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 a 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.

Thank you, and good morning, everyone. Welcome to Green Plains Inc. 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. Actual results could materially differ because of factors discussed in today's press release and the comments made during this conference call and in the Risk Factors section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement. 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 in 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 8-K we filed, 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, 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 will have nothing further to announce or discuss regarding the 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 in the start of the year with higher stocks numbers and production has remained stubbornly high with the exception of some weather-related slowdowns, 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 more positive. As we get into spring maintenance and 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 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 per day. We believe this represents a great opportunity to drive additional margin to the bottom line. We are really excited for 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 on 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 these volumes with our JV in Ethanol beginning commissioning as we speak and set to start protein production in the next couple of months. This will be the world's largest fluid-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 Tharaldson JV, to ultra-high protein has set us up well to service a global demand base whose demands have not waned or wavered. Our renewable corn oil production saw 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 R&D 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 the $2 per unit in cash plus the unpaid distribution, in exchange for 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 Pro, 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. 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 of 2022. 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% from 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 as $7.2 million, or $0.12 per diluted share. That compares to a net loss of $38.6 million, or $0.66 loss per share, for the same period in '22. One thing I'd like to note, 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. EBITDA for the quarter was $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 versus a year ago and came in at $24.3 million for the quarter. For modeling in 2024, depreciation and amortization should average approximately $24 million per quarter. We realized $49.7 million in consolidated crush for Q4 2023 compared to the $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. 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 '22. 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%. 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 revolver. 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. This provides us with the opportunity to simplify our corporate structure and governance, generate near-term earnings and cash flow accretion and reduces our SG&A expenses related to the partnership, improve the credit quality of the combined enterprise, as well as streamlining our reporting structure in 2024. Going forward, net income from non-controlling interest will no longer be included in anything from the partnership since we now own 100% of it, which represents about $5 million a quarter. Our non-controlling interest on the balance sheet will be adjusted as well. 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 was approximately $109 million. As of today, and considering the strategic review Todd spoke of earlier in this call, we anticipate CapEx will be in the range of $125 million to $150 million this year. Our plan is to deploy capital in the highest and best returning projects with shorter-term paybacks. Now, I'd like to turn the call back over to Todd.

Hey, thanks Jim. And so we have so many game-changing, 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, 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 and this is located at our Shenandoah plant in Iowa, and we believe we will be ready to begin delivering product 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 several current counterparties for a significant portion of our production over the next several years. With up to 40% lower carbon intensity than a wet mill, and we validated that in 2023 and continue to with life-cycle assessments for our dextrose compared to life-cycle assessments for U.S. corn wet-milling industry and the other European industries as well and we believe, and it's 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. 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 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, yet we feel the international markets are proving to be more 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 pro 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. 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 can continue to believe we are on track to convert 20% to 30% of our portfolio to 60-pro sales as we exit '24 and expand that in '25. Our current discussions are indicating strong demand for these higher protein levels. While we all want it to happen today, we believe this is not a matter of if, but a matter 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, the team is in advanced stages, very late stage, of some novel product enhancements and expect 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 for 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 on 60% protein, have verification of great digestibility and excellent amino acid profiles, and have started to sell 60% protein to Europe, Middle East and Asia, with South America as the final prize. 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 on this product and we continue to work every day very hard on this with the team we've put in place. 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 trunkline 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 that Nebraska Biofuels will have an early advantage over ethanol plants that aren't positioned for carbon capture at this time. 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 oils. 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 45Z Clean Fuel Production Credit. 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 will count towards lowering CI. We expect the updated GREET model in early March, and then we will have a better sense of our role of 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 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 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. 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, but 2025 is when we are an advantaged feedstock in totality. 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 for protein, bringing on our Tharaldson JV online, and positioning our Nebraska assets for decarbonization. Finally, another important milestone upon us is the upcoming commissioning of the collaboration with our Fluid Quip MSC 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 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 reduce further our production or 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. 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 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 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 rate, 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're 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 '25, carbon alone in Nebraska represents over $100 million a year opportunity, and we can reduce our carbon intensity even more and then when Summit Carbon comes online, watch out what 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. Our depreciation and interest are 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 MSC, an additional TST 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 alcohol and our SFCT 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 the call today, and we can start the Q&A session.

