Q4 2023 Green Plains Inc Earnings Call
Operator: Good morning, and welcome to the Green Plains Inc. fourth quarter and full year 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.
Good morning, and welcome to the Green Plains, Inc, fourth quarter and full year 2023 earnings conference call.
Following the company's prepared remarks instructions will be provided for Q&A at.
At this time all participants are in listen only mode. I will now turn the call over to your host Phil Boggs Executive Vice President Investor Relations. Mr. Boggs. Please go ahead.
Operator: I will now turn the call over to your host, Phil Boggs, Executive Vice President, Investor Relations. Mr. Boggs, please go ahead. Thank you, and good morning, everyone.
Phil Boggs: Thank you and good morning, everyone and welcome to Green Plains, Inc, fourth quarter and full year 2023 earnings call participants.
Phil Boggs: Welcome to Green Plains Inc.'s fourth quarter and full year 2023 earnings call. Participants on today's call are Todd Becker, President and Chief Executive Officer, Jim Stark, Chief Financial Officer, and several other members of Green Plains' Senior Leadership Team. There is a slide presentation available, and you can find it on the investor page under the events and presentations link on our 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. The actual results could materially differ because of factors discussed in today's press release and the comments made during this conference call 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 statement.
Phil Boggs: On today's call are Todd Becker, President and Chief Executive Officer, Jim Stark, Chief Financial Officer, and several other members of Green Plains Senior leadership team.
Phil Boggs: There was a slide presentation available and you can find it on the investor page under the events and presentations link on our website.
Phil Boggs: During this call we will be making forward looking statements, which are predictions projections or other statements about future events.
Phil Boggs: These statements are based on current expectations and assumptions that are subject to risks and uncertainties.
Phil Boggs: Actual results could materially differ because of factors discussed in today's press release and the comments made during this conference call and the risk factors section of our Form 10-K Form 10-Q, and other reports and filings with the Securities and Exchange Commission we.
Phil Boggs: We do not undertake any duty to update any forward looking statements now I'd like to turn the call over to Todd Becker.
Phil Boggs: 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. We reported a solid quarter this morning with $44.7 million of EBITDA and a plant utilization rate of 95%. In addition, this was our highest quarter yet of ultra-high protein production, along with our highest ever corn oil yields, but we still have further to go and more to unlock. Our team continues to execute on maximizing the opportunity across our entire platform, and we believe there is additional upside on our portfolio of assets that we aim to achieve as we move through 2024. This quarter and the start of 2024 had many events that have led us to this point where our structure has been simplified, and we are ready to bear the fruits of our labor on the path we laid out a few years ago and feel highly confident in our ability to achieve our goals. Before I dive into the quarter, we also announced a strategic review this morning. As you can see in the 8K we filed, we have entered into a cooperation agreement with Ancora.
Todd A. Becker: Thanks, Phil and good morning, everyone and thanks for joining our call today.
Todd A. Becker: We reported a solid quarter. This morning were $44 $7 million of EBITDA, and our plant utilization rate of 95%.
Todd A. Becker: In addition, this was our highest quarter yet a holter high protein production, along with our highest ever Cornwall yield, but we still have further to go and more to online our team continues to execute on maximizing the opportunity across our entire platform and we believe there is additional upside on our portfolio of assets that we aim to achieve as we move through 2000.
Todd A. Becker: 24, this quarter on the start of 2024 had many events that has led us to this point, where our structure has been simplified and we are ready to bear the fruits of our labor on the path, we laid out a few years ago and feel highly confident in our ability to achieve our goals before I dive into the quarter. We also announced the strategic review. This morning as you can see in the 8-K, we file.
Todd A. Becker: We have entered into a cooperation agreement with Ancora. Our board believes our company is undervalued and we will embark on a strategic review to best determine how to maximize our value for all shareholders as we aim to achieve new milestones over the coming months, we'll try we'll talk about later in the call. These are as you know far reaching processes and we'll explore all paths to value really.
Todd A. Becker: Our board believes our company is undervalued, and we will embark on a strategic review to best determine how to maximize our value for all shareholders as we aim to achieve new milestones over the coming months, which I will talk about later in the call. These are, as you know, far-reaching processes, and we will explore all paths to value realization. We have nothing further to announce or discuss regarding this strategic review at this time. Moving on to the results, we were largely open and unhedged in the fourth quarter, which started out quite strong, as we talked about, and then rapidly tailed off as the quarter progressed. Market fundamentals remained weak at the start of the year with higher stocks numbers, and production has remained stubbornly high, with the exception of some weather-related slowdowns.
Todd A. Becker: We have nothing further to announce or discuss regarding the strategic review at this time.
Todd A. Becker: After the results we were largely opening under hedged in the fourth quarter, which started out quite strong as we talked about and then rapidly tailed off as the quarter progressed market fundamentals remain weak and have started the year with higher stocks numbers on production.
Todd A. Becker: Remained stubbornly high with the exception.
Todd A. Becker: Oh, some weather related slowdowns, although this cold snap tempered this weakness it may have been the recipe we needed to change the 'twenty 'twenty four our outlook back to a more normal environment and more positive as we get into spring maintenance of summer driving season, we anticipate that the base margin to strengthen as it has historically with our strong around rates and simplified structure.
Todd A. Becker: Although this cold snap tempered this weakness, it may have been the recipe we needed to change the 2024 outlook back to a more normal environment and a more positive one. As we get into spring maintenance and the summer driving season, we anticipate that the base margin could strengthen, as it has historically. With our strong run rates and simplified structure, we are well positioned for this opportunity. Our team has done a great job bringing consistency back to our operating metrics, but we still have opportunities to further improve efficiencies and bring our operating costs per gallon down as inflation is tempering across our plant stack. Plants across the industry are getting older, which we believe, and we've been articulating for the last year, more and more we believe others in the industry are experiencing this as run rates seem unable to sustain the peak at 1.1 million barrels
Todd A. Becker: We are well positioned for this opportunity.
Todd A. Becker: Our team has done a great job, bringing consistency back to our operating metrics, but we still have opportunities to further improve efficiencies and bring our operating cost per gallon down as our inflation is tempering across our plants plants back classic.
Todd A. Becker: Classic plants across the industry are getting older which we believe we've been and we've been articulating for the last year more and more we believe other than the industry. Our experience is as run rates seem unable to sustain the peak at $1 1 million barrels per day. We believe this represents a great opportunity to drive additional margin to the bottom line.
Todd A. Becker: We believe this represents a great opportunity to drive additional margin to the bottom line. We are really excited about our protein production in 2024, and the fourth quarter was another good quarter of production with 66,000 tons of sales and a bit of a build in inventory because we produced 60% protein at a commercial scale in Wood River, and we have now just started to ship some early adopters some volumes. I will get more into that after Jim's comments, but great progress is being made. Looking forward, we are excited for the opportunity to add to these volumes with our JV at Theros and Ethanol beginning commissioning as we speak and set to start protein production in the next couple of months.
Todd A. Becker: We are really excited for our protein production in 2024 in the fourth quarter was another good quarter of production was 66000 tons of sales at a bit of a build on inventory because we produced 60% protein at a commercial scale and wood River and we've now just started to ship. Some early adopters some volumes I'll get more into that after Jim's comments, but great progress.
Todd A. Becker: It was being made looking forward. We are excited the opportunity to add these volumes with our JV entities volumes with our JV. If there wasn't ethanol beginning commissioning as we speak.
Todd A. Becker: Set to start protein production in the next couple of months. This will be the world's largest fluid quip MFC system and we are eager to apply our learnings from prior startups to this partnership the conversion of 735 million gallons of capacity, including that Theyre Olson JV to ultra high protein has set us up well to service a global demand.
Todd A. Becker: This will be the world's largest flu-equipped MSC system, and we are eager to apply our learnings from prior startups to this partnership. The conversion of 735 million gallons of capacity, including the Theracent JV, to ultra-high protein has set us up well to service a global demand base whose demands have not waned or wavered one bit. Our renewable corn oil production saw another impressive quarter with the highest yield for our platform yet.
Todd A. Becker: <unk>, who disease demands have not waned or wavered one bit.
Todd A. Becker: Our renewable corn oil production, so another impressive quarter with the highest yield for our platform yet we benefited from pricing some of our fourth quarter early before veg oil prices came under further pressure as well start ups have been slower than expected from the new Rd capacity coming online, but we still expect to have to start or wrap production over the next quarter or two liquidity in the fourth.
Todd A. Becker: We benefited from pricing some of our fourth quarter early before vegetable oil prices came under further pressure as well. Startups have been slower than expected from the new RD capacity coming online, but we still expect them to start or ramp production over the next quarter or two. Liquidity in the fourth quarter improved again as our platform ran consistently, and we were able to capture the available margins. In early January, we completed the acquisition of Green Plains Partners. In all, we issued 4.7 million shares of Green Plains stock and $29 million in cash, which included $2 per unit in cash plus the unpaid distribution in exchange for the outstanding public units of the partnership.
Todd A. Becker: Improved again as our platform ran consistently and we were able to capture the available margins in early January we completed the acquisition of Green Plains partners in all we issued four 7 million shares of Green Plains stock and $29 million in cash which included the $2 per unit in cash plus the unpaid distributions in exchange for the.
Todd A. Becker: The outstanding public units of the partnership we will also look at the assets in this portfolio to determine the right mix and opportunity to strengthen the story and balance sheet and drive value to our shareholders and now I'll hand, the call over to Jim to provide an update on the overall financial results I'll come back on the call to do a deeper dive on 60 probes startup or dextrose.
Todd A. Becker: We will also look at the assets in this portfolio to determine the right mix and opportunity to strengthen the story and balance sheet and drive value for our shareholders. Now, I'll hand the call over to Jim to provide an update on the overall financial results. I'll come back on the call to do a deeper dive on 60Pro, the start of our Dextrose facility and Shell project, as well as exciting carbon opportunities shaping up in Nebraska. Thank you, Todd, and good morning.
Jim Stark: Facility and shell project as well as an exciting carbon opportunities shaping up in Nebraska.
Jim Stark: Thank you Todd and good morning.
Jim Stark: Green Plains consolidated revenues for the fourth quarter were $712.4 million, which was $201.7 million, or approximately 22% lower than the same period a year ago. The lower revenue is attributable to lower prices for ethanol and dry distillers grains in Q4 of 23 as compared to the same period a year ago. We saw a drop in our commodity inputs, with corn and natural gas down significantly year over year, contributing to a solid improvement in operating income for the fourth quarter compared to an operating loss in the same quarter last year. As Todd stated earlier, our plant utilization rate was 95% during the fourth quarter. That compares to a 93.4% run rate reported in the same period last year and slightly improved from 93.9% in Q3 of 2023. We anticipate our plants to continue to perform in the low to mid-90% range of our stated capacity for 2024, barring any events outside of our control. For the quarter, we reported net income attributable to Green Plains at $7.2 million, or $0.12 per diluted share.
Jim Stark: Green Plains consolidated revenues for the fourth quarter were $712 $4 million, which was $201 7 million or approximately 22% lower than the same period a year ago.
Jim Stark: The lower revenue is attributable to lower prices for ethanol and dry distillers grains in Q4 23 as compared to the same period a year ago.
Jim Stark: We saw a drop in our commodity inputs with corn and natural gas down significantly year over year contributing to a solid improvement in operating income for the fourth quarter compared to an operating loss in the same quarter of 2022.
Jim Stark: As Todd stated earlier, our plant utilization rate was 95% during the fourth quarter that compares to 93, 4% run rate reported in the same period last year and slightly improved from 93, 9% from Q3 of 'twenty two 'twenty three.
Jim Stark: We anticipate our plants should continue to perform in the low to mid 90% range of our stated capacity for 'twenty 'twenty four barring any events outside of our control.
Jim Stark: For the quarter, we reported net income attributable to Green Plains is $7.2 million or 12 cents per diluted share that compares to a net loss of $38 $6 million or <unk> 66 cents loss per share for the same period in 'twenty two.
Jim Stark: That compares to a net loss of $38.6 million, or $0.66 loss per share, for the same period in 2022. One thing I'd like to note is that our diluted share count for the quarter and year was 58.9 million shares. This share count excluded the shares representing our outstanding convertible notes because using the as-if converted method would have been anti-diluted for the periods I stated.
Jim Stark: One thing I'd like to note, our diluted share count for the quarter and year was $58 9 million shares.
Jim Stark: This share count excluded the shares representing our outstanding convertible notes because using the as if converted method would have been anti dilutive for the periods I stated.
Jim Stark: Keep it up for the quarter with $44.7 million compared to the $5.7 million in the prior year period. Looking at the last two quarters of 2023, when our platform utilization was strong and we ran at our targeted level, EBITDA for these six months totaled approximately $97 million, a vast improvement over the negative $43 million in EBITDA recorded in the first half of 2023. Depreciation and amortization expense was lowered by $2.4 million compared to a year ago and came in at $24.3 million for the quarter.
EBITDA for the quarter was $44 $7 million compared to the $5 7 million in the prior year period.
Jim Stark: Looking at the last two quarters of 2023, when our platform you utilization was strong and we ran at our targeted level EBITDA for the six months totaled approximately $97 million a vast improvement over the negative 43 million in EBITDA recorded in the first half of 2023.
Jim Stark: Depreciation and amortization expense was lower by $2 $4 million versus a year ago and came in at $24 $3 million for the quarter.
