Green Plains Partners LP

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

Good morning, everyone. Welcome to Green Plains Inc. and Green Plains Partners' fourth quarter and full year 2021 earnings call. Participants on today's call are Todd Becker, President and Chief Executive Officer, Patrick Simpkins, Chief Financial Officer, and Leslie Vandermuelen, EVP, Product Marketing and Innovation. There is a slide presentation available, and you can find it on the investor page under the event 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 do not undertake any duty to update any forward-looking statements. 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. Our transformation continues to gain momentum. We continue to execute on key milestones necessary to achieve our 2024 and 2025 transformation, and we are making great strides towards achieving these goals. 2022 is shaping up to be a transformative year, and we are excited to review our progress and ongoing initiatives. We released our inaugural sustainability report late last year and are planning to release another in Q2. The market is starting to realize we are a true ESG story. We always have been, but we haven't always been forward about telling it. That has changed, and we have made significant commitment to reducing our GHG footprint 50% by the end of the decade and be carbon neutral by 2050. These aren't idle goals, and we have a concrete path to achieve them and more. For the fourth quarter, as we had indicated earlier, we had hedged our consolidated crush margins early. We strategically did this in order to reduce our risk and protect the capital that we had raised to execute on our transformation and ended the year with over $680 million in cash equivalents as well as additional liquidity from available credit facilities. We achieved 20 cents per gallon in the consolidated crush and approximately 17 cents for the full year. Overall in 2021, These results are in line with what was available in the daily average crush as we had significantly overachieved in the first half of the year. If we would have not hedged anything all year, our year would have not been substantially different, although the fourth quarter would have been higher, making up for extreme weaknesses in the first half that we avoided by hedging and risk management. Q4 was unique from many perspectives and unprecedented, maybe the only time we will see this. With that said, we managed for the long-term financial stability of Green Plains. Operationally, utilization at our Madison and Mount Vernon locations were impacted by supply chain constraints tied to national chip shortages and labor tightness, which delayed completion of these upgrades, limiting our opportunistic gallons. Just this week, we started one side of the new Mount Vernon dryers and expect the full system to be operational late this quarter. Additionally, our York location experienced grain bin damage during the quarter, which limited overall utilization at that location as well. While we are thankful that no one was hurt as a result of this accident, the combined challenges to the quarter and utilization from these three locations resulted in lost opportunity given the expansion of the crush in the spot market. We continue to be focused on running Green Plains 1.0 well in order to execute on Green Plains 2.0. The fourth quarter also included some negative impact from mark-to-market items in our export business, as well as some higher eliminations from ethanol gallons and renewable corn oil shipments that weren't delivered due to logistics challenges in the U.S. at the end of the quarter. Combined, these items reduced our results by about $8 million. Much of it will come back over the first couple of quarters in 2022 as deliveries on those positions got executed. On top of that, the York incident took over $5 million out for the quarter as well. Margins started out soft in 2022 as stocks and production levels built and increased fast. With current logistical challenges in trucking and rail service on the carriers, we saw the industry slow down and stocks grew this week. This along with the fact that ethanol is a significant discount to RBOB and the RIN values remain elevated, we believe the discretionary blender is fully incented to blend more ethanol. While hesitant to call a bottom to the margin structure, with gas demand rebounding this week as we get out of winter with mild temperatures, driving demand can clear this excess quickly. In addition, it looks like more parties continue to take advantage of a flawed Chicago pricing mechanism, which sent the market to new lows on very little volume, as we continue to argue for a better way to price a million barrels of ethanol production per day for the industry that are impacted by a few million gallons of sales in the window. Finally, as global economics begin to put the pandemic behind us, we believe we could see strong energy and transportation demand as we move through the year. More importantly, though, The market needs fuel ethanol plants to run as vegetable oil demand has been robust and prices continue to move higher. In addition, we are seeing strong demand for high-protein ingredients, particularly after we started up our second MSC location and begin to demonstrate our increased size and redundancy to the market. I will discuss that later in the call, the positive impact to our strategy for what seems to be a potential shortage in many of our products. We are scheduled to begin our 60% protein trial at Wood River in the next week or two, and we are excited about the potential to produce a new value-added ingredient that can be used to target the aquaculture space. We are working with our aquaculture customers who are excited to get samples of the new product, and we believe this could be transformative for us and our program. We have a long-term goal of moving beyond protein levels in the 50s and fully operating in the 60s and above, and we'll know more shortly on that opportunity. We broke ground on O'Brien in the fourth quarter and are on track for a mid-2022 startup of the patented MSC protein system at O'Brien, Mount Vernon, and Central City, and plan to break ground at Therosin this spring as soon as the ground is thawed. The long lead time equipment is in place, and we are executing our startup plans. Green Plains Partners was able to increase their distribution this quarter to 44 cents per unit. We are pleased to increase the distribution for a second quarter in a row. The partnership is ungirded The partnership is committed in long-term minimum volume commitments resulting in strong and stable cash flows. I will come back on the call to provide an update on our exciting ongoing initiatives for 2022 and beyond and spend time on all of our verticals, protein, oil, sugar, and carbon. Now I'll turn the call over to Patrick to review both Green Plains, Inc. and Green Plains Partners' financial performance.