Q2 2023 Green Plains Partners LP Green Plains Inc Earnings Call
Good morning, and welcome to the Green Plains, Inc, and Green Plains partners second quarter 2023 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 you host still box executive Vice President Investor Relations. Mr. Boss. Please go ahead.
Thank you and good morning, everyone and welcome to Green Plains, Inc, and Green Plains partners second quarter 2023 earnings call.
Participants on today's call are Todd Becker, President and Chief Executive Officer, Jim Stark, Chief Financial Officer, and Leslie Vandermeulen, EVP product marketing and innovation.
A slide presentation available and you can find it on the investor page under the events and presentations.
Website.
During this call we will 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, and other reports and filings with the Securities and Exchange Commission.
We do not undertake any duty to update any forward looking statements now I'd like to turn the call over to Todd Becker, Thanks, Phil and good morning, everyone and thanks for joining our call today. So during the quarter. We were challenged by several events that held us back a quarter from showing you. The results of the transformation as we experienced several significant events that negatively impacted what would have been a good <unk>.
Order.
First was our wood River incident, which took one of our largest locations down for most of the quarter. This impact to the company was over $18 million in total and we expect some recovery from insurance in the last half of the year. So some of this will be coming back in.
During Q2, our platform was in need of significant upgrades to prepare for 2024 and beyond and while we had some planned downtime. We also experienced a high level of unplanned downtime in Gen. One, which also had an impact on gen. Two production volumes and sales in hedges that we had in place already to lock the quarter and the challenges at our other plants.
Later in the quarter and really what the June event, and the highest margin environment, which we are unable to take advantage of with that said, we have put Q2 hedges onto locking over 20 cents a gallon and result, and unfortunate timing of these events took most of that away.
Last call, we indicated 12 to 17 cents a gallon opportunity on paper and we're tracking accordingly, and better through the end of May, but they're not yet wood river released back to us and up and running until weeks later than expected. In addition to unplanned outages with this downtime behind US. We are now operating at near full rate for both ethanol and ultra high protein operations.
And even more important wood river is making new production records as the team has done a great job getting the plant back to service, but more importantly, the state of the team. There is good after the tragedy they experienced because of these events our operations team diligently completed extended spring shutdowns at <unk>.
Many of our locations, resulting in an 81, 5% utilization rate for the quarter. Our operations leadership team implemented process control improvements to improve reliability and increase ultra high production Ultra high protein production.
Well in this downtime positions our assets to operate reliably during the third and fourth quarter with solid margins on paper today and at least half of our locations now capable of foregoing their typical fall shutdowns, enabling additional production. During these higher margin periods, we are seeing in corn oil protein and solid ethanol fundamentals.
Now onto the quarter, which Jim will cover more in depth later, our consolidated crush margin was one cent per gallon, but again, we are prepared for a solid last half between wood river negative absorption repairs and lost opportunity both protein and ethanol.
The 15 to 20 cent impact on the overall consolidated crush minimum our financial position remains very strong with significant liquidity and with a laptop opportunity and margins. We don't see a significant change to this strength as we returned to free cash flow generation during the last half, which will help pay for the large part of the capital needed for our build out for the rest of the year.
Sure.
In addition, we entered into a sale contract to divest our 55 million gallon Atkinson, Nebraska facility.
As it does not meet our parameters to justify making investments for our technology improvements.
Well, where we are going with Green Plains. This asset did not fit our long term vision there once it closes we believe this transaction will be accretive and we expect to close in the next few weeks and bring their capital back on the balance sheet.
Further increasing our financial strength as we optimize our asset base.
We expect to replace these volumes with either an expansion at one of our large locations, where our technologies are running which is very accretive.
For an acquisition opportunity, where we can immediately add technologies, therefore, not expanding fuel supplies in the market.
I will take you through a detailed recap of our transformation progress later in the call and walk you through how we are thinking about the last half of the year, but for now I want to reiterate that the fundamentals across each area of our strategy, our strong and improving.
Core ethanol demand remains to look continues to look solid and is tracking higher than prior year with 94 million acres of corn versus 84 million acres of soybeans. The price spreads remained favor for both protein and corn oil and timely rains. This summer have improved the USDA estimates for crop conditions in the west.
Finally gave me an opportunity again to source, our inputs a little bit easier than in the past several years. In fact, we have seen continued pressure on the western corn basis, just recently, especially new crop in 2024.
Our ultra high protein production is once again achieving rates of 800 to 1000 tonnes per day.
After the extensive downtime taken in the second quarter, we are seeing production rates as designed and have hit over 1000 tonnes per day on multiple days where.
We are planning to dedicate one of our sites to 60% protein production later this quarter and begin to build supply chain for delivering 60 pro to the market during the fourth quarter I'll get more into this exciting development later as well.
Really interesting data point is our investments were made on a three to three five pounds per bushel yield of protein.
And we have now achieved as high as five pounds with the MSC technology from fluid quip and in fact since Wood River has returned to full rate they have averaged well over four pounds.
Which overtime increases our capability to produce higher volumes and have better capital efficiencies no. Other technology in the world can achieve these rates.
The future of our platform is within sight and with our clean sugar facility on track to start up in early 2024, we are fast approaching being able to demonstrate the true potential of our full vision at one of our refineries and now I'll hand, the call over to Jim to provide an update on the overall financial results.
Thank you Todd and good morning, everyone Green.
Green Plains consolidated revenues for the second quarter were $887 $6 million $154 8 million or approximately 15% lower than the same period a year ago.
The lower revenues correlate to the lower production gallons of approximately 16% year over year for the second quarter. Our plant utilization rate was 81, 5% during the quarter compared comparing to the 96, 9% run rate reported in the same period last year.
As Todd mentioned earlier in the call, we anticipate our plants to perform much better in the second half of 2023 targeting utilization rates in the low to mid 90 percentage range of our stated capacity with all plants now operating.
For the quarter, we reported net loss attributable to Green plains of $52 6 million.
Or an 89 loss per diluted share that compares to a net income of $46 4 million or <unk> 73 per diluted share for the same period in 2022.
Adjusted EBITDA for the quarter was a negative $14 $9 million compared to the $56 7 million in the prior year as well as 2022.
Depreciation and amortization expense was higher by $3 7 million versus a year ago. Due to the addition of the EMC technology builds all offline and operating.
At the end of last year.