Jim Stark: For modeling in 2024, depreciation and amortization should average approximately $24 million a quarter. It realized $49.7 million in consolidated crush for Q4 2023 compared to $7.9 million in the prior year. Again, when you add in Q3 of 23, consolidated crush for the back half of the year totaled $98.2 million. For the fourth quarter, our SG&A cost for all segments was $32.8 million, compared to $28.9 reported in Q4 of 22. The increase was driven by higher consulting and professional fees and higher stock-based compensation. Interest expense was $8.7 million for the quarter, which includes the impact of debt amortization and capitalized interest.
Jim Stark: For modeling and 'twenty 'twenty, four depreciation and amortization should averaged approximately $24 million of course.
Jim Stark: You realized $49 7 million in consolidated crush for Q4, 2023 compared to $7 $9 million in the prior year.
Jim Stark: Again, when you add in Q3 of 'twenty three consolidated crush for the back half of the year totaled $98 $2 million.
For the fourth quarter, our SG&A cost for all segments was $32 $8 million compared to $28 nine reported in Q4 'twenty two the increase was driven by higher consulting and professional fees and higher stock based compensation.
Jim Stark: Interest expense was $8 7 million for the quarter, which includes the impact of debt amortization and capitalized interest it was $2 2 million higher than the prior year's fourth quarter. This increase was primarily due to capitalized interest being recorded in the prior year period as our MSC projects were under construction.
Jim Stark: It was $2.2 million higher than the prior year's fourth quarter. This increase was primarily due to capitalized interest being recorded in the prior year period as our MSC projects were under construction. Our income tax benefit for the quarter was $0.3 million compared to a tax expense of $4.9 million for the same period in 2022. At the end of the quarter, the federal net loss carry forwards available to the company were $37.3 million, which may be carried forward indefinitely. A normalized tax rate for the year, including minority interest, was around 28%.
Jim Stark: Our income tax benefit for the quarter was <unk> $3 million compared to a tax expense of $4 9 million for the same period in 'twenty two.
At the end of the quarter the federal net loss carryforwards available to the company with $37 3 million, which may be carried forward indefinitely.
Jim Stark: Our normalized tax rate normalized tax rate for the year, including minority interests was around 28%.
Jim Stark: We do anticipate that our tax rate for 2024 will be around 24%. Our liquidity position at the end of the quarter increased from the prior quarter due to continued strong execution and favorable industry fundamentals, leaving us well-positioned to achieve the next steps of our transformation plan. Our liquidity included $378.8 million in cash, cash equivalents, and restricted cash, along with approximately $251 million available under our working capital revolvers. I want to note that our acquisition of Green Plains Partners closed in early January. The final vote was supported by 92% of the unit holders that took the time to vote.
Jim Stark: We do anticipate that our tax rate for 'twenty 'twenty four will be around 24%.
Jim Stark: Our liquidity position at the end of the quarter increased from the prior quarter due to continued strong execution and favorable industry fundamentals, leaving us well positioned to achieve the next steps of our transformation plan. Our liquidity included $378 8 million in cash cash equivalents and restricted cash along with approximately.
Jim Stark: $251 million available under our working capital revolver.
Jim Stark: I want to note that our acquisition of Green Plains partners closed in early January the final vote was supported by 92% of the unitholders that took the time to vote.
Jim Stark: This provides us with the opportunity to simplify our corporate structure and governance generate near term earnings and cash flow accretion and reducing our SG&A expenses related to the partnership.
Jim Stark: This provides us with the opportunity to simplify our corporate structure and governance, generating near-term earnings and cash flow accretion, and reducing our SG&A expenses related to the partnership, improve our credit quality of the combined enterprise, as well as streamlining our reporting structure in 2024. Going forward, net income from non-controlling interests will no longer be included in anything from the partnership since we now own 100% of it, which represents about $5 million a quarter.
Jim Stark: Improve our credit quality of the combined enterprise as well as streamlining our reporting structure in 2024.
Jim Stark: Going forward net income from Noncontrolling interests will be will no longer be included in anything from the partnership since we now own 100% of it which represents about $5 million a quarter.
Jim Stark: Our noncontrolling interest on the balance sheet will be adjusted as well.
Jim Stark: I do want to give you a reminder, that we have no debt maturities until 2026, and our average cost of borrowing during the quarter was approximately 7%.
Jim Stark: Our non-controlling interests on the balance sheet will also be adjusted. I do want to give you a reminder that we have no debt maturities until 2026 and our average cost of borrowing during the quarter was approximately 7%. For the quarter, we allocated $31 million of capital across the platform, including $17 million to our Clean Sugar Initiative, about $6 million to other growth initiatives, and approximately $8 million toward maintenance, safety, and regulatory capital. Our total capital spend for 2023 is approximately $109 million.
Jim Stark: For the quarter, we allocated $31 million of capital across the platform, including $17 million to our clean sugar initiative about 6 million to other growth initiatives and approximately $8 million toward maintenance safety and regulatory capital. Our total capital spend for 2023 was approximately 109.
Jim Stark: Million dollars as of today and considering the strategic view Todd spoke of earlier in this call. We anticipate capex will be in the range of a $125 million to $150 million this year.
Jim Stark: Our plan is to deploy capital and highest and best returning projects with shorter term paybacks now I'd like to turn the call back over to Todd.
Jim Stark: As of today, and considering the strategic view Todd spoke of earlier in this call, we anticipate CAPEX will be in the range of $125 to $150 million this year. Our plan is to deploy capital in the highest and best-returning projects with shorter-term payback. Now, I'd like to turn the call back over to Todd.
Todd A. Becker: Thanks, Jamie So we have so many game changing and exciting things happening at Green Plains I could take a few hours to go over it but I'll give you. Some highlights instead, we are in the process of beginning to commission. Our first in the world's first commercial scale clean sugar technology system that enables a dry grind processing facility to make commercial quantities of dextrose for use in <unk>.
Todd A. Becker: Real food and chemical processes and this was located at our Shenandoah plant in Iowa, and we believe we will be ready to begin delivering products in the beginning of the second quarter on the customer front. We continue to have strong interest in our low carbon intensity dextrose products stay tuned for some announcements on commercial agreements as we are in late stage negotiations with.
Todd A. Becker: Hey, thanks, Jim. And we have so many game-changing, exciting things happening at Green Plains that it could take a few hours to go over them all, but I'll give you some highlights instead. We are in the process of beginning to commission our first, and the world's first, commercial-scale clean sugar technology system that enables a dry grind processing facility to make commercial quantities of dextrose for use in industrial food and chemical processes. This is located at our Shenandoah plant in Iowa, and we believe we will be ready to begin delivering product at the beginning of the second quarter. On the customer front, we continue to have strong interest in our low-carbon-intensity dextrose products. Stay tuned for some announcements on commercial agreements, as we are in late-stage negotiations with several counterparties for a significant portion of our production over the next several years, with up to 40% lower carbon intensity than a wet mill.
Todd A. Becker: Several car Counterparties for a significant portion of our production over the next several years.
Todd A. Becker: With up to 40% lower carbon intensity than a wet mill and we validated that in 2023 and continue to work with lifecycle assessment for our dextrose compared to lifecycle assessment for U S corn wet milling industry in the other European industries, as well and we believe and it's actually happening as it would be a game changer for us and could ultimately.
Todd A. Becker: Our entire company, we expect to see results quickly and our team is already working on a second even bigger location awareness where to put it but we will have further insights on that to share in the future as well our protein we continue to see strong demand for our ultra high protein products. We are nearing some commercial agreements on 60% protein but before.
Todd A. Becker: And we validated that in 2023 and continue to with life cycle assessments for our dextrose compared to life cycle assessments for the U.S. corn wet milling industry and other European industries as well. And we believe, and this is actually happening, it would be a game changer for us and could ultimately reshape our entire company. We expect to see results quickly, and our team is already working on a second, even bigger location where to put it, but we will have further insights on that to share in the future as well. As for our protein, we continue to see strong demand for our ultra-high protein products.
Todd A. Becker: We get to that the fourth quarter was our strongest quarter, yet on 50, 50% production and sales and we continue to broaden our domestic and export customer base. Yes, we feel the international markets are proven to be more value valuable to us for realization of better pricing and we expect that in the future a larger share of what we do will be in the 50 <unk>.
Todd A. Becker: Markets and that'll be offshore.
Todd A. Becker: We have sold some 60% protein commercially and smaller beginning quantities and are in the process of finishing some commercial feed trials with some larger potential customers and have begun price negotiations for a larger share of the recipes and rations that they have.
Todd A. Becker: We are nearing some commercial agreements on 60% protein, but before we get to that, the fourth quarter was our strongest quarter yet on 50% production and sales, and we continue to broaden our domestic and export customer base. However, we feel the international markets are proving to be more valuable to us for realization of better prices, and we expect that in the future. A larger share of what we do will be in the 50 professional markets, and that will be offshore. We have sold some 60% protein commercially in smaller beginning quantities and are in the process of finishing some commercial feed trials with some larger potential customers and have begun price negotiations for a larger share of the recipes and rations that they have.
Todd A. Becker: With any new product brought to market, we are executing the necessary steps to develop a large scale program, including setting up a global supply chain and importantly, we are making sure we get paid for what the product is worth we can continue to believe we are on track to convert 20 years to 30% of our portfolio to 60 pro sales as we exit 'twenty four and expand out in 'twenty five.
Hi.
Todd A. Becker: Our current discussions are indicating strong demand for these higher protein levels. While we all wanted to happen today. We believe this is not a matter of if but a matter of wet.
Todd A. Becker: <unk> our innovation team is focused on developing new and exciting product attributes commonly on addressable by macro ingredients such as both proteins for example.
Todd A. Becker: As with any new product brought to market, we are executing the necessary steps to develop a large-scale program, including setting up a global supply chain, and importantly, we are making sure we get paid for what the product is worth. We continue to believe we are on track to convert 20 to 30 percent of our portfolio to 60 percent pro sales as we exit 24 and expand that in 25. Current discussions are indicating a strong demand for these higher protein levels.
Todd A. Becker: The team is in advanced stages very late stage of some novel product enhancements and expect to start customer specific specific validation work later in the year.
Todd A. Becker: Innovation team is also implementing a new research solution to accelerate fermentation recipe developments for both our core products and our ingredient platform. Lastly, we are excited to be launching our branded products were 60% protein later in the first quarter. So stay tuned as we move through 2024.
Todd A. Becker: While we all want it to happen today, we believe this is not a matter of if but of when. Additionally, our innovation team is focused on developing new and exciting product attributes commonly unaddressable by macro ingredients such as bulk proteins. For example...
Todd A. Becker: So to reflect on what we've accomplished we have increased 50% protein production and sales in Q4, broadening our domestic and export customer base completed a commercial run a 60% protein have verification of great digestibility in excellent immuno acid profiles and have started to sell 60% protein to Europe Middle East and Asia with South America.
Todd A. Becker: Erica is the final price, let's not forget it is a brand new product and we are also a new as a supplier. So a lot of things have to be set up to do a large scale program, including a brand new end to end supply chain on this product and we continue to work hard very well continue to work every day very hard on this with the team we've put in place.
Todd A. Becker: The team is in the advanced stages, very late stage, of some novel product enhancements and expects to start customer-specific validation work later in the year. The innovation team is also implementing a new research solution to accelerate fermentation recipe developments for both our core products and our ingredient platform. Lastly, we are excited to be launching our branded products with 60% protein later in the first quarter, so stay tuned as we move through 2024. So to reflect on what we have accomplished, we have increased 50% protein production and sales in Q4, broadening our domestic and export customer base, completed a commercial run of 60% protein, have verification of great digestibility and excellent amino acid profiles, and have started to sell 60% protein to Europe, the Middle East, and Asia, with South America as the final prize.
Todd A. Becker: Beyond dextrose and protein probably the most important part of what we're trying to do is focus on the opportunities to decarbonize, our platform and produce low carbon alcohols, we have diversified our carbon strategy across multiple carbon capture system pipeline projects and continue to explore alternatives for our non pipeline locations.
Todd A. Becker: Our three Nebraska plants, which represent 287 million gallons of our production should come online in mid 2025, and we anticipate having some additional updates on the progress of the well permitting and compression equipment in the coming weeks and months given this product project already has its main trunk line in the ground.
Todd A. Becker: They repurpose natural gas pipeline and that sequestration would occur in Wyoming, which is privacy and it has already begun to approve classics wells. We are highly confident that Nebraska biofuels will have an early advantage over ethanol plants at art position for carbon capture at this time.
Todd A. Becker: But let's not forget, it is a brand new product, and we are also new as a supplier, so a lot of things have to be set up to do a large-scale program, including a brand new end-to-end supply chain for this product. And we continue to work hard very, continue to work every day very hard on this with the team we've put in place.
Todd A. Becker: <unk> died decarbonising these plants in the industry as a whole enables the production of lower carbon intensity ethanol positioning it to eventually be a feedstock for sustainable aviation fuel production, but also to have lower carbon intensity facilities, there's still make valuable animal feed ingredients and renewable corn oil.
Todd A. Becker: Beyond dextrose and protein, probably the most important part of what we are trying to do is focus on the opportunities to decarbonize our platform and produce low-carbon alcohols. We have diversified our carbon strategy across multiple carbon capture system pipeline projects and continue to explore alternatives for our non-pipeline locations. Our three Nebraska plants, which represent 287 million gallons of our production, should come online in mid-2025, and we anticipate having some additional updates on the progress of the well permitting and compression equipment in the coming weeks and months. Given this project already has its main trunk line in the ground as a repurposed natural gas pipeline and that sequestration would occur in Wyoming, which has primacy and has already begun to approve Class VI wells, we are highly confident Decarbonizing these plants and the industry as a whole enables the production of lower carbon intensity ethanol, positioning it to eventually be a feedstock for sustainable aviation fuel production, but also to have lower carbon intensity facilities that still make valuable animal feed ingredients and renewable corn oil.
