BPYPP — Brookfield Property Partners L.P.

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

1. Key Financial Results and Metrics:

• Consolidated Revenues: $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 recovery from a net loss of $73.5 million in Q3 2022.
• EBITDA: $52 million, compared to a negative $35.6 million in the prior year.
• Ethanol Operating Rate: 93.9%, improved from 81.5% in Q2 2023 and 90.9% in Q3 2022.
• Liquidity: $366.2 million in cash and equivalents, with $200 million available under a working capital revolver.
• Capital Expenditures: $29 million allocated across various initiatives, with an expected range of $25 million to $45 million for the remainder of 2023.

2. Strategic Updates and Business Highlights:

• Production Improvements: Achieved record production levels for Ultra-High Protein and higher average yields per bushel, with some locations exceeding four pounds per bushel.
• Joint Ventures: The Tharaldson joint venture is set to begin commissioning in Q1 2024, expected to be the largest MSC facility built.
• Decarbonization Initiatives: Committed to carbon capture projects, with four facilities involved in the Summit Carbon Solutions Project, targeting a 2026 startup.
• Clean Sugar Technology: The Shenandoah facility is on track for commissioning in Q1 2024, with strong customer interest anticipated.

3. Forward Guidance and Outlook:

• Q4 Expectations: Anticipated stronger free cash flow generation and improved margins, with a focus on maximizing production capabilities.
• 2024 EBITDA Guidance: Expected contributions of $80 million to $120 million from operating facilities, with potential upside from 60% protein production.
• Long-term Projections: Continued focus on expanding protein production and enhancing decarbonization strategies, with a goal of dedicating 20-30% of the portfolio to 60% protein in 2024.

4. Bad News, Challenges, or Points of Concern:

• Revenue Decline: Year-over-year revenue decrease attributed to lower commodity prices, particularly for ethanol and distillers grains.
• Corn Basis: The corn basis was $0.44 higher than the five-year average in Q3, presenting a headwind for margins, although it has moderated recently.
• Operational Challenges: Aging assets have required modernization efforts, leading to increased operational costs and complexity.
• Market Volatility: Fluctuations in corn oil prices and competition from foreign products (e.g., Chinese used cooking oil) could impact margins.

5. Notable Q&A Insights:

• Protein Demand: The company is seeing increased demand for its protein products, with a 25-30% increase in customer base during Q3.
• Carbon Strategy Confidence: Management expressed strong confidence in the execution of carbon capture projects, despite permitting delays.
• Ethanol Market Dynamics: Management noted better ethanol margins in Q4 but acknowledged volatility and the need to monitor production levels closely.
• 60% Protein Production: The company aims to ramp up production of 60% protein, with expectations for significant contributions to revenue as demand grows.

Overall, Green Plains Inc. demonstrated a solid recovery in Q3 2023, with strategic initiatives in protein production and decarbonization positioning the company for future growth, despite facing challenges related to commodity pricing and operational complexities.