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 the.

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 Relations. Mr. <unk>. Please go ahead.

Thank you and welcome to Green Plains, Inc, and Green Plains partners second quarter 2021 of the things call participants on today's call are Todd Becker, President and Chief Executive Officer, Patrick Simpkins, Chief Financial Officer, and Leslie Banner, Millen Executive Vice President product marketing and innovation, there's a slide presentation available and you can find it on the <unk>.

Investor page under the events and presentations link on both corporate websites.

During this call, we'll be making forward looking statements, which 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 releases and the comments made during this conference call and in the risk factors section of our form 10-K form 10-Q end of the reports and filings with the Securities and Exchange Commission.

Not undertake any duty to update any forward looking statement and now I would like to turn the call over to Todd Becker.

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

Creating 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, Jim and Tom for the 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 the audit Committee Chairman Martin has 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 tenure team built for the execution of our plan and our future growth, whereas the 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 nutrition as scientists sales and marketing and quality control. We did announce this morning. The Walter Cronin is transitioning out of Green plains to pursue personal investment opportunities and other and other interest in agriculture. Walter leaves knowing that the team. He helped create and mold alongside me is ready to take on the opera.

The market innovate and produce products around the game changing technology and IP portfolio. He will remain a real consultant for the company while pursuing his other passions as it remains of true believer in our story.

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

Leslie continues to build out his team, including a new senior Vice President of global ingredient 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 building the organization to deliver on our cultural transformation to ensure we can continue to attract and retain talent our human capital as we execute on the deployment of financial capital to support our transformation, we are hiring and have tremendous growth.

The opportunities in what we believe is the most exciting AG tech and innovation platform and all of the agriculture globally Green Plains is on a path toward creating sustainable ingredients that matter and we are building an organization of talent around the submission while we've accomplished many key milestones on our total transformation plan, 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 Fagan, Inc. Brings greater certainty to cleaning each project and the.

In a 9 to 12 month timeframe from groundbreaking.

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

Turning to the quarter, we delivered strong financial results in the second quarter and first half of 2021 and continue to execute on our transformation plan.

<unk> several key milestones on our path to 2024 and 2025, our consolidated margin was 37 cents a gallon aided by a strong spot market risk management and optimization gains and of mark to market gains on some forward physical positions as well our margins were also aided by record production yields in both ethanol and co.

Oil as our project 24 initiatives and continued improvement in our MFC facility at Shenandoah are already contributing to our results were.

We remain focusing focused on executing on all areas of our business as we continue our transformation. The Green Plains 2.0 during the quarter, we produced 191 million gallons of ethanol, which equates to about an 80% of 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 in the third quarter, which could impact utilization in the nearby months, but longer term, we anticipate operating capacity once project 24 of its fully completed.

By year end.

As we have of 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 finally back in line with the best operating plants in the industry while.

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 in ethanol stocks for the industry and a much higher level than last year at this time.

While the spot market is starting to improve its 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 the industry conditions in that quarter.

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

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

The 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 of continued stable cash flows.

Now I will 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.

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

Our net income was and it was inclusive of the $9.5 million charge recorded in interest income interest expense related to the private settlement of a portion of our 2024 convertible notes.

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

The plant utilization was 79, 9% compared to 53, 5% in the prior year.

Adjusted EBITDA was $54.8 million in the second quarter $36.9 million better than the $17.9 million we've reported in the prior year EBITDA.

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

For the quarter, our SG&A cost for all segments was $23.4 million compared to $25 million reported in Q2 of 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 in the prior year. However, adjusting for the 1 time charge of $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 of 24% to 25% taxpayer. However, we recorded a $4.8 million tax benefit in 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 from the prior year quarter.

Our liquidity position at the end of the quarter consisted of $615.4 million in 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 the 5 year 60 million dollar of amended term loan facility for the partnership.

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

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.

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

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 of 1.1 times coverage ratio on a normalized trailing 12 month distributable cash flow the new financing facility.