Todd A. Becker: Our two Iowa, and two Minnesota class, which represent 316 million gallons of production are on the summit carbon solutions project, which we expect to get state level approval in Iowa, North Dakota early this year. They continue to work on a path forward in South Dakota, and we expect this project to opt to be operational in late 2026, that's still.
Todd A. Becker: In time to participate in the 45, the clean fuel production credit.
Todd A. Becker: The Treasury Department has indicated that an updated version of the greet model will be utilized for Saf tax credits and importantly that Ccs and climate Smart AG practices, who will car will count towards lowering Ci.
Todd A. Becker: We expect the updated greet model in early March and then we will have a better sense of our role of our Decarbonize ethanol can play in a growing market for alcohol to jet sustainable aviation fuel today, Brazilian ethanol and so-called used cooking oil from China qualify to be imported for sustainable aviation fuel and receive U S tax credits. So it's only <unk>.
Todd A. Becker: And American corn farmers and soy farmers have the same opportunity after billions of dollars of investments. They have made over the years to grow the U S biofuels industry.
Todd A. Becker: Our two Iowa and two Minnesota plants, which represent 316 million gallons of production, are on the Summit Carbon Solutions Project, which we expect to get state-level approval in Iowa and North Dakota early this year. They continue to work on a path forward in South Dakota, and we expect this project to be operational in late 2026. That's still in time to participate in the 45B Clean Fuel Production Credit. The Treasury Department has indicated that an updated version of the GRIP model will be utilized for SAF tax credits, and importantly, that CCS and climate-smart ag practices will count towards lowering CI.
Todd A. Becker: Remember that under 45 Z, a renewable Cornwall, we'd be advantaged to other vegetable oils, rather than the dollar per gallon blender credit for every Rd or biodiesel gallon. These fuels will soon be judged on the C. I have the feedstock and we anticipate our corn oil will be in high demand as a low ci feedstocks for producing <unk>.
Todd A. Becker: Rd and sustainable aviation fuel with the latest decline in veg oil prices, we have seen those revenues under pressure with current pricing in the mid to high 40 per pound for 2025, and where we are in advantaged feedstock in totality.
Todd A. Becker: So to recap. This section we are very excited about the opportunity right in front of us starting for our first clean sugar facility, 60% commercialization proper protein, bringing out Arthur Olson JV online and positioning our Nebraska assets for de Carbonization. Finally, another important milestone upon us as the upcoming commissioning.
Todd A. Becker: We expect the updated GRIP model in early March, and then we will have a better sense of our role that our decarbonized ethanol can play in a growing market for alcohol-to-jet sustainable aviation fuel. Today, Brazilian ethanol and so-called used cooking oil from China qualify to be imported for sustainable aviation fuel and receive U.S. tax credits, so it's only right that American corn farmers and soy farmers have the same opportunity after billions of dollars of investments they have made over the years to grow the U.S. biofuels industry. Remember that under 45Z, our renewable corn oil would be advantageous to other vegetable oils. Rather than the dollar per gallon blender credit for every RD or biodiesel gallon, these fuels will soon be judged on the CI of the feedstock, and we anticipate our corn oil will be in high demand as a low CI feedstock for producing RD and sustainable aviation fuel.
Todd A. Becker: Of the collaboration with our fluid quip MFC technology combined with shell fiber conversion technology at our York, Nebraska location, we haven't talked about this much since we announced it last July.
Todd A. Becker: Cited about the long term potential that this game changing collaboration can have combining shell's fiber conversion technology with MSC from fluid quip technologies, we expect to be able to extract all available renewable corn oil from the kernel produce cellulosic sugars from the fiber that can be made into low Ci cellulosic ethanol.
And all and reduce further our production of our further enhance our production of high protein feed ingredients more to come on this as we bring the facility online beginning later this quarter, but now it's really worth paying attention to.
Todd A. Becker: With the latest decline in vegetable oil prices, we have seen those revenues under pressure. With current pricing in the mid to high $0.40 per pound, 2025 is when we will be an advantaged feedstock in totality. So to recap this section, we are very excited about the opportunity right in front of us, starting with our first clean sugar facility, 60% commercialization for protein, bringing our Therelson-JV online, and positioning our Nebraska assets for decarbonization. Finally, another important milestone for us is the upcoming commissioning of the collaboration with our Flu-Equip MSP technology combined with Shell Fiber Conversion Technology at our York, Nebraska location. We haven't talked about this much since we announced it last July, but we are excited about the long-term potential that this game-changing collaboration can have. Combining Shell's fiber conversion technology with MSV from Fluidquip Technologies, we expect to be able to extract all available renewable corn oil from the kernel, produce cellulosic sugars from the fiber that can be made into low-CI cellulosic ethanol, and further enhance our production of high-protein feed ingredients.
Todd A. Becker: When we set out in this transformation several years ago, we had a 2025 target laid out and this remains intact with some variability on how we get there some basically some based on the pricing like veg oils. Some based on the timing and some based on allocation of capital to the best returning projects. A lot has happened. Since then the biggest thing is the inflammation Inc.
Todd A. Becker: <unk>.
Todd A. Becker: Of the inflation reduction act and how products are treated that we produce but more importantly, the incentive programs. So when we look at 2025 full year and exit rate we remain in the guidance range. As we had originally laid out with an upside case as well the opportunity to achieve early de carbonization, particularly in Nebraska.
Todd A. Becker: Leading us to rethink our capital allocation strategy, we are in the process of reviewing additional opportunities to more efficiently decarbonize and even expand production in Nebraska at our three sites more to come on this as these projects come into view, but with the incentives that are now in place how do we not participate with the advantage we have geographically at Green Plains as we exit 'twenty five.
Todd A. Becker: Carbon alone in Nebraska represents over $100 million of your opportunity and we can reduce our carbon intensity, even more and then when summit carbon comes online watch out with your earnings power will have in our carbon strategies business. So.
Todd A. Becker: More to come on this as we bring the facility online beginning later this quarter, but now it's really worth paying attention. When we set out on this transformation several years ago, we had a 2025 target laid out, and this remains intact with some variability on how we get there, some based on pricing, like vegetable oils, some based on timing, and some based on allocation of capital to the best returning projects. A lot has happened since then.
Todd A. Becker: So think about the business and platform this way with a cleaned up structure, it's very easy.
Todd A. Becker: Our depreciation and interest are approximately $130 million per year at this point, so looking at our 2025 opportunity to meet and beyond <unk>.
Todd A. Becker: Free cash flow generation could be significant with the capital invested in MFC and additional CFT facility expanded carbon capture in Iowa, and Minnesota gets activated and renewable Cornell's further advantaged or 45, not including the potential upside from our low Ci alcohol.
Todd A. Becker: The biggest thing is the implementation of the Inflation Reduction Act and how products are treated that we produce, but more importantly, the incentive programs. So when we look at 2025 full year and exit rates, we remain in the guidance ranges we had originally laid out with an upside case as well. The opportunity to achieve early decarbonization, particularly in Nebraska, is leading us to rethink our capital allocation strategy. We are in the process of reviewing additional opportunities to more efficiently decarbonize and even expand production in Nebraska at our three sites. More to come on this as these projects come into view, but with the incentives that are now in place, how do we not participate with the advantage we have geographically at Green Plains?
Speaker Change: Our S FCT additional ability to grab to grab more of the high value products, we are close and getting closer every day to our goals set out a few years ago. The value of our technology portfolio is next and we believe we have a significant upside there as well so with that I'll leave it there and thanks for joining the call today and we can start the Q&A session.
Speaker Change: Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
We'll go first to Kristen Owen at Oppenheimer.
Kristen Owen: Great. Thank you for taking my question.
Kristen Owen: I realize the answer to this is probably.
Kristen Owen: All of the above but I wanted to start here with your comments on just all of the milestones that you're expecting in 2024.
Speaker Change: On track to the 2025 EBITDA run rate.
Todd A. Becker: As we exit 25, carbon alone in Nebraska represents over a $100 million a year opportunity, and we can reduce our carbon intensity even more. And then when Summit's carbon comes online, watch out for the earnings power we'll have in our carbon strategies business. So think about the business and platform this way. With a cleaned up structure, it's very easy.
Kristen Owen: You know given that the stock is now trading below your replacement value I wanted to ask you, what's the fulcrum that tips the balance for G. P. Ari into this 2.0 transformation.
Kristen Owen: Kind of seem like what what is to come on protein and is it sugar is it is it carbon and like what really tips. The scales here and how do we think about that in the context of this replacement values sort of valuation discussion.
Todd A. Becker: Our depreciation and interest is approximately $130 million per year at this point. So, looking at our 2025 opportunity and beyond. Free cash flow generation could be significant with the capital invested in MFC, an additional CST facility, expanded carbon capture in Iowa and Minnesota gets activated, and renewable corn oil is further advantaged through 45Z, not including the potential upside from our low CI alcohols and our SSVT additional ability to grab more of the high-value products. We are close, and getting closer every day to our goal set out a few years ago. The value of our technology portfolio is next, and we believe we have a significant upside there as well. So with that, I'll leave it there, and thanks for joining us on the call today, and we can start the Q&A session. Thank you. At this time, I would like to remind everyone that in order to ask a question, press the star, then the number one on your telephone keypad.
Speaker Change: Yeah, I think when we look at what's the fulcrum its really going to come through free cash flow generation and when we think about how we've cleaned up our structure and we look at the opportunity.
Speaker Change: <unk> 25, and that will begin to start generating significant free cash flow and by 'twenty six.
Speaker Change: Zero net debt you're negative.
Speaker Change: You're in a positive situation from the standpoint of you continue to build cash and I think I think that's what we're really set ourselves up or because when we kind of look at our ability to get to where we want to go.
Speaker Change: A lot of the capital has been spent some left to be allocated but theres also some upside as well. So when you look at all of the segments.
Speaker Change: The Iraq, obviously is a big deal since we started this and we think that carbon alone.
Kristen Owen: We'll go first to Kristen Owen at Oppenheimer. Thank you for taking the question. Todd, I realize the answer to this is probably all of the above, but I want to start here with your comments on just all of the milestones that you're expecting in 2024, on track to the 2025 EBITDA run rate. Given that the stock is now trading below your replacement value, I want to ask you, what's the fulcrum that tips the balance for GPRE into this 2.0 transformation? You know, we've kind of seen what is to come in protein, is it sugar, is it carbon, like what really tips the scales here and how do we think about that in the context of this replacement value, sort of valuation? Do you have a thing?
Speaker Change: It has increased and the opportunity our ability to commercialize 60 pro is also a big big opportunity for us.
Speaker Change: Then lastly.
Speaker Change: When we look at our clean sugar technology, and and our corn oil on top of that all of that when you add it all together and twenty-five it starts to generate significant free cash flow returns and that's really what we set this up work, which is why we simplified the structure where before it was a bit convoluted in terms of how do you get the money to the bottom line.
Speaker Change: And instead of just focusing on EBITDA, we're going to focus on EPS and free cash flow generation, but look for some things have to happen.
Todd A. Becker: I think when we look at what's the fulcrum, it's really going to come through free cash flow generation. And when we think about how we've cleaned up our structure and we look at the opportunity, in 2025, that will begin to generate significant free cash flow. And by 2026, you're not just zero net debt; you're negative.
Speaker Change: We've got to get clean sugar up and running we've got to think about we're number two is going to be we've got to continue to build out our protein systems and continue to commercialize <unk> pro.
Speaker Change: And we would like to see a bit of a recovering a recovery in veg oil prices, but that advantage that comes in is it's something we're looking forward to in 'twenty five but I think the bigger thing really is this base.
Speaker Change: Ability to to get a return on carbon capture is something we didn't really plan on being this this interesting and I think when you add all that together that's why we I think at this point not including the base fuel, which by the way we believe will be more valuable as you decarbonize.
Todd A. Becker: You're in a positive situation from the standpoint of continuing to build cash. And I think that's what we really set ourselves up for, because when we kind of look at our ability to get to where we want to go, a lot of capital has been spent, some left to be allocated, but there's also some upside as well. So when you look at all the segments, Oh.
Speaker Change: When you when that's how why we at this point, we think that 25 range of guidance that we've put out there is still solid and.
Todd A. Becker: The IRA Act obviously is a big deal since we started this, and we think that carbon alone has increased the opportunity. Our ability to commercialize 60Pro is also a big, big opportunity for us. And then lastly,
Speaker Change: But it all comes down to the structure of our income statement and I think the structure income statement is changing dramatically with our ability to get money to the bottom line very easily now.
Todd A. Becker: You know, when we look at our clean sugar technology and our corn oil on top of that, all of that, when you add it all together in 25, it starts to generate significant free cash flow returns. And that's really what we set this up for, which is why we simplified this structure. Where before, it was a bit convoluted in terms of how you get the money to the bottom line. And instead of just focusing on EBITDA, we're going to focus on EPS and free cash flow generation. But look, some things have to happen.
Speaker Change: So then I wanted to ask my follow up question, a little bit more granularity on the carbon side since that seems to unlock so many of these these lists for you you've talked about the advantaged facilities in Nebraska.
Speaker Change: The EBITDA potential there can you get a little bit more specific on the milestones maybe once we get past that that classics, while approval what needs to happen next and maybe talk about your your structure of that participation relative to what we've seen in your structure with summit.
