Q2 2024 Alto Ingredients Inc Earnings Call
Unknown Executive: at the time disclosed in Alto Ingredients' filings with the SEC. Except as required by applicable law, the company assumes no obligation to update any forward-looking statements. In management's prepared remarks, non-GAAP measures will be referenced. Management uses these non-GAAP measures to monitor the financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported. The company defines adjusted EBITDA as unadulterated, consolidated net income or loss before interest expense, interest income, provision for income taxes, asset impairments, loss and extinguishment of debt, unrealized derivative gains and losses, acquisition-related expense, and depreciation and amortization.
Ingredients filings with the SEC, except as required by applicable law. The company assumes no obligation to update any forward looking statements.
Operator: As required by applicable law, the company assumes a new obligation to update any forward-looking statements. In management's prepared remarks, non-GAAP measures will be referenced. Management uses these non-GAAP measures to monitor the financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported.
Speaker Change: In management's prepared remarks, non-GAAP measures will be referenced management uses these non-GAAP measures to monitor the financial performance of operations and believes these measures will assist investors in assessing the company's performance for the periods reported the.
Operator: The company defines adjusted EBITDA as unildated, consolidated net income or loss before interest expense, interest income, provision for income taxes, asset impairments, loss and extinguishment of debt, unrealized to repetitive gains and losses, acquisition-related expense, and depreciation and amortization. To support the company's review of any non-GAAP information, a reconciling table was included in today's press release.
Speaker Change: The company defines adjusted EBITDA as an outdated consolidated net income or loss before interest expense interest income provision for income taxes asset impairments loss on extinguishment of debt unrealized derivative gains and losses acquisition related expense and depreciation.
And amortization.
To support the company's review of any non-GAAP information a reconciling table was included in today's press release.
Operator: On today's call, Bryon will provide a review of our strategic plan and activities, and Rob will comment on our financial results.
Kirsten Chapman: To support the company's review of any non-GAAP information, a reconciling table was included in today's press release. On today's call, Bryon will provide a review of our strategic planning activities, and Rob will comment on our financial results. Then Bryon will wrap up and open the call for Q&A. It is now my pleasure to introduce Bryon McGregor. Please go ahead, sir. Thank you, Kirsten
Bryon McGregor: On today's call, Brian will provide a review of our strategic plan and activities and Rob will comment our financial results then Brian will wrap up and open the call for Q&A is now my pleasure to introduce Bryon Mcgregor. Please go ahead Sir.
Operator: Then Bryon will wrap up and open the call for Q&A.
Operator: It is now my pleasure to introduce Bryon McGregor. Please go ahead, sir.
Bryon McGregor: Thank you Kirsten.
Bryon McGregor: Thank you, Pearson. We welcome our investors, value customers, and other stakeholders joining us today. The peak in campus has been producing alcohol for over 150 years through many market cycles. We will continue to produce well into the future. Over the last few years, we've been leaning on our strong balance sheet by utilizing cash flow from operations and excess liquidity to fund capital upgrades and repairing maintenance. To strengthen our facilities and to improve our long-term profitability. While these additional expenses can impact our short-term results, our recent efforts are beginning to yield operational improvements, and we are confident we will reap long-term benefits.
Bryon McGregor: We welcome our investors, valued customers, and other stakeholders joining us today. The Pekin campus has been producing alcohol for over 150 years through many market cycles.
Bryon McGregor: We welcome our investors value customers and other stakeholders joining us today.
Speaker Change: The Beacon campus has been producing alcohol for over 150 years through many market cycles.
Bryon McGregor: We will continue to produce well into the future. Over the last few years, we've been leaning on our strong balance sheet by utilizing cashflow from operations and excess liquidity to fund capital upgrades and repair and maintenance, to strengthen our facilities and to improve our long-term profitability. While these additional expenses can impact our short-term results, our recent efforts are beginning to yield operational improvements, and we are confident we will reap long-term benefits.
Speaker Change: We will continue to produce well into the future over the last few years.
Bryon McGregor: In Q2, our initiatives increased production, and our peak in cap is positioning us to benefit from improving ethanol margins. These efforts further demonstrate the advantages of our production facilities located there, including the ability to operate profitably on a consistent basis. More specifically, in Q2, even with over $5 million relating to spring outages, our Beacon Campus generated over $10 million of gross profit, up from over $4 million in Q1, reflecting these programs and higher crush margins in June. The average Chicago crush margin increased to $0.21 per gallon, compared to just about breaking even in Q1. In July, the average Chicago crush margin rose further to $0.48 per gallon.
Bryon McGregor: In Q2, our initiatives increase production in our peak in campus, positioning us to benefit from improving ethanol margins. These efforts from their demonstrate the advantages of our production facilities located there, including the ability to operate properly on a consistent basis. More specifically, in Q2, even with over $5 million relating to spring outages. Our peak in campus generated over $10 million of gross profit, up from over $4 million in Q1, reflecting these programs and higher crush margins in June. In Q2, 2020-4, the average Chicago crush margin increased to 21 cents per gallon compared to just about break even in Q1, 2020-4.
Bryon McGregor: In July, the average Chicago crush margin rose further to 48 cents per gallon. These improvements align with the optimism we expressed on our Q1 call regarding strengthening crush margins, solid-core supplies, and growing export demand. Assuming margins remain strong, we expected to deliver solid financial results in Q3.
Bryon McGregor: These improvements align with the optimism we expressed on our Q1 call regarding strengthening crush margins, solid corn supplies, and growing export demand. Assuming margins remain strong, we expect to deliver solid financial results in Q3. That said, our consolidated Q2 2024 net loss and adjusted EBITDA were negatively impacted by the cost of our biennial wet mill outage, preventative repairs and maintenance at all our facilities, lower feed and carbon prices, particularly with respect to our Columbia facility, and realized losses on hedging activities.
Bryon McGregor: Rob will discuss our financial results in greater detail in a moment. However, to generate more sustainable profitability in the long term, we've been actively expanding our revenue streams. I'll review our operations and strategic initiatives, beginning with carbon capture and storage, or CCS. We expect that regulatory developments and carbon market fluctuations will affect this initiative on an ongoing basis. Most recently, Illinois signed into law the Safe CCS Act on July 18th, establishing stringent safety, financial, and insurance requirements for carbon dioxide pipelines. This Act also imposes a moratorium on the construction of new carbon pipelines until the Federal Pipeline and Hazardous Materials Safety Administration finalizes its new safety rules or July 1, 2026, whichever occurs sooner.
Bryon McGregor: That said, our consolidated Q2 2020-4 net loss and adjusted EBITDA were negatively impacted by the cost of our biennial wet mill outage, preventative repairs and maintenance at all our facilities, lower feed and carbon prices, particularly with respect to our Columbia facility, and realized losses on hedging activities.
Rob Olander: Rob will discuss our finance results in greater detail in a moment.