We realized a one cent per gallon consolidated crush for Q2 of 'twenty three that compares to 28 cents per gallon crush in the prior year on a sequential quarter to quarter basis. We saw the consolidated crush margin per gallon strengthened <unk> when compared to the third quarter of this year.
Our AG and energy segment recorded a $2 9 million in EBITDA, that's about $7 $9 million lower than the prior year. This decline was driven by lack of opportunities in our merchant businesses, which ebbs and flows with each year quarter to quarter.
For the second quarter, our SG&A costs for all segments was $33 $3 million compared to $30. One for Q2 of 2022.
This increase was driven by increased legal fees associated with GPP buy in and increased personnel costs, including severance costs I'd like to remind our callers we do consolidate GPP in Green Plains and these SG&A cost so that would be legal fees on both sides for both entities.
Interest expense of $9 7 million for the quarter includes the impact of debt amortization capitalized interest, which was higher than the $7 8 million reported for the second quarter of last year due to reduced capital interest as certain projects have been completed.
I would like to note that our interest income was approximately 2 million higher in the second quarter 2003, when compared to the same period a year ago.
The income tax benefit for the quarter was right at $1 million compared to a tax expense of $2 90 for the period in 2022 at the end of the quarter. The net loss. The net loss carryforwards are available to the company were $140 million, which may be carried forward indefinitely. We continue.
To anticipate that our normalized tax rate for Green Plains, Inc. Excluding minority interest should be around 21%.
Our liquidity position remains solid and at the end of the quarter, we had $359 8 million in cash cash equivalents and restricted cash along with approximately $128 million available under working capital revolver.
We are focused on executing the next steps or transformation and have the capital and liquidity to do so.
For the second quarter, we allocated $17 million of capital Cross platform, which included $10 million to our clean sugar build in Shenandoah.
And MSC protein initiatives.
About $4 million that was also allocated to growth other growth initiatives and approximately $3 million toward maintenance safety and regulatory capital.
For the remainder of 'twenty three we anticipate capex will be in the range of $60 million to $90 million as we continue to work through the timing of permitting and for MSC technology deployments at a couple of our larger plants.
Green Plains partners reported net income of $9 3 million and an adjusted EBITDA of $12 7 million for Q2 of 2023, which was in line with the $12 9 million reported for the same period a year ago. The minimum volume commitment supported the partnership steady financials during the quarter, while plant utilization rates at Green Plains were lower.
In the prior year.
The partnership declared a quarterly distribution of $45.05 per unit with a 99 times coverage ratio for the quarter.
The partnership also reported distributable cash flow of $10 $7 million for the quarter slightly lower than the $11 three for the same quarter of 2022.
Over the last 12 months the partnership produced adjusted EBITDA of $50 $9 million distributable cash flow of $43 $5 million and declared distributions of $43 $2 million, resulting in a 1.01 times coverage ratio, excluding any adjustment for the principal payments made in the past year.
As a reminder, on May three 2023, the company submitted a non binding preliminary preliminary proposal to the board of directors of Green Plains Holdings LLC. The general partner of Green Plains Partners L. P to acquire all of the publicly held common units of the partnership not already owned by Green Plains.
The conflicts committee of the board of directors of the general partner had been delegated the authority to evaluate and is currently evaluating the possible burns of the proposed transaction.
Now I'd like to turn the call back over to Todd.
Thanks, Jim So theres a lot to talk about and I know, we have limited time, and while Q2 was challenging the last half of 'twenty, three and 'twenty four looks solid and our path forward is gaining traction and looking better for a couple of years now we've been talking about the transformation to a 2.0 AG tech sustainable producer of high value ingredients focused on the four pillars.
<unk> of protein renewable corn oil clean sugar and de carbonization and the future is now quickly on de carbonization, which is a bit out of our normal order, but probably underappreciated. This is one of the several reasons, we are gaining traction and our clean sugar technology products and protein carbon scores do matter.
We are now less than two years away from what we believe is a significant financial opportunity when we decarbonize a majority of our platform.
Incentive structures are firmly in place don't underestimate our discount our carbon and pipeline strategy as we believe all roads will lead to alcohol to jet sustainable aviation fuel production importantly, though.
Hi, carbon intensity of all of our ingredients will be reduced even further which is a key selling point for our ultra high protein today, and our clean sugar technology dextrose in the future. We literally received our latest protein lifecycle carbon intensity yesterday score.
Which showed a 46% lower score for a high price for our high protein products compared to Goran corn gluten meal globally aligning this data with P. F. ISO and <unk> plus rules. This is very important to pet food and agricultural producers globally. In addition, our CST carbon intensity.
Cannot be matched by current products in the market today, which is why we arent significant negotiations with more demand than we can supply over the next several years more later on this as well.
Our decarbonize our de carbonization opportunities so that now it should at least at $120 million to $180 million annualized economic opportunity starting in the last half of 2025.
We have also executed a few different new contracts around our carbon strategy that gives us the confidence to use this number as we and we have more to go.
Our protein initiatives remain on track and our commercial success has continued to see strong results, even with our reduced rates in Q2, which was a short term impact our turnkey JV with <unk> in North Dakota is anticipated to begin operations in the first quarter of 2024 with our Madison a fair amount locations on deck next pending permitting from Illinois.
In Minnesota <unk>.
<unk> those three facilities will increase our annual marketing capacity by 250000 tons, bringing our total annual run rate to 580000 tons of ultra high protein production, including full turnkey rates, which is very close to what we had laid out for our 2025 volumes. We believe this number grows as our yields at each site get much better in <unk>.
Wood River, the 2025 economic uplift remains in the $150 million to $210 million range that we have pointed out for the last couple of years.
Protein margins have gotten stronger for two main reasons first our reorder rate remains high and even more important our prices continue to increase in relation to our input costs.
Well during the ramp up over the first three year few years, the corn soy relationship narrowed. This is now normalized and we are seeing initial margins on new sales in the range of 15 to 17 cents per gallon uplift for that site, which is why our ability to run jenne. One platform fallout is important and that hurt us in the second quarter as we indicated.
We continue to see great success in the marketing of the ingredient and earn significant late stage discussions with commercial counterparties for our 60% protein products.
We expect our first commercial shipments beginning in the fourth quarter and we continue to believe that 20% to 30% of our platform could be 60% protein sales during 2020 for our ultra high protein has a higher protein concentration in soybean meal and it does without the anti nutritional factors and importantly, our fermented use product for pet food.
