Green Plains Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 4, 2023

There are 13 speakers on the call.

Operator

Morning, and welcome to the Green Plains Inc. And Green Plains Partners Second Quarter 2023 Earnings Conference Call. Following the company's prepared remarks, instructions will be provided for Q and A. At this time, all participants are in listen only mode. I will now turn the call over to your host, Phil Boggs, Executive Vice President, Investor Relations.

Operator

Mr. Wallace, please go ahead.

Speaker 1

Thank you, and good morning, everyone. Welcome to Green Plains Inc. And Green Plains Partner's Q2 2023 earnings call. Participants on today's call are Todd Becker, President and Chief Executive Officer Jim Stark, Chief Financial Officer And Leslie VanderMeelen, EVP, Product Marketing and Innovation. There is a slide presentation available, and you can find it on the Investor page under the Events and Presentations During this call, we will be making forward looking statements, which are predictions, projections or other statements about future events.

Speaker 1

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 In the comments made during this conference call and in the Risk Factors section of our Form 10 ks, Form 10 Q and other reports and filings with the Securities and Exchange We do not undertake any duty to update any forward looking statement. Now I'd like to turn the call over to Todd Becker.

Speaker 2

Thanks, Phil, and good morning, everyone, and thanks for joining our call today. So during the quarter, we were challenged by several events that held us back a quarter from showing you the results of transformation as we experienced several significant events that negatively impacted what would have been a good quarter. The first was our Wood River which took one of our largest locations down for most of the quarter. This impact to the company was over $18,000,000 in total and we expect some recovery from insurance The last half of the year, so some of this will be coming back. In addition, during Q2, our platform was in need of significant upgrades to prepare For 2024 and beyond and while we had some planned downtime, we also experienced a high level of unplanned downtime in Gen 1, Which also had an impact on Gen 2 production volume and sales and hedges that we had in place already to lock the quarter in.

Speaker 2

The challenge is that our other plants came later in the quarter and really was a June event in the highest margin environment, which we were unable to take advantage of. With that said, we had put Q2 hedges on to lock in over $0.20 a gallon in results and unfortunate timing of these events took most of that away. On the last call, we indicated $0.12 to $0.17 a gallon opportunity on paper and we were tracking accordingly and better through the end of May, But did not get Wood River released back to us and up and running until weeks later than expected in addition to unplanned outages. With this downtime behind us, we are now operating at near full rate for both ethanol and ultra high protein operations and even more important, Wood River is making new production records as the team has done a great job getting the plant back to service, but more importantly, the state of the team there is good after the tragedy they experienced. Because of these events, our operations team diligently completed extended spring shutdowns At many of our locations resulting in an 81.5 percent utilization rate for the quarter, our operations leadership team implemented process control improvements to improve reliability and increase ultra high production ultra high protein production.

Speaker 2

All in, this downtime positions our assets to operate reliably during the 3rd Q4 with solid margins on paper today and at least half of our locations are now capable of foregoing their typical fall shutdowns Enabling additional production during these higher margin periods we are seeing in corn oil, protein and solid ethanol fundamentals. Now on to the quarter, which Jim will cover more in-depth later. Our consolidated crush margin was $0.01 per gallon. But again, We are prepared for a solid last half between Wood River negative absorption, repairs and lost opportunity for both protein and ethanol. There was a $0.15 to $0.20 impact on the overall consolidated crush minimum.

Speaker 2

Our financial position remains very strong with significant liquidity And with the last half opportunity in margins, we don't see a significant change to this strength as we return to free cash flow generation during the last half, which will help pay for the large part of the capital needed for our build out for the rest of the year. In addition, we entered into a sale contract to divest our 55,000,000 gallon Atkinson, Nebraska facility as it does not meet our parameters to justify making investments for our technology improvements. For where we are going with Green Plains, this asset did not fit our long term vision. And once it closes, we believe this transaction will be accretive. We expect to close in the next few weeks and bring the capital back on the balance sheet and further increasing our financial strength as we optimize our asset base.