Bryon McGregor: To generate more sustainable profitability in the long term, we've been actively expanding our revenue streams. I'll review our operations and strategic initiatives, beginning with carbon capture and storage or CCS. We'll expect that the regulatory developments in carbon market fluctuations will affect this initiative on an ongoing basis. Most recently, Illinois signed into law the Safe CCS Act on July 18th, establishing stringent safety, financial, and insurance requirements on carbon dioxide pipelines. This act also imposes a moratorium on construction of new carbon pipelines until the Federal Pipeline, Pipeline and Hazardous Materials Safety Administration finalizes its new safety rules, or July 1st, 2026, whichever occurs sooner.
Bryon McGregor: This timing aligns with our current proposed CCS project permitting and construction schedules. We believe the act will add clarity for the industry on CCS projects, although we do anticipate increased compliance and other requirements. The CCS market also remains dynamic. For instance, on the economic front, current prices in the low-carbon fuel standard markets are at historic lows, and voluntary carbon markets are nascent.
Bryon McGregor: This timing aligns with our current proposed CCS project permitting in construction schedules. We believe the act will add clarity for the industry on CCS projects, although we do anticipate increased compliance and other requirements. The CCS market also remains dynamic; for instance, on the economic front, current prices in the low carbon fuel standard markets are at historic lows, and voluntary carbon markets are nascent. As such, it is difficult to project with certainty beyond the value of the 45Q tax credits that begin at $25 a metric ton. What the dollar values of the associated environmental attributes will be over the life of our proposed CCS project.
Bryon McGregor: As such, it is difficult to project with certainty beyond the value of the 45Q tax credits, which begin at $85 a metric ton, what the dollar values of the associated environmental attributes will be over the life of our proposed CCS project. Given our plans to take a capital-light approach to this project, we need to align Alto and its various partners' resources to best bear the various risks while retaining the appropriate financial benefits. Given these evolving dynamics, it's important that we bring the right partners to the table. We believe we're doing so effectively as we continue to work collaboratively with Vault and other parties.
Bryon McGregor: Given our plans to take a capital light approach to this project, we need to align Alito and its various partners' resources to best bear the various risks while retaining appropriate financial benefits. Given these evolving dynamics, it's important that we bring the right partners to the table. We believe we're doing so effectively as we continue to work collaboratively with all to the other parties.
Bryon McGregor: Moving to operations as previously discussed, we conducted our buying a wet mill repairs and maintenance outage of Peak and Campus in April. This scheduled outage was completed on time, within budget, and is now demonstrating improvements over prior operational performance. For example, we increase production at the wet mill, improving capacity utilization while reducing our fixed cost per unit. The peak and campus is now fully operational in taking advantage of the summer driving season economics. We remain on track to achieve 90 million gallons or more, especially alcohol sales in 2024. We are encouraged when the demand for existing from existing and new customers.
Bryon McGregor: Moving to operations, as previously discussed, we conducted our biennial wet mill repairs and maintenance outage at Peak and Campus in April. This scheduled outage was completed on time within budget and is now demonstrating improvements over prior operational performance. For example, we increased production at the wet mill, improving capacity utilization, while reducing our fixed costs per unit. The Beacon Campus is now fully operational and taking advantage of the summer driving season economics.
Bryon McGregor: We remain on track to achieve 90 million gallons or more of specialty alcohol sales in 2024. We are encouraged by the demand for existing products from existing and new customers. Capitalizing on our proximity to the river, which gives us access to the gulf and the ability to export product, we're building a second loading dock at our Pekin campus that will increase barge volume, reduce our overall transportation costs, and provide critical redundancy. We expect the cost of the second doc to be less than $3 million.
Rob: Back to achieve 90 million gallons or more of a specialty alcohol sales in 2024, we are encouraged by the demand for existing from existing and new customers.
Rob: We're capitalizing on our proximity to the river, which gives us access to the Gulf and the ability to export product. We're building a second loading dock at our Pekin campus that will increase barge volume reduce our overall transportation cost and.
Bryon McGregor: We're capitalizing on our proximity to the river, which gives us access to the gold and the ability to export product.
Bryon McGregor: We're building a second loading dock at our peak and campus that will increase barge volume, reduce our overall transportation costs, and provide critical redundancy. We expect the cost of the second dock to be less than $3 million.
Rob: And provide critical redundancy.
Rob: We expect the cost of the second ought to be less than $3 million.
Bryon McGregor: Now let's pivot to review our Western plans. We built these facilities at a time when destination plans delivered a solid and differentiated value proposition. As competition and chord basis increased in carbon values decline, we began investing in these plans to broaden our revenue streams and improve profitability.
Rob: Now, let's pivot to review our western plants.
Bryon McGregor: Now let's pivot to review our Western plan. We built these facilities at a time when destination plans delivered a solid and differentiated value proposition. As competition in corn bases increased and carbon values declined, we began investing in these plants to broaden our revenue streams and improve profitability. Ultimately, our goal is to optimize their value, which could include operating them for the long term as part of our portfolio of production assets or evaluating the sale of one or both plants.
Rob: We built these facilities at a time when destination plans delivered a solid and differentiated value proposition.
Rob: As competition in corn basis increase in carbon values decline.
Rob: We began investing in these plans to broaden our revenue streams and improve profitability. Ultimately our goal is to optimize our value which could include operating them long term as part of our portfolio of production assets or evaluate evaluating the sale of one or both plants.
Bryon McGregor: Ultimately, our goal is to optimize their value, which could include operating them long-term as part of our portfolio of production assets or evaluating the sale on one or both plans. In Magic Valley, we continue to work with our high-protein system vendor, Harvesting Technology, to produce increased levels of coral oil and higher protein feed products that garnered higher prices. In January of this year, we hot idle the plant due to negative regional crush margins and to address the excess water and mass balance challenges that inhibited our ability to operate the plant at capacity and to achieve the target results from our corn oil and high protein system.
Bryon McGregor: At Magic Valley, we continue to work with our high-protein system vendor, Harvesting Test Technology, to produce increased levels of corn oil and higher-protein feed products that garner higher prices. In January of this year, we hot idled the plant due to negative regional crush margins and to address the excess water and mass balance challenges that inhibited our ability to operate the plant at capacity and to achieve the target results from our corn oil and high protein system.
Speaker Change: <unk> Valley, we continue to work with our high protein system vendor harvesting test technology.
Speaker Change: To produce increased levels of corn oil and higher protein feed products that garner higher prices.
Speaker Change: In January of this year, we hot idled the plant due to negative regional crush margins and to address the excess water in mass balance challenges that inhibited our ability to operate the plant at capacity and to achieve the target results from our corn oil and high protein system.
Bryon McGregor: We made significant modifications that included the installation of additional equipment and adjustments to the design process flows. Also in Q2, to optimize plant efficiency upon restart, we accelerated routine maintenance activities, including tuning other major plant equipment and operating systems, performing routine cleanings and flushing prior process residuals. We resumed operations in early July and are encouraged by the initial results. We expect to increase production rates in the coming weeks as we complete the system upgrades. We intend to do so carefully to ensure the process remains balanced and our products meet quality expectations. We anticipate having a clear picture with respect to the effectiveness of this system modifications and the general performance of the plant later this summer.
