrella.

Yeah, I mean, when we look at the Mark to market wasn't that big but it was it was something that I just wanted to call out because it'll probably reverse and and a couple of quarters. So but it is about a $5 million to $7 million gain and we had to pull forward just from physical contracts and the reason, we typically don't have to do that but we just wanted to make sure. When we put those sales on and put book those purchases on.

And that in the third quarter, we will be able to run all of our plants based on farmer supply and and thus far we're going to be able to run all of our plants. At this point, we will look at the market conditions and make decisions from that perspective, but I think supply of corn and most of our plants on the input side is available on top of that we definitely had some gains on.

Our optimization strategies around early crush as well as.

What we do around options and and maximizing our limiting the risk of the downside that was another $5 million to $10 million and the rest was really just from the <unk>.

The margin of the business, but we had record yields of producing ethanol and we had record yields are producing corn oil and we're not going to give those out necessarily but.

We.

We believe that also contributed to our success even at lower run rates. So.

It's just step by step and I think we're making great steps, but we're really focused on and while that's a nice to have and it generated significant free cash flow for us to continue to help us on our journey of transformation. We've always said this and I think it's really important to remember.

We have to run our generation 1 platform so that our generation 2 and 2 point all runs really really well and so it's still important to make sure we optimize and we make sure that all of our our generation 1 plants are operating.

At low cost very well very efficient and and reducing our downtime because.

They continue to have to run to make all of our new high quality products.

Thanks, Todd and then just my second question is specific to the protein side of things and more specifically on the Aqua feed just wanted to maybe see if we could get an update on how things are kind of they go for and optimal and.

The agreement you guys have with Polish economy and.

And what Youre looking for out of that side of the business to kind of get it.

To the next level as you roll out the additional approach and facilities.

Yes, so how we look at it is is optimal will be a critical component of how we think about rolling out some of our product into finished products and they continue to do their work around the up the Aqua culture Laboratory and we're just.

Getting ready to open up another feed innovation center, and Omaha, as well, which will not which will make commercial feeds for use and aqua and other and other verticals as well and thats getting close to completion as well because that's part of what we have to do which is work with our customers and think a little bit differently than others, where we're going to they'll help pull.

Through their solution and will be there to help them do that the optimal strategy continues to remain on track and we work with Aqua poultry customers around the world as well to help them design their diets and their feeds and.

And we're very excited about the opportunity, it's probably side by side as we scale up protein will scale up optimal.

While we have a great team that we've built there that is truly getting us ready to add value beyond just selling it 1 truckload at a time, but to move more into a finished finishing are giving a complete solution to our customers and its customers, which we think is unique to what's available and the market today Leslie has been really soon.

Peer heading this for several years, let's say if you want to give a quick update and some of the progress. We've made that'd be helpful. Yeah. I think what we're focused on is driving inclusion rates into.

Higher value diets.

So mine is yellow tail and.

That's showing a lot of progress and as a result, as Todd mentioned earlier with our new SVP of global ingredients sales, we're accelerating that effort. So they really get into countries, where we see immediate opportunities to get into the diets at substantial levels.

Thanks, Todd things literally really appreciate it.

Thank you.

Thank you. Our next question comes from the line of Manav Gupta from Credit Suisse. Your line is now open.

Hey, My first question is and I look at the <unk>.

It's still trading at a significant premium to par and ideal producing and if I understand correctly, the corn oil and maybe a slightly more difficult to process, but its carbon intensity like half, mostly a benign and and so as these treatment units do come online do you expect the GAAP between the soy and blue.

As the RGB to compressed materially as you go along.

Well every day is obviously trading at a premium because of the the refining capacity United States is still somewhat limited and so to get and RV D. Soybean oil you, obviously, you're paying a premium for that we we deliver a crude oil which is trading at almost parity with soybean oil today just from a cash.

Crude the crude standpoint.

So.

I think we've made a lot of progress and the last 3 months to get to almost an equal footing to crude oils and and again, if we had if we had the capability to pretreat as well, we'd get a premium but there's a cost there is a cost to doing that so.

So I think we've made the progress we need I think what's more interesting is the interest debt coming into door for our for our low Ci renewable corn oil is off the charts for all of the projects that are that are starting up and being built and the United States and they understand the importance and.