Speaker 2

We expect to replace these volumes with either an expansion at one of our larger locations where our technologies are running, which is very accretive Or look for an acquisition opportunity where we can immediately add technologies, therefore not expanding fuel supplies in the market. I will take you through a detailed recap of our transformation progress later in the call and walk you through how we are thinking about the last half of the year. But for now, I want to reiterate that the fundamentals across each area of our strategy are strong and improving. Core ethanol demand remains To look continues to look solid and is tracking higher than prior year. With 94,000,000 acres of corn versus 84,000,000 acres of soybeans, The price spreads remain in favor for both protein and corn oil and timely rains this summer have improved the USDA estimates for crop conditions in the West, Finally giving an opportunity again to source our inputs a little bit easier than in the past several years.

Speaker 2

In fact, we have seen continued pressure on the Western corn basis Just recently, especially new crop in 2024. Our ultra high protein production is once again achieving rates of 800 to 1000 tons per day. After the extensive downtime taken in the Q2, we are seeing production rates as designed and have hit over 1,000 tons per day on multiple days. We are planning to dedicate one of our sites to 60% protein production later this quarter and begin to build supply chain for delivering 60 Pro to the market during the 4th Quarter. I will get more into this exciting development later as well.

Speaker 2

One really interesting data point is our investments were made on a 3 to £3.5 per bushel yield of protein and we have now achieved as high as £5 with the MSC technology from FluEquip. And in fact since Wood River has returned to full rate, they have averaged well over £4 which over time increases our capability to produce higher volumes And have better capital efficiencies. No other technology in the world can achieve these rates. The future of our platform is with Incyte and with our Clean Sugar facility track to start up in early 2024, we are fast approaching being able to demonstrate the true potential of our full vision at one of our refineries. And now I'll hand the call over to Jim to provide an update on the overall financial results.

Speaker 3

Thank you, Todd, and good morning, everyone. Green Plains consolidated revenues for the 2nd quarter were $857,600,000 16% year over year for the 2nd quarter. Our plant utilization rate was 81.5% during the quarter comparing to the 96.9% run rate reported in the same period last year. As Todd mentioned earlier in the call, we anticipate our plans perform much better in the second half of twenty twenty three, targeting utilization rates in the low to mid-ninety percentage range of our stated capacity with all plants now operating. For the quarter, we reported net loss attributable to Green Plains of $52,600,000 or an $0.89 loss per diluted share.

Speaker 3

That compares to net income of $46,400,000 or $0.73 per diluted share for the same period in 2022. Adjusted EBITDA for the quarter was a negative $14,900,000 compared to the $56,700,000 in the prior year as well as 2022. Depreciation and amortization expense was Higher by $3,700,000 versus a year ago due to the addition of the MC Technology builds all on line and operating at the end of last year. We realized a $0.01 per gallon consolidated crush for Q2 of 2023 That compares to $0.28 per gallon crush in the prior year. On a sequential quarter to quarter basis, we saw the consolidated crush margin per gallon strengthen $0.08 when compared to the Q1 of this year.

Speaker 3

Our Ag and Energy segment recorded a $2,900,000 in EBITDA. That's about $7,900,000 lower than the prior year. This decline was driven by lack of opportunities on our merchant businesses, which ebbs and flows with each year quarter to quarter. For the Q2, our SG and A cost for all segments was $33,300,000 compared to $30,100,000 for Q2 of 2022. This increase was driven by increased legal fees associated with GPP buy in and increased personnel costs including severance costs.

Speaker 3

I'd like to remind our callers we do consolidate GPP and Green Plains in this SG and A cost, so that would be legal fees on both sides for both entities. Interest expense of $9,700,000 for the quarter includes the impact of debt amortization of capitalized interest, which was higher than the 7 $8,000,000 reported for the Q2 of last year due to reduced capital interest as certain projects have been completed. I would like to note that our interest income was approximately $2,000,000 higher in the Q2 of 2023 when compared to the same year period a year ago. The income tax benefit for the quarter was right at $1,000,000 compared to a tax expense of $2,900,000 for the period in 2022. At the end of the quarter, the net loss carryforwards available to the company were $140,000,000 Which may be carried forward indefinitely.

Speaker 3

We continue to anticipate that our normalized tax rate for Green Plains Inc, Excluding minority interest should be around 21%. Our liquidity position remains solid and at the end of the quarter We had $359,800,000 in cash, cash equivalents and restricted cash along with approximately $128,000,000 available under working capital revolver. We are focused on executing the next steps of transformation and have the capital and liquidity to do so. For the 2nd quarter, We allocated $17,000,000 of capital across the platform, which included $10,000,000 to our clean sugar build in Shenandoah and MSC protein initiatives. About $4,000,000 was also allocated to growth other growth initiatives and approximately $3,000,000 toward maintenance, safety and regulatory capital.