Todd A. Becker: We've got to get clean sugar up and running. We've got to think about where number two is going to be. We've got to continue to build out our protein systems and continue to commercialize 60-Pro. And we would like to see a bit of a recovery in vegetable prices, but that advantage that comes in is something we're looking forward to in 25. I think the bigger thing, really, is this base, to get a return on carbon capture is something we didn't really plan on being this interesting. And, I think when you add all that together, that's why, at this point, not including the base fuel, which by the way we believe will be more valuable as you decarbonize, that's why we, at this point, think that the 25 range of guidance that we have put out there is still solid.
Speaker Change: Okay.
Speaker Change: Yes, we can't really get into because of the some of the agreements that are in place with each of the different structures, except to say that what we've laid out in terms of Nebraska.
Speaker Change: What are the milestones.
Speaker Change: Their ability to get the classics, well permits, which they've already which Wyoming has started to issue and this and this company is next in line for that.
Speaker Change: Our ordering of compression equipment, which we are in process of finalizing what is needed and then the construction of that the the couple.
Speaker Change: Couple of things will have to do in Nebraska in terms of upgrading their pipeline, which I think theyre doing anyway. This is a very solid company and then.
Todd A. Becker: But it all comes down to the structure of our income statement, and I think the structure of our income statement is changing dramatically with our ability to get money to the bottom line very easily now. So then I want to ask my follow-up question about a little bit more granularity on the carbon side, since that seems to unlock so many of these lists for you.
Speaker Change: And then I think when we when we have all that.
Speaker Change: It looks like a mid twenty-five startup.
Speaker Change: And you know, we're not that far away from that because there's a lot of work is being done already there already have been.
Speaker Change: Building, new laterals for their natural gas to move off of different pipeline. So all of it's happening I mean, there's the money's being spent the difference in this project is the pipes in the ground already so that's that's where do you think is no. When you look at Nebraska isn't an advantage situation in a much earlier, starting point, but that doesn't mean, the rest aren't going to come as well, it's just timing.
Todd A. Becker: You've talked about the advantaged facilities in Nebraska, and you've outlined the EBITDA potential there. Can you get a little bit more specific on the milestones, maybe once we get past that Class VI well approval, what needs to happen next, and maybe talk about your structure of that participation relative to what we've seen in your structure with Summit. Yeah, we can't really get into that because of some of the agreements that are in place with each of the different structures except to say that what we've laid out in terms of Nebraska, what are the milestones. Their ability to get Class 6 well permits, which they've already done, which Wyoming has started to issue, and this company is next in line for that.
Speaker Change: At this point, but he he kinds of Nebraska, what we've laid out is as we start up mid.
Speaker Change: Midyear twenty-five hopefully, which I think I think we're on track at this point for somewhere in that range, you start generating baseload earnings or over $100 million a year annualized just off just on the three Nebraska plant. So when you look at that and I'm looking at it very carefully when we look at capital allocation.
Speaker Change: Fastest paybacks quite frankly are trying to get more volume out of some of those sites. It doesn't mean I'm going to do.
Todd A. Becker: Our ordering of compression equipment, which we are in the process of finalizing what is needed, and then the construction of that. A couple of things left to do in Nebraska in terms of upgrading their pipeline, which I think they're doing anyway. It's a very solid company.
Do a double or anything like that of our sites, but adding a fermenter are adding some grind or adding to some capacity to take advantage of these fast paying projects.
Speaker Change: If you could you could supercharge those earnings out of Nebraska pretty fast.
Todd A. Becker: And then I think when we have all that, it looks like a mid-25 startup. And we're not that far away from that, because a lot of work is being done already. There has already been... Building new laterals for their natural gas to move off of different pipelines.
Speaker Change: And that's what we're looking to do I mean, those base earnings are so strong and so powerful that those first couple of years 145, Z and hopefully we get 45 the extended.
Some serious cash generation, that's what we're going to go after pretty hard.
Todd A. Becker: So all of it's happening, I mean, the money's being spent, the difference in this project is that the pipe's in the ground already. So that's where you think, when you look at Nebraska, it's in an advantaged situation and a much earlier starting point, but that doesn't mean the rest aren't going to come as well. It's just timing at this point.
Speaker Change: Thanks, So much Todd I'll take the rest offline.
Speaker Change: Thanks.
Speaker Change: We'll move next to Jordan Levy at tourist.
Jordan Levy: Good morning.
Jordan Levy: I know, it's difficult to really give any concrete outlook here with the volatile.
Jordan Levy: And all of that but I'll.
Jordan Levy: I'll ask you anyway, you've got clean sugar and barrels and starting up youre getting going on 60 pro sales utilization generally appears to be trending better maybe just help us walk through how you're thinking about the high level 2024, EBITDA trajectory here.
Todd A. Becker: But the econs in Nebraska, what we've laid out is, as we start up mid-June, we're going, mid-year 25, hopefully, which I think we're on track at this point for somewhere in that range, you start generating base load earnings over $100 million a year annualized, just on the three Nebraska plans. So when you look at that, and I'm looking at it very carefully, when we look at capital allocation, the fastest paybacks, quite frankly, are trying to get more volume out of some of those sites. It doesn't mean I'm going to do a double or anything like that on our sites, but adding a fermenter or adding some grind or adding to some capacity to take advantage of these fast-paying projects. You could supercharge those earnings out of Nebraska pretty fast, and that's what we're looking to do. Those base earnings are so strong and so powerful that those first couple of years when they're in 45Z, and hopefully, we get 45Z extended, that's some serious cash generation, and that's what we're going after pretty hard. Thanks so much, Todd.
Jordan Levy: Yes, I mean, the base fuels started out weak so we have to deal with that but I think overall it started out weak last year, but actually at this point. This year were better on the market than last year. So if that makes any sense. So I mean, and this is a cold snap was actually a little bit of what this industry needed to draw some stocks pretty hard.
Jordan Levy: And get production offline and it's taken a little bit longer to come back on line that doesn't mean it won't come back online, but we're also seeing an uptick right now in blending in some markets. We're also seeing an uptick right now in some export takeaways with some new entrants coming in as well and we're trying to assess that to determine at that base fuel and what we do.
Jordan Levy: And what the opportunity is but when you look at it year over year at this time.
Jordan Levy: It looks better than it did last year, but again.
Jordan Levy: As we all know that's a very volatile part of anybody's portfolio.
Jordan Levy: Our key milestones as I kind of referenced here was we want to be able to make the extra ship dextrose in commercial quantities and while the contribution may take a little while once we prove that we can do that we can do it at scale and we could ship it to customers being used globally or domestically or globally.
Jordan Levy: We know that we're off to the races, because the margin structure there exceeds everything else that we would be doing in totality. So.
Kristen Owen: I'll take the rest of it. Thanks. We'll move next to Jordan Levy at Truist. Morning, all. Todd, I know it's difficult. The Ultimate Parody Site-Limited, LLC.
Jordan Levy: So we think that owning and controlling that technology proving it out at full commercial scale and you can kind of see it online occasionally when we when we show pictures, let's say this is a game changing technology that I think redefines Green plains in the future on top of carbon capture on top of the other things that we're doing but think about it like this Jordan.
Jordan Levy: I'll ask you anyway, you've got Clean Sugar and Berylton starting up. Utilization. The Bulletproof Executive 2013, High Level. Yeah, I mean, the base fuels started out weak, so we have to deal with that. But I think overall, it started out weak last year.
Jordan Levy: We have plants that may not be on our pipeline, while they may be they may be clean sugar plants, and that's really how we're thinking about this at this point. So they may be a full or partial conversion to clean sugar at that point and we're going to increase our dextrose capabilities. We are months away from showing the naysayers, who said you can't make dextrose to be used in industrial production at Aneth.
Todd A. Becker: But actually, at this point this year, we're better off in the market than we were last year, if that makes any sense. So I mean, and if this cold snap was actually a little bit of what this industry needed to draw some stocks pretty hard and get production offline, and it's taking a little bit longer to come back online, that doesn't mean it won't come back online. But we're also seeing an uptick right now in blending in some markets. We're also seeing an uptick right now in some export takeaways, with some new interest coming in as well. And we're trying to assess that to determine on that basis fuel and what we do, and what the opportunity is. But, you know, when you look at it year over year at this time, it looks better than it did last year.
Jordan Levy: On a dry grind ethanol facility.
Jordan Levy: Arent, we arent are years away or months away and we're highly confident that we will be able to compete and ship product on top of everything else.
Jordan Levy: We've outlined look we're well positioned I wish I had more actually I wish I could actually have more plants at this point and more production with our platform. You know we have as many as 17 plants in the past, but I think within our platform, we could see some expansion opportunities or repurposing some plants as well. So net we don't see a gain in production overall, but we see a gain in our <unk>.
Jordan Levy: These opportunities.
Todd A. Becker: But again, you know, as we all know, That's a very volatile part of anybody's portfolio. Our key milestones, as I kind of referenced here, were we want to be able to make dextrose and ship dextrose in commercial quantities. And while the contribution may take a little while, once we prove that we can do that, we can do it at scale, we could ship it to customers for use globally or domestically, so not globally, we know that we're off to the races. Because the margin structure there exceeds everything else that we would be doing in totality.
Jordan Levy: 25 and beyond so.
Jordan Levy: I think we own a very powerful portfolio of technology does that is undervalued as well.
Jordan Levy: Yeah.
Speaker Change: Thanks for that.
Speaker Change: Maybe just to kind of hit on something you said about wuxi.
Speaker Change: Yeah.
Speaker Change: I'm just curious how youre thinking about portfolio at this point.
Speaker Change: Is there any portfolio as better and worse.
Speaker Change: I'm just curious your thoughts around that.
Speaker Change: Downsizing to scale up to a more premium plants.
Speaker Change: Just how youre thinking about the portfolio overall at this point given the opportunities you see out there.
Speaker Change: We're going to look at our plants that we do all the time, we have we haven't work to do I think we have some areas that we wouldn't mind.
Todd A. Becker: So, we think that owning and controlling that technology, proving it out at full commercial scale, and you can kind of see it online occasionally when we show pictures, this is a game-changing technology that I think redefines Green Plains in the future on top of carbon capture, on top of the other things that we're doing. But, you know, think about it like this, Jordan.
Speaker Change: Looking at a different opportunity there like the east, where we would probably put a sugar sugar build out there and then the west wherever we can take advantage of some of these some of these opportunities some of our plants. These plants are getting older. So we have some capex too.
Speaker Change: Two to do to improve these plants, but.
Speaker Change: Once these carbon initiatives come into play there'll be plenty of opportunities to make sure that we can upgrade so that we can make it make as much product as we can and so.
Todd A. Becker: We have plants that may not be on a pipeline. Well, they may be clean sugar plants. And that's really how we're thinking about this at this point. So it may be a full or partial conversion to clean sugar at that point. And we're going to increase our dextrose capabilities. We are months away from showing the naysayers who said you couldn't make dextrose to be used in industrial production at a dry grind ethanol facility. We aren't years away. We're months away.
Speaker Change: I think over the next couple of years, we're going to look at our plants back to determine what fits what doesn't and what can we go elsewhere. What can we expand what can we divest off to earn more offered money in other areas and so we're continually look at that.
Speaker Change: One of the areas that you know when we think about the future of Green Plains. We have some we have some fantastic locations in some fantastic plants that quite frankly could could produce more and we have other locations that depending on that may not fit the future Green plains, depending on how we think about our technology deployment, but as of right now we're going to.
Todd A. Becker: And we're highly confident that we will be able to compete and ship product. On top of everything else that we've outlined, look, we're well-positioned. I wish I had more, actually.
Speaker Change: We're going to keep the stack, we have you can't buy an ethanol plant I mean, it's not like you can go out and say.
Speaker Change: To the market I'd like to buy one of the values are significantly higher than our stock price represents in a replacement perspective, you cannot buy a plant in the market of high quality for the value of what our overall us stock price represents a day or more.
Todd A. Becker: I wish I could actually have more plants at this point and more production within our platform. We had as many as 17 plants in the past. But I think within our platform, we could see some expansion opportunities or repurposing of some plants as well. So, net, we don't see a gain in production overall. But we see a gain in our earnings opportunities in 2025 and beyond. You know, I think we own a very powerful portfolio of technology that is undervalued as well. The Bulletproof Executive 2013, You know, maybe just to kind of... Whatever, I'm just curious how, The Bulletproof Executive 2013 ®MD-BO www.globalonenessproject.org We're going to look at our plant stack. We do it all the time.
Speaker Change: The value of many portfolio so.
Speaker Change: While they certainly have pressured up lately and we believe thats unfounded, because just the base value of our assets alone. We believe are worth more than what the market is giving us credit for before you even talk about the additions of MSC the additions of clean sugar.
Speaker Change: And the additions of carbon capture equipment as well.
Speaker Change: Absolutely thanks for that.
Speaker Change: Mike.
Speaker Change: We'll move next to Adam Samuelson at Goldman Sachs.
Adam Samuelson: Yes, Thank you and good morning, everyone.
Adam Samuelson: Good morning, good morning.
Todd A. Becker: We have some work to do. I think we have some areas that we wouldn't mind looking at a different opportunity there, like the east, where we would probably put a sugar building out there, and then the west, wherever we could take advantage of some of these opportunities. Some of our plants, these plants are getting older.
Adam Samuelson: So maybe just.
Adam Samuelson: Just coming back to kind of the framing on 2024 and I appreciate there's a lot of moving pieces between.
Adam Samuelson: The underlying ethanol market and kind of the different plants that are commissioning Todd but can we just maybe zero in on the contribution.