But the potential headline risk.

Just doing a food oil versus a waste oil and lower Ci scores and so if you can get that into the mix or even go fully and some of these plants and we're seeing interest and that as well I think theres going to be.

And at least parity if not a premium and the future for a low Ci renewable Cornwall as more of the supply gets locked up I believe.

Renewable corn oil supply will get locked up and will become harder and harder to buy and we will trade at a premium to crude soybean oil and the future and where and.

Several disruptive discussions across multiple parties multiple plants multiple companies and how we can monetize our oil and participate in the $2.50 to 350 margin structure that exists for renewable diesel otherwise at the end of the day. This industry will just building on its own I don't think we want to go there.

Route because I think there is enough capacity, but I do believe debt. We are standing on what I think is 1 of the biggest opportunities and margin expansion for what we do around monetizing our oil and sharing and the renewable diesel margin, which we believe is in the future of our company.

And that's.

And that's.

Positive for you I have a quick follow up here could you just remind us about the cost of conversions and the 50 million gallon facility and 100 million gallon facility and some of the cents per gallon. If you wanted to add.

And the extra mobility unit or if you don't tailoring Tri Ed If you could just walk us through that mats we quickly.

Upgrade to the MSE.

Oh for MFC, Okay, yes, yes. So so we have been in that range of right around $40 to 50 cents a gallon equivalent depending if you are a driver or not have a dryer or if you need 2 drivers. If you have a plant that's big enough you might need 2 dryers.

To process all of that capacity. So it's still it's still in that range.

A shenandoah Wood river, because they had a dryer and we retrofitted debt dryer was a little bit cheaper capital costs, but and no buy and because of the size of that plant will be a little bit higher capital costs. So it just depends on all of that but and that $40 to 50 cent per gallon rate range of conversion and Thats why we said at the baseline 15 cents per gallon.

The investment thesis was based on its somewhere a little under 2 a little over a 3 year payback or low 30% and return on capital. So.

That has not changed at all and our minds.

No that's absolutely right and if.

And calling out your price of state of the idea that the payback probably would see less until yes. Thank you for taking my questions.

Youre welcome. Thank you.

Thank you. Our next question comes from the line of Eric Stine from Craig Hallum. Your line is now open.

Good morning, everyone.

Good morning, good morning.

Hey, just on the carbon side.

And as you think about the summit project can you just talk about any regulatory hurdles. There I know I've read some pushback because there's a view that it could enable cold pants coal plants to operate longer things along those lines, but what anything needed on the regulatory side.

As part of this project.

Well yeah. The team at summit continues to work on that most of what's been signed up on the pipeline have been ethanol plants that produce a 99.6% pure carbon so very easy cost of of sequestration and and.

And Thats, where were really where they have been focused on and they haven't focused much on the coal power and coal plant powered size power side.

And some fertilizer type plants have have expressed interest as well to the pipeline. So it's really and agricultural pipeline agricultural carbon fermentation carbon and and Theyre doing a great job and all 5 state and 'twenty 100 mile of pipe to build to get through regulation of the of the local and the state organizations.

As well as and what the federal government and corps of engineers, and and and obviously and the infrastructure Bill you could see that came out.

Lots of opportunities for carbon infrastructure that want that they're willing to discuss financing with as well. So I don't think we'd put that I don't think they would have probably put that in there without the thought that these pipelines and probably get built especially our carbon pipeline. If you think about there's still plenty of oil pipelines that got even recently that.

Came into service and the last 10 or 15 years, but I think this carbon pipeline has from our from our viewpoint has a great.

Chance of success, we're involved early and it we're a believer and the team and the and and the company and we think that.

That this pipeline because of the way that it's structured through 5 agricultural states all the way of ending up in North Dakota, everything and we've seen has given us broad support from a government policy perspective, and obviously permitting and those type of things need to continue on.

But so far everything we've seen.

Potential shareholder and a potential investor has been positive.

Got it and Thats, great color and maybe last 1 from me just you mentioned that you are undertaking the the internal analysis on your potential involvement and any any timeline on that or is that kind of more open ended and details to be announced going forward no.