<unk> gives a further nutritional advantage versus soybean meal and other high protein offerings now depending on the customer we can tailor biological recipes now to suit their needs for protein in east and our partnership with Novozymes allows this to happen as we are now beginning to see the fruits of those labors as well we don't believe anyone.
In the World can do what our companies are doing together we.
We have been pointing to these opportunities for some time now and the future is now two other quick points.
First we are now producing for the first time ever non GMO Ultra high protein, we will shift to customers for initial analysis and trials over the next several months the cost will be high but the returns will be higher second post. This production run being completed next week, we expect to dedicate one of our MSA locations as a 60 pro.
<unk> to produce commercial quantities to ship in Q4, and 2024 and hope to keep that location on this program for the majority of its production.
Renewable corn oil prices have seen a recent resurgence in strength as renewable diesel capacity continues to come online we.
We are seeing renewable corn oil pricing consistently achieve premiums to soybean oil due to the lower carbon intensity of our product as a result, we are once again seeing corn oil pricing in the 65 to 75 cents a pound range and remember under the 40 fives, the clean fuel production credit or low Ci renewable oil is further advance.
The soybean oil starting in 2025 and I think that is also under appreciated.
For our clean Sugar initiative, our engineering teams and construction crews at Shenandoah continue to make great progress on construction.
And the project continues to be on track for mechanical completion in late 2023 and startup in early 2024, we are doing something that has never been done at a dragline facility, creating a truly revolutionary bio refinery and using that to create a lower carbon intensity dextrose than what is available today in the market <unk>.
<unk> interest remains very high and we are confident we will have a majority of the first year's capacity spoken for prior to startup and I expect to have announced are all commercial sales commitments before the end of the year.
The last half of 2023, obviously looks completely different from the first half for us as we are operating in a position to deliver stronger utilization numbers due to the shutdowns that we took in the second quarter and we are well positioned to hit the targeted run rates for our protein and oil businesses that we have laid out.
At today's pricing renewable Cornwall alone could contribute $70 million to $80 million for the second half of 2023 on pace for the annualized run rate. We have discussed in the past the output from our protein business is back on pace for the run rates. We have discussed previously and believe there is upside to that number depending on the level of 60% protein sales we have in 2024.
But all in adding in AG and energy and net of corporate overhead we are setting up for a strong finish for non ethanol contributions during the back half of the year as we have previously guided to.
The current outlook for our Gen. One platform is materially stronger than the recent past favorable corn market drivers and an anticipated larger carryout, coupled with improved year over year driving demand has led to an expansion in the ethanol margin setting the back half of 2023 to be stronger across all of our areas of our business.
Finally.
I wanted to provide a brief technology update as we indicated on our last call. We are working towards some exciting technology news for fluid quip technologies, the first which was fulfilled in our shelf for fiber conversion technology, our <unk> announcement about our collaboration.
With Exelon a subsidiary of shell one of the largest world the world's largest energy companies should not be discounted as well because we have been working with them. Since early 2021 to develop a process to combine fermentation precision mechanical separation and processing and fiber conversion into one platform. They are building.
<unk>, a very large pilot <unk> facility adjacent to our York Innovation Center, where we are adding the MSC process side by side.
Recruiting for this venture is well underway and getting into the public sphere helps. These efforts. So what is that what is it that we are doing this collaboration combining MFC with SFC T represents an innovative technology for agricultural processing and allows us to break down a kernel of corn into its high value products, leaving nothing behind.
And in addition to the fermentation and precision and separation technology that we have been using at Green Plains and flew equip this collaboration as a chemical breakdown step of the fiber portion of what has already been separated through the biological mechanical means which is significantly different than anything <unk> seen in the past increasing the amount of <unk>.
Protein that can be recovered capturing all remaining renewable corn or corn oil and producing cellulosic sugars, which expands the ability to make low carbon ethanol, which we believe can be a key component feedstock for saf and for other low carbon ethanol markets like Canada set another way.
This process will convert our lowest value co product <unk> or dry distillers grains into three high value products renewable corn oil ultra high protein and Cellulosic ethanol. It's really just the next step and Decarbonising our platform of maximizing the value added products from our bio refining process, we anticipate to start up in 2024.
<unk>, which is not far away and we will look to commercialize this technology at one of our MFC facilities that we have already built which is lower capital intensity for us upon achievement of key milestones.
In addition, fluid quip has its first MSC technology sale into Europe , the opportunity not only further validates fluke grips MSC as being the leading position by separation technology globally.
But it also demonstrates feedstock flexibility and efficiency is the application will be for wheat as its primary feedstock.
You can work with corn wheat, and its Oregon blends, which opens the door to additional markets around the world and.
In addition, fluid quip patents, we just got stronger as we were issued four new patents this quarter to related to clean sugar one for related to protein.
<unk> includes oil recovery.
And one focused on enzyme recycling of converting pulp cellulose based material into sugars. We also expect more brown broad patent coverage globally for clean sugar technologies to be issued very shortly as we have been informed by several countries. They are coming.
The value of flu quips IP portfolio is a key differentiator for differentiator for Green Plains and wildlife Underappreciated. These latest announcements begin to demonstrate the value of the investment in fluid quip, we made in 2021.
We truly have a revolutionary technology company, whose IP, we are deploying to reinvent our platform and the Greens Green Plains 2.0.
We have been pointing to this future for some time now and although we have seen some setbacks with the success. We are seeing across all of our pillars. The opportunities. We are executing on our just ahead of us and we believe the future is finally upon us and is now and with that I'll leave it there. Thanks for joining our call today now let's start the question and answer session.
Okay.
Thank you in order to ask a question press Star then the number one on your telephone keypad. Please limit your questions to no more than two at this time, if you wish to ask additional questions. Please rejoin the queue.
We'll pause now for a minute to compile the Q&A roster.
Your first question comes from Greg <unk> from <unk> capital Greg. Please go ahead.
Hi, good morning, and thanks for taking my questions.
So hey, good morning.
<unk>.
Hydro down 900 tonnes, a day line of sight on 60 pro.
You did exactly what you said you would do right.
There's been a lot of learning there and it's kind of been.
Nothing ever goes in a straight line right.
And most investors. These days are now starting to look forward to clean sugar.
Can you can you maybe just describe for us some of the things.
That you learned from the rollout of high growth.
Translating to clean sugar, obviously youre starting in a in a different place given the fluid quip here, but I'm sure. There's some some important things you can share with us to help us understand what.
