Green Plains Partners LP

Investor Relations. Mr. Box, please go ahead.

Thank you, and good morning, everyone. Welcome to the Green Plains, Inc. First Quarter 2024 Earnings Call. Participants on today's call are Todd Becker, President and Chief Executive Officer, Jim Stark, Chief Financial Officer, and several other members of Green Plains Senior Leadership Team. There is a slide presentation available, and you can find it on the Investor page under the Events and Presentations link on our website. 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 release, in 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. We are not alone in managing through a challenging market during the first quarter driven by industry oversupply from elevated production during a mild winter leading to an increased stocks position combined with weaker vegetable oil markets and compressed protein markets as well, leading to a weak first quarter and negative EBITDA of $21.5 million, although an improvement from last year of about 22%. The typical first quarter doldrums hit the industry as well as a quick deep freeze that had an outsized impact on some of our plants. Since we saw the extended margin compression, we took the opportunity to launch two major refreshes in Mount Vernon and Obeyan so we can run beyond historical norms at some of our best plants when completed, especially at Obeyan, which is one of our historically strongest margin plants that we've had for the last 15 to 17 years. As I said, both of these are happening at traditionally strong margin sites, so we're going to have an outsized effect in a low margin environment. Operationally, we performed well with utilization at about 92% and another strong quarter of protein production. And in an improved margin environment, we can start to push towards high 90% run rates with all the refresh investments we have made and are making. Speaking of margins, though, we have recovered a bit, but still a long way to go. Q2 margins now range from the mid-high single digits to the low teens across the rest of the quarter on average. For the rest of the year, every month has returned to a positive margin on the curve, which is unique for this industry at this time of year. This is at least a 25 cent a gallon improvement off the lows in some months. We'll talk fundamentals a little bit later on the fuel markets. During the quarter, though, we continue to execute on our transformation strategy across the board, completing the acquisition of Green Plains Partners in early January. started commissioning of the SFCT demonstration facility with our partners at Shell in March, commissioning our CST project in Shenandoah as we speak, as well as bringing our MSC protein joint venture at Thurlson Ethanol in North Dakota online over the last couple of weeks, in addition to launching our sequence brand for our 60Pro product. We achieved these key milestones, and I will discuss more about these areas as we go through the call. It may seem like this is all not happening during times of macro weakness, but I can assure you that it is, and we have a lot of positive updates to share on sugar, protein, and carbon, which is part of the reason we see positive margins currently for the rest of 2024. Of note, the recent GREET SAF modeling update demonstrates that if you can make low-carbon fuels, you have an asset more valuable today than you did on Tuesday morning. I will show you that path as well. We continue to anticipate that as spring maintenance and summer driving season progresses, we expect to see seasonal stock draws leading to strengthening base margins and lead us out of the winter doldrums that we have been stuck in for the last several months. Corn plantings look to be off to an excellent start, which could lead to more favorable basis values as we move through the summer. We remain primarily open to the margin structure across all of our products. One quick update on the strategic review. The board and the leadership team are fully engaged with evaluating our strategic options as we disclosed last quarter. We continue to believe the value of our platform is not reflected in our stock price even more so after the greet update that I mentioned. Hopefully you saw during the quarter we announced our new specialty ingredient brand, Sequence, for our 60% protein product. We are really excited about this brand and what it represents for the high-value aquaculture feed and pet food markets we serve, as well as our ability to begin to custom-tailor nutritional solutions for our customers beyond just selling them protein, which is why we called it Sequence. Leslie and the innovation team have been working hard on a very specific tailored taste and texture solutions that can be combined with sequence, another reason we are getting traction with our customers. Our sequence sales have been increasing as we approach the equivalent of one plant's production's worth of recurring sales, representing approximately 10% of our production capacity. Interest in this product has been strong. We believe we are on track to exit the year at the 20% to 30% capacity being committed to repeat sales customers and anticipate expanding it from there with the goal of eventually moving to 100% of our production to sequence. This product separates us from a more commoditized 50-Pro market that has been under pressure from soybean meal to corn that spread between soybean meal and corn, which has been influenced by rapidly expanding soy crush capacity, although we have seen soybean meal prices elevate quite nicely over the last several days. Base margins for our 50-Pro were under pressure from both a tighter protein spread as well as decline in vegetable oil pricing. But we have always said we justify the investment with 50% protein, so build them for 60% slash sequence or higher. Our sequence protein becomes a differentiator in the long run. Let me tell you why we're getting traction. This is a novel 60% protein. It's the world's first plant-based 60% protein ingredient made from a combination of corn and yeast. It is fermented for intestinal health. Corn and yeast provide a greater bioavailability and nutritional benefits for the customers we serve. Lastly on this topic, I'm very pleased to report that in a recent analysis titled Emerging Protein-Rich Ingredients for Aquaculture, our protein ingredient received the highest accolades in a recent European report that continues to validate our view that our scalable and low carbon intensity protein products are a much welcomed addition to the supply of quality ingredients for aquaculture of which we are in trials in some of the highest value markets in the world today. With ethanol at a roughly $1 gallon discount to RBOB, it makes sense to max blend. And we are seeing strong exports and could end up the record year for US exports, potentially even exceeding 2018 1.7 billion gallons. And now I'll hand the call over to Jim to provide an update on the overall financial results. I'll come back on the call to provide an updated strategic outlook and how carbon and sugar will play a larger role going forward.