We'll go first to Kristen Owen at Oppenheimer.

Great, 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? We've kind of seen what is to come on 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 discussion?

I believe the key factor in achieving our transformation lies in generating free cash flow. As we've streamlined our structure, we see significant opportunities in 2025 that will lead to substantial free cash flow generation. By 2026, not only will we achieve zero net debt, but we will also have a positive cash position as we continue to accumulate cash. This is the foundation we've established for ourselves. While we've already deployed much of our capital, there are still allocations remaining and potential upsides to consider. The IRA Act is a significant factor in our strategy, as it has enhanced our opportunities, particularly in carbon capture. Our ability to commercialize 60-Pro is another crucial opportunity, along with advancements in our clean sugar technology and corn oil production. By 2025, the combination of these elements will start yielding meaningful free cash flow, which is the objective behind our simplified structure. Previously, it was complicated to deliver financial results, but now we will prioritize earnings per share and free cash flow generation. There are essential steps we need to take: getting clean sugar operational, determining the positioning of our second product, expanding our protein systems, and advancing the commercialization of 60-Pro. We also hope to see an uptick in value-added prices. We expect the advantage of carbon capture to play a significant role, which was not anticipated to be this impactful. Considering everything, we view our guidance for 2025 as solid, as it hinges on our evolving income statement structure. We've made significant progress in efficiently translating revenue into profit at the bottom line.

So then I want to ask my follow-up question a little bit more granularity on the carbon side, since that seems to unlock so many of these sort of lists for you. You've talked about the advantaged facilities in Nebraska. 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 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 the Class VI well permits, which Wyoming has started to issue and this company is next in line for that. 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 we'll have to do in Nebraska in terms of upgrading their pipeline, which I think they're doing anyway. It's a very solid company 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. They already have been building new laterals for their natural gas to move off of different pipelines. So all of it's happening. The money's being spent. The difference in this project is the pipes in the ground already. So that's where you think, when you look at Nebraska, it's in an advantaged 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 at this point, but the econs in Nebraska, what we've laid out, is as we start up 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 plants. 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 of our sites, but adding a fermenter or adding some grind or adding to some capacities 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 years when they're in 45Z, and hopefully, we get 45Z extended, that's some serious cash generation. That's what we're going to go after pretty hard.

Thanks so much, Todd. I'll take the rest offline.

We'll move next to Jordan Levy at Truist.

Good morning, all. Todd, I know it's difficult to really give any concrete outlook here with the volatility and crushing all of that, but I'll ask you anyway. You've got Clean Sugar and Beryltone starting up. You're 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?

The base fuels started out weak, which we need to address, but overall, we are performing better in the market compared to this time last year. This recent cold weather was somewhat beneficial as it helped reduce stock levels and production is taking longer to ramp back up. This doesn't mean production won't resume, but we are also observing an increase in blending in certain markets and the emergence of new export opportunities. We are assessing these factors to understand what they mean for base fuel and the opportunities we have. Year-over-year comparisons show some improvement, although it remains a volatile area of the portfolio. One of our key goals is to achieve commercial-scale shipments of Dextrose. While it may take some time for contributions to become noticeable, once we demonstrate our ability to produce at scale, we anticipate significant opportunities to supply both domestic and global customers since the margin structure for Dextrose surpasses our other operations. By owning and controlling this technology, we believe it will redefine the future of Green Plains, alongside our efforts in carbon capture and other initiatives. We are considering our plants that might not be connected to a pipeline as potential clean sugar plants, and we plan to enhance our dextrose capabilities. We are only months away from showing skeptics that we can produce dextrose in an industrial setting at a dry grind ethanol facility. We have confidence that we will be able to compete and deliver products. Overall, we are well-positioned, and I indeed wish we had more plants and production capacity. Historically, we had 17 plants, and I see potential for expansion or repurposing some of our existing facilities. While we do not foresee an increase in overall production, we anticipate growth in our earnings opportunities looking to 2025 and beyond. We believe we possess a strong and undervalued portfolio of technology.