He does not have a mandatory principal principal repayment requirement and therefore, the partnership should have ample liquidity to support higher distributions, providing an improved return to unit holders going forward under the.

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 in the 4.1 times coverage ratio, excluding any adjustment for the required principal payments amortized in the past year now I'd like to return the call back over to Todd.

Thanks, Patrick.

So of 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 build out schedule.

Bringing fagan ink gone as our general contractor as a trusted partners to construct and complete these builds with high quality and high surety for a job well done they will build the remainder of our protein platform of a broker and have broken ground on our central city location.

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

For those that aren't familiar fagan was instrumental in building much of the industry and even built several of our locations. Their name is synonymous with quality of execution and we can out of 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 an opportunity unlike any I've witnessed over the past 14 years of Green Plains the initiatives in front of us that can be accomplished through our ownership of fluid quip are exciting to put it mildly. Our go forward strategy continues to be focused on 5 verticals ultra high protein renewable corn oil specialty alcohols clean sugar.

Carbon.

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

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

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 scientists quality control specialists and sales and development professionals.

As I said early 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.

Now 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 in agriculture, we don't want to get ahead of the early and encouraging results. We continued to see in 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.

The into other protein verticals the.

The project execution 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 in strong demand due to rapid growth in renewable diesel and our low carbon intensity renewable corn oil as a waste oil is highly sought out as a valuable feedstock 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.

The continued 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 the off take agreements and can allow us to learn grow and expand the value that we can create together.

We are defining success in our distillers corn oil development efforts is creating value beyond just the value of oil as we expect to participate in 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 an end when someone just buys our oil to earn outside of.

The returns because of our low Ci scores and waste oil classification.

We still believe the line in the sand 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 in the upcoming season contracting season, which should provide some color on long term values in the space.

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

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

Synthetic biology ecosystem around the around our innovative clean sugar project product.

Additionally, we are exploring our own ambitions around disruptive eastern 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 milling complex is in the United States. There's still an enormous amount of work to do and we are hiring of 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 of fuel.

<unk> in full scale elsewhere uniquely positions Green plains, so look at our own capabilities to produce the unique products.

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 in the.

The demand.

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

We have assembled a world class due diligence team, including experts in engineering right of way pipeline construction and carbon policy to make us to aid us in making our decisions.

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

We are exploring the potential returns on those projects, we have embarked on an 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 on 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 the direct injection of opportunities. We are exploring even the infrastructure bill shows the enthusiasm from both sides of the aisle to help make projects like the SCS.

Pipeline.

<unk>.

Carbon capture the 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 unveil an inaugural sustainability report by the end of the year, but of recently posted data sheets on 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 our recent improvement is encouraging the.

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 in 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 an innovated innovative AG tech team and combine them with our strategic partnerships to use science and technology to truly develop.

Sustainable ingredients the matter of our growing world our path to 2025 is clear, but we know there will be obstacles along the way our job as the break them down and deliver deliver on what we believe is the best opportunity and agricultural technology and transformation in the markets day. Thank you to our stakeholders for your support in 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.

You wish to ask the additional questions. Please rejoin the queue.

<unk> asked the question you will need to press star 1 on your telephone.

With all of 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.

The 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 feedback in 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 the $1.50.

As you laid out sort of in the inner an upside scenario.

Yeah. So we're learning a lot and we're still in the 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 <unk>.

Food grade sugar as well and we're waiting to put that equipment in because I think that's an important market that we want to address but the industrial markets are extremely important as well of 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 as because of what we can get an assessment from them on.

How our product will fit into their future as well and we've seen of 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.

The build a true.

<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 the slipstream, where we can also slipstream some of our.

Sugars as well into a different system than 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 <unk>.

<unk> plant into a modern bio refinery, where you won't make ethanol of 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 and his technical aspect of what we're accomplishing.

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

We're very excited about it we're excited of the fact that when we know we now know that we can make the product. We're excited of 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.

Not startups in synthetic biology, and so we're learning a lot. We think we're on a good path and we think that.