Speaker 3

For the remainder of 2023, we anticipate CapEx will be in the range of $60,000,000 to $90,000,000 as we continue to work through The timing of permitting for MSC technology deployments at a couple of our larger plants. Green Plains Partners Reported net income of $9,300,000 and an adjusted EBITDA of $12,700,000 for Q2 of 2023, Which was in line with the $12,900,000 reported for the same period a year ago. The minimum volume commitment supported steady financials during the quarter while plant utilization rates at Green Plains were lower than the prior year. The partnership declared a quarterly distribution of $0.455 per unit with a 0.99 times coverage ratio for the quarter. The partnership Also reported distributable cash flow of $10,700,000 for the quarter, slightly lower than the $11,300,000 for the same quarter of 2022.

Speaker 3

Over the last 12 months, the partnership produced adjusted EBITDA of $50,900,000 distributable cash flow of $43,500,000 And declared distributions of $43,200,000 resulting in a 1.01 times coverage ratio excluding any adjustment for the principal payments made in the past As a reminder, on May 3, 2023, the company submitted a non binding preliminary proposal to the Board of Directors Green Plains Holdings LLC, the general partner of Green Plains Partners LP, to acquire all the publicly held common units of the partnership not already owned by Green Plains. The Complex Committee of the Board of Directors of the General Partner have been delegated the authority to evaluate and it is currently evaluating

Speaker 2

there's a lot to talk about and I know we have limited time and while Q2 was challenging, the last half of twenty twenty three and twenty twenty four looks solid And our path forward is gaining traction and looking better. For a couple of years now, we have been talking about the transformation to a 2.0 agtech sustainable producer of high value ingredients focused on the 4 pillars of protein, renewable corn oil, clean sugar and decarbonization and the future is now. Quickly, on decarbonization, which is a bit out of our normal order, but probably underappreciated. This is one of the several reasons we are gaining tractions In our clean sugar technology products and protein, carbon scores do matter. We are now less than 2 years away from what we believe is a Significant financial opportunity when we decarbonize a majority of our platform as the incentive structures are firmly in place.

Speaker 2

Don't underestimate or discount our carbon and pipeline strategy as we believe all roads will lead to alcohol to jet sustainable aviation fuel production. Importantly though, CI carbon intensity of all of our ingredients will be reduced even further, which is a key selling point for our ultra high protein today And our clean sugar technology, DEXTROS, in the future. We literally received our latest protein life cycle carbon intensity yesterday score, Which shows a 46% lower score for our high protein products compared to corn gluten meal globally, Aligning this data with PEF, ISO and ISCC plus rules. This is very important to pet food and aquaculture producers globally. In addition, our CST carbon intensity cannot be matched by current products in the market today, which is why we are in significant negotiations with more demand And we can supply over the next several years, more later on this as well.

Speaker 2

Our decarbonization opportunities That now should at least add $120,000,000 to $180,000,000 annualized economic opportunity starting in the last half of twenty twenty five. We have also executed a few different new contracts around our carbon strategy that give us the confidence to use this number as we and we have more to go. Our protein initiatives remain on track and our commercial successes continue to see strong results even with our reduced rates in Q2 which was a short term impact. Our turnkey JV with Deralson in North Dakota is anticipated to begin operations in the Q1 of 2024 with our Madison and Fairmont locations on deck next Pending permitting from Illinois and Minnesota. Completing those three facilities would increase our annual marketing capacity by 250,000 tons Bringing our total annual run rate to 580,000 tons of ultra high protein production including full turnkey rates which is very close to what we had laid out for our 2025 volumes.

Speaker 2

We believe this number grows as our yields at each site get much better and match Wood River. The 2025 economic uplift remains in the $150,000,000 to $210,000,000 range that we have pointed out for the last couple of years. Protein margins have gotten stronger for 2 main reasons. 1st, our reorder rate remains high and even more important, our prices continue to increase in relation to our input costs. 2nd, while during the ramp up over the 1st few years, the corn soy relationship narrowed.