Thanks for that and maybe just to kind of hit on something you said about wishing you had more plants or whatever, I'm just curious how you're thinking about the portfolio at this point. You have, as any portfolio has better and worse plants. I'm just curious, your thoughts around downsizing to scale up to your more premium plants or how you're thinking about the portfolio overall at this point, given the opportunities you see out there.

We're going to look at our plant stack. We do all the time. 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 build out there, and then the west wherever we can take advantage of some of these opportunities. Some of our plants, these plants are getting older. So we have some CapEx 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 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 offered money in other areas. And so we're continuing to look at that and that's one of the areas that, 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, 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. It's not like you can go out and say to the market, I'd like to buy one. 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, we believe are 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.

Right. Absolutely, thanks for that.

We'll move next to Adam Samuelson at Goldman Sachs.

Thank you. Good morning, everyone. So maybe just coming back to kind of the framing on 2024, and I appreciate there's a lot of moving pieces between the underlying ethanol market and kind of the different plants that are commissioning, Todd, but can we just maybe zero in on the contribution from HiPro and I believe in your script you said you expect to exit the year kind of with 20%, roughly 20% of HiPro sold at 60%. What proportion of actual 2024 volumes are going to be sold at 60%? And can you kind of help frame the premiums that you're seeing today? And as we think about '25 volumes, is it only 20% of 25% HiPro volumes that are 60% or is it a substantially larger number than that?

Yes, let's discuss the potential demand for our 60 Pro product. We are currently engaged in numerous discussions and I've identified sufficient interest that could absorb all of our production if we can secure the buyers' commitment. It's primarily about timing. We hope to begin selling out one of our plants within the next 12 months. We are actively negotiating on a global scale regarding pricing and are concluding tests that have been ongoing for several years. However, predicting the exact start date is challenging. Our goal for this year is to have 20% to 30% of our production committed to 60 Pro, and we aim for even more in 2025. I can assure you that we've identified ample demand that could consume our entire output, but we need the buyers to follow through. Additionally, we are observing interesting shifts in the corn-soy ratio, with soy prices fluctuating and corn remaining strong. This has influenced buyer decisions on various feed replacements. In summary, we have identified enough demand to potentially take all of our product, and it’s just a matter of time. We anticipate starting the program this year, with a stronger performance expected in 2025.

Okay. And then included in the release and a separate 8-K this morning you kind of announced that the board is going to initiate a strategic review process, a standstill agreement with kind of a major shareholder. Can you talk about what is 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. I think 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 its best for all of our long-term shareholders as well, and a lot of people have been in the story for quite a while. As we said in our release, it's not limited to acquisitions, divestitures, merger 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 and 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 achieve out of our platform and Green Plains, and we're going to test that out.

Well, Adam, I jump in and add one thing. 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 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.

Okay. And if I could just squeeze one more in on decarbonization and think how you talked about a $100 million plus annualized run rate from the Nebraska plants once the pipeline started up next year. So am I interpreting that 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, kind of what are you assuming the CI score for your ethanol would be next year?

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. So what we're looking at first is York to say, how do 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, that's what we're putting out there with upside from there and some of it will be driven by 45Z, some of its driven by 45Q to start going to Z later on so those aren't in the numbers and then on top of that, the more interesting thing that we're seeing is the interest on top of LCFS because LCFS will see where that market goes to, but the interest in the 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 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 at $100 a ton, I think there's 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 and so when we're done, we think that like a central city's carbon score will be somewhere in the mid-20s before you even get into pharma carbon and before you get into post-combustion carbon or some other areas. So that gives you an idea of our lowest plant. 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, absolutely we believe is a qualifier for anything that comes out of greed for SAF modeling.

All right, that's super helpful. I'll pass it on. Thanks.

We'll move to our next question from Eric Stine at Craig-Hallum.

Good morning, everyone. Just a few questions on my end. 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. Do you have customers that are waiting on that and they 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 have a trial period and it'll take some time.