Bryon McGregor: We made significant modifications that included the installation of additional equipment and adjustments to the design process, also in Q2 to optimize plant efficiency upon restart. We accelerated routine maintenance activities including tuning other major plant, equipment, and operating systems, performing routine cleanings and flushing prior process residuals. We resumed operations in early July and are encouraged by the initial results. We expect to increase production rates in the coming weeks as we complete the system upgrade.
Speaker Change: We made significant modifications that included the installation of additional equipment and adjustments to the design process flows.
Bryon McGregor: We intend to do so carefully to ensure the process remains balanced and our products meet quality expectations. We anticipate having a clearer picture with respect to the effectiveness of the system modifications and the general performance of the plant later this summer. In Q2, we significantly improved the production rates at our Columbia plant by addressing centrifuge limitations we experienced in Q1. As a result, we increased capacity utilization rates in Q2 and anticipate further improvements as the summer dry spring season continues.
Bryon McGregor: In Q2, we significantly improve the production rates at our Columbia plant by addressing centrifuge limitations we experienced in Q1. As a result, we increase capacity utilization rates in Q2 and anticipate further improvements as the summer driving seen and continues. We're currently working on other ways to improve the facility's profitability and help to share more information with you over the coming quarters.
Bryon McGregor: We're currently working on other ways to improve the facility's profitability and hope to share more information with you over the coming quarters. Before I turn the call over to Rob, I'd like to note that customers have indicated their support of our efforts to continue to improve our sustainability and lower our carbon footprint. In July, our ICP and Pekin plants received the 2024 Bronze Medal Sustainability Rating from Ecovatis, which honors the top 35% of companies assessed. Ecovatis is a globally recognized business sustainability rating service that sets corporate sustainability standards.
Bryon McGregor: Before I turn the call to Rob, I'd like to know that customers have indicated their support of our efforts to continue to improve our sustainability and lower our carbon footprint. In July, our ICP and pecan plants received the 2024 Bronze Medal sustainability reading from EcoVadis, which honors the top 35% of companies assessed. EcoVabis is a globally recognized business sustainability rating service that sets corporate sustainability standards.
Rob Olander: Now I'll turn the call to Rob. Thanks, Brian. I'll review the financial results for the second quarter of 2024 compared to the second quarter of 2023. During Q2, 2024, we sold 95.1 million gallons, relatively consistent with 94.4 million gallons sold during Q2 of 2023. However, due to lower market prices in 2024, Q2 2024 net sales were 236 million dollars compared to 307 million dollars in Q2 2023. Although ethanol prices decreased, crushed margins remain consistent. Therefore, lower ethanol prices did not materially impact growth profit. In fact, during Q2 2024, our pecan campus contributed over 10 million dollars to growth profit, even after considering its average costs, loss production margins, and derivative losses.
Bryon McGregor: Now,
Robert Olander: Thanks, Bryon. I'll review the financial results for the second quarter of 2024 compared to the second quarter of 2023. During Q2 2024, we sold 95.1 million gallons, relatively consistent with 94.4 million gallons sold during Q2 of 2023. However, due to lower market prices in 2024, Q2 2024 net sales were $236 million compared to $317 million in Q2 2023. Although ethanol prices decreased, crush margins remained consistent. Therefore, lower ethanol prices did not materially impact gross profit.
Robert Olander: In fact, during Q2 2024, our Pekin campus contributed over $10 million to gross profit, even after considering its outage costs, loss production margins, and derivative losses. Total gross profit per quarter was $7.6 million, down $9.6 million from Q2 2023, yet up over $10 million from Q1 2024. Various factors impacted our gross profit and bottom line results. While our essential ingredients return improved 46% in Q2 of 2024, compared to 38% a year ago, revenues decreased in Q2 of 2024 compared to Q2 of 2023. This is largely the result of a compression on protein prices due to an increase in soybean meal supply, a consequence of production growth and soy crush driven by the demand for renewable diesel.
Rob Olander: Total growth profit per quarter was 7.6 million dollars, down 9.6 million dollars through Q2 2023, yet up over 10 million dollars from Q1 2024. Various factors impacted our growth, profits, and bottom-line results. While our essential ingredients return improved 46% in Q2 of 2024, compared to 38% a year ago, revenues decreased in Q2 of 2024 compared to Q2 2023. This is largely the result of a compression on protein prices due to an increase in soybean meal supply, a consequence of production growth and soy next. Renewable Fuel Revenue and Bottom Line Results at our Columbia Plant were natively impacted by historic low carbon market pricing.
Robert Olander: Next, renewable fuel revenue and bottom-line results at our Columbia plant were negatively impacted by historic low carbon market prices. Additionally, as Bryon outlined on our last call, in Q2, we completed repairs and maintenance initiatives, including our peak and wet mill outage, to improve our operational performance heading into Q3. It is important to note that costs associated with wet mill outages are more substantial than those for dry grind facilities due to the nature and extent of the maintenance activities, the extent of downtime required, and the opportunity cost.
Rob Olander: Additionally, as Bryon outlined on our last call in Q2, we completed repairs and maintenance initiatives, including our peak and wet mill outage, to improve our operational performance heading into Q3. It's important to note that costs associated with wet mill outages are more substantial than those for dry grind facilities due to the nature and extent of the maintenance activities, the extended downtime required, and the opportunity costs. The biennial outage cost $3.6 million, and the planned ICP outage cost $1.8 million in Q2, 2024. This does not include lost revenue associated with approximately $3.5 million fewer production gallons.
Robert Olander: The biennial outage cost $3.6 million, and the planned ICP outage cost $1.8 million in Q2 2024. This does not include lost revenue associated with approximately 3.5 million fewer production gallons. During Q2, on a consolidated basis, we recorded $11.3 million in repairs and maintenance expense, including a portion of the outage costs, and we remain on track for our 2024 estimate of $34 million in total repairs and maintenance expense for all plans. Finally, realized derivative losses for Q2 of 2024 were $2.9 million compared to $5.5 million in realized derivative gains for the same quarter in 2023. As covered previously, we employ a variety of risk management strategies to mitigate the price volatility of different commodities throughout the year as a normal course of business.
Rob Olander: During Q2 on a consolidated basis, we recorded $11.3 million in repairs and maintenance expense, including a portion of the outage costs, and we remain on track for our 2024 estimate of $34 million in total repairs and maintenance expense for all plants. Finally, realized derivative losses for Q2 2024 were $2.9 million compared to $5.5 million in realized derivative gains for the same quarter in 2023. As covered previously, we employ a variety of risk management strategies to mitigate the price volatility of different commodities throughout the year as a normal course of business. Our consolidated net loss for Q2, 2024 was $3.1 million compared to net income of $7.6 million in Q2 of 2023.