Clean sugar it looks like from an execution standpoint.
With all the learnings you've had in the last couple of years.
Yes, I think thanks for the question I think our ramp up for sugar will be significantly different from the learnings we had in a ramp up from protein we underappreciated.
The difficulty at times to put a new technology in place, but I think as we rollout more and more of our sites. We learned everyday and then we saw better results.
In terms of how we built them and in how we run them and we're even seeing it today. It just as we optimize our protein technologies. When we built these assets we thought we'd have a 3% to three five pound per bushel yield and we now know based on our partnership with Novozymes as well as things we can do mechanically.
We will be able to achieve five pounds per bushel consistently which allows us not only to hit are laid out numbers that we put out there in terms of volumes for 2025, but exceed them as well as we continue to get more and more out of these systems and debottleneck them took a little bit longer than I think we appreciate it but we're going to take those learnings apply them to <unk>.
<unk> sugar is a two to 300 million pound system that we're building right now and a difference as well is that when we went out and hired.
While we believe our experts in wet milling and and making dextrose.
Going all quite frankly to crystallize.
Dextrose as well and so we have set up very very differently. So that it's not gen. One dry grind.
Talent management running these assets, it's actually a wet milling team that we hired from several of the largest in the world that wanted to come work for us on this revolutionary technology implementation because we believe this is really the future of our company and so on top of that then we wanted to get ahead of marketing the.
Product in terms of this takes a product longer to market all the way through food, but industrial use of dextrose Ah remains high and so one key differentiator for US was to get on our carbon scores very early because this product is a significant reduction in carbon intensity, which is a big deal for both industrial and food.
Products. So when do we start up our focus on hopefully selling out to industrial markets and then ultimately this should take us about four to six months to get food grade certified and we all we are already food grade certified in the process at our York facility.
We will get food grade certified at a better facility in Shenandoah and then start to hit the food market later in 2024 and start to look at where do we where do we go next do we increase Shenandoah capacity, which is fully expandable that's how we designed it.
Or do we move to other locations, where we have interest and geographic demand that they want us to build closer to their sites or they want to colocate on our properties. So.
We just approached it very differently, but this product is so much more valuable in total to what our bottom line impact can be versus protein, which is why this technology. We believe is just such a game changer for us but.
This one we're going to roll out very carefully and make sure that number one we don't overload the market, but number two we come online and think about all the things long before we start these up that can that can take away some of the the length that it takes us startup technologies.
Thank you for that.
The other is the other big question out there right now.
As with the.
The MLP.
Not too many weeks away from being consolidated acquaintance, let's hope for a small number.
This opens up the field for you too much more easily execute on M&A.
And in the past you've been very active and even had.
Some interesting situations where one.
One of the chunky portfolios you've had.
An opportunity to offer a vastly superior.
Proposal to one of the sellers I think because of a.
Tax advantaged structure for them.
Continue maybe.
Update us on how active you've been over the last couple of years as far as evaluating assets and whether or not your appetite is likely to be single plants or possibly portfolios and.
What are the complications these days as far as actually executing acquisitions in the in the broader sort of ethanol plant market.
Well, that's a lot to unpack there, but let me just focus on a couple of things. We continue to negotiate with conflicts committee and really can't talk much more than that I'm, bringing the MLP and we talked about in the past some of the reasons why we want to do that and we'll just leave it at that just because of where we're at in the process.
Secondly from an acquisition standpoint, we've been on the sidelines a bit they are ethanol plants in general are harder to buy in the size scope and scale that we want to.
To apply our technologies to them and as you saw we divested a small plant for us to dislocation Ali geographically.
And also the way that the logistics work out of there just won't fit our long term strategy around protein oil sugar and de carbonization, but if it's somebody else's, which is good but it was a smaller subscale plant to what we want to operate in the future.
Acquisitions are hard they are expensive the value of our assets have gone up if you want to build one two day replacement value for ethanol plant in the Midwestern and the Midwest is $2 25 to $2 50, a bushel minimum.
That's a gallon sorry, $2 25 to $2 50, a gallon minimum and Thats before you add on any of our technologies as well. So M&A is pretty difficult, we absolutely want to begin to re expand our platform.
Over the next several years and look for opportunities, but everything got more expensive, which replacement cost is meaningful in this industry and why is it meaningful because before you even take a look at ethanol margins have somewhat recovered blends are going up we believe our technologies can be applied but more importantly, if you are sitting on one of the pipelines or.
The summit for example, which can get built as quick as probably quicker than most.
You're in an advantaged position and theres going to be the haves and the have nots in the next couple of years of who gets up and running first and Thats why we chose summit as one of our partners is because we think that'll be the haves and that'll get build first and you'll have you could have a multiyear advantage over those that are not on a pipeline that is operating yet so.
That's why people when you look at acquisitions do you have to value very different this industry in the past and if we get to jet fuel, which you've already seen projects being announced the.
The value of an asset to produce low carbon alcohol and low carbon feedstocks is just going to continue to go up notwithstanding some of the volatility we face. So we absolutely would love to expand our platform. We don't really want to build a bunch more fuel capacity I mean, we have some sites we can expand.
Little bit so we can take advantage of of being on a pipeline.
But also if you take a look at place like Shenandoah, where we're going to take capacity out of the market as we build up our clean sugar that'll give us an opportunity as well so.
They are out there, but its getting much harder and much more expensive to do M&A in this industry. It's not like it was a few years ago no matter what the margin is in any given quarter by the way.
Great well, thank you for that I'll hop back in the queue.
Thank you.
Next question comes from Adam Samuelson from Goldman Sachs. Please go ahead.
Yes. Thank you good morning, everyone.
Good morning Ann.
Hi.
So I guess my first question, just maybe making sure we're clear on kind of the quarter and kind of how you're framing the second half.
I think in the prepared remarks, Todd you talked to the Wood River issue and the other unplanned and planned downtime.
Potentially.
Leaving two.
<unk> 20 cents a gallon of margin.
On the table.
As we look forward with the with the network now operating at high rates less downtime in the second half of the year and where the forward curves are at your mix of.
Hi problem corn oil.
Is that kind of margin level.
Or that margin level plus.
Kind of the right way to think about second half EBITDA.
Yes, I mean, it's ebbing and flowing we saw a nice expansion back yesterday, but yes, I think youre not far from those ranges today, if not potentially even better and.