Now our product, it's a little bit of both of what you're saying. So for the food guys, we got to wait to get some of them want to see the plant, the product, what's it 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 food takes a little bit longer. On the industrial side, we have already been approved as a product in industrial processes with some of the customers we're talking to and others are in final stages as well, and 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 '25 and '26. We're on multi-year negotiation taking place and we think we'll get some of those completed in the next kind of 30 days to 45 days and it's a little bit different, I think, than when we started out on protein because protein we were kind of bringing a new product on. It wasn't soy 548, it wasn't corn-gut meal somewhere in between, nobody's ever used it. So that one took probably a little bit longer. On Greek 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, in industrial products, they're still getting requests for them to lower their carbon score of their product as well so the retailer may be able to lower that. So it's a very different process for us. 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 we'll immediately go to 50% and then work to get to 100%. That's kind of our plan. 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 to say that we're going to go full bore on where do we go with number two.

Maybe just turn it into high pro. You mentioned that the international demand for 50 pro is quite high, but also talking about there's enough demand that eventually you could be completely at 60 pro. So just thinking about that dynamic as the market kind of evolves and as you look at the market, do you think that those foreign markets will pay for 60 pro or is that more of a domestic sale when all is said and done?

Well, first of all, on the 50 pro, what I said is 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. The active member that a lot of aqua is done globally, not necessarily in the U.S. So most of everything we do aqua other than some areas in the U.S. is going to be foreign. In terms of pet, it's a combination of both domestic and foreign export markets and then also when we look at kind of, those are really the two big markets that were focused on 60 pro, but we have enough identified demand and in discussions that could take all of it. If they all call today, we have some work to do to ramp up, but that's actually, as we often laugh to ourselves, what if they all call today, right? So we have 50 pro on for the rest of the year. We've got things committed in pet for the rest of the year. So we have a team that constantly works every day with global demand to play 60 pro and 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 and as I said, 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.

We'll take our next question from Ben Bienvenu with Stephens.

So network capacity utilization at 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 that you've been doing through the transformation. As you look forward to 2024, should we expect a similar run rate as we move forward to absent seasonality and maintenance and the like? Or should we expect more variability as you commission or ramp new projects?

No, our goal is to achieve this or better as we progress. We believe there’s still more potential to unlock in our platform. The January freeze caused a slight slowdown, which may have cost us a point or two, but we are back up and running this morning with all systems operational. Our team is working hard, and we continue to discover improvements every day. These systems are aging, but we are pushing these assets to their limits and anticipate more breakthroughs to unlock additional capacity. Challenges like moving enough corn and aging conveyors are on our radar. We are still on a journey to achieve optimal run rates. While there may be an occasional down quarter, overall, we have made significant progress from the beginning of the year to the end. However, there remains much work ahead, and Chris and the operations team are dedicated to maximizing our assets every day. I do not expect our utilization to decline.

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 continuing to advance any of these transformational initiatives in terms of hey sugar, this first ramp in sugar is quite successful and you want to do a second one? Or is that not the case and it's more a context for thinking beyond maybe some of the things that you've been doing already, and it's incremental, not constraining.

We're maintaining our usual business practices across all areas we've discussed. There are no changes in that regard. We believe, as does the board and some of our shareholders, that we are undervalued in comparison to our replacement value, our future cash flows, and the simplification previously outlined. It's now easier to increase profits, and we need market support for that. We are still fully committed to our initiatives and projects, including clean sugar number two and ensuring we can produce it effectively in clean sugar number one. We must select the best sites and secure the necessary utilities and wastewater capabilities. Our focus remains on 60 Pro and decarbonization. While everything continues as usual, it's important to occasionally reflect on what other opportunities we should consider regarding our portfolio, company location, and overall value as mentioned in our press release.

Okay, very good. Thanks so much, Todd. Best of luck.

We'll go next to Salvator Tiano at Bank of America.