Speaker 2

This is now normalized and we are seeing initial margins on new sales in the range of $0.15 to $0.17 per gallon uplift for that site, Which is why our ability to run GEN-one platform full out is important and that hurt us in the Q2 as we indicated. We continue to see great success in the marketing of the ingredient And are in significant late stage discussions with commercial counterparties for our 60% protein products. We expect our first commercial shipments beginning in the Q4 We continue to believe that 20% to 30% of our platform could be 60% protein sales during 2024. Gives a further nutritional advantage versus soybean meal and other high protein offerings. Now Depending on the customer, we can tailor biological recipes now to suit their needs for protein and yeast and our partnership with Novozymes allows this to happen we are now beginning to see the fruits of those labors as well, we don't believe anyone in the world can do what our companies are doing together.

Speaker 2

We have been pointing to these opportunities for some time now and the future is now. 2 other quick points. 1st, We are now producing for the first time ever non GMO ultra high protein. We will ship to customers for initial analysis and trials over the next several months. The cost will be high, but the returns will be higher.

Speaker 2

2nd, post this production run being completed next week, we We expect to dedicate one of our MSC locations as a 60 Pro facility to produce commercial quantities to ship in Q4 and 2024 and hope to keep that location on this program for the majority of its production. Renewable corn oil prices have seen a recent resurgence in as renewable diesel capacity continues to come online. We are seeing renewable corn oil pricing consistently achieve premiums to soybean oil Due to the lower carbon intensity of our product, as a result, we are once again seeing corn oil pricing in the $0.65 to $0.75 a pound range. And remember, under the 45Z Clean Fuel Production Credit, our low CI renewable oil is further advantaged to soybean oil starting in 2025. And I think that is also underappreciated.

Speaker 2

For our Clean Sugar initiative, our engineering teams and construction crews at Shenandoah continue to make great progress on construction And the project continues to be on track for mechanical completion in late 2023 and start up in early 2024. We are doing something that has never been done at a dry grind facility, creating a truly revolutionary biorefinery And using that to create a lower carbon intensity deck strokes than what is available today in the market. Customer interest remains very high And we are confident we will have a majority of the 1st year's capacity spoken for prior to start up and expect to have announceable commercial sales commitments before the end of the year. The last half of twenty twenty three obviously looks completely different from the first half for us as we are operating and positioned to deliver stronger utilization numbers due to shutdowns we took in the 2nd quarter and we are well positioned to hit the targeted run rates for our protein and oil businesses that we have laid out. At today's pricing, renewable corn oil alone could contribute $70,000,000 to $80,000,000 for the second half of twenty twenty three on pace for the annualized run rate we have discussed in the past.

Speaker 2

The output from our protein business is back on page for the run rates we have discussed previously and believe there is upside to that number depending on the level of 60% protein sales we have in 2024. But all in, adding in Ag and Energy and net of corporate overhead, We are setting up for a strong finish for non ethanol contributions during the back half of the year as we have previously guided to. The current outlook for our Gen 1 platform is materially stronger than the recent past. Favorable corn market drivers and an anticipated larger carryout Coupled with improved year over year driving demand has led to an expansion in the ethanol margin setting the back half of twenty twenty three to be stronger across all of our areas Finally, I want to provide a brief technology update. As we indicated on our last call, we are working towards some The first, which was fulfilled in our Shell Fiber Conversion Technology or SFCT announcement About our collaboration with Equalon, a subsidiary of Shell, one of the largest world the world's largest energy companies should not be discounted as well Because we have been working with them since early 2021 to develop a process to combine fermentation, Precision Mechanical Separation and Processing and Fiber Conversion into one platform.

Speaker 2

They are building A very large pilot SFCT facility adjacent to our York Innovation Center where we are adding the MSC process side by side. Recruiting for this venture is well underway and getting into the public sphere helps these efforts. So what is it that we are doing in this collaboration? Combining MSC with SFCT represents an innovative technology for agricultural processing It allows us to break down a kernel of corn into its high value products leaving nothing behind. In addition to the fermentation and precision separation technology That we have been using at Green Plains and FluEquip, this collaboration adds a chemical breakdown step of the fiber portion of what has already been separated through the biological and mechanical means, which is significantly different than anything you've seen in the past, increasing the amount of protein that can be recovered, Capturing all remaining renewable corn oil and producing cellulosic sugars which expands the ability to make low carbon ethanol, Which we believe could be a key component feedstock for SAF and for other low carbon ethanol markets like Canada.