And look I mean part of our Q2.
It is also the fact when you don't run in the market expands and the prices go up you can't execute on high priced contracts, which then becomes a bit of a double whammy having to buy those in that we're having to cancel them and to the advantage of the of the person on the other side. So.
For us it was.
We are tracking really well and unfortunately, all of our big sites.
<unk> hit at the same time and while we had planned downtime at several of them they turned into unplanned downtime as well.
And so.
It wasn't just really just missing the margin was actually having to.
Bye and hedges and and also buy in sales of high <unk> high priced protein sales as well that.
That hurt us so going forward as if we get clean and when as were clean right now.
When we have the real opportunity to kind of achieve those type of margins and more than we saw them higher even since then but they've come down a little bit.
Is that corn rally.
<unk> went up very fast and that has come down I think ethanol numbers are improving again, we saw a couple of weeks of builds. So I think we're setting up for a basis a pretty good fundamental outlook for just.
Just the base fuel in the last half and then and then protein as.
As we indicated when you have the corn soy spread doing what it's doing in corn sitting around $5 and soy sitting around.
Our soy meal sitting over at $440, obviously inverted into next year, it's really in the favor of our strategy again and while we've got a lot of questions from our shareholders about a year and a half ago when that spread narrowed I think this ebbs and flows but it's it's really favorable for not just last half of 2024 as well and we're seeing a good.
Pick up in demand as our product continues to get better and better inclusion rates and rations across all of the animal sectors, including pet food and agriculture.
Yes.
Okay No that's.
That's really helpful and if I can just ask.
Follow up on on high Pro commercialization, you talked about a 60%.
60% sales that are that youre, working on and selling getting those sales done.
In the fourth quarter can you help us frame, where the premium versus regular soy meal or irregular.
<unk> would be just as we think about the incremental contribution from getting meaningful portions of your production to a 60% level.
<unk>.
We will take that.
Push a higher proportion of your hydro production up into that 60% range.
Yeah. Our first step is just to start competing in really as a replacement for corn gluten meal and soy protein concentrates and Thats really where our replacement is the.
As we've seen soy meal increase and the corn spread.
Corn and soy spread.
Go in our favor for 50 pro when Youre competing against a corn gluten meal at the spread between corn gluten meal and soy meal have narrowed a bit so.
While.
We'll deal with that a little bit I mean, what we can see today is at least on paper a 14 to 17 uplift again is for kind of how we're how we're thinking about almost double the margin again now.
At the starting point and we want to get involved in these rations, but the demand that we're seeing at least nearby is coming from outside of the United States.
In terms of Aqua culture for 60 pro.
And then we're working on significant demand within the United States next year in 2024 for agriculture, and pet and other areas and really in the early stages of swine. So.
We are just starting to where we are we have been working significantly hard on the program over the last six months to 12 months and getting.
Getting into different rations and getting through a lot of the evaluation stages and we're at the end of those with very very good high marks but again the spread narrowed between some of the higher protein products and soybean meal, just because of the front end soybean meal curve. So but overall, if we had to look at it on paper, we kind of look at.
The base margin.
In 50, pros and where we've kind of 15 and 18 cents a gallon today the base margin in 60 pro starting at kind of 30% to 40 cents a gallon of uplift today and it really just some of it depends on markets. Some of it depends on what what where we're going to go in the world. Some of it depends on freight, but overall, we see a significant uplift.
To that end in.
Overall, great acceptance of the product whats really unique and differentiated green plains from anybody else.
As with there are new plant JV coming on in early 'twenty, four or redundancy is a key and critical component in our volume is a key and critical component that we can now sell you 50000 tons of 100000 tons to 150000 tons. It really there's no there's not a limit there relative to an inclusion rate and.
And that's a game changer, when you talk to a customer and instead of having to sell them for a 5000 tons. So redundancy really matters and it will matter even more than 60 pro markets.
Alright, that's all that's all helpful color I'll pass it on thanks, Thank you very much.
Next question from Christopher Glynn from Oppenheimer. Please go ahead.
Hi, good morning, Thanks for taking the question.
Dovetailing on that last response, Todd you mentioned in the prepared remarks that you are planning to move a single facility are about 20% dedicated capacity to 60 pro. So can you just talk us through what you are hearing in the market. That's giving you the confidence that you can allocate that capacity to that that higher level of pricing.
What we're hearing is really preparing for shipments hopefully in September to satisfy Q4 demand that we're working on today in late stage negotiations.
So we can't just turn it on overnight. It takes a it takes about a week or two just to start to get the plant fully switched over from 50 to 60 Pro we got to make sure that we work with our biology partners to make sure we have the adequate.
Inputs that we need and fermentation that just takes time, so a little bit as you have to anticipate what stages you are in discussions and when we look at the size.
Of the discussions we have to convert.
One of our plants fully to 60 pro.
It's going to be the best outcome. So we can satisfy its been a chicken and egg.
When they want it you better have it and I think we learned that in their 50 pro is that we built inventories on 50 pro and.
And it took a little time to work through those inventories, but because we had those inventories we were able to really start to get traction in the 50 pro market, we're going to have to do the same thing in 60 pro start to build inventories later this quarter. So that we can satisfy what we believe is demand and we're not just seeing demand from a standpoint of ship me a trucker ship me a tote.
Or even a container we're actually starting to see enough volume that were potentially starting to ship.
Pieces of vessels as well around the world. So there.
And there is enough we gives us enough confidence it is time to make a switch to one of our plants and have the product available in the market.
And just a clarifying question on that we're talking multiple customers in multiple end markets or just a little bit more color that you can provide on the customer standpoint.
Multiple customers multiple end markets multiple geographies some as big as vessel holds not vessel quantum that a full vessel.
And even down to one truck at a time and we just want to be prepared to.
To ship and be ready to go we've we've been work we've been in significant trials evaluations.
You can go on and on test labeling all the things that are really important to our.
To our customers, we've been working on that for well over a year as we had been indicating to everybody.
It's it's a long process to get here, we thought it would take US three to five years and it's as we said it took a three to five months to make it now we had now it takes about another year to kind of get through all of the evaluations because once we made it it's been in the supply chain, it's been an evaluation and so far we haven't really seen.
Any market that has come back to us to say hey that didn't work for us.
And so our R. R.
Our opportunity and while we can propose to customers around everything from performance taste as well as carbon intensity is extremely beneficial.
Okay.