Robert Olander: Our consolidated net loss for Q2 2024 was $3.1 million compared to net income of $7.6 million in Q2 2023. Adjusted EBITDA for Q2 2024 was negative $5.9 million, including $3.6 million in costs related to our wet mill outage and $2.9 million in realized losses on derivatives. This compares to positive adjusted EBITDA of $14 million, including $5.5 million in realized derivative gains in Q2 2023. As of June 30th, our cash balance was $27 million, and our total loan borrowing availability was $95 million, including $30 million under our operating line of credit and $65 million subject to certain conditions under our term loan facility.
Rob Olander: Adjusted EBITDA for Q2, 2024 was negative $5.9 million, including $3.6 million in costs related to our wet mill outage and the $2.9 million in realized losses on derivatives. This compares to positive adjusted EBITDA of $14 million, including $5.5 million in realized derivative gains in Q2 2023. As of June 30, our cash balance was $27 million, and our total loan borrowing availability was $95 million, including $30 million under our operating line of credit and $55 million, such that certain conditions under our term loan facility. In Q2, 2024, we used $13.7 million in our operating activities, bringing the year-to-date total to a net use of $12.3 million.
Robert Olander: In Q2 2024, we used $13.7 million in our operating activities, bringing the year-to-date total to a net use of $12.3 million. We invested $4.7 million in CapEx, bringing the year-to-date total to $9.3 million, in line with our $25 million plan for 2024. As Bryon noted, we are pleased with the margins in July, and if they remain strong and we continue to meet our production targets, we expect to deliver positive adjusted EBITDA for Q3. With that, I'll turn the call back to Bryon.
Rob Olander: We invested $4.7 million in catbacks, bringing the year-to-date total to $9.3 million, in line with our $25 million plan for 2024. As Brian noted, we are pleased with the margins in July, and if they remain strong, and we continue to meet our production targets, we expect to deliver positive adjusted EBITDA for Q3.
Bryon McGregor: With that, I'll turn the call back to Brian. Thank you, Rob. We've been executing our plan to improve our profitability and leverage our strength and opportunities. The major planned outages we could lead in the second quarter, positioned us to benefit from positive crush margins in the second half of 2024. We're excited to see our initiatives come to fruition, bolstering our ability to continue to serve our customers for many years to come.
Rob: Thank you Rob.
Rob: We've been executing our plan to improve our profitability and leverage our strengths and opportunities.
Bryon McGregor: We've been executing our plan to improve our profitability and leverage our strength and opportunities. The major planned outages we completed in the second quarter position us to benefit from positive crush margins in the second half of 2024. We're excited to see our initiatives come to fruition, bolstering our ability to continue to serve our customers for many years to come. Operator, we're ready to begin Q&A.
Rob: The major planned outages, we completed in the second quarter position us to benefit from positive crush margins in the second half of 2024, we're excited to see our initiatives come to fruition bolstering our ability to continue to serve our customers for many years to come.
Operator: Operator, we're ready to begin to win it.
Speaker Change: Operator, we're ready to begin Q&A.
Rob: Yes.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. If you're using a speaker phone, please pick up your handset before pressing the key.
Speaker Change: We will now begin the question and answer question ask a question you May Press Star then one on your touch 10.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.
Speaker Change: If anything it's bigger.
Zhang please pickup your handset before pressing helpful.
Operator: To withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster.
Speaker Change: Your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Sameer Joshi: Your first question comes from Sameer Joshi with H.C. Waynot.
Speaker Change: Your first question comes from Sameer Joshi with H C Wainwright.
Sameer Joshi: Your first question comes from Sameer Joshi, with HB Wainwright.
Sameer Joshi: Hey, good afternoon, guys. Thanks for taking my questions. Let me start with the last point you discussed about the CAPEX of 25 million on target or in line with the guidance. So far, you have spent 9.3 million.
Sameer Joshi: Hey, good afternoon, guys. Thanks for taking my questions.
Sameer Joshi: Hey, good afternoon, guys. Thanks for taking my questions. Let me start with the last point you discussed about the CapEx of $25 million on target or in line with the guidance. So far, you have spent $9.3 million. What is the rest of the CapEx slated for this second half?
Speaker Change: Let me start with the last.
Sameer Joshi: The last point, you discussed about the capex of $25 million on target or in.
Speaker Change: In line with the guidance so.
Speaker Change: So far you have.
Speaker Change: <unk> spent $9 3 million.
Rob Olander: What is the rest of the CAPEX C-A-K-4 for this second half? Sure, we've got a variety of different CAPEX projects that we've reviewed and approved, and we have planned for later this year. I will note that we spent less year to date, but there's also more spend slated in the second half of 2024.
Speaker Change: What is the rest of the Capex.
Speaker Change: For this second half.
Speaker Change: Hi.
Robert Olander: Yeah, sure. We've got a variety of different CAPEX projects that we've reviewed and approved that we have planned for later this year. I will note that we've spent less this year to date, but there's also more spending slated for the second half of 2024.
Speaker Change: Yes, sure we've got a variety of different capex projects that we've reviewed and approved that we have planned for later this year.
Speaker Change: I will note that we've spent less year to date.
Speaker Change: But there is also more spend slated in the second half of 2024.
Rob Olander: Any particular ideas you're focused on for that? A lot of the areas involved, you know, the things that we talked about before, increasing plant efficiencies, upgrading various systems, things like that would also include the 3 million from the new pipeline, right, the new loadout or loading facility, right, the new alcohol dock, yeah. Got it.
Speaker Change: And then any particular areas you're focused on for that.
Sameer Joshi: Any particular areas you're focused on for that?
Robert Olander: A lot of the areas involve, you know, the things that we talked about before, increasing plant efficiency, and upgrading various systems.
Speaker Change: A lot of areas involves things that we've talked about before increasing plant efficiencies.
Speaker Change: Trading various systems.
Speaker Change: So the things like that.
Sameer Joshi: Would also include the three million from the new pipeline, right, the new load out or loading facility, right, the new alcohol doc. Yep.
Speaker Change: We'll also include the $3 million from the the new pipeline rather new.
Speaker Change: Slowdown or loading facility right, the new alcohol dock yep.
Speaker Change: Got it.
Sameer Joshi: And then these various upgrades that are being done, and you talked about increasing capacity utilization as a result of each of these maintenance and upgrades. Is there a quantification, can you quantify what levels were you achieving before and what are the expected levels for, say, 3Q and 4Q of utilization at these plants?
Rob Olander: And then these various upgrades that are being done, and you talked about increasing capacity utilization as a result of each of these maintenance and upgrades.
Speaker Change: And then.
Speaker Change: These.
Speaker Change: Various upgrades.
Speaker Change: Done.
And you talked about increasing capacity utilization that detail.
Speaker Change: Each of these.
Speaker Change: Maintenance in our bids is the quantifying any.
