Green Plains Partners LP

Good morning and welcome to the Green Plains, Inc. and Green Plains Partners second quarter earnings conference call. Following the company's prepared remarks, instructions will be provided for Q&A. At this time, all participants are in listen-only mode. I will now turn the call over to your host, Phil Boggs, Senior Vice President, Investor Relations. Mr. Boggs, please go ahead.

Thank you 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 Leslie Vandermuelen, Executive Vice President, Product Marketing and Innovation. There's a slide presentation available, and you can find it 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 today'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 will not undertake any of these to update any forward-looking statement. And now I'd like to turn the call over to Todd Becker.

Thanks, Phil. Good morning, and thanks for joining our call today. We've been focusing for some time on developing our organization to deliver on our transformation. The changes to our board of directors announced last week was another sign in that development and demonstrates that we are fully focused on our mission to lead the transformation into biorefrineries, creating sustainable ingredients that matter, and follow our shareholders and owners that want our board to represent a broad group of diverse members that have the experience and ambition to help our company achieve its goals for all of our stakeholders. We want to thank Gordon, Jim, and Tom. for their tireless commitment to our journey, and they leave knowing their efforts have contributed to our success. We also want to welcome Martin Salinas to the board. He will also assume the role of audit committee chairman. Martin has been a member of the GPP board and is deeply familiar with Green Plains, Inc., allowing him to step in and contribute right away. We have also been enhancing our executive leadership team and have a broad 10-year team built for the execution of our plan and our future growth. Leslie Vondermuelen was recently promoted to Executive Vice President, Product Marketing and Innovation, as part of our plan to build a high-quality organization to support our ingredient marketing and innovation platform with a deep bench of nutritionists, scientists, sales and marketing, and quality control. We did announce this morning that Walter Cronin is transitioning out of Green Plains to pursue personal investment opportunities and other interests in agriculture. Walter leaves knowing that the team he helped create and mold alongside me is ready to take on the opportunity to market, innovate, and produce products around a game-changing technology and IP portfolio. He will remain a real consultant for the company while pursuing his other passions as he remains a true believer in our story. We expect this transition to be seamless as Leslie and Walter have been working side-by-side for many years. Leslie continues to build out his team, including a new Senior Vice President of Global Ingredient Sales, who has led the sales and marketing organization of the largest producer and distributor of fish meal in Peru. He is joining our organization to expand on our success with ultra-high protein and help drive higher inclusion rates in global aquaculture diets and all other animal verticals. We are very excited about the evolution of this team as we put the pieces together that represent the future of Green Plains. We have been building an organization to deliver on our cultural transformation to ensure we can continue to attract and retain talent or human capital as we execute on the deployment of financial capital to support our transformation. We are hiring and have tremendous career opportunities in what we believe is the most exciting ag tech and innovation platform in all of agriculture globally. Green Plains is on a path toward creating sustainable ingredients that matter, and we are building an organization of talent around this mission. While we have accomplished many key milestones on our total transformation plan We know much remains. With FluidQuip fully integrated into our platform, we have now ordered the essential log lead time equipment for all of our upcoming MSD protein projects, which, when combined with Fagan Inc., brings greater certainty to completing each project in a 9- to 12-month time frame from groundbreaking. We also executed on our first shipments of dextrose out of our innovation center at York, keeping us on track to deploy clean sugar technology on a larger scale in the coming years. I will touch more on that later in the call. Turning to the quarter, we delivered strong financial results in the second quarter and first half of 2021 and continue to execute on our transformation plan, achieving several key milestones on our path to 2024 and 2025. Our consolidated margin was 37 cents a gallon, aided by a strong spot market, risk management and optimization gains, and a mark-to-market gains on some forward physical positions as well. Our margins were also aided by record production yields in both ethanol and corn oil, as our Project 24 initiatives and continued improvement in our MSC facility at Shenandoah are already contributing to our results. We remain focused on executing on all areas of our business as we continue our transformation to Green Plains 2.0. During the quarter, we produced 191 million gallons of ethanol, which equates to about an 80% utilization rate. Production has been trending higher as we bring sites online from our Project 24 initiative and should continue higher after our Madison, Illinois location starts up. However, we are cautiously watching the current margin structure in the third quarter, which could impact utilization in the nearby months, but longer term we anticipate operating capacity once Project 24 is fully completed by year end. As we have a line of sight of 100% operating capacity resulting in sub-24 cents per gallon operating costs, we believe when looked at like for like, puts our asset base finally back in line with the best operating plants in the industry. While the second quarter margins were strong, industry production ramped up fast, as we outlined on our last call, resulting in ethanol stocks for the industry at a much higher level than last year at this time. While the spot market is starting to improve, it still has a lot of work to do to become positive due to continued crop and supply uncertainties. On paper, though, fourth quarter margins are positive, and we will continue to pursue our process of margin maximization subject to industry conditions in that quarter. We will continue focusing on controlling things that are under our control, operating safely, innovating around science and technology, while creating sustainable ingredients that matter. Green Plains Partners recently announced a $60 million five-year amended credit facility led by BlackRock, allowing us to return to our prior strategy of of distributing cash to our unit holders, which includes Green Plains Inc., the parent. We have great financial partners that helped refinance this line, and this showed our commitment to maintaining a financially strong MLP, and the partnership continues to be protected by long-term minimum volume commitments, driving continued stable cash flows. Now I'll turn the call over to Patrick to review both Green Plains Inc. and Green Plains Partners' financial performance, Then I'll come back on the call to talk more specifically about our ongoing initiatives and how each vertical fits into our transformation plan.