Todd A. Becker: So we have some capital expenditure to do to improve these plants, but once these carbon initiatives come into play, there'll be plenty of opportunities to make sure that we can upgrade so that we can make as much product as we can. And so I think over the next couple of years, we're going to look at our plant stack to determine what fits, what doesn't, what can we go elsewhere, what can we expand, what can we divest of to earn more money in other areas. And so we continually look at that.
Adam Samuelson: From Hy Pro and I believe in your script, you said you expect to exit the year got it.
Adam Samuelson: With 20% roughly 20% of high personal to 60%.
Adam Samuelson: What proportion of actual 2024 volumes are going to be sold at 60% and can you kind of help frame the premiums.
Todd A. Becker: You know, that's one of the areas that, you know, when we think about the future of Green Plains, we have some fantastic locations and some fantastic plants that, quite frankly, could produce more. And we have other locations that, you know, depending on, that may not fit the future of Green Plains, depending on how we think about our technology deployment. But as of right now, we're going to keep the stack we have. You can't buy an ethanol plant. I mean, it's not like you can go out and say... You know, to the market, I'd like to buy one.
Adam Samuelson: That youre seeing today.
Adam Samuelson: And as we think about 'twenty five volumes what.
Adam Samuelson: Is it only 20% to 25 high pro volumes that are 60% or.
Adam Samuelson: As a substantially larger number than that.
Adam Samuelson: Okay.
Speaker Change: Yeah, So let's start with what we believe the demand for 60 pro can be we are in enough discussions right now and I've identified enough demand that would take all of our product. If we can get them to buy it and that's really what it comes down to and it's just it just takes time and so whether it's going to be starting in the middle of this year, which is kind of what we're hoping.
Todd A. Becker: The values are significantly higher than our stock price represents in a replacement perspective. You cannot buy a plant in the market of high quality for the value of what our overall stock price represents today or the value of many portfolios. So while they certainly have pressured us lately, we believe that's unfounded because just the base value of our assets alone, you know, we believe is worth more than what the market's giving us credit for. Before you even talk about the additions of MSC, the additions of clean sugars, and the additions of carbon capture equipment as well. Bye.
Speaker Change: For us to start getting one of our plants sold out.
Speaker Change: For the next 12 months I mean, that's really what we're in negotiations around the world at this point on on values, but also in the fact that we're getting a lot of conclusions on.
Speaker Change: Got some testing that's been taking place over the last several years as well so I, it's hard to predict when it will start we say.
Speaker Change: When we say last this year, we want to have a 20% to 30% of our production sold at 60 Pro and that's what we that's what we're shooting for every day and we want to have much more than that in 2025 is what were shooting for everyday but I can I can assure you and I can say this we are in enough negotiation that could eventually take all.
Adam Samuelson: We'll move next to Adam Samuelson at Goldman Sachs. Yes, thank you. Good morning, everyone.
Speaker Change: It we just have to get the buyer on the other side to execute and what the changes what we're watching here, which is very interesting which is the changes in.
Operator: Morning. Good morning. So maybe just coming back to kind of the framing on 2024, and I appreciate there are a lot of moving pieces between the underlying ethanol market and kind of the different plants that are commissioning. Todd, but can we maybe zero in on the contribution from Hypro? And I believe in your script you said you expected to exit the year kind of... with 20%, roughly 20% of Hypro sold at 60%. What proportion of actual 2024 volumes are gonna be sold at 60%? And can you kind of help frame the premiums?
Speaker Change: The ratios between corn and soy when you have.
Speaker Change: Soy coming down and sort of going up and all of a sudden soy meal coming down and corn staying strong in those ratios have played with a buyers' minds, a little bit like how do they put on something versus a kind of corn gluten meal replacement all the way to a fish meal replacement.
Speaker Change: So long answer to say that we have enough demand identified that could take all of our product. It's just no matter of time now.
Speaker Change: So I can't you know we believe this year, we're going to get we're going to start the program and we think in 2025, it will be much stronger.
Speaker Change: Okay and then.
Speaker Change: Included in the release in a separate 8-K this morning kind of announce the board's going to do it.
Todd A. Becker: that you're seeing today, and as we think about 25 volumes, what... Is it only 20% of 25 high-pro volumes that are 60%, or is it a substantially larger number than that? Yeah, so let's start with what we believe the demand for 60Pro could be. We are in enough discussions right now, and I've identified enough demand that would take all of our product if we could get them to buy it. And that's really what it comes down to, and it just takes time.
Speaker Change: The strategic review process at a standstill agreement with kind of a major shareholder can you talk about.
Speaker Change: What.
Speaker Change: Just elaborate a little bit on what what.
Speaker Change: Youre going to be doing now from a strategic review perspective at the board and in yourself on the management of have not been doing over the last two years just to clarify whats changing.
Speaker Change: Yes, that's a great question, you know I think from standpoint of where we're at in the evolution of our cycle, we're not very happy with this latest share.
Todd A. Becker: And so whether it's going to be starting in the middle of this year, which is kind of what we're hoping for, is to start getting one of our plants sold out for the next 12 months. So we're in negotiations around the world at this point on values, but also in the fact that we're getting a lot of conclusions on some testing that's been taking place over the last several years as well. So it's hard to predict when it will start raining.
Speaker Change: Share price decline.
Speaker Change: But we also want to do what's best for all of our long term shareholders as well and a lot of people have been in the story for quite a while.
Speaker Change: As we said in our release is not limited to that.
Speaker Change: Acquisitions divestitures merger sales partnerships and financing is all of those we work on all of the time plenty of those other than the sale process in the merger process per se. We just think there's a lot of value to unlock here, we talked a lot of our shareholders and ancora was one of them and I think we came to a good conclusion on on how we're going to them.
Todd A. Becker: We say this year we want to have 20 to 30% of our production sold at 60Pro, and that's what we're shooting for every day. And we want to have much more than that in 2025. But I can assure you, and I can say this, we are in enough negotiations that could eventually take all of it. We just have to get the buyer on the other side to execute.
Speaker Change: Broached the future I think they want to achieve as high a value as they can for how they're thinking about it but so do all of our shareholders. So it's not like we've havent done some of these things, but I think when we look at Green Plains, we able to power a very powerful platform that I believe we believe today is significantly undervalued versus our future cash flows.
Todd A. Becker: And with the changes, what we're watching here, which is very interesting, which is the changes in the ratios between corn and soy. You know, when you have soy coming down and soy going up, and all of a sudden soy meal coming down and corn staying strong, and those ratios have played with buyers' minds a little bit, like how do they put on something versus a kind of corn gluten meal replacement all the way to It's a long answer to say that we have enough demand identified that could take all of our product. It's just a matter of time now.
Speaker Change: We're gonna have to test the market on that a little bit and more to come on that but really at this point I think what's in the press release is what we're gonna say at this time, but being on the board and being a large shareholder myself I strongly believe that there's a lot of value to still.
Speaker Change: Achieve out of our platform and Green Plains and we.
Speaker Change: We're going to we're going to test that out.
Speaker Change: Adam I'd jump in and add one thing I think what is different coming into 'twenty four than previous year. It is bringing in the partnership really is going to allow us to have more flexibility in what we want to do particularly as Todd said, if we want to reposition our assets from an ethanol perspective, it's much more easier for us to move forward. So the fact that that's that.
Todd A. Becker: And so I can't, you know, we believe this year we're going to get, we're going to start the program, and we think in 2025 it'll be much stronger. Okay, and then included in the release and a separate 8K this morning, you kind of announced that Ford is going to initiate a strategic review process. You had a standstill agreement with kind of a major shareholder. Can you talk about what... Just to elaborate a little bit on what you're going to be doing now, from a strategic review perspective, that the board and yourself and the management have not been doing over the last two years, just to clarify what's changing. Yeah, that's a great question.
Speaker Change: Tucked in now and we're back to a whole Green Plains Corporation I think it's going to help streamline is how we can move forward on a variety of different things to me. So that's what's probably different today than maybe over the past few years.
Speaker Change: Okay, and if I could just squeeze one more in on de Carbonization and things that you talked about.
Speaker Change: 100 million plus annualized run rate.
Todd A. Becker: You know, from the standpoint of where we're at in the evolution of our cycle, we're not very happy with this latest share price decline. But we also want to do what's best for all of our long-term shareholders as well. And a lot of people have been invested in this story for quite a while.
Speaker Change: From the Nebraska plants once once the pipeline started up next year. So am I interpreting that that you think that the net value from 45 Z to your to your Nebraska footprint is something on the order of 30 to 40.
Todd A. Becker: You know, as we said in our release, it's not limited to acquisitions, divestitures, mergers, sales, partnerships, and financing. It's all of those we work on all of the time, plenty of those other than the sale process and the merger process, per se. We just think there's a lot of value to unlock here. We talked to a lot of our shareholders, and Cora was one of them, and I think we came to a good conclusion on how we're going to approach the future. I think they want to achieve as high of a value as they can for how they're thinking about it, but so do all of our shareholders. So it's not like we haven't done some of these things, but I think when we look at Green Plains, we have a very powerful platform that we believe today is significantly undervalued versus our future cash flows, and we're going to have to test the market on that a little bit
Speaker Change: A gallon.
Speaker Change: That's correct kind of what are you assuming the Ci score for ethanol.
Speaker Change: What would be next year.
Speaker Change: Yes, we have a couple of different plants. Some actually go right down to the 45 Z, but one of our plants still goes stays on 45, Q and those calculations. So there's an upside because we're looking at York.
Speaker Change: And what to do as an old plant with a higher Ci score. So they qualify for 45 Q plus.
Speaker Change: Any carbon credits as well so what we're looking at first as you work to say how do we first decarbonize that plant and we think we'll probably do it through distillation and significantly dropped their carbon scores. So we can actually earn more on top of that so yeah as a starting point.
Speaker Change: That's what we're that's what we're putting out there with upside from there and some of it will be driven by 45 <unk>. Some of it's driven by 45 Q to start going to Z later on so those aren't in the numbers.
Todd A. Becker: More to come on that, but really, at this point, I think what's in the press release is what we're going to say at this time, but being on the board and being a large shareholder myself, I strongly believe that there's a lot of value to still be gained out of our platform and Green Plains, and we're going to test that out.
Speaker Change: And then on top of that the more interesting thing that we're seeing is the interest on top of LC avast, because I'll tell you about what we'll see where the market goes to but.
But the interest in the voluntary credits from high quality carbon sequestration, and we're just kicking that off but.
Jim Stark: I think what is different coming into 24 than previous years is bringing in the partnership really is going to allow us to have more flexibility in what we want to do, particularly, as Todd said, if we want to reposition our assets from an ethanol perspective, it's much more easier for us to move forward. So the fact that that's tucked in now and we're back to a whole Green Plains Corporation, I think it's going to help streamline us how we can move forward on a variety of different things to me. So that's what's probably different today than maybe over the past two years. OK, and if I could just squeeze one more in on decarbonization.
Speaker Change: But right now we're seeing values in that 30 to $50 a ton range just for good high quality credits from new projects like this but I think when you looked at what summit was able to achieve a $100 a ton I think theres upside from there as well so we'll put a little bit out in those numbers, but overall, you're right to think about that but if we can.
Speaker Change: And so when we're done we think that like a central cities carbon score.
Speaker Change: B.
Speaker Change: Somewhere in the mid twenties.
Speaker Change: Before you even get into farmer carbon and before you get into a.
Adam Samuelson: I think Todd talked about a $100 million-plus annualized run rate from the Nebraska plants once the pipelines start up next year. So am I interpreting that you think that the net value from 45Z to your Nebraska footprint is something on the order of $0.30 to $0.40 a gallon? And if that's correct, what are you assuming the CI score for your ethanol would be? Uh... what would it be? Yeah, we have a couple of different plants; some actually go right onto the 45Z, but one of our plants still stays on 45Q in those calculations, so there's an upside because we're looking at York. And what to do is an old plant with a higher CI score, so they qualify for 45Q plus any Carbon Credits as well.
Speaker Change: Post combustion carbon or some other areas. So that gives you an idea of our lowest plant will probably be in the mid to low twenty's to start.
Speaker Change: But Europe will take a little bit more time to get there so it'll be a range, but mid to low twenty's absolutely. We believe as a qualifier for anything that comes out of grief for Saf modeling.
Speaker Change: Alright, that's.
Speaker Change: Super helpful I'll pass it on thanks.
Speaker Change: Yes.
Speaker Change: We will move to our next question from Eric Stine at Craig Hallum.
Eric Stine: Good morning, everyone. Just a few questions on my end.
Eric Stine: Maybe just starting on clean sugar, obviously, Shenandoah coming online that's a near term event I'm curious what that does for commercial discussions.
Todd A. Becker: So what we're looking at first is York to say how we first decarbonize that plant, and we think we'll probably do it through distillation and significantly drop that carbon score, so we can actually earn more on top of that. So yeah, as a starting point. You know, that's what we're putting out there with upside from there. And some of it will be driven by 45Z, some of it's driven by 45Q to start going to Z later on, so those aren't in the numbers.
Eric Stine: Have customers that are waiting on that and they don't need to.
Eric Stine: I need to see it is rather short in terms of the time period and then.
Eric Stine: They get going and take volume pretty quickly or is this something where you have a trial period.
Eric Stine: It will take some time.
Eric Stine: Now our product it's.