Rob Olander: Is there quantifying, like, can you quantify it, like, what levels were you achieving before and what are the expected levels for the DQ and for Q-of utilization? So, Samir, it depends on what we're talking about, and that's why we didn't provide specific details in the prepared remarks. But what we're overall seeing is somewhere between 10% and 15% improvements from production prior to the event. And again, it depends. As an example, we've seen about a 10% improvement in ethanol production. Overall, that would include both specialty and beverage. I'm sorry, specialty and fuel, but it would also, you know, we've seen up to 15% improvements in essential ingredients, a lot of our quality essential products that come out, including yeast, that come out of the wet milk.
Speaker Change: Can you quantify it.
Speaker Change: What levels are you assuming before and what are the expected loans for us.
Speaker Change: At EQM <unk> of utilization.
Speaker Change: Yes.
Robert Olander: So Sameer, it depends on what we're talking about and that's why we didn't provide specific details in the prepared remarks. But what we're overall seeing is somewhere between 10 and 15% improvements from production prior to the event. And it just again, it depends.
Speaker Change: So sameer it depends on what we're talking about and that's why we we didn't.
Speaker Change: Provide specific details in the prepared remarks, but what were overall seeing is somewhere between 10% to 15% improvements from production prior prior to the event.
Speaker Change: Again, it depends as an example, we've seen about a 10% improvement in ethanol production.
Robert Olander: As an example, we've seen about a 10% improvement in ethanol production. Overall, that would include both specialty and beverage, I'm sorry, specialty and fuel. But it would also, you know, we've seen up to 15% improvements in essential ingredients, a lot of our quality, essential products that come out, including yeast that comes out of the wet mill. So overall, I'm very pleased. And, you know, we hope to see continued improvement in that over the, you know, as we continue to further line out the operations. Thanks for that color.
Speaker Change: Overall that would include both specialty and beverage I'm sorry specialty in.
Speaker Change: Fuel, but it would also and we've seen up to 15% improvements in essential ingredients a lot of our.
Speaker Change: Quality.
Speaker Change: Essential products had come out including east they come out of out of the wet mill.
Rob Olander: So overall, very pleased. And, you know, we hope to see continued improvement in that over the, you know, as we continue to further line out the operation. Thanks for that color.
Speaker Change: So overall very pleased.
Speaker Change: And we.
Speaker Change: We hope to see continued improvement in that over the over the as we continue to further lineup the operations.
Speaker Change: Great.
Sameer Joshi: Thanks for that, Kallur. And then just one clarification, maybe the OPEX was up slightly. I know that these other costs are not drawn through the OPEX line, but was there a reason for this slight bump in OPEX? It's G&A. Yeah, we're here.
Speaker Change: Thanks for that color.
Rob Olander: And then just one clarification: maybe the OPEX was up slightly.
Speaker Change: And then just one clarification maybe.
Speaker Change: The opex.
Speaker Change: Was up slightly.
Rob Olander: I know that these costs are not run through the OPEX line, but was there reason for this slight bump in the OPEX? Yeah, we're here, sorry. Yeah, I mean, there's a lot going into the other OPEX category.
Speaker Change: I don't know that these other costs have not run through the Opex line, but what's.
Speaker Change: And the reason for the slight bump more opex.
Speaker Change: Okay.
Speaker Change: SG&A.
Speaker Change: Yes, we're here sorry.
Robert Olander: Sorry. Yeah, I mean, there's a lot going on in the other categories. One thing to note is, you know, until we've officially approved the path forward related to our carbon capture and storage project, some of the upfront costs run through that.
Speaker Change: Yes.
Speaker Change: There's a lot going in into the other Opex category one thing to note is until we've.
Rob Olander: One thing to note is, you know, until we officially approved the path forward related to our carbon capture and storage project, some of the upfront costs run through that line item. So, I'm all grown close. Oh, you got it. Okay, thanks. Now, that activity is clearly picked up. Yeah, similar. Sorry, that activity is clearly picked up year over year. And so that would account for the material portion of it. Thanks.
Speaker Change: Officially.
Speaker Change: Prove the path forward related to our carbon capture and storage project some of the upfront costs run through that line item.
Speaker Change: Some outbound costs, Okay got it okay. Thanks.
Robert Olander: I'm off the ground, class. Oh, that activity is clearly picked up year over year, and so that would account for a material portion of it.
Speaker Change: Clearly picked up.
Speaker Change: Some years already that activity has clearly picked up year over year, and so that would account for a material portion of it.
Speaker Change: Thanks.
Sameer Joshi: I'll take my other questions offline, thanks.
Sameer Joshi: I'll take my other questions off. Thanks.
Speaker Change: I'll take my other questions offline. Thanks.
Operator: Okay, thanks, Sameer. Thank you.
Speaker Change: Okay. Thanks, Amit Thank you.
Operator: Okay.
Operator: Thanks, Samir. Thank you.
Eric Stine: Your next question comes from Eric Stein with Craig Helen Capital Group. Hi, Brian.
Speaker Change: Your next question comes from Eric Stine with Craig Hallum Capital Group.
Eric Stine: Your next question comes from Eric Stine with Craig Helen Capital Group.
Eric Stine: Hi, Brian Hi, Rob.
Bryon McGregor: Hi, Rob.
Eric Stine: Hey, so just on carbon capture. So I can appreciate, you know, the timeline in July 1st of 26 and how that matches up. But I also know, you know, there are a number of steps that were targeted, kind of in the interim.
Eric Stine: So just on carbon capture, so I can appreciate, you know, the timeline of July 1st of 26, and how that matches up. But I also know, you know, there are a number of steps that were targeted kind of in the interim. So just curious how you think about that, how your partners are thinking about that, the various steps, whether it's the class six permit, negotiating with those financing partners, and thinking about an investment in your region versus maybe some other region where they're not running into the same issues. So just some thoughts on that would be great.
Speaker Change: Eric.
Eric: So just on carbon capture.
Eric Stine: So I can appreciate the timeline in July 1st of 26, and how that matches up but I also know.
Speaker Change: There are a number of steps that were targeted kind of in the interim. So just curious how you think about that how your partners are thinking about that the various steps whether it's the class six permit.
Bryon McGregor: So just curious how you think about that, how your partners are thinking about that, the various steps, whether it's the classics permit, negotiating with those financing partners and thinking about an investment in your region versus maybe some other region where they're not running into the same issues. So just some thoughts on that would be great. Sure. So, as I mentioned in our prayer remarks, we think that we picked the right partners. We're working, you know, diligently ahead. They've been very collaborative and cooperative. Clearly having to address issues as they arise as an example, the Safe CCS Act that recently was enacted in Illinois and pivoting and addressing those issues.
Speaker Change: Negotiating with those financing partners and thinking about an investment in in your region versus maybe some other region, where theyre not running into the same issue. So just some thoughts on that would be great.
Speaker Change: Sure so.
Robert Olander: Sure, so. As I mentioned in our prior remarks, we think we picked the right partners. We're working, you know, diligently ahead. They've been very collaborative and cooperative.
