Green Plains Partners LP

Good morning, and welcome to the Great Plains Incorporated and Green Plains Partners Third Quarter Earnings Conference Call. Following the company's prepared remarks, instructions will be provided for Q&A. At this time, all participants are enlisted on the mound. I will now turn the conference call over to your host, Phil Boggs, Senior Vice President, Investor Relations and Treasurer. Mr. Boggs, please go ahead.

Thanks, Carmen. Welcome to Green Plains Inc. and Green Plains Partners Third 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. Factual results could materially differ because of factors discussed in yesterday's press releases 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 thanks, everybody, for joining the call this morning. For the quarter, we reported a net loss of $34.5 million, or $1 per diluted share. This loss included a $13.8 million non-cash tax adjustment related to charges in our deferred tax assets. Without that non-cash adjustment, the net loss would have been much narrower or closer to $0.60 a share. More importantly, we were free cash flow positive for the quarter, including another strong quarter of cash distributions from Green Plains Cattle Company. We reported $8.8 million in adjusted EBITDA for the quarter, and our consolidated crush margin was $0.08 a gallon, which included almost $0.06 a gallon of negative absorption from plants that were shut down due to regional market conditions, Project 24 upgrades, and normal scheduled plant turnarounds. Our plants that were operating earned almost $0.14 a gallon consolidated crush margin, as the completed Project 24 upgrades helped improve the whole portfolio. We look forward to the completion of all of our upgrades, which reduce plant downtime that affected this quarter. Another impact to Q3 was the movement of sales from this quarter to Q4 and Q1 of industrial alcohol from New York, Nebraska, as customers elected to wait to receive USP-grade alcohol as our upgrade is almost fully completed. This not only solidified our sales book, but expanded it as well. I'm happy to report that we have begun to make USP-grade, but not just at the maximum rate yet. We expect to achieve full rate by late December. When we take all of this into consideration, Q4 is looking to be better than previous quarters based on current market conditions, higher operating rates, less negative absorption, and the completion of York's upgrade. We are trying to do what we can to lock down the quarter with a more active hedge program. So as you can see, there's a lot of noise in our numbers, but generating free cash through all of that is what we are trying to accomplish as we achieve our path to 2023. Let me take a minute to review the accomplishments on the total transformation that we have achieved over the past few months, including enhancing our liquidity, which we expect to help accelerate our transformation. We were excited to close on our $75 million protein financing with MetLife during the quarter and continue to have ongoing discussions with additional parties to finance the balance of our protein initiative. We believe this will result in more financing alternatives than we have seen in the past and secure our path to transforming our platform. As we recently announced, we also sold the remaining 50% interest in our cattle business for $80 million. While we strongly believe in the future of this business, we are utilizing this capital to invest in more accretive and predictable earning streams. When combined with the $75 million MetLife financing, as well as the estimated $56 million tax refund we expect to receive from the IRS in the near future, We expect to have over $200 million in incremental liquidity to fund the protein build-out. Including our strong cash position, you can see we're in great shape financially, maybe the best shape in years. Our term debt limited to our convertible bonds and some project-based financing, and with that said, we are basically net term debt zero. In addition, other than security for our MetLife loan, none of our assets are encumbered or used as any collateral for any financings. During the third quarter, we were also pleased to break ground on our Wood River ultra-high protein project as our second installation, and we are excited to have them join Shenandoah in producing value-added ultra-high protein upon its expected start late Q2 2021. We have also announced that we have chosen Obeyan, Tennessee location to be our third facility to receive the FluEquip MSC technology, which will bring our total capacity with FluEquip's technology of over 200,000 tons of a whole ultra-high protein annually. We want to thank the state of Tennessee, especially the governor's office, who have motivated us to do this project, and we will continue to work with them to get this up and running as quick as we can. At an estimated initial 15 to 20 cents a gallon uplift, we will be adding 45 to 60 million in incremental EBITDA from just these three locations. O'Brien has been one of our best and most profitable locations over the years, and this technology will firmly cement it as a top-performing biorefinery, if not the best-performing in our company and the industry. The $60 million Obion project is expected to come online by the end of 2021. We are also announcing that we are further upgrading our York location to alcohol purities above USP. While we expect York's USP project to be completed in the fourth quarter and have several customers excited to take that product, we believe that we needed to take the next step. We have contracted with the Flu Equip again to upgrade the York location to produce grain neutral spirits, or GNS, which firmly establishes that location as a long-term participant in various high-value alcohol markets. Our Mount Vernon location is well underway with its Project 24 upgrade and is expected to be complete in the first quarter of 2021. We have also received word from the state of Illinois that our Madison location should receive its permit soon, allowing us to proceed with Project 24 upgrade at that site. Given the success we have seen at our other location, we anticipate meeting or even beating our platform OPEX target of 24 cents a gallon by the second quarter of 2021 when Project 24 is complete. So, as you can see, all these initiatives, we are continuing to execute on our strategy and are adding speed to our escape velocity to transform this company and lessen the reliance on the ethanol crush. During the quarter, we produced approximately 189 million gallons of ethanol, which put us at a 67% utilization rates. Margins have mostly been contained at the spot market and remain inverted in the future. The weekly EIA data has been neutral to supportive towards margins as production has maintained levels below 950,000 barrels per day range until this week, while inventory stocks have been consistently around 20 million barrels. This stock number supports positive spot margins as well, but the weekly numbers are something we are watching closely. Green Plains Partners continued with stable operations protected by a long-term minimum value commitment in place and benefit from the rate adjustment that went into effect in July. During the third quarter, we began to amortize the term loan we put in place in June and paid down $12.5 million of VAT debt. Now I'll turn to call over to Patrick to review both Green Plains Inc. and Green Plains Partners' financial performance. I'll then come back on the call to talk more specifically about our ongoing initiatives to transform the company into to our GNS alcohol, protein, and aquaculture initiatives, and a little more on markets and policy in the election. Patrick?