That all sounds very positive one one follow up question unrelated just given some of the discussion around re rating of the asset footprint and replacement cost.
Any indication you can give us on the transaction value for Atkinson, what we should anticipate in terms of cash on the balance sheet from that thank you that werent confidentiality with with both sides of this transaction and it's it was a smaller.
Site and from that and it didn't have rail I mean, theres a lot of things on this site that didn't match, what we wanted so.
Relatively speaking, where it's not really a material transaction, but it's definitely enough cash for our balance sheet that makes a difference as well so.
But it wasn't really great financial strength without this as well.
That's just one more step out as I indicated.
Our free cash flow generation at least based on current markets should pretty much cover a lot of our capex in terms of our growth initiatives, which really this leaves us in a very similar financial position at the end of the year going into 2024 with potentially.
Madison or Fairmont getting their permanent later this year, so, especially Madison.
Fairmont will take a little bit longer than that so we just want to make sure we were positioned now.
Now from the standpoint of being able to execute on our <unk>.
We can really make the money and be accretive and Thats why we executed on this transaction, but we would not have put any of our technology at this site.
It really didn't match our long term needs.
Next question from Manav Gupta UBS. Please go ahead.
Hi, I wanted to understand a little bit better we are seeing a rebound in continental prices, but youre also seeing rebound in animal tallow Leslie benign. So it appears all pretty much all Ivy feedstocks are on an uptrend.
I understand what's driving it is it a function of the plants running a lot more reliably now ramp doesn't compatible something that the supply side also.
I guess not being able to supply necessarily benign. So the whole market is tight if you could just talk about the dynamics of the R&D feedstock market.
Yes.
Yes, it's interesting when the market was in the in the.
40% fifties, we we're selling we're still selling our oil at kind of 5% to 12 over that market. So that was just the.
Market for corn oil distiller renewable clients, we call renewable Cornell.
Now that the soybean meal market has rallied on the front end a little bit the sales obviously.
From standpoint of doing basis sales are beneficial to us, but beyond that we are still selling at a premium to that I mean, I think there's just multiple factors I think theres not I don't know that the supply is the issue I think demand is just becoming so robust.
We're starting to see really good uptake of oils into renewable diesel more importantly, though.
When you kind of look at some recovery in <unk>. When you look at the value of Ci points.
For what we produce and even tallo is when you look at the low Ci feedstocks.
We have not really seen anywhere where that was a trade anywhere the discount to soybean oil anymore and in fact as we move towards 2025, which is just not that far away.
We are we have a benefit too.
The end users because of the IRA to use more corn oil. So we're really in a really good position.
While we didn't mentioned it manav as well is that fluid quip continues to see and their technology.
Expanded yields before we even get to use <unk> technology. So.
We are implementing one of their technologies new technologies in Wood River over the next several months, which we believe has the capability to increase our yields.
At an MSC facility to kind of 1314 and they've already.
<unk> seen those results at an earlier application at a non green plains plant that they had a different system running already they upgraded its now we're going to take those findings.
And apply it so we're very confident in our ability to produce oil, but I think it's really just demand is finally showing up.
And I think supply has not really grown quite frankly, I mean, we're not making any more oil as an industry, we're not making it soybean oil theres not a bunch of new plants that started up in soy crushing is coming but so spy hasnt really expanded while demand is finally kind of exceeding it again.
Okay.
Fallout pairings.
Drew let al gauge kind of hit to multiple needs a TTM ethanol production on ultra Ultra high brew help us understand EBIT better during dollars Shine litigation or otherwise what are some of the lessons noncash and what can be done to make sure something like this does not happen again.
<unk>.
Well, we don't want to ever wanted to happen I think it was an unfortunate event it was during the shutdown.
We can't really get into a lot of the divi details Osha has released the plant released the plant back to us and.
And we are already preparing.
During the end of that to bring that plant up as fast as we could took a little while to get protein and oil running we just want to make sure. The team was good and stable but.
Look these are incidents that we never want to happen. So I mean, we learn from every incident like this it is unfortunate.
It is hard on the team it's hard on the company overall, it's not just that wood River facility.
We are certainly.
Cognizant of what it can do to our employees and I think it just had multiple effects across the company but.
There is as we move on we'll just take our learnings, but I think overall.
We are running that plant full out again and the team is in good shape and Osha has.
As it relates to plant back to us So we will move on and learn from that.
Next question comes from Tom <unk> with Bank of America. Please go ahead.
Yes, thank you very much.
I actually want to get a little bit more color on the rest of the outages. So firstly, if I understood correctly, given the 15 to 20 centers that you set.
On consolidated margins it seems to us that it's probably another.
10% to 20 medium impact that you saw in the other facilities. Besides wood River and does this makes sense and also what type of outages, where do they did you have cabo essentially things during planned turnaround that needed to be repaired or would they or simply things broke down.
Throughout the quarter.
Yes, I think it was a little bit of everything you are talking about it and on top of that.
The Domino effect of having good hedges on in an expanding market, having good sales on of high protein and a decreasing market, which then you lose those and you have to.
You have to exit some of those opportunities and so it was yes. It was it was a combination of the fact that we were in shutdowns that took significantly longer to bring back up as we found more areas that we needed to to repair and in overall.
Had some significant.
Unplanned downtime of things that just happened during the quarter was a bit of a perfect storm.
We werent expecting it.
But but but what we were able to do then is during those are our operations team again.
We've brought in a new head of operations. He has built a team around him. They got their head around it we are highly skilled and highly competent across that team. We brought in people across industries from from refining all the way into wet milling all the way into dry milling and built a really new team as we as we had turned that team over.
<unk> and <unk>.
They had kind of hit it hard in.
And set us up so that during that time at least we were able to quickly mobilize take advantage.
And get through some of the things we would have done in the last half of our normal shutdowns.
Fall shutdowns and we cannot we're not going to have to do some of those now which is going to be helpful. So it was just a bit of a perfect storm that hit us. Unfortunately, we've prepared.
We had ourselves set up for a pretty good quarter and between Wood River.
The spiral effect of marking things in and then and then having unplanned downtime.
Just.
Just hit Us hard and we'll move on from that and just run run full out as best we can during last half in and show everybody. What this is capable because we could have shown it in the second quarter and just.
It just was not able to execute because of those couple of reasons.
Perfect and as a follow up.
You mentioned you are in the final stages of negotiations for the 60 pro volumes before I personally at least was under the impression things were more firm in terms of sales or so is there any risk that.
