Green Plains Partners LP

Good morning and welcome to the Green Plains Inc. and Green Plains Partners fourth quarter and full year 2022 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'll now turn the call over to your host, Phil Boggs, Executive Vice President, Investor Relations. Mr. Boggs, please go ahead.

Thank you and good morning. Welcome to Green Plains Inc. and Green Plains Partners' fourth quarter and full year 2022 earnings call. Participants on today's call are Todd Becker, President and Chief Executive Officer, Jim Stark, Chief Financial Officer, and Leslie Vandermuelen, EVP of Product Marketing and Innovation. There is 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, in the comments made during this conference call, and in the risk factor 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, Bill, and good morning, everyone. We have a lot to talk about, so let's get started. The fourth quarter margins were improved off the lows we experienced during the prior quarter, but we are still faced with some challenging headwinds due to weakness in ethanol margins in the quarter, which happened very quickly over a few days. This industry has such great potential, and we continue to have a small imbalance in production versus demand that weighs heavily on margins. In addition, the pricing structure, in our opinion, remains broken. where very little volume in the market each day on the close prices a million barrels a day of production. This pricing mechanism needs to be addressed in the future. In the western Corn Belt, the basis remains stubbornly high for this time of year, about $0.45 per bushel higher than the prior five-year average and $0.30 higher than the prior year. A severe cold snap in December caused outages across our platform, and when combined with rail embargoes, which hit green plains unusually hard. We had inventory backed up at some of our locations, leading to plant slowdowns and some plants going offline for a period of time. We estimate the storm cost our platform around two cents per gallon for the quarter alone, just over those few weeks. In addition, we made an economic decision to temporarily idle 10% of our production capacity based on current market conditions and continue to evaluate the right time to bring capacity back online. Despite these challenges, we ran at 93% utilization rate across our platform as we benefited from pulling our seasonal maintenance into the third quarter and continued to see increasing production rates at locations we invested technology into over the last few years. Overall, our results showed a consolidated crust margin of around $0.03 per gallon and EBITDA close to $6 million. What we are also learning is our transformation is more important than ever and contributed to our positive margins. even with the headwinds from the traditional platform, which is why we continue to execute on our ambitious transformation of Green Plains that we laid out for you over the past few years. Our focus is on our four pillars of protein, oil, sugar, and carbon, all combined with a focus on lowering our costs of traditional operations. During 2022, we've made great progress on the transformation, completing the construction of three additional MSE protein technology locations, which makes five total and breaking ground on our first clean sugar facility in Shenandoah at commercial scale. We continue to make progress on our overall decarbonization of our platform, positioning ourselves for the future of sustainable aviation fuel with our exciting alcohol to jet announcements we've made recently. Our MSC projects at Central City, Mount Vernon, and Obeyan continue to come online during the quarter. The incremental yields from these new MSC systems during commission During commissioning contributed to another quarterly production record for our low carbon renewable corn oil, I can now say that all five of our msc facilities are now completed and operational and producing ultra high protein. In fact, during this week alone, we said daily production of platform records, this is a huge accomplishment for our team to bring these facilities online in a continued challenging supply chain and Labor market. On the last call, I indicated that we expect to make significant, exciting progress on our commercial sales for 2023, and we have done just that, which I will discuss later in the call. Our carbon initiatives continue to progress, first starting with Osaka Gas and Tallgrass to utilize carbon from our southeastern locations to produce asynthetic fuel and methane products. While still in development phase for now, we are optimistic about the potential of this project. We also just announced a sustainable aviation fuel partnership with Tallgrass, PNNL, and United Airlines to develop a new alcohol-to-jet technology. United's offtake for this product demonstrates the urgency of developing pathways to decarbonize aviation fuel, and we believe the use of decarbonized ethanol as a low-carbon feedstock, which Green Plains has a supply agreement into the joint venture as well, could be transformational, not only for our company and our shareholders, but also for the whole industry. We are excited to continue to develop this novel technology from PNNL as Blue Blade Energy scales it up and works towards a pilot facility in the coming years. This gives us confidence in the long-term value of our biorefinery platform and the optionality around what we do and what we are coming. Today, the fundamentals of our base ethanol business remain challenged, yet as we all have seen, things move quickly on our margin structures. We remain open to the forward margin as there has not been real opportunities to hedge forward There are times I feel like a broken record, which is why our technology transformation is more important than ever. The EPA recently proposed RFS volumes of 15.25 billion gallons per year. This administration has repeatedly demonstrated a commitment to higher level ethanol blends, including allowing for E15 to be sold during the summer for the fourth straight year. Our value proposition as the lowest cost octane enhancer remains both domestically and globally. We are capturing more corn oil from every kernel and are headed to 1.2 pounds mechanically, and regardless of the final RVO levels, we believe the rapid expansion of renewable diesel production will continue and our distiller's corn oil will remain in demand. As we always do, we are going to focus on the things within our control, executing on our transformation plan, bringing additional MSC and corn oil facilities online, completing our clean sugar build in Shenandoah, and executing on our carbon plans. Jim will recap our efforts in just a moment and discuss our success during 2022 to strengthen our balance sheet as we ended the year with over $500 million in cash. As a result, we believe we are well positioned to execute on our transformation strategy. Our partnership, Green Plains Partners, delivered another consistent quarter and declared a distribution of 45.5 cents per unit while maintaining stable coverage ratios. And now I'll hand the call over to Jim to provide an update on the overall financial results. Jim?