There's 3 ways to look at it you can the slipstream at you can you can you.

You can retrofit a current 50 million gallon plant or 60 million gallon plant on your path to 100 of 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.

The transition 1 side, while keeping the other side of the traditional plant or transition both sides of ultimately down the road so very exciting.

We're very excited about the progress of lot of work to do still 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 HR. So you said your heart.

That's pretty good news REIT investors of applauding. The fact, you named 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 your understanding of underlying real and the.

The way you said it.

You have any color you can share on its plans.

And availability to work with you.

Yeah, 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 than we have in the past in the past we are really about evacuation of low value low margin commodities and a high.

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

The high value products with higher margin structures that you would need to have the developed relationships at each of those verticals. So in ultra high protein. It's nutrition is 2 nutritionists the 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 in there and their own supply chain and we believe we can do all of those things.

As partners and so.

While sales and.

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 of what we do because the.

When you look at where we sell our products to weather, an aqua culture, or pat or dairy or poultry or swine, where all of our all of our products are going to go to.

The sales person or the trader makes the contact with the nutritionists and the scientists 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 of this.

Because if you look at what we have we have used we of fermentation we of science, we of 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 on the starting path of innovation and around this product and it's not just going to be <unk>.

Protein concentrations and I think while we spend a lot of time, saying 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 the species and each of these verticals. So those of the type of people that were looking for so it's going to be salespeople, it's going to be technologists and clean sugar of we're going to look.

For people that haven't been involved in dextrose, and glucose and in 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 of wet mill and whether the products. They can get out of that and carbon were going higher carbon specialists to help us understand not only the fact that we're involved in the carbon.

The project with some of 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 the 45 queuing 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 of the type of people that we're hiring we have hired him I mean, how exciting is it when we have 1 of the largest of.

<unk>.

Our new VP of our 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 of global Aqua culture company. That's extremely exciting as we believe the anti soy movement will continue within agriculture, and our product is very exciting.

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 of all of these products over the next several years.

On the on the Walter.

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

The own personal investments as well as consult on the soy.

Processing industry and some of the projects that are going to be coming on line and so we've we've discussed this at length and what was important is that he leaves us well set up with an organizational structure that we built the 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 this was just the right time for him to go pursue some interest that he has but he leaves the company in 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 of shareholder in 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 the many channels of the things that are needed to be successful as well and it will still be around working with Leslie and making sure you consult with us on all things protein.

And oil so he is he's.

He'll be missed and we thank him for his great contribution but the.

The company is well set up now to move in the future as well.

Thanks, Congratulations on all of the progress this quarter.

Thanks, Greg appreciate it.

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

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 in the back half of the year.

And secondly on the synthetic biology comments.

Can you flush out a little bit of 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 the you need to build out the expertise in those areas.

Yes, so back half of the year, we're going to bring wood river on obviously to the startup we believe that we should be starting up of 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 has kind of 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 weighted and therefore it. So we think sometime mid September we're going to we're going to fire of that plant up we've already been in <unk>.

Up 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 on line. We should have 2 to 3 months of production coming out of there, while finishing up the year of at Shenandoah. So contribution there when we look at it is all of the Shenandoah for the full year and in a little bit of contribution of from Wood River at towards the end of.

Of the year of 21, it really starts to.

Get a full year of 2020 in 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 in aqua, Pat or dairy and poultry and as well as other areas. So we think of a full year of.

Of those 2 plants and then we will start the cadence in other plants in 2022, probably central city comes on first.

We will break ground and or buying in 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 in mid 2022.

In.

The synthetic biology biology area, and the east and development and I'm Gonna, let Leslie just comment on it real quick 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 in the 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 of 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 in that already and I think our capital intensity because of what we already possess in the sugar the fermentation in 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 in on that and kind of what we're thinking about around specifically in some of our sales channels Leslie.

Thank you Todd, Yes, we have been developing.

The specific applications in the east internally, we've done this ever since we took over the York Innovation Center.

