Summary of Green Plains Inc. and Green Plains Partners Q3 2023 Earnings Call

1Key Financial Results and Metrics

EBITDA: Reported at $52 million for Q3 2023, a significant improvement from a negative $35.6 million in Q3 2022.

Net Income: $22.3 million, or $0.35 per diluted share, compared to a net loss of $73.5 million, or $1.27 loss per diluted share, in the prior year.

Consolidated Revenues: $892.8 million, down 6.5% from the previous year, primarily due to lower prices for ethanol and dry distillers grains.

Plant Utilization Rate: Improved to 93.9%, up from 90.9% year-over-year and significantly higher than 81.5% in Q2 2023.

Liquidity: Strong position with $366.2 million in cash and equivalents, plus $200 million available under a working capital revolver.

2Strategic Updates and Business Highlights

Protein Production: Achieved record production levels for Ultra-High Protein, with plans to increase production further in Q4 and beyond.

Merger Agreement: Executed a definitive merger agreement with Green Plains Partners, expected to simplify corporate structure and enhance earnings.

Decarbonization Initiatives: Continued focus on carbon capture and sequestration, with commitments to projects that could lead to significant operational advantages.

Clean Sugar Technology: The Shenandoah facility is on track for commissioning in Q1 2024, with strong customer interest already noted.

3Forward Guidance and Outlook

Q4 Expectations: Anticipating better free cash flow generation and improved performance across all product lines due to favorable market dynamics.

2024 EBITDA Guidance: Projected contributions from five MSC facilities and the Tharaldson JV could range from $80 million to $120 million, with additional upside from 60% protein production.

Long-term Goals: Aiming for 20% to 30% of the portfolio to consist of 60% protein products by 2024, with a focus on scaling production and securing customer contracts.

4Bad News, Challenges, or Points of Concern

Revenue Decline: The decrease in consolidated revenues reflects ongoing pricing pressures in the ethanol and distillers grains markets.

Corn Basis Issues: Although corn basis has improved, it was previously a significant headwind, impacting margins.

Regulatory Delays: Permitting processes for new facilities have taken longer than anticipated, affecting expansion timelines.

Market Volatility: Ethanol and corn oil prices have shown volatility, which could impact future margins and profitability.

5Notable Q&A Insights

Protein Demand: There is strong demand for protein products, with a 25% to 30% increase in customer base noted during the quarter.

Carbon Strategy Confidence: Management expressed confidence in the carbon capture projects, particularly with Summit Carbon Solutions, despite some permitting delays.

Ethanol Margins: While margins are expected to improve in Q4, management remains cautious about market fluctuations and production levels.

60% Protein Production: The company is optimistic about the ramp-up of 60% protein production, with plans to increase its share of total protein sales significantly in 2024. Overall, Green Plains Inc. reported a strong recovery in Q3 2023, with significant improvements in financial metrics and operational performance, while also navigating challenges related to market conditions and regulatory processes.