And we've assembled a diligence team and.

And with external and internal and we think we have some of the best and brightest from from both sides involved and in this and this diligence process were not I don't think were months away from making decisions I think where it'll be quicker than that we've been at it for a while.

Summer guys want to get to some of the carbon solutions pipeline and the Midwest carbon expressed wants to get started on funding and.

And yet it'll be it'll be gated at each threshold they'll call more capital and.

And we think that fits our needs as well from the standpoint of funding but.

It's definitely.

Something we're spending a lot of time on and and I think it'll be starting to become to come to fruition shortly to make our determination on what we want to do for Green Plains shareholders. It is a great opportunity for our shareholders for us to we are the biggest shippers to date and signed up but theres other shareholders, obviously that are large and shippers.

And our large.

And our initial investor and the and the development company as well for some at risk capital. So we think we're very well positioned and.

And when you look at a $4 billion to $5 billion pipeline. When you take 45 Q2 tax credits on top of value of carbon and we think the participating as a large shareholder and part of the development company to pay could reap great rewards for our shareholders.

Okay. Thanks.

Thank you.

Thank you. Our next question comes from the line of Selman, a KOL from Stifel. Your line is now open.

Thank you good morning.

So thinking about Green Plains partners and sort of your 1.1 times coverage ratio implies.

Pretty significant step up in distributions is the goal to be where you were at before you cut the distribution.

Well, we won't be quite where we were simply because we don't have the same same.

Same throughput volume just speak from the sale of plants, but.

Yes in effect, where we had given guidance prior at a 1.1 coverage will be doing the same.

So you can back and the envelope that and come up with what distributions would be on an annual basis.

The partnership does have significant liquidity and we will continue to have significant liquidity and the board will consider what to do with any excess liquidity over and above a 1.1 coverage.

Or whether or not they.

And believe they can lower below the 1.1 coverage but.

That is the plan as of now and if you do the back of the envelope calculations, you'll see that it's returning a significant distribution back from shareholder to the unit holders.

Understood and I guess, you're kind of going back to the liquidity I guess and and I'm trying to think about growth. It seems like your leverage will be pretty low, but where you've got the.

You've got a sort of a $60 million.

Cap there.

So I'm just kind of wondering what do you have to then seek additional outside financing. If you wanted to grow the partnership or should we just think of the partnership.

And just sort of being steady state and just sort of returning cash and debt.

Just sort of running through the contract length, if you will.

Yeah, I don't think you should think of it like that I mean, obviously, the first and most important thing we needed to do was refinance the line this year and get to a point, where we can resume distributions to get the partnership on solid financial footing and looking forward to the future and we've and.

<unk> that I think that was a worry of some but we're not we weren't quite as worried but we knew we'd be able to get some financing done, but I think doing that number 1 is the step 1 and and a multi step process to determine what the best future of the partnership is it's not going to be just have a partnership and run through the contract I mean, I don't I don't anticipate.

Faith.

That's not our strategy, but we also have to determine the long term viability of mlps well what can we do with this <unk> carbon ever fit into it and in the future. We'll have to look at that again no. We haven't we haven't spent a lot of time on that but those are things that by having the optionality of the pipeline investment that might be something we look at it and the future but.

Then I think this is this is 1 of the last Mlps to go public.

And it gives us great optionality as it adds and MLP, but also as as a G. P. At Green Plains, Inc. I'm not sure we're ready to give up that optionality and what to do with it.

Always going to be opportunities that we should be looking at the first and the first and most important thing was to number 1 refinance the debt and number 2 resumed the distribution and then from there we can consider the strategic aspects of moving forward with this.

Got you and then just last 1 from me can you just remind us how long those contracts run through.

8 years, so 8 years from just about where we are now so there's we actually increased those back when we actually did the sale of the award plant and.

So it's a it's 8 years effectively July call. It 2029 I believe.

Alright, Thank you very much.

And <unk>.

Thank you. Our next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Yes, thanks, and good morning, everyone.

Good morning, Adam.

Wondering Todd.

A lot of ground already been covered here, but wanted to circle back from first on high Pro and you talked about.

Some of the kind of ongoing conversations with a variety of different customer sets from for 2022 and.