Negotiations may not youll be outcome that you would like and may actually not settle Vaughn 60 pro volumes here.
It's been a while since we announced obviously.
<unk> partnership with rebranding so car things progressing there as well.
Yes.
So I don't think we gave anybody a certainty of sale, but what we did say is where we're negotiating in the fourth quarter. We feel like now we're in such late stages that we're even negotiating destinations price all those type of things. So we know we'll make it into some rations.
Into the fourth quarter and that's why we're now start to ramp up it takes it will.
Take us a good 30 days to get into full production rate, even though we can start to hit it within a few days, but just to get consistent and make sure that the plants lined out running well.
But that's why our confidence has gone up relative to starting up one of our 60 pro plants, even earlier than probably we thought where we're going to do our river. Its partnership remains strong we are already in one of their ration through one of their third party suppliers, we know that for a fact.
Working on getting into another ration of theirs, we know that our product is very valuable. Our partnership has remained strong we're looking at kind of their volume going forward and what we can do together and where we should really place our asset.
It's a long game when you think about the feeding cycles for what they do and whether other salmon producers do around the world. This is a two year cycle almost from the time you start till the time you harvest.
And end product and so we have plenty of time, but the partnership remains strong the asset base is starting to be thought of as an asset in the middle of that already and we hopefully will start to see the benefit the full benefit of that.
Partnership over the next kind of year or two but it's a long game. When you think about the feeding cycle of these companies in the growth cycle of these companies.
Now many better than river into the World and I can only I can only assure you that our partnership is as strong in place and looking for where we're going to continue to expand it.
Thank you very much.
Next question comes from Laurence Alexander Jefferies. Please go ahead, Hi, This is Dan Rizzo on for Laurence just a quick question are there any lingering costs associated with the combination with with GPP thats going to occur later in the next couple of months.
Yes, I would say Theres a dip.
Pending on where we get to in a transaction. There is still there is still absolute merger costs that could happen there as we need shareholder votes, we need there's lawyers theirs.
Several things in terms of filing so, yes, I mean I would say.
Deal fees all of those type of things have to happen and.
But overall, we could break those out and if there are one timers, but I think the overall benefit of bringing them in would be greatly exceed that if we can if we can get this deal done.
And I'm, sorry, if I forgot this but have you quantified what the what the synergies are with who is doing this the cost of the cost savings are.
Yes, I mean, what we said is number one.
By bringing the partnership back in obviously.
We don't send some of our money out the door in terms of fees, we get that back in but we're paying for that.
Some savings in SG&A and.
So overall interest savings as well potentially as we will look to do see what we do with that piece of debt. So, but we're still negotiating with the conflicts committee and we should have more on that during.
During the quarter.
Alright, Thank you very much.
Okay.
Next question comes from Jordan Levi Twist Securities. Please go ahead.
Hey, Al I.
I appreciate all the commentary.
The improved outlook you talked to in the back half of the year, maybe if we could just unpack that a little bit more and help frame up how we should be thinking about what run rate EBITDA might look like given the levels Youre running Adam protein right now and what Youre seeing in crush in Dcs.
Yes.
Yes, I mean, I think when you kind of look at it.
On paper similar or better to the margins, we we locked in during Q2 overall.
And depending on where we see.
<unk> performed well, we got to watch core market closely I mean.
Bombing, a black sea port from the Ukraine, Russia, It doesn't help our crush but overall the crush expanded the numbers came back in line.
Run rates were over overly stated in our opinion last week at $10 90. It is probably not possible just doesn't stay there very long.
And I think we'll get some better EIA data going forward I think were below last year's stocks levels blending continues to increase RIN values have not broken since the <unk>.
Updated RV OS at all so if you look at kind of retailers are making plenty of money blending ethanol, we're seeing more and more.
<unk> type 88 octane sales happen to the consumer we've been we've seen uptick in 85 sales, which we didn't we didn't know how quick how much traction that will continue to maintain over the years, but when you look at corn oil alone.
Relative to the first half just take prices.
Where they're at today I mean that alone is.
Isn't that $75 million to $80 million range, just contribution where the first half was more of a.
Because of prices and volatility is more of that $50 to $60 million range in the first half so that alone gets us back we got the question one.
How did you come up with 70 or 60 or 70 cents a pound in your long term view of of oil and I think it's taking shape nicely and so protein as well.
We've got to deliver on some of these 60 pro sales, but overall, we should start to really see a nice protein uplift.
We we are looking forward to the day, which is going to come soon when we're able to really break out laptop protein numbers for you, but I can tell you that it's on pace with what we had previously indicated.
On top of that.
Fluid quip it will start to gain some traction on some of the sales that they start to make member when we make a sale in fluke of it actually increases.
<unk> at Green Plains or is a margin on technology and Theyre working on incredible technology opportunities.
Well outside of protein and what they do and so they have a much bigger engineering and construction and technology business as well. So we're looking forward to their contributions and we'll just have to wait and see where ethanol comes in and.
And even that last half on AG and energy is usually stronger than the first half than we because third and fourth quarters is really we start to kick in on that as well. So overall when you kind of look at it.
On paper, it's greater than what we were flagging in in the second quarter, and we'll have to see where it goes from there and fundamentals are good and everything we're doing.
Thanks Todd.
Maybe just shifting gears over to the regulatory front it looks like the administrations working through how to think about.
Methanol.
Scott.
Curious.
What your thoughts are there.
Yes.
What implications that might have.
So I have Devin here with US who you guys met on our IR, a teacher and except to say and I'll just leave it and ill, let Devin can give you a little more color.
We're very focused on making sure that the regulations are in place that give ethanol as good of a shot as anything else and alcohol.
First step is to Decarbonize, which is why we're very happy with the choices. We've made around our de carbonization strategy and being up what we believe will be earlier than a large part of the industry because of the choices we made.
But overall it looks like we're getting good bipartisan support.
We're making sure that the modeling is thought up correctly and I'll, let I'll, let debbie comment on that a little bit.
So like we said on the <unk> and we want to see the department of Energy's Argonne greet model used that allows for decarbonize ethanol to serve as a primary feedstock for alcohol to jet SaaS. We saw some encouraging comments from the president just last week in Maine, where he said that farmers have a vital role to play in producing SaaS. So that was encouraging.