Speaker Change: As I mentioned in our prepared remarks, we think that we pick the right partners. We're working diligently ahead, they've been very collaborative and cooperative.
Speaker Change: Clearly having to address issues as they arise as an example, the safe Ccs Act that recently was.
Robert Olander: Clearly, having to address issues as they arise, as an example, the Safe CCS Act that recently was enacted in Illinois, and pivoting and addressing those issues. Not to fully reiterate what was in the prepared remarks, but maybe from an additional color is that. Um...
Speaker Change: Acted in Illinois.
Speaker Change: And pivoting unit in addressing those issues.
Speaker Change: And.
Bryon McGregor: And not to fully reiterate what was in the prayer remarks, but maybe from additional color is that. There are in the capital light approach, there are risks that and and adjustments that you need to make that you would otherwise wouldn't need to make if you were just doing it all on balance sheet, right. I think that we have those parties that are there and best suited to be able to handle those risks, but it's also doing it in the way and in an organized way so that you're not assuming risks that you otherwise don't need to take beforehand.
Speaker Change: Not to fully reiterate.
Speaker Change: What was in the prepared remarks, but.
Speaker Change: Maybe from additional color is that.
Speaker Change: Okay.
Speaker Change: There are.
Robert Olander: There are. In the capital light approach, there are risks that, Yeah. Yeah. Adjustments that you need to make that you would otherwise wouldn't need to make if you were just doing it all on a balance sheet, right? I think that we have those parties that are best suited to be able to handle those risks. But it's also doing it in a way and in an organized way so that you're not assuming risks that you otherwise don't need to take beforehand. So as an example, if you think about the class search permit, that's a two-year program, right, at a minimum from EPA.
Speaker Change: And in the capital light approach there are risks that.
Speaker Change: And.
Speaker Change: Adjustments that you need to make that you would otherwise wouldnt need to make if you were just doing it all on balance sheet right.
Speaker Change: I think that we have those parties that are are there and best suited to be able to handle those risks.
Speaker Change: But it's also doing it in a way and in an.
Speaker Change: And organized way so that.
Speaker Change: You're not assuming risks that you otherwise don't need to take beforehand. So as an example, if you think about.
Bryon McGregor: So, as an example, if you think about the classics per minute, that's a two-year program, right, at a minimum from EPA. and you have to make decisions as to when you want to start to do your, you know, purchasing for compression. Do you assume that, you know, do you start right on the box and start ordering that before you have your class experiments, or do you wait until you've got your class for six permitted, you know, approved and submitted and waiting final approval and some of those other processes that need to be in place. So those are all the things that are going into consideration.
Speaker Change: The classics permitted Thats, a two year program right at a minimum from EPA.
Robert Olander: And you have to make decisions as to when you want to start to do your purchasing for compression. Do you assume that, you know, do you start right out of the box and start ordering that before you have your classic permits? Or do you wait until you've got your class six permit approved and submitted and awaiting final approval?
Speaker Change: And you have to make decisions as to when you want to start to do your.
Speaker Change: Purchasing for compression.
Speaker Change: Do you assume that it or do you start right out of the box and start ordering that before you have your classics permits or do you wait until you got your class six permits approved and submitted and waiting for final approval.
Robert Olander: and some of those other processes need to be in place. So those are all the things that are going into consideration. You know, there are a number of parties out there that are willing to sell, as an example, their carbon credits or the environmental attributes well in advance to finance their terms.
Speaker Change: Some of those other process that need to be in place. So those are all the things that are going into consideration.
Bryon McGregor: You know, there are a number of parties out there that are willing to sell, as an example, there are carbon credits or the environmental attributes well in advance to finance their terms. You know, is that the appropriate approach and are you giving up too much, or do you try and retain those values and wait for those to come in the future. So those are all things that are a few things that come into, you know, come into the calculus when you're working through this process. So I don't know if that's helpful or, but it is.
Speaker Change: There are a number of parties out there that are willing to sell and as an example, their carbon credits are the environmental attributes well in advance to finance their their terms is that the appropriate.
Robert Olander: You know, is that the appropriate approach? And are you giving up too much? Or do you try and retain those values and wait for those to come in the future? So those are all things that are a few things that come into, you know, come into the calculus when you're working through this process. I don't know if that's helpful, Eric, but it's, again, trying to find balance and critical.
Speaker Change: Approach and are you, giving up too much or do you try and retain those values.
Speaker Change: And wait for those to come in the future. So those are all things that are a few things that come in to come into the calculus when youre working through this process.
Speaker Change: So I.
Speaker Change: I don't know if thats helpful, Eric, but it's Dan again.
Bryon McGregor: So, but find balance in critical return.
Eric Stine: Trying to.
Eric Stine: Balancing risk and return.
Eric Stine: Sure, I mean, but in the net effect, you do feel, whether it's with Volt or with some of the, you know, financial partners that you are in negotiations with, that those are the right parties that are willing to deal with that with the needed flexibility, just given the situation. Okay. Alright, I appreciate that. And then maybe I'm just turning to Magic Valley. So good to hear that you've got the restart, and it's been going for what a month or so.
Eric Stine: Sure.
Eric Stine: Sure I mean, but net effect you do feel.
Eric Stine: I mean, but net effect you do feel, whether it's with Vault or with some of the, you know, financial partners that you are in negotiations with, that those are the right parties that are willing to deal with that, with the needed flexibility, just given the situation.
Speaker Change: Wondering with vault or with some of the financial partners that you are in negotiations with that those are the right parties that are willing to deal with that and with the needed flexibility just given the situation.
Eric Stine: Correct. Okay.
Eric Stine: Correct.
Speaker Change: Okay.
Eric Stine: All right. Appreciate that.
Eric Stine: You know, just curious, like what it sounds like you're taking the right approach to, being measured in it. But what, what do you kind of need to see? You know, to where you're convinced that you're on the right track? And you know, does this push this out a little bit? The decision in terms of maybe rolling this technology out to other plants?
Speaker Change: Alright, I appreciate that and then maybe just turning to Magic Valley. So good to hear that you've got the restart and it's been going for what a month or so just curious like what it sounds like you are.
Eric Stine: And then maybe just turn it in a magic valley.
Bryon McGregor: So good to hear that you've got the restart, and it's been going for what, a month or so. You know, just curious, like what it sounds like you're taking the right approach to be measured in it. But what, what do you kind of need to see?
Speaker Change: <unk> taken the right approach to to be measured in it but what what do you kind of need to see.
Bryon McGregor: You know, to where you're convinced that you're on the right track and, and, you know, is it just push out a little bit the decision in terms of maybe rolling this technology out to other plants? So we are pleased with what we've seen so far that the steps that we took to expand and add additional equipment to be able to give additional leniency into the process so that you don't have to have everything out aligned fully all of the time was important. And we're seeing the value of that today, probably running it around 70% capacity today.