And maybe just help us think about with where Shenandoah has been operating consistently I mean do you think between Shenandoah and then wood river, starting up and the third quarter or just.

Are we at a point for 2022, and where we should be thinking about the off take of those facilities being purely at the 50% level or do you think that we're going to be seeing meaningful amount of volume being.

Contractually committed and <unk>.

Higher protein content, just think help us think about the range of outcomes in terms of price realization and your ability to move up that Jacob.

Yes, I think I think exactly what you are saying, which is a range of outcomes. We are in discussions right now at 50% to 52 pro on plants and we're in discussions at higher protein concentrations and determining the value of what what's possible and what's probable.

As you've known we've hit 58 protein and even as high as 60, 60, plus and now it's really weird and working with customers, especially and and patent Aqua to say what should we do it a steady state what are you ready for and I would say that there will be a range of outcomes in 2022 or I do but I do believe.

Obviously, we have to get to that point that we will have sales from 50 pro through 58 pro at different utilization rates with different species, and especially and patent Aqua. So I think we're going to make some progress in 2022 and I think by 2023, we'll make more progress, but we have we still are working.

And protein concentrations, both mechanically and biologically and on top of that we're working on and nutritional solutions are finally, putting into some place some of the work that we've done with some of our partners around.

Taste, and and profiles and nutritional characteristics. So I think we're going to have a little bit of everything and 2022 and going into 2023 and 24 as we start to move up and our quality and.

And move up and our characteristics I think it'll be a portfolio effect ultimately trying to get through 2.

<unk> 'twenty 'twenty 5 'twenty 6 to get everything at those higher valued products, but it should we should have the start of 2022 to move up.

All of our product up the J curve.

All right. That's really helpful. And then I think there was an illusion and the prepared remarks that the capex would be might be above.

The high end of the of your of your prior guidance and is that project timing and maybe broadly.

What.

Is capital cost inflation and just inflate.

Inflation and metals and materials and Labour, having any impact on what do you think some of the some of the hydro investments.

Could cost.

Yes.

Inflation and very little at this point, which is 1 of the reasons why we stepped up and ordered all are long lead time equipment early because we did see a bubble.

In terms of steel prices and that type of thing. So we actually stepped up and did that so the reason that guidance may be higher is really driven by 2 things number..1 is we went ahead and basically purchased all key long lead time equipment for basically all the projects earlier and we plan to and the second is really based on construction schedules so depending on the <unk>.

<unk> schedules take place during the year that could that could drive the.

And number higher.

We're a more progressive on those schedules.

Got it.

And that's really helpful. I appreciate the color I'll pass it on thanks.

Thanks.

Thank you. Our next question comes from the line of Ken Zaslow from Bank of Montreal. Your line is now open.

Hey, guys how are you.

And I can't.

Maybe I missed it what was the incremental profit from Shenandoah relative to the rest of the portfolio there because we haven't.

We don't break those numbers out yet Ken I think as we bring on more of our protein portfolio and the future. We will do that but at this point, we're not breaking out a single plant location, except to say we are achieving the results that we expected.

And and we're doing very well and that business today.

Okay and.

And as I kind of think about debt, if you're hitting your return characteristics and the.

Looking at the industry margins. They werent so great. So you would argue that.

And that business.

It has delivered on expectations.

Hi, Paul.

Is that a fair assumption.

Well I mean over the total amount of gallons that we produce and our total platform. Its a small contribution because it is an 80 million gallon plant over 1 billion gallons and and at 80 million gallon plant its earning the returns that we said so it's only a small contribution to the margin basically what we said is.

5 to 10 cents per gallon from our optimization programs were this quarter.

Other couple of pennies a gallon from some mark to market gains that we had to take this quarter and the rest was really from yield of the traditional generation 1 platform and increasing increasing the opportunity. There and then just to just a market that was available during the quarter.

So.

Overall, it's still a small contributor because it's 1 plant to 8% of our production.

For 1 quarter so.

Margins were a little bit better and Q2 and.

And they ended up being better than we expected.

And my next question is when you are thinking about.

Ping an.

Wood River.

And now.

And central City.