We expect to see regulations put out by Treasury as early as next month September on the current 40 be SaaS tax credit and then shortly thereafter for 45, and there's a lot of discussion, but as Todd mentioned tremendous amount of bipartisan support from both the house and the Senate to continue to encourage the administration to allow for.
War Decarbonize the ethanol to serve as a feedstock and helped to meet this app Grand Challenge goal of 3 billion gallons by 2030, which we don't believe is possible unless you use these agriculture ROE based feedstocks.
Very helpful. Thank you.
Thank you.
Next question comes from Eric Stine, Great.
Please go ahead.
Good morning, everyone.
Good morning, Good morning, Hey, just just going back to 60 Pro I mean is this a matter more of just.
The market or your place in the market developing I mean is there any reason as we think long term that your entire platform is <unk> 60 per barrel.
Just to confirm I believe you said that in the near term you are hoping 20% to 30% would be 60 pro.
It's why we built America I mean, we didn't build.
Our systems to run 50 pro we built them because we knew with our partnership with fluid quip and our investment there that we've made and the amazing technology. They have in the consistency of their product and the way it flows in the way it looks in the color of it it's very different than anything else available in the market the way we dry it the way we process it.
It's just consistent we have no problem consistently making $50 52 anything we want to make on demand.
And gaining large our yield increases which is why we did it as well, but we bought <unk> equipped and we invested in flu equipped with our partners.
To make 60% protein and more and greater and so our whole platform and our whole marketing efforts over getting into 'twenty four 'twenty five have been to maximize our market penetration.
And 60% protein and and.
And Thats, where we believe we're heading when we look at a new plant and where we want to build the next one.
We basically have to say, if we push yield and we push protein. We also know that what is our fiber product and it look like as well because we have we are creating new products. We are creating east products, we're creating fiber products. When we make 60 <unk>, it's a very different outcome, but yes.
Our intent and our plan is to go as far as fast and as quickly as we can and the highest amount of volumes to move to a 60 pro market and we are focused on doing that it will take a while.
Because it has to be a global outcome and so now we're working with partners globally as well for distribution and talking with potential partners.
And distribution as well because youre going to have to.
This is a global product and and we think Thats, where the best places to really get Max penetration.
Against products everything from corn gluten meal to soy protein concentrates all the way to what we're doing on our biological opportunities.
In terms of taste and texture and profiles to even start to think about.
Things like Fisher.
Fish meal replacement as well and that's really where that's the ultimate Pandora's box that we continue to try to solve for everyday.
Got you and then.
I guess not to totally try to pin you down, but I mean in terms of timing you said it will take a while I mean is that is that two three years out or is that it's going to take five plus years. It's about five years. So I can assure you I can't assure I mean I can almost assure you of that every time I say I can assure you. It is probably not the best thing to say, but it's not.
Five years out I mean, our program has fully been designed and the people we brought in.
To help market this product and sell it all have experienced at the higher protein levels and customer base. So it's just time, it's not going to matter in our view, it's not a matter of if can we can do the whole thing we should be able to I mean, there is.
10 million tons of demand globally, if not greater that just for just for things like corn gluten meal and more for high preferred corn or soy protein isolates and soy protein concentrates and those type of things and we brought a new leader to the team.
That came out of cargo that spend his time globally in different protein and agriculture businesses and he is now running our our protein marketing as well and so we're tracking that type of talent to this company so that.
When they show up at the door they have great.
Customer relationships, but also a lot of credibility from where they came from to where they are to where we're going and we build teams around all of our products clean sugar and protein Cornell's little easier they just call and they buy it but and those products. We wanted to make sure that we staff those.
With deep technical and marketing experience and that this really didn't exist in the gen. One industry. So we're tapping that from.
All of our large all of our larger counterparts in agriculture and energy.
Okay. Thank you.
Thank you.
Our last question comes from Andrew Charles <unk> from BMO capital markets. Please go ahead Andrew.
Hey, guys. This is Dan on for Andrew.
Just one quick one.
On the ultra high protein EBITDA build on Todd I think you alluded to this earlier, but.
You guys seem to still be on track for $150 million run rate by the end of 2024, if you could just briefly kind of walk us through the path.
Now how that how that looks.
Obviously, we've heard a bunch on 60 pro at the beginning of the year just trying to bridge that gap in the 25.
Yes.
Yes, so when we look at it basically when we think about it today, we have 560 million gallons converted.
And we're going to have half the <unk> JV happy of our turnkey so thats as about 85 million gallons converted.
And then.
When you add at least one of the two Fairmont or Madison at 760 million gallons converted.
When you look at how much coronary grind there.
At <unk> in terms of our yield.
And then you take that times, what we believe will be by by the time, we get there four five to five pounds per bushel.
And then youre hitting higher targets volumetric Lee.
What we had outlined and then when we look at 2024.
As we leave 24 with 20% to 30% of our capacity and 60 pronged go into 25, when you put all of that into the calculator and we'll be very happy to do that I don't I can't do that right now on this call it meets or exceeds those targets relative to <unk>.
<unk> incentives of gallon uplift on 50 pro.
30% to 47, a gallon uplift on 60 pro not including all of the other opportunities that our innovation team works on to increase value of our products. Even further in terms of that product suite and things like drive <unk> and 60, <unk> 60 for Oes to those type of things.
And when we've kind of put that all in we are even more confident today with the things that we're seeing driven by yield driven by protein driven by price spreads driven by innovation that we can hit that $150 million to $200 million Mark that we laid out and then build from there.
Awesome, Thanks, Tom I have a great weekend.
Okay. Thank you very much.
I will now turn the call back over to Mr. Bankers CEO for closing remarks.
Yes, hey, thanks, everybody for being on the call a lot of questions a lot of great questions. We really appreciate it as you can see we're making great progress across our product suite.
<unk> second quarter, we appreciate that how we've come out of it better than where we were in at plants are running better protein is running great sugars on track.
Oil markets have recovered significantly from the quarter lows when we're down into the <unk> now we're up into the <unk> again high <unk>.
So overall, we think.
We're in a good place to show what the opportunity is in the last half and deliver a few quarters.
To make sure you are confident that we can deliver on 24 and 25 million are.
Our takeaways from 'twenty, three going to 24, and our exit run rate in 'twenty four goes into 'twenty five and that's why we're extremely confident between de carbonization, which those numbers have only gotten better to hit those 25 numbers that we laid out and began to hit those in 'twenty four as well. So we appreciate your support and we'll talk to you next quarter.
Ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.
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