Speaker 2

Said another way, This process will convert our lowest value co product DDGS or dry distillers grains into 3 high value products Renewable corn oil, ultra high protein and cellulosic ethanol, it's really just the next step in decarbonizing our platform and maximizing the value added products from our biorefining We anticipate to start up in 2024, which is not far away, and we will look to commercialize this technology at 1 of our MSC Facilities that we have already built, which is lower capital intensity for us upon achievement of key milestones. In addition, FluidQuip has its first MSC technology sale into Europe. The opportunity not only further validates FluidQuip's MSC has been the leading precision type fat separation technology globally, but it also demonstrates feedstock flexibility and efficiency as the application will be for wheat as its primary feedstock. MSE can work with corn, wheat and its organ blends which opens the door to additional markets around the world. In addition, FluidClip's patent suite just got strong as we were issued 4 new patents this quarter, 2 related to clean sugar, 1 related to protein, which Oil recovery and one focus on enzyme recycling of converting pulp cellulose based material into sugars.

Speaker 2

We also expect more broad patent coverage globally for clean sugar technologies to be issued very shortly as we have been informed by several countries they are coming. The value of FluidClip's IP portfolio is a key differentiator for Green Plains. And while often underappreciated, these latest announcements begin to demonstrate the value of the investment in Fluke technology company whose IP we are deploying to reinvent our platform in the Green Plains 2.0. We have been pointing to this future for some time now and although we have seen some setbacks with the success we are seeing across all of our pillars, the opportunities we are executing on Are just ahead of us and we believe the future is finally upon us and is now. And with that, I'll leave it there.

Speaker 2

Thanks for joining our call today. And then let's start the question and answer session.

Operator

Please limit your questions to no more than 2 at this time. If you wish to ask additional questions, please rejoin the queue. We will pause now for a minute to compile the Q and A roster. Your first question comes from Greg Irwin from Ruth Capital. Greg, please go ahead.

Speaker 4

Good morning and thanks for taking my questions.

Speaker 5

Good morning, Todd.

Speaker 4

Hey, good morning. So, Hygro, down 900 tonnes a day, line of sight on SafetyPro, You did exactly what you said you would do, right? There's been a lot of learning there and it's kind of been Nothing ever goes in a straight line, right? And most investors these days are now starting to look forward to clean sugar. Can you maybe just describe for us some of the things that you learned from the rollout of Hypro that translate into clean sugar?

Speaker 4

Obviously, you're starting in a different place given the owned Fluid Quip here, but I'm sure there's some important things You can share with us, to help us understand what Clean Sugar looks like from an execution standpoint, with all the learnings you've had in the last couple of years. Yes,

Speaker 2

I think thanks for the question. I think our ramp up for sugar will be significantly different from the learnings we had in our ramp up from protein. We underappreciated The difficulty at times to put a new technology in place. But I think as we rolled out more and more of our sites, we learned every day and then we saw better results In terms of how we built them and how we run them. And we're even seeing it today.

Speaker 2

It's just as we optimize our protein technologies, When we built these assets, we thought we'd have a 3 to 3.5 pound per bushel yield. And we now know based on our partnership with Novozymes as well as things we can do mechanically, we will be able to achieve £5 per bushel consistently, Which allows us not only to hit our laid out numbers that we put out there in terms of volumes for 2025, but exceed them as well As we continue to get more and more out of these systems and debottleneck them. Took a little bit longer than I think we appreciate it, but we're going to take those learnings, apply them to Sugar. Sugar is a £200,000,000 to £300,000,000 system that we're building right now. And the difference as well is that we went out and hired What we believe are experts in wet milling and making dextrose, going all quite frankly to crystallize Dextrose as well.

Speaker 2

And so we have set up very, very differently so that it's not Gen 1 dry grind Talent management running these assets, it's actually a wet milling team that we hired from several of the largest in the world I wanted to come work for us on this revolutionary technology implementation because we believe this is really the future of our company. And so on top of that then We wanted to get ahead of marketing the product. In terms of this takes a product longer to market all the way through food, but industrial use of Gross remains high. And so one key differentiator for us was to get on our carbon scores very early Because this product is a significant reduction in carbon intensity, which is a big deal for both industrial and food products. So when we start up, we're focused on Hopefully selling out to industrial markets and then ultimately it should take us about 4 to 6 months to get food grade certified and we are already Food grade certified in the process at our York facility.