What type of array of customers are you looking at what is the composition that you're seeing right now at Shenandoah and then how we think that being developed are you looking primarily at the pet food industry, which is a little bit stickier and have you.

<unk> markets and in the protein processing business.

How are you thinking about that and where are you getting interest and how you're building the portfolio around these new facilities.

Yeah, we think Shenandoah for the most part will remain and pet.

And through through next year and beyond we think part of our a large part of Wood River will probably end up and.

Pat as well and then we've also shipped into dairy.

We've also shipped into Aqua and we think 2022 will be a big Aqua year force as well so I think it will come into 2022.

Really with all of the species, probably not as much on swine, but I would say Pat Aqua.

Very and even some poultry for their all veg diets and a replacement for some other ingredients I think we are starting to see that and poultry as well and some interest. So I think it will come into 2022 and really be shipping into 3 to 4 main markets next year at many different protein levels and concentrations as well before we even get into kind of characteristics of what we can do.

For our customers.

Okay, and then just the cost that's associated with.

The incremental sales force and all of that how does that change. The margin returns is that does that change anything materially.

And then I'll leave it there.

No I don't I don't think so I mean every obviously every penny that we had over the whole platform is about $10 million, if protein and that depending across the whole platform.

It will probably eat into some of the first penny out of the 15 going up to much higher levels of margin contribution.

But what we talk about is.

And we have to build this sales force we have to build this.

These these nutritionists and scientists and we'd like to add a lot of them, we have a lot and our numbers already today and but we do still have.

A significant amount of people to hire but again labor has never really been the big driver behind behind this business in terms of our cost structures and so I think we will I think it will still remain under control and I don't think you'll see much change I mean, our SG&A will probably go up over the next couple of years at corporate but I don't think I don't think you'll see a.

Significant uplift.

Great. Thank you.

Thank you. Our next question comes from the line of Luke Washer from Bank of America. Your line is now open.

Hi, good morning.

I wanted to ask about your corn yields.

Again, clearly a great quarter with regard to corn yields and I think it was $8.4 pounds push all which I think is a quarterly record high.

How much is debt is driven by Shenandoah versus are you potentially doing other debottlenecking and your other plants can we expect this kind of yield going forward and <unk>.

Moving up higher as you rollout that and the <unk> technology.

Yes. It is not just from the Shenandoah, Although we are definitely seeing what we needed auto Shenandoah and terms of the MSC and the guidance. We've given you were moving up all of our yields before we even put and MSC protein and.

As you know.

It was a once ignored part of the process because it only contributed a couple of pennies, but with when you take a look at 64 and oil or 65 and oil and you look at the contribution from.

And there is still are the sustainable corn oil that we produce if you're talking about potentially in the teens per equivalent gallon and so now we focus on it a lot more there's definitely debottleneck and going on at all of our generation 1 plants to more focus on increasing the yields of corn oil to take advantage of these prices and at and.

And more value if you take a look at margin contribution through the first half of the year. It was definitely over over about 10 cents per gallon of margin contribution from corn oil and traditionally its been 3 to 4 cents per gallon, so and it's going up from there at 64.65 and oil so we might as well focus on something thats paying what we think is paying the most in terms of contra.

<unk> and opportunity and consistency but.

But we have absolutely been day modest Debottlenecking, our generation 1 systems, which then gives us even a better opportunity when we startup and MSC system. So we can start pushing towards <unk> 9 and 1.1 pounds per bushel yield from a traditional corn oil processing business by the time, we add fluid.

On top of that we think we can be a 1.2 to 1.4 pounds per bushel by putting and fluid quip system in and the math on that is just is just significant for contribution to our future.

It sounds good and just 1 more on what you were talking about with regards to renewable diesel and your potential to get in on the economics. There are you looking at potential jv's or an equity stake can you provide a little bit more detail and what youre thinking and and this is a part of the due diligence that you were talking about earlier.

Yes, listen I think the market has woken up to the fact that theres more R&D plants coming on and oil capacity available.

And it's really haven't.

A significant effect on the price of your inputs and so now you have to focus on the next step, which is ci and carbon intensity and to get paid on that so when you take a look at what the margin looks like with a lower Ci fats and distillers corn oil versus a soybean oil you have to have that included to.

