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

1Key Financial Results and Metrics

Revenue: $892.8 million, down 6.5% year-over-year due to lower ethanol and dry distillers grains prices.

Net Income: $22.3 million ($0.35 per diluted share), a significant improvement from a net loss of $73.5 million ($1.27 loss per diluted share) in Q3 2022.

EBITDA: $52 million, compared to a negative $35.6 million in the prior year.

Ethanol Operating Rate: 93.9%, up from 90.9% in Q3 2022 and significantly improved from 81.5% in Q2 2023.

Liquidity: $366.2 million in cash and equivalents, with approximately $200 million available under the working capital revolver.

2Strategic Updates and Business Highlights

Production Growth: Achieved record production levels for Ultra-High Protein and continued to refine processes across five facilities.

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

Decarbonization Initiatives: Committed to carbon capture and sequestration projects, with four facilities participating in the Summit Carbon Solutions Project, targeting a 2026 startup.

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

Protein Production: Aiming to allocate 20-30% of production to 60% protein products in 2024, with ongoing demand from various markets.

3Forward Guidance and Outlook

Q4 Expectations: Anticipate improved free cash flow generation and continued strong performance across all products.

2024 EBITDA Guidance: Projected contributions of $80 million to $120 million from MSC facilities, excluding additional upside from 60% protein production.

Long-term Goals: Maintain guidance for 2025 EBITDA in the range previously outlined, with expectations for significant contributions from carbon initiatives and protein production.

4Challenges and Points of Concern

Revenue Decline: The decrease in revenue year-over-year is attributed to lower prices for key products.

Corn Basis Issues: The corn basis was significantly higher than the five-year average during Q3, impacting margins, though it has since normalized.

Operational Challenges: Aging assets have required modernization efforts, leading to operational headwinds in the past. The new leadership team is focused on addressing these issues.

Market Volatility: Ethanol margins have been volatile, with fluctuations in pricing impacting profitability.

5Notable Q&A Insights

Protein Demand: There is a growing demand for protein products, with successful contract renewals and increased customer interest noted.

Carbon Strategy Confidence: Management expressed confidence in the execution of carbon capture projects, despite industry-wide permitting challenges.

Ethanol Market Outlook: The company remains open to market opportunities, with expectations for strong demand and pricing in Q4, although there is caution regarding potential volatility.

60% Protein Production: The transition to higher protein production is seen as a key growth area, with management optimistic about achieving higher inclusion rates and expanding market reach. Overall, Green Plains demonstrated a solid recovery in Q3 2023, with improved financial metrics and strategic initiatives aimed at long-term growth, despite facing challenges related to market conditions and operational efficiencies.