Back in 2017. So the question that we saw was how do we leverage our internal capacity with our partners as Todd mentioned on Novozymes all of 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, all of them really 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 the high level is attributable to the pricing in those mark to market context, Todd I think you mentioned versus the.

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

Most of it's an umbrella.

Yes, 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 will probably reverse in the next couple of quarters. So, but it is about a $5 million to $7 million gain we had the pull forward of 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 a put book those purchases on.

That in the third quarter, we will be able to run all of our plants based on farmer supply 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 at 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 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 the margin of the business, but we had record yields of producing ethanol, we had record yields of 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 of 1 platform so that our generation 2 and 2 point of 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 of <unk> plants are operating.

At low cost very well very efficient 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 through the optimal in the.

The agreement you guys have with Polish economy.

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 protein 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 in Omaha, as well, which will not which will make commercial feeds for use in 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 of a little bit differently than others, where we're going to bill help pull.

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

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

While we are of 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 fin.

Finished finishing are giving a complete the solution to our customers. These customers, which we think is unique to what's available in the market today Leslie has been really spearheading. This for several years, let's say if you want to give a quick update on some of the progress. We've made that'd be helpful. Yes, I think what we're focused on is driving inclusion rates.

Into <unk>.

Higher value diodes, we targeted some honest yellow tail and.

And that's showing a lot of progress and as a result of as Todd mentioned earlier with our new SVP of global ingredients sales were accelerating that efforts of the 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.

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 when I look at the IDB HCA of benign.

It's still trading at a significant premium to the idea of producing and if I understand correctly, the corn oil, maybe a slightly more difficult to process, but its carbon intensity like half mostly of benign and so as the speed treatment units do come on line 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 an 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 <unk>.

The crude standpoint.

So.

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

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

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

The renewable corn oil supply will get locked up it will become harder and harder to buy and we will trade at a premium to crude soybean oil in the future and where and sell.

Several of the scrubber discussions across multiple parties multiple plants multiple companies and how we can monetize our oil and participate in the $2.50 to $3.50 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 the 1 of the biggest opportunities in margin expansion for what we do around monetizing our oil and sharing in the renewable diesel margin, which we believe is in the future of our company.

That's the.

That's very positive for you.

Quick follow up here could you just remind us about the cost of conversions of the 50 million gallon facility of 100 million gallon facility in terms of the cents per gallon. If you wanted to add the extend of mobility unit or if you don't tailoring dry Ed if you could just walk us through that the mats, we quickly but the <unk>.

Upgrade to the MSE.

All of our MSC, Okay, yes, yes, so we have been in that range of right around 40% to 50 cents a gallon equivalent depending if you of a driver or not have a dryer or if you need 2 drivers. If you of a plant that is big enough you might need 2 dryers.

The 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 I know of buying because of the size of that plant will be a little bit higher capital costs. So it just depends on all of that but in that 40 to 50 cent of gallon range range of conversion and Thats why we said at the base line 15 cents per gallon, which.

Of the investment thesis was based on its somewhere a little under 2 of little over a 3 year payback or low 30% of return on capital. So that that has not changed at all in our minds.

No that's absolutely right.

I don't like the 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.

Hey, just on the carbon side.

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 pans coal plants to operate longer things along those lines, but what.

Needed on the regulatory side.

As part of this project.

Well the out of 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 of 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 plant powered size power side of <unk>.

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

Well then what the federal government the corps of Engineers and.

And obviously in the infrastructure Bill you could see that came out there was lots of opportunities for carbon infrastructure that want that theyre 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 probably get built especially of carbon pipeline. If you think about it.

Plenty of oil pipelines that got even recently that that came into service in the last 10 or 15 years, but I think this carbon pipe line has from our from our viewpoint is of great.

<unk> of success, we're involved early in it.

A believer in the team and the and in the company and we think that.

That this pipeline because of the way that its structure through 5 of agricultural states all the way of ending up in North Dakota everything 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.

As a potential shareholder of potential investor has been positive.

Got it that's great color and maybe last 1 from me just you mentioned that you are undertaking the the.