Yes, good morning. So, firstly, I want to come back to the Nebraska project and understand a little bit some of the economics. You mentioned the $100 million, which certainly sounds pretty good, but I think for the Summit pipeline, you had disclosed a little bit some information. How would it work here in terms of, 45Z and 45Q that you mentioned will benefit you? Do you have to actually share these with the pipeline operator and who is incurring the cost of the carbon capture equipment that you said you're 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 update in May 2025. What gives you confidence that you will receive equipment and be able to install by that timeframe?

Well, that backlog, first of all, it's addressed 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 early enthusiasm, I think when we look at start updates for all the different projects that are out there, Nebraska project being the first, earliest start update, 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 start-up. The e-cons, we can't, and the different contracts, we really never put out there what each of those would represent, nor at this point, would we do that 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, no matter what project 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 carbon credit values. So generally speaking, the e-cons for Nebraska are what we've outlined. The total e-cons, kind of when we look forward for '26 and beyond, and especially when you get into the 45Qs era, they'll come down a little bit, but generally speaking, you want to attack anything you can to get on in the 45Z area. 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 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 45Qs, based on the end of 45Z, you're talking about full rate at Green Plains in the 150 rate to 200 rate for the first couple 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 only one year away or so from the first project starting up. And by the way, lastly, that's a long answer, but there is a project already operating at an ethanol plant in a direct inject that is earning all of the money that we talked about relative to Zs, or relative to the 45Q today where 45Z comes online, but it's happening. 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 going to get a lot of big corn harvest probably in 2024. What are you seeing in terms of the corn base you're paying this year, what you're expecting for 2020? Sorry, what are you seeing about the corn base you're paying right now and for the full year and generally, what we're thinking about paying $0.18, $1 more in corn bases in 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. Ethanol is down significantly as well. So while the corn basis is down year-over-year, ethanol is down, but flat prices down, which means the storage grains are down. 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 generalities, not necessarily what we're at our plant, Nebraska is a 10-over to 20-over basis market today; Middle Iowa processors is a 5-over to 15-over basis market today and Central Illinois is about 10-over to 15-over. So a lot of people are modeling much lower corn costs generally because they're 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 and that's really how you achieve your goals.

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 the $0.90 improvement in your corn cost setting aside the actual corn price, which is also declining, that would seem to add a very, very meaningful amount to your development, which I don't think we saw in your court. So that's why I'm trying to understand what you're saying.

You're not considering all the factors involved; it's made up of natural gas, corn, ethanol, and distillers grains. You can't focus on just one of these components, like a decrease in corn cost, which affects ethanol pricing. The market doesn't allow you to reap the full benefit from a drop in input costs. The overall margin is determined by the combined effects of corn, ethanol, natural gas, and distillers grains, minus your operating costs, which leads to the EBITDA margin. It's all interconnected in the calculation.

I understand that I'm trying to clarify something important. When we examine the corn and ethanol prices, if we consider the base figure of $0.30 per gallon, it seems like the profits from ethanol should actually be stronger than they appear. That's what I'm attempting to address, and I'm trying to understand what might not be fully grasped here.

Yeah, but remember, we look at our EBITDA and adjust for our SG&A because we are an independent company. While others may not adjust for SG&A, our plants operate differently than those of the best producers, which results in slightly higher costs. Generally, we have a little more operating expenses, but it's all part of the overall equation. The market is not fully benefiting from the significant decrease in corn input costs because everything else has adjusted accordingly.

Thank you very much.

We'll move next to Craig Irwin at ROTH MKM.

Good morning and thanks for taking my questions. So most of what was top of mind has already been put out there. So maybe Todd, can 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. So we've heard that there's actually a pretty intense level of interest because of SAF and the anticipated language this March, ethanol to aviation fuel is something that's pretty simple by a couple of pathways. I like the pathway you're working on. But I understand that the asking price for a lot of these plants is pretty rich and they also have demands for tails on carbon, etcetera. Can you maybe just update us on what you're seeing in the private market and we did mention the strategic review so that that always does include a potential sale. Would you expect those conditions to maybe be a part of the consideration for green plants as well?