Speaker Change: To where you're convinced that you're on the right track and as it does this push out a little bit the decision in terms of maybe rolling this technology out to other plants.
Speaker Change: Yeah.
Speaker Change: So we are.
Robert Olander: So we are, pleased with what we've seen so far, that the steps that we took to expand and add additional equipment to be able to give additional leniency into the process so that you don't have to have everything out aligned fully all of the time was important and we're seeing the value of that today probably running at around 70% capacity today so to achieve you know six, what we would define as successes is being able to achieve maximum capacity that we saw before we implemented the project and be able to achieve the goals and the targets that we have established with harvesting technology to put in the tech into the, you know, put that system into place. Um.., given, you know, to answer your question with regards to other applications within the portfolio of assets that we have.
Speaker Change: Pleased with what we've seen so far.
Speaker Change: The steps that we took to expand.
Speaker Change: And add additional equipment to be able to give.
Speaker Change: Additional.
Speaker Change: Leniency into the process. So that you don't have to have everything out aligned fully all of the time was important and we are seeing the value of that today.
Speaker Change: You're running at around 70% of capacity today, so to achieve.
Bryon McGregor: So to achieve, you know, six, but we would define as success is being able to achieve maximum capacity that we saw before we implemented the project and be able to achieve the goals and the targets that we have established with harvesting technology to put into the, you know, put that system into place.
Speaker Change: Six what we would define as good successes as being able to achieve maximum capacity that we saw before we implemented the project and be able to achieve the goals and the targets that we established with harvesting technology to put in the tech into the put that system into place.
Speaker Change: Yeah.
Bryon McGregor: Given, you know, to answer your question with regards to other applications within our within the portfolio of assets that we have, it's certainly an open option still, but I think that we aren't, we think it's prudent and to be measured and to see the success through not only because we've been waiting a long time, but some of investors to see the results of this investment. So we want to see that through before we make any comments or decisions with regards to what we're going to do going forward and our other side.
Speaker Change: Kevin.
Kevin: To answer your question with regards to other.
Kevin: Applications within our within the portfolio of assets that we have is certainly an open option still but I think that we are we think it's prudent.
Robert Olander: It's certainly an open option still, but I think that it's prudent to be measured and to see the success through, not only because we've been waiting a long time, but so have investors to see the results of this investment. So we want to see that through before we make any comments or decisions with regard to what we're going to do going forward at our other sites.
Kevin: To be measured and to see the success through not only because we've been waiting a long time, but sort of investors to see the results of this <unk>.
Kevin: Investment so we want to see that through before we make any comments or decisions with regards to what we're going to do going forward at our other sites.
Operator: Okay, thanks a lot.
Eric Stine: Okay, thanks a lot. Thanks, Eric.
Kevin: Okay. Thanks, a lot.
Eric Stine: Thanks, Eric.
Justin Dopierala: Again, if you have a question, please press stars, then one. Your next question comes from Joseph and Dopierala with DOMA Capital.
Joseph Ndopulewa: Again, if you have a question, please press star then 1. Your next question comes from Joseph Ndopulewa with Donor Capital.
Speaker Change: If you have a question. Please press Star then one you're.
Joseph <unk>: Your next question comes from Joseph <unk> with Janney capital.
Joseph Ndopulewa: Hey guys, thanks for taking my question. Hello Justin. Hi. Just to tack on to that last thing, in the prepared remarks, you mentioned that you're expecting a Magic Valley update later this summer. Is that something that would be prior to your next earnings call, then?
Justin Dopierala: Hey guys, thanks for taking my questions. Hello, Justin.
Joseph <unk>: Hey, guys. Thanks for taking my questions.
Eric Stine: Hello, Justin Hi, Yeah, just to tack onto that last thing.
Justin Dopierala: All right. Just to tack on to that last thing, I'm in the prepared remarks you mentioned that you're expecting a Magic Valley update later this summer. Is that something that would be prior to your next earnings call, then?
Joseph <unk>: The prepared remarks, you mentioned that Youre expecting a magic Valley update later this summer is that something that would be prior to your next earnings call then.
Joseph <unk>: Okay.
Bryon McGregor: It's a good question. Will, to the extent that there's material disclosure, we'll make sure that we do that. Otherwise, it may line out appropriately with the third quarter call.
Speaker Change: It's a good question.
Robert Olander: It's a good question, and to the extent that there's material disclosure, yeah, we'll we'll make sure that we do that. Otherwise, it may line out, you know, appropriately with the third quarter call. If you think about it, you're not only talking about reaching, you know, achieving capacity, but really, what you're also talking about is being able to place your product and get the penetration that you were hoping for with regard to higher proteins and, and, and corn oil and placement of that product. So, you know, whether it's I guess what we'd like to say is, let's play it by ear, but we'll Okay, and I...
Speaker Change: We'll to the extent that there is material disclosure.
Joseph <unk>: We'll make sure that we do that otherwise in mainline out appropriately.
Joseph <unk>: With the third quarter call. If you think about it you are not only talking about reaching achieving capacity, but really what youre also talking about us being able to place product in and get the penetration that you were hoping for with regards to higher proteins and.
Bryon McGregor: If you think about it, you're not only talking about reaching, achieving capacity, but really what you're also talking about is being able to place your product and get the penetration that you were hoping for with regards to higher proteins and coral oil and placement of that product. So, you know, whether it's, I guess what we'd like to say is let's play it by ear, but we'll make sure that we provide information as appropriate.
Eric Stine: In corn oil and placement of that product so.
Eric Stine: <unk>.
Speaker Change: Well I guess, what we'd like to say is let's play by ear, but we'll make sure that we provide information as is appropriate.
Joseph Ndopulewa: Okay, and I imagine the success of that would probably go a long way towards your ability to be able to monetize the Western assets as well.
Justin Dopierala: Okay, and I imagine the success of that would probably go a long way towards your ability to be able to monetize the Western assets as well.
Speaker Change: Okay, and I imagine the success of that would probably go a long ways towards your ability to be able to monetize the western assets as well.
Bryon McGregor: Would that be fair to say? Well, certainly wouldn't hurt. Absolutely. You wouldn't hurt us either to have that asset on, right? I mean, these are unique assets. Exactly.
Eric Stine: Would that be fair to say.
Robert Olander: Well, certainly.
Speaker Change: It certainly wouldn't hurt.
Eric Stine: Yeah.
Joseph Ndopulewa: Aaron Spychalla, Sameer Joshi, Robert Olander, Michael Kandris, David Bastian, Aaron Spychalla, We want to make sure that we maximize value for shareholders, whichever way it is. Okay, and you highlighted the shutdown costs of Pekin. I was wondering if you could quantify the impact of Magic Valley being idled as well, as far as that western gross margin is concerned.
Eric Stine: Absolutely.
Speaker Change: You highlighted it doesn't hurt us either to have that asset on right. I mean these are unique assets.
Eric Stine: Right, so that we maximize value for shareholders whether it's.