The economics work because you can't just build this on a 100% soybean oil and I think that was the fallacy that BRD market sat on is that there's enough oil for all of these projects and if you look at all the projects and the board and some of their green built some of that being started up some that are and construction and some that are under development.

I think that explains a little bit of Hawaii.

The soybean crushing industry has done so well and why theres. So much opportunity there, but also why we are doing so well and our oil and our own business. So our view is and we have been and discussions with how do we participate if you want all of our oil and we believe we can consolidate other amounts of oil within our supply chain. If you want all of our.

Oil and and you want that committed to your project.

We're not just going to do that without participation and some of what they're earning and and I would tell you the discussions from 6 months ago, and a year ago, where they basically told US we don't need you and youre not going to get anything to today, whereas we need your low carbon intense oil and we will help and we will allow you to earn.

And a outsized return and participate and the margin structure that debt is in place for renewable diesel and those discussions have completely changed course, and I believe are available to us and and we will commit our all of our oil.

And I and my view, we will commit all of our oil to a joy partnership and.

I think that's going to happen.

Sounds good thank you thank.

Thank you.

Thank you. Our next question comes from the line of David Driscoll from DD Research. Your line is now open.

Great. Thank you and good morning, and I. Appreciate you squeezing me and first off I'd just like you say congratulations on the refinancing of the partnership I remember well, where the company was in July of last year, So really great job guys. It's a big deal.

Todd and wanted to ask about the regulatory environment. Some of your insights there has been a lot of events that have happened and the last quarter. So E 15 vapour pressure waivers RFS volumes what are your what are your big picture thoughts concerns where are we headed.

Yes, so obviously not a lot of wins, but how we look at it is the first cut of protein is worth 15. So were first kind of oils were 12 and.

And the first cut of sugar is worth 60.

So when you take a look at all of that before we even have to worry about ethanol, we think we're well positioned and any regulatory environment that exists. We also believe that you will see expansion of blends even and even in this environment because of the ability to earn outsized return and blending more ethanol through the pump and we're starting to see some markets start to.

GAAP to that which is which is what we've seen obviously you want to return to the export market, which would be very helpful. If we had that today and we'd be and very different shape this quarter and.

Terms of the ethanol margin, but look I mean for us.

Those are transitory issues to our future of Green Plains, if we can.

And if and when we when we finish all of our projects and when we bring up all of our opportunities and protein low sugar and carbon and I didn't add carbon on top of that which is 15 right now available just from the.

The California, <unk>, but even if.

Even if that's not there you've got the 45 Q and you had the voluntary markets that are starting to take shape. So for us at Green Plains, while all of those things are certainly.

Our moral losses, I would say more than us we're focused on the future and leaving that in the rearview mirror, which again is 15 cents from the first cut of protein and you could use your imagination from there and how much we can get from that and and what we control around the J curve.

12% to 15 and test that oil 60 on sugar 15 to 30 and carbon and all of a sudden and you've got something that's very very special and that's how we're looking at our future and that's the blue Sky opportunity that exist for this company and and we're very look and owning and controlling the IP owning the development opportunities around this very important portfolio.

And our fluid quip partners have developed that is so important to the future I think we can look at a lot of that and a rearview mirror today, although obviously the industry definitely need some wins from our standpoint, and we're focused on other things today.

Thank you very much.

Alright, thank you.

Thank you at this time I'm showing no further questions I would like to turn the call back over to Todd Becker for closing remarks.

Yeah, Hey, thanks, everybody for coming out and as you can see we have some very exciting accomplishment.

Last quarter and what's ahead of us.

Definitely very excited about all all of our verticals protein oil sugar and carbon and have massive opportunities ahead of us we're moving out a lot of these opportunities and we think thats going to be very exciting for our our shareholders. We believe that we are the most exciting AG tech and innovation platform and agriculture today and there is no other opportunities that are similar to this and.

A company our size with.

With the market cap that we have today and the opportunity ahead of us. So thanks for all of your support and we'll look forward to next quarter and giving you more updates on everything we're doing and and all of these verticals and and we'll talk to you soon and thank you.

Sure.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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And then.

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