The private market is not really active right now. There is a lot of interest in plants, but with our high-quality facility in a prime location, the cost to engage in discussions starts at around $1.80 to $2.00 per gallon for replacements. Constructing a new plant today would likely cost between $2.00 and $2.50 per gallon. Considering our capacity of about 950 million gallons, that's without accounting for protein, dextrose, carbon, or any additional factors—this is the baseline cost to clear a quality plant in the private market. This highlights some significant challenges we face. When comparing these factors with our market capitalization and lower net debt position, it's clear that the public markets are significantly undervalued compared to the private sector. This trend has been consistent historically. We recognize this situation and believe we are strategically positioned. However, from the perspective of decarbonized alcohol, that potential value is not yet reflected in the market. We are receiving inquiries about partnerships and supply agreements for decarbonized alcohol. Interest is growing, but stakeholders are waiting to see progress with carbon capture. We believe decarbonized alcohol will become a highly valuable asset, which supports our confidence in our position in Nebraska.

Excellent. Then just a macro question around shafts and the potential deletion or diversion of ethanol, core ethanol capacity into the aviation fuel market, for many years we were talking about exports to Canada, to Mexico, to China, India and potentially tightening economics to the benefit of ethanol producers. Would you expect, the diversion of a billion gallons of production into shaft markets, ethanol production into shaft markets to have a similar impact to what was optimistically looked for around exports in the last many years?

If you examine the capabilities and demand for sustainable aviation fuel (SAF), the potential could be much greater than currently indicated. For context, a gallon of ethanol only converts to two-thirds of a gallon of SAF. Looking at a billion gallons of ethanol, that translates to 2,600 million gallons of aviation fuel, which is a minor amount in a domestic market of 30 billion to 40 billion gallons. It's a small step towards achieving those targets. However, developing this infrastructure will be costly, requiring billions of dollars to invest in SAF. I believe it will happen, initially appearing in a certain form, but to achieve real scale, it will need to come from decarbonized alcohol. Without that, the conversation doesn't even begin, which is why we view Nebraska as a crucial and undervalued asset in our strategy. The first company to bring this to market will reap significant rewards, which is why we are aggressively advancing these projects. If a billion gallons are successfully redirected, I actually think it could be several billion gallons, and then the market will need to adapt to meet everyone else's demands. The world doesn't necessitate us to remove two or three billion gallons of ethanol from the fuel supply as that would significantly influence prices.

Okay. And the last question if I may is the, I guess, most investors know you just can't get a catalytic converter on a jet, right? That technology would be great, but it's not available, but I think people really don't understand that aviation emissions are not tracked above 2,500 feet and can you maybe share with us what you're hearing from investors? Are people educated on the fact that you've got, 500 ppm, 600 ppm of sulfur in jet fuel that's needed for the lubricity while, on road diesel is supplied, right? So are you hearing a more educated, complete discussion around this from investors as they look at the responsible environmental investment in sustainable aviation fuels?

You caught me off guard a bit, but I will say that carbon intensity is crucial. It is measured and monitored. People understand that producing sustainable aviation fuel will reduce the carbon intensity of an aircraft, and this is driven by demand rather than forced. I believe that is significant. Someone is recognizing this. I might not fully grasp everything you mentioned, but awareness is growing, as we receive ongoing inquiries about decarbonized outputs for sustainable aviation fuels. Our focus is on how to commercialize it and meet the current demand, while also waiting for guidance from the government on GREET.

And that does conclude the question-and-answer session. I would like to turn the conference over to Todd Becker for closing remarks.

Thanks, everyone. We are in a strong position financially as a company and we are not going anywhere. We've successfully addressed many issues from the first half of the year, although there is still work to be done. Our operating run rates remain consistent. We have demonstrated to the market that we are successfully commercializing products and, despite different opinions on timelines, we are aligned with our initial 2025 guidance and our current status for 2024. Exciting products and a robust technology portfolio are on the horizon. We are eager to unlock the value of our company and will keep you updated on our progress. This quarter, we have significant developments including the start-up of Shenandoah, the CST system, and SFCT, as well as ongoing efforts with 60 Pro. Keep an eye on us; we are optimistic about the future. Thank you.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.