Bryon McGregor: We want to further maximize value for shareholders, whether it's, you know, whichever way it is. Okay.
Eric Stine: Whichever way it is.
Joseph Ndopulewa: Okay, and you highlighted the shutdown costs of pecan.
Rob Olander: And you highlighted the shutdown cost of peak end. I was wondering if you could quantify the impact of Magic Valley being idled, as well as that Western Ghost Margin. Yeah, you know, we don't typically provide those levels of specifics, but if you recall, we chose to bring the plant down earlier this year when the crush margin environment was less favorable. And so enlarged that kind of offset our operating losses, which kind of also underscores, you know, the reason why we're incorporating this technology, which is, you know, to improve our profitability and our crush margins in more challenging market environment.
Speaker Change: If you could quantify the impact of Magic valley being idle as well as far as that western gross margin.
Eric Stine: Okay.
Eric Stine: Yeah.
Robert Olander: Yeah, you know, we don't typically provide those levels of specifics. But if you recall, we chose to shut down the plant earlier this year when the crush margin environment was less favorable. And so, in large part, that kind of offsets our operating losses, which kind of also underscores, you know, the reason why we're incorporating this technology, which is, you know, to improve our profitability and our crush margins and a more challenging market environment. So it's kind of hard to, you know, quantify the lost opportunity costs in that case.
Speaker Change: Typically provide those those levels of specifics, but if you recall, we chose to bring the plant down earlier this year when the crush margin environment was less favorable.
Robert Olander: And so in large that kind of offset our operating losses, which kind of also underscores. The reason why we're incorporating this technology, which is.
Speaker Change: To improve our profitability and our crush margins and more challenging.
Speaker Change: Market environments.
Rob Olander: So it's kind of hard to, you know, quantify, you know, the lost opportunity cost in that case. Got it.
Speaker Change: So it's kind of hard to quantify the lost opportunity cost in that case.
Speaker Change: Got it.
Rob Olander: And I guess just my last question for you guys is, you know, as you noted, you know, in July, you know, Crush margins have doubled. So I'm a little bit surprised by your guidance of positive, you know, adjusted EBDI versus, you know, coming out and, you know, announcing or guiding towards, you know, positive net income. Are there any major Q3 uncapitalized costs? Costs, we should be aware of; are you guys just being ultra conservative?
Joseph Ndopulewa: And I guess just my last question for you guys is, um, as you noted in July, crushed margins have doubled. So I was a little bit surprised by your guidance of positive, you know, adjusted EBITDA versus, you know, coming out and announcing or guiding towards positive net income. Are there any major Q3 uncapitalized costs we should be aware of? Or are you guys just being ultra conservative?
Speaker Change: And I guess just my my last question for you guys is how do you know.
Speaker Change: Ed you know on July crush margins have doubled so a little bit surprised by your guidance of positive adjusted EBITDA versus coming out.
Speaker Change: Announcing our guiding towards positive net income.
Speaker Change: Are there any major.
Joseph Ndopulewa: Three on capitalized costs cost, we should be aware of or are you guys just being ultra conservative.
Speaker Change: Yeah, I'll take that one yeah.
Rob Olander: I'll take that one. Yeah, I mean, just, you know, we try to be, you know, conservative, but also transparent in what's going on. You know, our comments stem from July being behind us now and us being, you know, pleased with the financial results. As we stated on the call, as long as our, you know, the Crush Margin remains strong and we continue to produce at the levels we are, it should be a very favorable quarter.
Robert Olander: No, I'll take that one. Um, yeah, I mean, we try to be, you know, conservative but also transparent about what's going on. Our comments stem from July being behind us now and us being, you know, pleased with the financial results. As we stated on the call, as long as our crush margins remain strong and we continue to produce at the levels we are, it should be a very favorable quarter. Okay, thank you. But, you know, keep in mind that we operate in a, you know, commodity market.
Speaker Change: On the industrial we tried to be conservative, but also transparent and what's going on.
Speaker Change: In our comments stem from July being behind US now and us being pleased with the financial results as we stated on the call as long as are the crush margins remained strong and we continue to produce at the levels. We are it should be a very favorable quarter.
Rob Olander: Okay, thank you. But, you know, keep in mind, we operate in the commodity markets, and so, you know, things have in flow. And there's some things that just, you know, we're beyond the impact that income that you may or may not be able to control. As an example, you're to realize gains and losses and unrealized gains and losses and derivatives and like. So, probably falls in the conservative camp.
Speaker Change: Okay. Thank you, but keep.
Speaker Change: Keep in mind, we operate in the commodity markets and so things ebb and flow.
Joseph Ndopulewa: And there's some things that just, you know, we're beyond the, that impact that income that you may or may not be able to control. As an example, you're Unknown Speaker, realize gains and losses and unrealized gains and losses and derivatives, and like so, probably falls in the conservative camp.
Speaker Change: And there are some things that just.
Speaker Change: Beyond that.
Joseph Ndopulewa: It will impact net income that you may or may not be able to control as an example year.
Speaker Change: Okay.
Speaker Change: Realized gains and losses, and unrealized gains and losses and derivatives. Unlike so.
Speaker Change: Probably falls in the conservative.
Speaker Change: Pam.
Rob Olander: Okay, thank you, Thomas. Under promise, over deliver. All right, hold you to it. I know you will.
Joseph Ndopulewa: Okay. Thank you Thomas under promise over deliver.
Joseph Ndopulewa: Okay, thank you. Under promise, under promise, over deliver. All right, hold you to it. I know you will.
Speaker Change: Alright, how would you do it.
Speaker Change: Okay.
Speaker Change: No you will.
Bryon McGregor: It concludes our question and answer session. I would like to turn the conference back over to Brian McGregor, signing closing remarks. Thank you, Kayleigh. Thanks everyone for joining us today. In September, we hope to see you at the H.C. Wainwright Annual Conference. We appreciate your ongoing feedback and support.
Joseph Ndopulewa: This concludes our question and answer session I would like to turn the conference back over to Brian Mcgough for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Bryon McGregor for any closing remarks.
Brian Mcgough: Thank you kaley. Thanks.
Bryon McGregor: Thanks, everyone, for joining us today. In September, we hope to see you at the H.G. Wainwright Annual Conference. We appreciate your ongoing feedback and support. Have a good day.
Speaker Change: Thanks, everyone for joining us today in September we hope to see you at the H C. Wainwright annual conference. We appreciate your ongoing feedback and support have.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Have a good day.
Speaker Change: Have a good day.
Speaker Change: Yes.
Operator: The conference has now concluded. Thank you for attending today's presentation.
Speaker Change: The conference has now concluded thank you for attending Hudson reliable.
Operator: May now, this canal.
Speaker Change: [music].
Speaker Change: Yes.
unknown: ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ??
Speaker Change: [music].
Operator: Ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah, ah
unknown: Okay.
unknown: [music].
Speaker Change: Okay.
Speaker Change: [music].