The.

Internal analysis on your potential involvement of any.

The timeline on that or is that kind of more open ended in details to be announced going forward.

No I mean, we've assembled the diligence team.

External and internal.

We have some of the best and brightest from from both sides.

<unk> and this and this diligence process.

I don't think were months away from making decisions I think where it will be quicker than that we've been at it for a while.

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

The yet it'll be it'll be gated at each threshold they'll call more capital in 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 signed up but theres. Other shareholders. Obviously that are large and shippers that are large where initial investor.

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

When you look at of $4 billion to $5 billion pipeline. When you take 45 Q2 tax credits on top of value of carbon.

Do you think the participating as a large shareholder and part of the development company to pay.

Can reap great rewards for our shareholders.

Okay. Thanks.

Thank you. Our next question comes from the line of Selman <unk> from Stifel. Your line is now open.

Good morning.

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

Pretty significant step up in.

<unk> 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 the plants, but.

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

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

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

Or whether or not.

Believes 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 to the shareholder to the unit holders.

Understood and I guess, you're kind of going back to the the liquidity I guess 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 to sort of the $60 million.

Cap there.

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

Just sort of being steady state and just sort of returning cash and.

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

Yes.

You should think of it like that I mean, obviously, the first and most important thing we needed to do was refinanced 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 accomplished that I think that was a worry of some but we're not we werent 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 in a multi.

Step process to determine what the best future of the partnership is it's not going to be just have a partnership of run through the contract I mean, I don't I don't anticipate that that's not our strategy, but we also have to determine the long term viability of mlps, what what can we do with this the carbon ever fit into it and in the future of will have to look at that again.

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 of investment that might be something we look at it in the future, but again I think this is this is 1 of the last mlps to go public.

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

Always going to be opportunities that we should be looking at <unk>. The first in 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 is we actually increased the those back when we actually did the sale of the <unk> plant.

So it's 8 years effectively July of call it 2029 of belief.

Alright, Thank you very much.

The <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 of the first on hydro and you talked about.

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

Maybe just help us think about when.

<unk> has been operating consistently.

Do you think between Shenandoah and then wood river, starting up in the third quarter or just.

Are we at a point from 2022, 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 amounts of volume being.

Contractually committed at higher protein content, just think of help us think about the range of outcomes in terms of price realization and the ability to move up that J curve.

I think I think exactly what you are saying, which is the range of outcomes. We are in discussions right now at $50 to 52 pro on plants and where the discussions at higher protein concentrations of determining the value of what what's possible and what's probable as you've known we've hit 58 protein and even as of.

High of $60.60, plus and now it's really we've been working with customers, especially in the 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 in 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 still are working on.

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

Taste and profiles of the nutritional characteristics. So I think we're going to of a little bit of everything in 2022 and going into 2023 of 24, as we start to move up and our quality and move up in our characteristics I think it'll be a portfolio effect ultimately trying to get through.

$2025.26 to get everything at those higher valued products, but it should we should have the start of 2022 to move up with some of our product of the J curve.

Alright, Thats really helpful. And then I think there was an illusion of the prepared remarks of 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.

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

Wood costs.

Yes.

Very inflation very little at this point, which is 1 of the reasons why we stepped up and ordered all of our 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 of equipment for basically all of the projects earlier than we planned to and the second is really based on construction schedules. So depending on the out of this construct.

The schedules take place during the year that could that could drive the the.

The number higher if were more progressive on those schedules.

Got it.

That's really helpful. I appreciate the kind of I'll pass it on thanks.

Yes.

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.

I can.

Maybe I missed it what was the incremental profit from Shenandoah relative to the rest of the portfolio of there because of we haven't we don't break those numbers out yet Ken I think as we bring on more of our protein portfolio in the future. We will do that but at this point, we're not breaking out of the single plant location, except to say we were achieving.

The results that we expected.

And.

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

Okay.

If 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.

That business.

It has delivered on expectations on the.

The hydro.

Is that a fair assumption.