Speaker 2

We'll get food grade certified at a better facility in Shenandoah and then start to hit the food market later in 2024 And start to look at where do we go next? Do we increase Shenandoah capacity, which is fully expandable? That's how we designed it? Or do we move to other locations where we have interest in geographic demand that they want us to build closer to their sites Or they want to co locate on our properties. So and we just approached it very differently, but this product is so much more valuable in total To what our bottom line impact can be versus protein, which is why this technology we believe is just such a game changer for us.

Speaker 2

But This one, we're going to roll out very carefully and make sure that number 1, we don't overload the market, but number 2, we come online and think about all the things long before we start these up That can take away some of the length that it takes to start up technologies.

Speaker 4

Thank you for that. So the other big question out there right now is with the MLP not too many weeks away from being consolidated, Let's hope for a small number. This opens up the field for you to much more easily execute on M and A. And in the past, you've been very active and even had some interesting situations where One of the chunky portfolios you had an opportunity to offer a vastly superior Proposal to one of the sellers, I think, because of a tax advantage structure for them. Can you maybe Update us on how active you've been over the last couple of years as far as evaluating assets and whether or not your appetite is likely to be for Single plants or possibly portfolios?

Speaker 4

And what are the complications these days as far as actually executing acquisitions in the broader sort of ethanol plant market?

Speaker 2

Well, that's a lot to unpack there. Let me just focus a couple of things. We continue to negotiate with the complex committee and really can't talk much more than that on bringing the MLP in. And we talked about in the past some of the reasons why we want to do that and we'll just leave it at that just because of where we're at in the process. Secondly, from an acquisition standpoint, we've been on the sidelines a bit.

Speaker 2

They are ethanol plants in general are harder to buy in the size, scope and scale that we want To apply our technologies to them. And as you saw, we divested a small plant. For us, it's just locationally, Geographically and also the way that logistics work out there just won't fit our long term strategy around protein, oil, sugar And decarbonization, but if it's somebody else's, which is good. But it was a smaller subscale plan to what we want to operate in the future. Acquisitions are hard.

Speaker 2

They're expensive. The value of our assets have gone up. If you want to build one today, replacement value for an ethanol plant in the Midwestern In the Midwest is 2.25 to 2.50 a bushel minimum. That's a gallon sorry, 2.25 to 2.50 a gallon minimum And that's before you add on any of our technologies as well. So M and A is pretty difficult.

Speaker 2

We absolutely want to Begin to re expand our platform over the next several years and look for opportunities, but everything got more expensive, Which replacement cost is meaningful in this industry and why is it meaningful because before you even take a look at ethanol margins have somewhat recovered, blends are going up. We believe our technologies can be applied, but more importantly, if you're sitting on one of the pipelines or a summit, for example, Which can get built as quick as probably quicker than most, you're in an advantaged position. And there's going to be the haves and the have nots In the next couple of years of who gets up and running first and that's why we chose Summit as one of our partners is because We think that'll be the halves and that'll get built first and you will have you could have a multiyear advantage over those that are not on a pipeline that is operating yet. That's why people when you look at acquisitions, you have to value very different this industry in the past. And if we get to jet fuel, which you've already seen projects being announced, The value of an asset to produce low carbon alcohol and low carbon feedstocks is just going to continue to go up notwithstanding some of the volatility we faced.

Speaker 2

So We absolutely would love to expand our platform. We don't really want to build a bunch more fuel capacity and we have some sites we can expand a little bit so we can take advantage of Being on a pipeline, but also if you take a look at place like Shenandoah where we're going to take capacity out of the market as we build up our clean sugar that will give us an as well. So they're out there, but it's getting much harder and much more expensive to do M and A in this industry. It's not like it was a few years ago, no matter what the margin is any given quarter, by the way.

Speaker 4

Great. Well, thank you for that. I'll hop back in the queue.

Speaker 2

Thank you.

Operator

Next question comes from Adam Samuelson from Goldman Sachs. Please go ahead.

Speaker 6

Yes. Thank you. Good morning, everyone.

Speaker 3

Good morning, Adam.

Speaker 6

Hi. So I guess the first question just maybe making sure we're clear on kind of the quarter and Kind of how you're framing the second half. I think in the prepared remarks, Todd, you talked to the Wood River Issue and the other unplanned downtime is kind of potentially leaving Up to $0.20 a gallon of margin on the table. As we look forward with the network now Creating at high rates, less downtime in the second half of the year and where the forward curves are at your mix of Hi, pro. Corn oil, is that kind of margin level or that margin level plus Kind of the right way to think about second half EBITDA?