Todd A. Becker: And then on top of that, the more interesting thing that we're seeing is the interest, on top of LCFS, because LCFS, we'll see where that market goes, but the interest in voluntary credits from high-quality carbon sequestration. And we're just kicking that off. But right now, we're seeing values in that $30 to $50 a ton range just for good, high-quality credits from new projects like this, but I think when you look at what Summit was able to achieve at $100 a ton, I think there's upside from there as well. So we'll put a little bit of that in those numbers, but overall, you're right to think about that, but if we can... And so So that gives you an idea of our lowest plant.
Speaker Change: It's a little bit of both of what you are saying so for the food guys. We've got to wait to get some of them want to see the plant the product whats youre running get our final certification. So that always takes a little bit longer because what we can show them out of York isn't necessarily serially, what theyre going to buy out of Shenandoah. So.
Speaker Change: As food takes a little bit longer on the industrial side, we have already been approved.
Speaker Change: As a product in industrial processes for some of the customers, we're talking to and.
Speaker Change: And others are in final stages as well, but there has not been any negative feedback from the standpoint of.
Speaker Change: Anything industrial which is the largest quantities that they will start with that this product won't work in their processes.
Speaker Change: They want to see the first product out of Shenandoah, but we are negotiating for shipment this year and much larger shipments and 25 and 26 were on multi year negotiated.
Todd A. Becker: We'll probably be in the mid to low 20s to start, but York will take a little bit more time to get there, so it'll be a range. But mid to low 20s are absolutely a qualifier for anything that comes out of GREET for SAF modeling. All right, that's super helpful; I'll pass it on.
Speaker Change: Sorry negotiations taking place and.
Speaker Change: And we think we'll get some of those completed in the next kind of $30 to 45 days and.
Speaker Change: It's a little bit different.
Speaker Change: And when we started out on protein because protein we were kind of bringing a new product on it wasn't soy for 48, it wasn't corn gluten meal or somewhere in between nobody's ever used it. So that one took probably a little bit longer on Crete sugar at dextrose.
Eric Stine: Thanks. We'll move to our next question from Eric Stine at Craig Hallam. Good morning, everyone.
Todd A. Becker: Just a few questions on my end, um, maybe just starting on clean sugar, you know, obviously Shenandoah coming online that's a near-term event. I'm curious what that does for commercial discussions: do you have customers that are waiting for that, and they don't need to see it, it's rather short in terms of the time period, and then they get going and take volume pretty quickly, or is this something where you So for the food guys, we've got to wait to get some of them to see the plant, the product, how it's running, get our final certification. So that always takes a little bit longer because what we can show them out of York isn't necessarily what they're going to buy out of Shenandoah. So, you know, food takes a little bit longer.
Speaker Change: Carbon copy of what you buy every single day, except you get a lower Ci and even though maybe sustainability has taken a backseat in some stories.
Speaker Change: The buyers still want to buy a low ci feedstocks, because theyre getting still getting for example in industrial products.
Speaker Change: They are still getting requests for them to lower their carbon score of their of their product as well so that they can so the retailer may be able to lower that so.
Speaker Change: It's a very different process for us we just have to make the product now.
Speaker Change: $201 million plus capability per pounds per year will started up slow, but it will immediately go to 50% and then work to get to a 100% that's kind of our plan.
Todd A. Becker: On the industrial side, we have already been approved as a product in industrial processes for some of the customers we're talking to, and others are in the final stages as well. But there has not been any negative feedback from the standpoint of anything industrial, which is the largest quantities that we'll start with, that this product won't work in their processes. Obviously, they want to see the first product out of Shenandoah, but we are negotiating for shipments this year and much larger shipments in 2025 and 2026. We're in multi-year negotiations taking place. And we think we'll get some of those completed in the next kind of 30 to 45 days. It's a little bit different, I think, than when we started out on protein because we were kind of bringing a new product on. It wasn't soy 548, it wasn't corn gluten meal, it was somewhere in between. Nobody's ever used it.
Speaker Change: This is a year, where we kick it off and then as soon as we see that product come out.
Speaker Change: I think that gives us the confidence.
Speaker Change: To say that where we are.
Speaker Change: It's going to go full bore on where do we go with number two.
Speaker Change: Got it that color is helpful.
Speaker Change: Maybe just turning to hydro you mentioned that.
Speaker Change: Ed.
Speaker Change: International demand for 50 pro was quite high.
Speaker Change: But also talking about there is enough demand would eventually you could be completely at 60 per hour. So just thinking about that dynamic as the market kind.
Speaker Change: Kind of evolves and as you look at the market I mean, do you think that those foreign markets.
Todd A. Becker: So that one took probably a little bit longer. On wheat sugar, on dextrose, it's a carbon copy of what you buy every single day, except you get a lower CI. And even though maybe sustainability has taken a backseat in some stories, the buyers still want to buy a low-CI feedstock because they're still getting, for example, an industrial product. They're still getting requests for them to lower their carbon score for their product as well, so the retailer may be able to lower that. It's a very different process for us.
Speaker Change: Well paid for 60 pro or is that more of a domestic sale. When all is said and done.
Speaker Change: Well first of all just on the 50 pro what I said is we are earning higher returns internationally than domestically at this point, but we are selling into both markets as we develop our our 50 pro market globally.
Speaker Change: We definitely get a higher value for the product when it goes offshore and 60 pro market.
Todd A. Becker: We just have to make the product now. It's a 200 million plus capability per pound per year. We'll start it up slow, but it will immediately go to 50% and then work to get to 100%. That's kind of our plan.
Speaker Change: I would say, it's a mix of domestic and export to achieve success.
Speaker Change: There's a lot of Aqua has done globally not necessarily in the U S. So most of everything we do Aqua.
Eric Stine: So this is the year where we kick it off, and then as soon as we see that product come out... I think that gives us the confidence, you know, to say that we're going full bore on where we go with number two. Got it. That color is helpful.
Speaker Change: Other than some some areas in the U S is going to be is going to be forum.
Speaker Change: In terms of.
Speaker Change: Pat it's a combination of both domestic and foreign or an export market.
Todd A. Becker: Maybe just turning to high pro, you mentioned that the international demand for 50 pro is quite high, but you also talked about there being enough demand that, eventually, you could be completely at 60 pro. So just thinking about that dynamic is how the market kind of evolves. And if you look at the market, do you think that those foreign markets will pay for 60 pro?
Speaker Change: And then also when we look at kind of.
Speaker Change: Those are the really the two big markets that we're focused on 60 pro but we have enough identified demand and in discussions that could take all of it if they are if they all call today.
Speaker Change: We we have some work to do to ramp up but you.
Todd A. Becker: Or is that more of a domestic sale when all said and done? Well, first of all, on the 50 Pro, what I said is that we're earning higher returns internationally than domestically at this point, but we're selling to both markets as we develop our 50 Pro market globally, but we definitely get a higher value for the product when it goes offshore. On the 60 Pro market, I would say it's a mix of domestic and export to achieve success. You have to remember that a lot of aquaculture is done globally, not necessarily in the U.S., so most of everything we do aquaculture, other than some areas in the U.S., is going to be foreign.
Speaker Change: You know that that's actually as we as we often left ourselves.
Speaker Change: What if they all call today right. So I mean, we have 50 pro on for the rest of the year, we've got things committed in.
Speaker Change: And Pat for the rest of the year. So, but we are we have a team that consists constantly works every day with global demand to play 60 pro and it's again, it's not a matter of if it's going to be a matter of when it's going to be a matter of how fast.
Speaker Change: As I said and I'll say it one more time, we have enough identify demand to take all of our product. We just got to get it to that to that next point.
Todd A. Becker: In terms of PET, it's a combination of both domestic and foreign in export markets. And then also, when we look at kind of, those are really the two big markets that we focused on 60Pro, but we have enough identified demand and are in discussions that could take all of it if they all call today. You know, we have some work to do to ramp up, but, you know, that's actually, as we often laugh to ourselves. What if they all call today, right?
Speaker Change: Okay. Thank you.
Speaker Change: We will take our next question from Ben <unk> with Stephens.
Ben: Thanks, Good morning.
Ben: Good morning.
Ben: So.
Ben: Our capacity utilization at 95% in the quarter very strong.
Ben: It seems like the network is running efficiently now I know you guys have had a lot of work that you've been doing through the transformation.
Todd A. Becker: So, I mean, you know, we have 50 Pro on for the rest of the year. We've got, you know, things committed in the patch for the rest of the year. So, but we are, we have a team that constantly works every day with global demand to play 60 Pro. And it's, again, it's not a matter of if, it's going to be a matter of when, and it's going to be a matter of how fast. As I said, and I'll say it one more time, we have enough identified demand to take all of our product. We just got to get it to that next point. Okay, thank you. We'll take our next question from Ben Biandou with Stephen. Thanks for watching. Good morning.
Ben: Look forward to 2024 should we expect a similar run rate as we move forward and absent seasonality and maintenance and the like.
Speaker Change: Or should we expect more variability as you commission or ramp.
Ben: New projects.
Ben: No.
Ben: To have this or better as we move forward, we think theres more to unlock in our platform still.
Ben: The January freeze, we slow down a little bit, but it might cost us a point or two but generally we're back up and running this morning with everything running every dryer running every system running this morning. So you know.
Ben Biandou: So, network capacity utilization was 95% in the quarter, very strong. It seems like the network is running efficiently now. I know you guys have had a lot of work to do through the transformation. As you look forward to 2024, should we expect a similar run rate as we move forward, absent, you know, seasonality and maintenance and the like? Or should we expect more variability as you commission or ramp up new projects? No, I mean, our goal is to have this or better as we move forward. We think there's more to unlock on our platform still. The January freeze, we slowed down a little bit, but it might cost us a point or two. But generally, we're back up and running this morning with everything running, every dryer running, every system running this morning. So we had a very, very good team this morning, and we're not done. We still have... We find new things every single day.
Ben: We had a team and we're not done we still have we find things every single day. These are getting older. So but we are pushing these is pushing these assets as hard as we can and we think there's some more breakthroughs that come to unlock more capacity just that we even have today, whether it's moving enough corn conveyors are getting old those type of things. So we're.
Ben: Or not done with with achieving.
Ben: Achieving run rates, yes could there be a down quarter here and there sure, but generally speaking from where we started the year to where we ended the year made a lot of progress, but there's a long way still a long way to go and Chris and the operations team across the whole company understand it and are fully focused on getting the most out of our assets everyday but I don't think you should expect that our our.
Ben: <unk> will go down.
Ben: Okay.
Ben: As it relates to the review of strategic alternatives and kind of broadening the scope of what you look at.
Todd A. Becker: These are getting older, but we are pushing these assets as hard as we can. And we think there's some more breakthroughs to come to unlock more capacity just that we even have today, whether it's moving enough corn, conveyors are getting old, those type of things. So we're not done with achieving run rates. Could there be a down quarter here and there? Sure. But generally speaking, from where we started the year to where we ended the year, we made a lot of progress. But there's a long way to go...
Ben: Does that preclude you from continuing to advance any of these transformational initiatives in terms of a sugar.
Ben: The first ramp in sugar, it's quite successful and you wanted to do a second one.
Ben: Or is that not the case and it's more a.
Todd A. Becker: We still have a long way to go, and Chris and the operations team across the whole company understand that and are fully focused on getting the most out of our assets every day. But I don't think you should expect that.
Ben: A context for.
Ben: Hum.
Ben: Thinking beyond maybe some of the things that you've been doing already and it's incremental nuts.
Ben: Constraining.
Ben: But we're not it's business as usual on every single thing we've laid out there is nothing changing from that perspective.
Ben Biandou: Our utilization will go down. As it relates to the review of strategic alternatives and kind of broadening the scope of what you look at, does that preclude you from, you know, continuing to advance any of these transformational initiatives in terms of, hey, sugar, this first ramp up in sugar is quite successful, and want to do a second one? Or is that not the case, and it's more of a, you know, a contact score? thinking beyond maybe some of the things that you've been doing already, and it's incremental, not, you know, constraining?
Ben: Just to make sure that we.
Ben: We believe the board believes I believe are some of our shareholders believe that we're just undervalued first rate first versus replacement value second versus the value of our future cash flows third versus the simplification that Jim outlined and it's very simple now to get money to the bottom line. We just we need the market to two.
Todd A. Becker: It's business as usual on every single thing we've laid out. There's nothing changing from that perspective. Just to make sure that we believe, the board believes, I believe, some of our shareholders believe that we're just undervalued, first versus replacement value, second versus the value of our future cash flows, and third versus the simplification that Jim outlined. It's very simple now to get money to the bottom line. We need the market to help us with that, but no, nothing's changing in terms of it being business as usual. If we are already looking at clean sugar number two, we want to make sure we can make it to clean sugar number one. We've got to make sure we pick the best sites, make sure we have the utilities, the wastewater, all the things that we need that we discover. We are still fully focused on 60 pro. We are still fully focused on decarbonization.
Ben: Help us with that but we're no nothing is changing in terms of its business as usual if if we are already looking at clean sugar number two we wanted to make sure we can make it and clean schirmer sugar number one we got to make sure we pick the best sites to make sure we have the utilities' wastewater all the things that we need that we discover.
Ben: We are still fully focused on 60 pro we are still fully focus on de carbonization, it's business as usual, but I think this is a good time, sometimes did also pause to make sure that.
Ben: What else should we be looking at from a portfolio mix from the location of our company from the value of our company.
Ben: Everything that we've outlined in the in the press release.
Todd A. Becker: It's business as usual, but I think this is a good time sometimes to also pause to make sure that what else should we be looking at from a portfolio mix, from the location of our company, from the value of our company, from everything that we've outlined in the press release. Okay, very good. Thanks so much, Todd.
Okay very good thanks, so much Tom best of luck.
Ben: Yes.