Well I mean over the total amount of gallons that we produce in our total platform. Its a small contribution because it's an 80 million gallon plant over 1 billion gallons and ended 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 mark to market gains that we had to take this quarter and the rest of relief from yield of.

The traditional generation of 1 platform and increasing increasing the opportunity there and then the just the just the 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 from.

The 1 quarter so.

Margins were a little bit better in Q2.

And the ended up being better than we expected. Okay. My next question is when you are thinking about.

Bring on.

Wood River.

<unk>.

In Central City.

What type of array of customers or 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 have you.

The markets in the protein processing business.

How are you thinking about that.

Are you getting interest in how you're building the portfolio around these new facilities.

Yes, we think Shenandoah for the most part will remain in pet.

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

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

We've also shipped into Aqua and we think 2022 will be of big Aqua year for us 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 debt.

3 and even some poultry for the all veg diets and a replacement for some other ingredients I think we are starting to see that in 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.

It.

Okay, and then just the cost of associated with the.

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 at depending across the whole platform.

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

But what we talk about us.

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

These these nutritionists and scientists where we've had a lot of them we have a lot in 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 youll 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 Youll see.

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.

Clearly a great quarter with regard to corn yields I think it was <unk> 84 pounds push all of which I think as the quarterly record high.

How much of that is driven by Shenandoah versus are you potentially giving other debottlenecking of your other plants can we expect this kind of yield going forward.

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

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

Yes.

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 cents of oil or 65% oil and you look at the contribution from <unk>.

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 debottlenecking going on at all of our generation of <unk> plants to more focus on increasing the yields of of corn oil to take advantage of these prices.

Add 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% oil so we might as well focus on something thats paying what we think is paying the most in terms of contra.

<unk>, an opportunity and consistency but.

But we have absolutely been the 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 the <unk> 9 and 1 point of 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 of 1.2 to 1.4 pounds per bushel by putting in 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 of <unk> or an equity stake can you provide a little bit more detail on what youre thinking and this is 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 than oil capacity available.

And it's really having a.

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 of fats and distillers corn oil versus a soybean oil you have to have that included to.

Make the economics work because you can't just build this on a 100% soybean oil and I think that was the fallacy that the Rd market sat on is that there's enough oil for all of these projects and if you look at all of the projects and the board of some of the or being built some of their being started up some that are in construction and some of 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 in our oil and our own business. So our view is and we have been in 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.

And you want that committed to your project.

We're not just going to do that without participation in some of what they're earning 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 of oil and we will help and we will allow you to earn.

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

Okay.

In my view, we will commit all of our oil to a joy partnership and I think thats going to happen.

The good thank you.

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 in the 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 the big deal.

Todd I wanted to ask about the regulatory environment. Some of your insights theres been a lot of events that have happened in 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.

How we look at it as the first cut of protein is worth 15. So were first kind of oils were 12.

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 in any regulatory environment that exists. We also believe that you will see expansion of blends even in even in this environment because of the ability to earn outsized return of blending more ethanol through the pump, we're starting to see some markets start to <unk>.

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

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

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

If and when we when we finish all of our projects and when we bring up all of our opportunities in protein low sugar and carbon 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 got the 45 Q and you had the voluntary markets that are starting to take shape. So for us of Green plains, while all of those things are certainly.

Our moral of 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 you could use your imagination from there and how much we can get from that and what we control around the J curve.

12% to 15 test that oil 60 on sugar 15 to 30 cents on carbon and all of a sudden 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 exists for this company in and we're very look in owning and controlling the IP owning the development opportunities around this very important portfolio.

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

Thank you very much.

Alright, thank you.

Thank you at this time line is 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 on as you can see we have some very exciting accomplishment.

Last quarter and what's ahead of us.

Definitely very excited about all of all of our verticals protein oil sugar and carbon have massive opportunities ahead of us we're moving out of 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 of agriculture today and there is no other opportunities that are similar to this in a.

The company our size with the.

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

Sure.

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

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As of today.

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