Green Plains Inc.

Good morning and welcome to the Green Plains, Inc. and Green Plains Partners Second Quarter Earnings Conference Call. Following the company's prepared remarks, instruction will be provided for Q&A. At this time, all participants are on a listen-only mode. I will now turn the conference over to your host, Phil Boggs, Senior Vice President, Investor Relations and Treasurer. Mr. Boggs, please go ahead.

Good morning and welcome to Green Plains, Inc. and Green Plains Partners Second Quarter 2020 Earnings Call. Participants on today's call are Todd Becker, President and Chief Executive Officer, Patrick Simpkins, Chief Financial Officer, and Walter Cronin, Chief Commercial Officer. There is a slide presentation available, and you can find the presentation on the investor page under the events and presentations link on both corporate websites. 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 yesterday's press releases, in the comments made during this conference call, and in the risk factors section of our Form 10-K 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. For the quarter, we reported a net loss of $8.2 million. or $0.24 a diluted share. While we had a small loss, we were free cash flow positive for the quarter. We also reported $17.9 million in adjusted EBITDA for the quarter. Before I get more specific on our results, I would like to recognize how proud we are of our employees during the quarter as we continued our high-quality alcohol donation program and partnership with the University of Nebraska at Lincoln as students, staff, and professors made hand sanitizers. This product was provided for free to various organizations ranging from daycares to USDA offices to local school districts, which we believe positively impacted Nebraska health and wellness during this pandemic. The market value of this production from hand sanitizer programs was significant, and the gratitude from those receiving this was simply something we could not have done without a facility like Green Plains York, Nebraska. We never, ever said no to an organization in need. Our positive results were driven by several businesses within our portfolio. We had another record quarter in our investment in Green Plains Cattle Company, which will allow a dividend to be paid to all the partners. Our high-quality alcohol sales out of our York, Nebraska facility helped deliver strong results, and we had some beginning contribution from our high-protein sales from Shenandoah, Iowa. Finally, the completed Project 24 facilities continued to reduce our operating costs per gallon. Without these improvements and initiatives, ethanol margins would have been very negative. While cattle in the last half of the year will become more normalized, the rest of the initiatives that provided better performance versus the market margins should continue as part of our ongoing results. While certainly ethanol margins will remain volatile, these initiatives are just the beginning of what is possible as we continue the total transformation of Green Plains over the next several years. We produced approximately 149.9 million gallons of ethanol in which put us at a 53.5% utilization rate for the quarter. We exercised our operational discretion to slow our shutdown plans as a result of the negative margin environment, but we did not furlough any employees during these slowdowns. We will continue to follow the data moving forward. While we have seen margins improve off their lows in April and the spot market remains slightly positive, margins are very inverted, which is clearly sending a signal to the markets. The weekly EIA data has been negative towards margins as production is now over 950,000 barrels per day, which is too much in our opinion. While EIA stocks got down to levels we have not seen in many years, they began to rise last week. Clearly, this industry lacks discipline. The consolidated crush margin for the second quarter was 9 cents per gallon, which was strongly influenced to the positive due to high-grade alcohol sales. Fuel ethanol margins were generally weak during the quarter. but we believe that through a combination of slowdowns and margin management, we achieved better than the daily average market. We have now completed Project 24 upgrade at our Fairmont plant, where we are starting this plant back up and expect to see similar results to what we have realized on our previously reported Wood River facility, as well as our Superior and Fergus Falls plants. Up next for Project 24 is our Mount Vernon location, which will be done by the late fourth quarter. Project 24 has been delayed at our Madison facility due to the state of Illinois permitting and also at our York, Nebraska location, as we will not take that plant offline because of their positive contribution to the overall financial performance of the company. But we believe, with what we have accomplished so far, we will be at or below 24 cents per gallon by the end of Q4 and expect to complete our Project 24 initiative by Q1 2021, subject to state permitting. We are excited to have announced that we have secured credit approval for $75 million financing to continue funding of our protein initiative. This gives validation to our strategy and allows us to quickly proceed with Wood River as our second protein location, as well as to begin engineering a third location as well. We expect Wood River to come online during the second quarter of 2021. When completed, we will have over 200 million gallons of capacity to capable of generating 15 to 20 cents per gallon of incremental margin from this high-value protein feed. This is incremental margin to what Green Plains' historical platform could produce. During the coming months, we'll be working with our strategic partners to increase the value of this product and its nutritional characteristics, allowing us to move further up the margin curve. We will continue to work on project-level financing for every location in our platform as the product has immediate acceptance as a high-protein replacement ingredient in aquaculture and pet food. We believe this financing is just the beginning of a rapid deployment across the platform. Green Plains Partners reported $13.2 million of adjusted EBITDA for the quarter. The coverage ratio was 3.99 times for the second quarter and 1.59 times for the trailing 12 months, as amortization of principal for the new loan didn't begin until July. Now I'm going to turn the call over to Patrick to review both Green Plains, Inc. and Green Plains Partners' financial performance. I will then come back on the call to talk more specifically about our York and Wood River USP and FCC alcohol production, protein and aquaculture initiatives, and a little more on markets and policy. Patrick?