Ben: We'll go next to Salvator Tiano of Bank of America.
Salvator Tiano: Yes, good morning.
Salvator Tiano: Firstly I wanted to come back to the Nebraska projects.
Salvator Tiano: <unk>.
Salvator Tiano: And understand little bit samples the economics, I mean, you mentioned, the 100 million, which.
Salvator Tiano: Best of luck. Thank you. We'll go next to Salvatore Tiano at Bank of America.
Salvator Tiano: Certainly sounds pretty good but I think we're solid pipeline you have disclosed there'll be some information how would it work here in terms of.
Salvator Tiano: The Bulletproof Executive 2013, Yes, good morning. So, firstly, I want to come back to the Nebraska project and understand a little bit of the economics. I mean, you mentioned the 100 million, which certainly sounds pretty good, but I think for the summit pipeline, you had disclosed a little bit of information. How would it work here in terms of, you know, 45Z and 45Q that you mentioned will benefit you? Do you actually have to share these with the pipeline operator?
Salvator Tiano: You know 45 to $3 45 to that you mentioned or benefits you do you have to actually share. These with the pipeline, operator, and who is incurring because of that.
Salvator Tiano: Carbon capture equipment that you said, you're ordering right now.
Salvator Tiano: And the last part these here just a little bit on the timeline you said you're finalizing the order at my I was under the impression that usually.
Todd A. Becker: And who is incurring the cost of the carbon capture equipment that you said you were ordering right now? And the last part is here, just a little bit on the timeline. You said you're finalizing the order, and I was under the impression that usually the backlog wouldn't allow something to be ready within a year, but you seem to have a start-up date in mid-2025. What gives you confidence that you will receive the equipment and be able to install it by that time? Well, that backlog, first let's address the backlog. That backlog has certainly come down a lot just because of the different delays and different projects around the United States, with Navigator not building anymore, as well as some of the enthusiasm that was the early enthusiasm. I think when we look at
Salvator Tiano: The backlog wouldn't allow something to be ready within a year, but you seem to have a startup date of mid 2025. What gives you confidence that you will receive equipment and be able to install by that timeframe.
Speaker Change: Well that backlog first let's address the backlog that backlog has certainly.
Speaker Change:
Speaker Change: Come down a lot just because of the different delays in different projects around the United States.
Speaker Change: With navigator nut.
Building anymore as well as some of the enthusiasm that was early enthusiasm I think when we look at startup dates for all the different projects that are out there, Nebraska project being the first earliest startup date compression equipment is available and so.
Speaker Change: We're confident that as we put the order and we'll be able to be up in time for the for the startup the economy as we can and the different contracts and we really never put out there what each.
Todd A. Becker: Startup dates for all the different projects that are out there, the Nebraska project being the first, earliest startup date; compression equipment is available, and so we're confident that as we put the order in, we'll be able to be up in time for the startup. The Econs, we can't, and the different contracts; we really never put out there what each of those would represent, nor would we do that at this point, except to say that we're giving you a range of what Nebraska is capable of in terms of starting points with upside from there. The key is Get it, no matter what project it is, get it in the ground to earn some 45Zs, try to extend 45Z if we can, and then you move to 45Q and then carve credit values.
Speaker Change: Each of those would represent nor at this point.
Speaker Change: Would we do that except to say that we're giving you a range.
Speaker Change: What Nebraska is capable of in terms of.
Speaker Change: Starting points with upside from there.
Speaker Change: He is.
Speaker Change: No matter what project is get it in the ground to earn some 45 disease try to extend 45 Z. If we can and then you move to 45 Q&A carbon credit values. So generally speaking the econ for Nebraska.
Speaker Change: What we've outlined the total economy.
Speaker Change: Kind of when we look forward for.
Todd A. Becker: So generally speaking, the Econs for Nebraska are what we've outlined. The total Econs are kind of what we look forward to, and beyond, and especially when you get into the 45Q era, they'll come down a little bit. But generally speaking, you want to attack anything you can to get out into the 45Z area.
Speaker Change: 26, and beyond and especially when you get into the 45 choose era, they'll come down a little bit, but generally speaking you want to attack anything you can to get out and get out into 45, <unk> Z area. If we were today.
Todd A. Becker: If we were, today... fully operating across the western plants that we have on different pipelines. We would be significantly higher than that, relative to our carbon earnings for that, not on top of the fact that we strongly believe that. Those earnings are going to come, and they're not being appreciated, quite frankly, in the valuation of our company. And the reason I say that is because, you know, three years ago, nobody wanted to talk about it; nobody believed it.
Our fully operating across the western plants that we have on them.
Speaker Change: Different pipelines.
Speaker Change: We would we.
Speaker Change: We would be significantly higher than that relative to our carbon earnings for that not on top of the pack with.
Speaker Change: We strongly believe that.
Speaker Change:
Speaker Change: We strongly believe that.
Speaker Change: Those earnings are going to come and.
Speaker Change: And they're not being appreciated.
Speaker Change: Quite frankly, an evaluation of our company and the reason I say that is because.
Speaker Change: Three years ago, Nobody wanted to talk about it nobody believed it we're a year away from the first project coming online. So when you look at carbon strategies earnings as you get into just on 45 queues based on these and the end of 45 Z you're talking about full rate at Green Plains.
Todd A. Becker: We're a year away from the first project coming online. So when you look at Carbon Strategies earnings, as you get into just 45Qs and the end of 45Z, you're talking about full rate at Green Plains, in the 150 to 200 rate for the first couple of years of Z when all the projects are online in terms of EBITDA, and then dropping a little bit after that when 45Q takes over. So there's some serious earnings power that I think nobody wanted to talk about a year ago, but it's definitely worth talking about today, because we're really only one year away or so from the first project starting up. And by the way, lastly, that was a long answer, but...
Speaker Change: And the $1 50 to 200 rate for the first couple of years of Z. When all the projects are online in terms of EBITDA and then dropping a little bit after that 145 key takes over so there's some serious earnings power that I think.
Speaker Change: Nobody wants to talk about a year ago, but it's definitely we're talking about today, because we're one year, where only one really only one year away or so from the first project starting up and there are and by the way lastly.
Todd A. Becker: There is a project already operating, at an ethanol plant in a direct injector, that is earning all of the money that we talked about relative to Z's or relative to the 45Q today. Well, 45Z comes online, but it's happening.
Speaker Change: A long answer but.
Speaker Change: There is a project already.
Speaker Change: Operating.
At an ethanol plant in a direct inject.
Speaker Change: That is earning all of the money that we talked about relative to disease and or relative to the $2 45, Q today or 40 basis. He comes online, but it's happening monies being earned already on some of these projects.
Todd A. Becker: Money's being earned already on some of these projects. Okay, perfect. And I wanted to touch base a little bit on your corn costs. Clearly, the market has not been very tight recently, and we're still gonna get a lot of big corn harvests probably in 2024. What are you seeing in terms of the corn base you're paying this year, and what are you expecting for 20?
Speaker Change: Okay perfect.
Speaker Change: I wanted to touch base, a little bit on.
Speaker Change: On your corn costs nearly the market has been.
Speaker Change: Has not been very tact recently, and we're still going to get them.
Speaker Change: It would be corn harvest probably in 2024, what are you seeing in terms of the.
Speaker Change: Corn basis, you're paying this year, what youre expecting for 'twenty sorry.
Salvator Tiano: Sorry, what are you seeing about the corn base you're paying right now and for the full year? And generally, when we're thinking about paying 80 cents, $1 or more in corn basis for the past year, in 2023, shouldn't that be a very meaningful tailwind for your core ethanol margins this year? Well, it's a combination of everything.
Speaker Change: What are you seeing about the corn basis, you're paying right now and for the full year and generally when we're thinking about.
Speaker Change: Okay.
Speaker Change: Since $1 or more in corn basis in the past year in 2023.
Speaker Change: Wouldn't that be a very meaningful tailwind for your asset core ethanol margins this year.
Speaker Change: Well, it's a combination of everything I mean ethanol is down significantly as well so while the corn basis is down year over year ethanol down and flat prices down which means distillers grains are down so but generally speaking we just manage the margin. If you take a look at some of the big processors and I'll give you the the generalities honestly what were at our plant, Nebraska as a <unk>.
Todd A. Becker: I mean, ethanol is down significantly as well. So while the corn basis is down year over year, ethanol is down, but the flat price is down, which means distiller's grains are down. So, generally speaking, we just manage the margin. If you take a look at some of the big processors, and I'll give you the generalities, not necessarily what we do at our plant, Nebraska is a 10 to 20 over basis market today. Middle Iowa Processors is a 5 to 15 over basis market today, and Central Illinois is about 10 to 15 over.
Speaker Change: <unk> to 'twenty over basis market today.
Speaker Change: Iowa processors, as a 5% to 15 over basis market today.
Speaker Change: And central Illinois about 10% to 15 over so a lot of people are modeling.
Todd A. Becker: So a lot of people are modeling a much lower corn cost. Generally, because they're going back to historical basis in some areas, but generally across the bigger processor markets, we're still sitting a little bit over corn, but that's still significantly lower than $1 or $1.50 over corn we were a year ago or two years ago. So that is a nice thing to have, but generally speaking, it all just goes into the equation to come up with a margin, and that's really how you achieve your goals.
Speaker Change: Much lower corn costs.
Speaker Change: Generally because they are going back to historical basis in some areas, but generally across the bigger processor market, we're still sitting a little bit over corn, but that's still significantly lower than $1 or $1 50 over corn, we were a year ago or two years ago. So that is a nice thing to have but generally speaking it all just goes into the equation to come up with a margin in there.
Salvator Tiano: Well, I guess what I'm trying to understand if I'm missing is, as you said, $0.10, $0.20 versus $1 before. So, if we think about an 80-cent improvement in your corn costs, setting aside the actual corn price, which is also deflating, that would seem to add a very, very meaningful amount to your debt, which I don't think we saw before. So, that's why I'm trying to understand what... Yeah, but you're not... Again, it's four components.
Speaker Change: It's really how you achieve your goals.
Speaker Change: Well I guess, what I'm trying to understand if I'm missing as you said 10 to 20.
Speaker Change: $1 before.
Speaker Change: We think about the maintenance.
Speaker Change: Improvement in your corn calls setting aside.
Speaker Change: The actual form price and social just lagging that would seem to.
Speaker Change: You know.
Speaker Change: Very very meaningful amount do you think about which I don't think we said before so thats why im trying to understand why you're not again, it's all it's a more it's four components its natural gas, it's corn as ethanol distillers grains and you can't just look at one of those components to think just because there is a dollar less corn cost, which is 30, a gallon ethanol has adjusted for that.
Todd A. Becker: It's natural gas, it's corn, it's ethanol, and it's distiller's grains. And you can't just look at one of those components and think, just because there's a dollar less for corn, which is 30 cents a gallon, ethanol has adjusted for that. It's not like they can take away what corn gives it, ethanol can take it away.
Speaker Change: It's not like what what corn give us ethanol can take a way so.
Todd A. Becker: So you know, that's kind of what happens when the market adjusts. You don't just get to earn the full dollar a gallon or dollar a bushel gain just because your input cost dropped. It all goes into the margin.
Speaker Change: That's kind of what happens as the market adjusts you don't just get to earn the dollar a gallon or $1 a bushel gain just because of your inputs costs dropped. It's all goes into the margin its corn ethanol natural gas and distillers grains lesser operating costs gets you to an EBITDA margin. So it's all just part of the calculation.
Salvator Tiano: It's corn, ethanol, natural gas, and distiller's grains, less your operating cost gets you to an even margin. So it's all just part of the calculation. I know that's exactly what I'm trying to get to, because when we look at the corn price and the ethanol price, if you add the base, like you said, 30 cents, for example, per gallon, the ethanol profits probably should be stronger than they are. That's what I'm trying to get to, and that's why I'm trying to figure out what I'm missing.
Speaker Change:
I know that and that's exactly what I'm trying to get to because when when we do get the corn price methanol price. If you add the base that you sent therapy for example benefit per gallon.
Speaker Change: Yeah.
Speaker Change: <unk> profits.
Speaker Change: They probably should be stronger lumber yards, that's what I'm trying to get to.
Speaker Change: That's why in terms of what that may be missing here.
Craig Irwin: Yeah, but remember, often what you see is we take a, we look at our EBITDA, we take a, our, we adjust for our SG&A because we are an independent company. And while you may see others that don't necessarily have to adjust for SG&A, our plants, you know, right now, because we have a different type of plant stack than maybe the best producer, it costs us a little bit more, but, you know, generally speaking, a little more op-ex, but generally speaking, it's all a combination of, and you're not going to get, you're not, the Input cost is breaking hard because everything else has adjusted around it. Thank you very much.
Speaker Change: Yeah, but remember often what you see is we take a when we look at our EBITDA. We take a are we adjust for our SG&A because we are an independent company and while you may see others that don't have can actually adjust for SG&A. Our plants right now because we have a different type of plants back then maybe the best producer it costs us a little bit.
Speaker Change: More but generally speaking a little more opex, but generally speaking.
Speaker Change: It's all a combination of and Youre not going to get you're not the market is not getting the full benefit of this corn input.
Speaker Change: Input cost braking hard because everything else is adjusted around it.
Speaker Change: Okay. Thank you very much.
Todd A. Becker: We'll move next to Craig Irwin at Roth MKM. Good morning, and thanks for taking my question. So, most of what was top of mind has already been put out there, so maybe, Todd, could we talk a little bit about... private market transactions and really what's going on around some of the plants that are being offered out there? We've heard that there's actually a pretty intense level of interest because of staff and the anticipated language this March. You know, ethanol to aviation fuel is something that's, you know, pretty simple through a couple pathways. I mean, I like the pathway you're working on, but, you know, I understand that the asking price for a lot of these plants is pretty high, and they also have demands for tails on carbon, et cetera. Can you maybe just update us on what you're seeing in the private market? And you did mention the strategic review, so that always does include a potential sale. Would you expect those conditions to maybe be a part of the consideration for Green Plains as well?
We'll move next to Craig Irwin at Roth MKS.
Craig Irwin: Hi, good morning, and thanks for taking my questions.
Craig Irwin: Most of what was top of mind has already been put out there. So maybe Todd can we talk a little bit about <unk>.
Craig Irwin: That market transactions and really what's going on around some of the plants that are that are being offered out there. So we've heard that.
Craig Irwin: This is actually a pretty intense level of interest because of SaaS.
Todd A. Becker: And the anticipated language this march.
Todd A. Becker: Ethanol to aviation fuel is something thats.
Todd A. Becker: Pretty simple back couple pathways, I mean, I liked the pathway you're working on but.
Todd A. Becker: You know I understand that the asking price for a lot of these plants is pretty rich and they also have demands for tails on carbon et cetera can you maybe just update us on what youre seeing in the private market.
Todd A. Becker: And you did mentioned the strategic review so that that always does include a potential sale would you expect there.
Todd A. Becker: Those conditions to maybe be a part of the consideration for green plains as well.
Todd A. Becker: So the private market isn't really existing today. There's definitely a lot of interest in plants, but if you have a good operating, high-quality plant in a good location, it's above, it's above, you know, it's in that $1.80 to $2.00 range before you could even get somebody to even talk to you about a gallon of replacement. To replace a plant today, it's in that $1.00, well, probably $2.00 to $2.50 a gallon range to build a plant today from scratch.
Todd A. Becker: Okay.
Todd A. Becker: So the private market.
It isn't really existing today theres definitely a lot of interest for plants, but if you have a good operating high quality plan and a good location, it's above it's above.
Todd A. Becker: At $1 80 to $2 range before you could even get somebody even talk to you or a gallon of replacement to replace apply and today. It's a net dollar well probably two to $2 50, a gallon range three to build a plant today from scratch.
Todd A. Becker: When you look at our, you know, what we think is 950 million gallons or so of capacity, and you look at that without, that's without protein, without dextrose, without carbon, without anything today, that's what it would take, I think, in the private market to even think about clearing a plant of any good quality. I think that's some of the bigger issues that we see. When you look at that compared to our market cap and our net debt position, which is, the public markets are a significant discount, and it's not just us, it's others that are in the public, a significant discount to the valuation of the private market. But that's been going on really since the beginning of time, so we see that often.
When you look at our what we think is 950 million gallons or so of capacity and you look at that without that's without protein without dextrose without carbon without anything today, that's what it would take I think in the private market to even think about clearing a plant of any good quality I think that's some of the bigger issue that we see when you look at that compared to.
Todd A. Becker: Our market cap and our net debt position, which which is.
Todd A. Becker: Lower.
Todd A. Becker: The public markets are a significant discount and it's not just us. It's others that are public are significant discount to the valuation of the private market.
Todd A. Becker: But that's been going on really since the beginning of time so we.
Todd A. Becker: We see that we see that often.
Todd A. Becker: And so we're well positioned, but when we look at it from the perspective of decarbonized alcohol, that isn't even being valued yet. So I mean absolutely, calls come in to say how do we partner with you, how do we look at your decarbonized alcohol, how do we get supply agreements, those are just starting, but they want to see, obviously, the carbon capture happen. But decarbonized alcohol will be a very valuable asset, and that's why we believe we're well positioned in Nebraska. Excellent. Then just a macro question around SAF and the potential deletion or diversion of ethanol, and corn ethanol capacity, into the aviation fuel market. You know, for many years, we were talking about exports to Canada, to Mexico, to China, and India and potentially tightening tightening economics to the benefit of ethanol producers.
And so we're well positioned but when we look at it from the perspective of Decarbonize, the alcohol that isn't even being valued yet so I mean, absolutely the calls come in to say how do we partner with you how do we look at your Decarbonize alcohol, how do we get aggregate supply agreement those are just starting but they want to see obvious obviously, the carbon capture happen, but decarbonize the alka.
Todd A. Becker: The hall will be a very valuable asset and that's why we believe we're well positioned in Nebraska.
Todd A. Becker: Excellent and then just.
Todd A. Becker: Just a macro question around around SaaS and.
Todd A. Becker: The potential deletion or diversion of ethanol corn ethanol capacity into the aviation fuel market.
Todd A. Becker: For many years, we were talking about exports to Canada to Mexico to China.
Todd A. Becker: India.
Todd A. Becker: And potentially tightening.
Tightening economics for the benefit of ethanol producers would you expect the diversion of 1 billion gallons of production into SaaS markets ethanol production and just to have markets to have the similar impact.
Todd A. Becker: Would you expect, you know, the diversion of a billion gallons of production into SAF markets, ethanol production, into SAF markets to have a similar impact to what was, you know, optimistically looked for around exports in the last many years? Well, if you take a look at the SAF capability and the demand for sap, it could be significantly higher than that. Remember, a gallon of ethanol gets cut down by a third, so it's only two-thirds of a gallon of SAF, and when you look at that, take a billion gallons of ethanol, it's only 600 million gallons of aviation fuel, which is a drop in the ocean, and it doesn't need to be blended in a 30, 40 billion gallon domestic market. I mean, it's a drop in the bucket to get to those numbers.
Todd A. Becker: What was.
Todd A. Becker: Optimistically look for around exports in the last many years.
Todd A. Becker: Look if you take a look at the SaaS capabilities and a demand for SaaS it could be significantly higher than that or member a gallon of ethanol.
Todd A. Becker: Get cut down by a third so it's only it's only two.
Todd A. Becker: Two thirds of a gallon of Saf and when you look at that take 1 billion gallons of ethanol for 600 million gallons of aviation fuel, which is a drop and it doesn't need to be blended in a $30 40 billion gallon domestic market I mean, it's a drop in the bucket to get to those numbers against somebody has to build it they're going to be expensive you need billions of dollars to build I think it is.
Todd A. Becker: Again, somebody has to build it. It's going to be expensive. You need billions of dollars to build SAF. I think it will come. I think it first comes out of vegetable oils, which is what we're seeing, but if you really want to get real scale, it's going to have to come out of alcohol. But it starts and ends with decarbonized alcohol.
Todd A. Becker: Going to come.
Todd A. Becker: I think the first comes out of the veg oils, which is what we're seeing but if you really want to get real scale, it's going to have to come out alcohol, but it starts and ends with decarbonize alcohol. If you don't have decarbonize. The alcohol you don't have a discussion and that's why we believe first and foremost Nebraska is very valuable within our platform totally undervalued, but it starts with <unk>.
Craig Irwin: If you don't have decarbonized alcohol, you don't have a discussion, and that's why we believe, first and foremost, Nebraska is very valuable within our platform, totally undervalued, but it starts with decarbonized alcohol, and the first to market will get some of the best benefits, and so that's why we're pushing so fast on these projects, but I think it would be a bit premature to say that if successful, I think it'd be billions of gallons. And then the market will have to figure out how to get to what they need just to satisfy everybody else's needs because it's not like the world needs us to take two or three billion gallons of ethanol off the fuel market. That would have a significant impact on price. Okay, and the last question, if I may, is I guess most investors know you just can't get a catalytic converter on a jet, right? You know, that technology would be great, but it's not available.
Todd A. Becker: Carbonized alcohol and the first to market, we will get some of the best benefits and so that's why we're pushing so fast on these projects, but no I think I think it would be light to say that if successful 1 billion gallons would be diverted I think it would be billions of gallons and then the market will have to figure out how do they get what they need just to satisfy you.
Todd A. Becker: Body else's needs because it's not like the world needs us to take two or 3 billion gallons of ethanol off the fuel market that would be have a significant impact to price.
Speaker Change: Okay, and then last question if I may I guess.
Speaker Change: Most investors know you just can't get a catalytic converter on a jet right.
Speaker Change: <unk> technology will be great, but it's not available.
Todd A. Becker: But I think people really don't understand that aviation emissions are not tracked above 2,500 feet. And can you maybe, you know, share with us what you're hearing from investors? You know, are people educated on the fact that you've got, you know, 5, 600 PPM of sulfur in jet fuel that's needed for lubricity while, you know, on-road diesel is sulphuric, right? So, are you hearing more educated, complete discussions around this from investors as they look at the responsible environmental investment in sustainable aviation fuels? You stumped me a little bit, but... I would only tell you that, look, carbon intensity is very important.
Speaker Change: But I think people really don't understand.
Speaker Change: I understand that aviation emissions are not tracked about 2500 feet.
Speaker Change: And can you maybe share with us what you're hearing from investors.
Speaker Change: Our people educated on the fact that you've got 500, 600 ppm of sulfur and jet fuel that is needed for the lubricity.
Wow.
Speaker Change: On road diesel supply it right. So are you hearing a more educated.
Speaker Change: <unk> discussion.
Speaker Change: Around this from investors as they look at the the responsible environmental investment in sustainable aviation fuels.
Okay.
Speaker Change: You Stumped me a little bit but.
Speaker Change: I would only tell you that look to be the.
Speaker Change: Carbon intensity.
Speaker Change: It's very important.
Todd A. Becker: It's measured and monitored. I think people understand if you make sustainable aviation fuel, you're going to lower your carbon intensity of an aircraft. And it's a demand pull, not a demand push. I think that's the most important thing, so somebody's realizing it.
Speaker Change: It's measured and monitored I think people understand if he makes sustainable aviation fuel you're in a lower carbon intensity of an aircraft.
Speaker Change: And it's a demand pull not a demand push I think thats. The most so somebody's realizing it.
Todd A. Becker: I don't know that I understood much of what you were saying, but somebody's realizing it. So, because we continually get calls in for decarbonized alcohol from SAF. How do we commercialize it? And how do we get it into the demand that's there for it today?
Speaker Change: I don't know that I understood much of what you were saying, but somebody is realizing it. So because we are getting we continually get calls in for de carbonized alcohol to say, how do we commercialize it and how do we get it into into the demand. Therefore today and obviously waiting for greed and the government to give us a bit more guidance on it as well.
Todd A. Becker: And obviously, we are waiting for GREET and the government to give us a bit more guidance on that as well. So maybe I can restate that. Do you think investors understand how incredibly dirty jet fuel is compared to on-road fuel? And take carbon out of the equation, the responsibility we have for equal treatment of airlines versus trucking and commercial and retail transportation? I don't know if that's the case or not, but I do know that it's been proven that ethanol reduces carbon emissions by over 50, almost over 50% in automobiles. I'm assuming it would be the same in, at minimum, the same in the jet, in particular emissions. In particular emissions as well.
Speaker Change: So maybe I can restate that do you think investors understand how incredibly dirty.
Speaker Change: Jet fuel is versus on road fuel.
Speaker Change: And take carbon out of the equation.
Speaker Change: The responsibility, we have four equal treatment of the airlines versus trucking and commercial.
Speaker Change: Retail transportation.
Speaker Change: I don't know if thats, the case or not I do know that it's been proven that ethanol reduces carbon emissions by over 50, almost over 50% in automobile summit I'm, assuming it would be the same and at minimum the same jet so in particular.
Speaker Change: In particular emissions as well great.
Craig Irwin: Great. Hey, thanks for taking my call. And that does conclude the question and answer session. I would like to turn the conference over to Todd Becker for closing remarks. Yeah, thanks, everybody.
Speaker Change: Great Okay.
Speaker Change: Thanks, Alright, thanks J J.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: And that does conclude the question and answer session I would like to turn the conference over to Todd Becker for closing remarks.
Todd A. Becker: Yes, Thanks, everybody look we're in a really good place financially were strong as a company. We remain strong we are not going anywhere we continually to prove that we come out of our.
Look, we're in a really good place. Financially, we're strong as a company. We remain strong. We're not going anywhere. You know, we continue to prove that we've come out of our... The first half of the year when our plants definitely had some problems, and we've fixed a lot of those, but we have more to go to show our operating run rates continue to be steady.
Todd A. Becker: The first half of the year, where our plants definitely had some some some problems and we fixed a lot of those when we have more to go sure operating run rates continue to be steady I think we've shown the market that we are commercializing products.
I think we've shown the market that we are commercializing products, and while some people may have different timelines, we're right on the timeline we thought we would be relative to our initial 25 guidance and where we're sitting for 24. We have great products coming. We've got a great technology portfolio. We're excited to realize the value of this company, and we'll keep you informed on the progress that we're making, and we've got some great stuff happening this quarter with startup Oceanondoa. We, with the CST system, the startup of SSTT, and continue to work on 60Pro. So keep watching us; we're excited about the future. Thank you. And this concludes today's conference call. Thank you for your participation. You may now disconnect.
Todd A. Becker: Some people might have different timelines, we're right on the timeline, we thought we would be relative to our initial 25 guidance on where we're sitting for 'twenty four with great products coming and we've got great technology portfolio. We're excited to realize the value of this company and.
Todd A. Becker: And we will keep you informed on.
Todd A. Becker: And the progress that we're making and we've got some great stuff happening in this quarter with startup of Shenandoah.
Todd A. Becker: With the CST system, the startup of SFC.
Todd A. Becker: And continue to work on 60, <unk> keep watching us we're excited about the future. Thank you.
Speaker Change: And this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: [music].