Speaker 2

Yes. I mean it's ebbing and flowing. We saw a nice expansion back yesterday. But yes, I think you're Not far from those ranges today, if not potentially even better. And look, I mean part of our Q2 was also the fact when you don't run and the market expands and the prices go up, you can't execute on high price Contracts then becomes a bit of a double whammy having to buy those in or having to cancel them and to the advantage of the person on the other side.

Speaker 2

For us it was we are tracking really well and unfortunately all of our big sites Hit at the same time and while we had planned downtimes at several of them, they turned into unplanned downtimes as well. And so it wasn't just really just missing the margin, it was actually having to buy in hedges and also buy in sales, High priced protein sales as well that hurt us. So going forward, if we get clean and when as we're clean right now, That's when we have the real opportunity to kind of achieve those type of margins and more. And we saw them higher even since then, but they've come down a little bit As that corn rally went up very fast and now it's come down, I think ethanol numbers are improving again. We saw a couple of weeks of builds.

Speaker 2

So I think we're setting up for a base a pretty good fundamental outlook for just the base fuel in the last half. And then protein, As we indicated, when you have the corn soy spread doing what it's doing and corn sitting around $5 and soy sitting around Our soy meal is sitting over at $4.40 obviously inverted in the next year. It's really in the favor of our Strategy again. And while we got a lot of questions from our shareholders about a year and a half ago when that spread narrowed, I think this ebbs and flows, but it's really favorable For not just last half, but 2024 as well. And we're seeing a good pickup in demand as our product continues to get better and better inclusion rates In rations across all the animal sectors, including pet food and aquaculture.

Speaker 6

Okay. That's really helpful. And if I could just ask a follow-up on HyPro commercialization. You talked about A 60% sales that are that you're working on and selling getting those sales done In the Q4, can you help us frame where the premium versus regular soy meal or regular UHP would be, just as we think about the incremental contribution from getting meaningful portions of your production to a 60% level And what it will take to push a higher proportion of your HyPro production up into that 60% range.

Speaker 2

Yes. Our first step is just to start competing really as a replacement for corn gluten meal And soy protein concentrates and that's really where our replacement is. As we've seen soy meal increase and the corn spread Corn and soy spread go in our favor for 50 Pro when you're competing Against a corn gluten meal, the spread between corn gluten meal and soy meal have narrowed a bit. So while we'll deal with that a little bit, What we can see today is at least on paper a $0.14 to $0.17 uplift again It's kind of how we're thinking about almost a double the margin again. Now that's a starting point and we want to get involved in these rations.

Speaker 2

But the demand that we're Seeing at least nearby is coming from outside of the United States in terms of aquaculture for 60 Pro. And then we're working on significant demand within the United States next year in 2024 for aquaculture and pet And other areas and really in the early stages of swine. So we are just starting to we have been working significantly hard on The program over the last 6 to 12 months and getting into different rations and getting through a lot of the evaluation And we're at the end of those with very, very good high marks. But again, that's spread narrowed between some of the higher protein products and soybean meal just because of the front end soybean meal curve. So but overall, if we had to look at it on paper, we kind of look at the base margin in 50 Pro, somewhere would be kind of 0 point dollars0 a gallon today.

Speaker 2

The base margin in 60 Pro starting at kind of $0.30 to $0.40 a gallon uplift today. And really just some of it depends on market, some of it depends on what where we're going to go in the world, some of it depends on freight. But overall, we see a significant uplift To that and overall great acceptance of the product. What's really unique and differentiates Green Plains from anybody else As with our new plant JV coming on in early 2024, our redundancy is a key and critical component and our volume is Key and critical component that we can now sell you 50,000 tons, 100,000 tons, 150,000 tons. It really there's not a limit there relative to an inclusion rate.

Speaker 2

And that's a game changer when you talk to a customer instead of having to sell them 4,000 or 5,000 tons. So redundancy really matters and it will matter even more in 60 Pro Markets.

Speaker 6

All right. Great. That's all helpful color. I'll pass it on. Thanks.

Speaker 2

Thank you very much.

Operator

Next question from Kristen Owen from Oppenheimer. Please go ahead.

Speaker 7

Hi, good morning. Thank you for taking the question. Just dovetailing on that last response. Todd, you mentioned in the prepared remarks that you're planning to move a single facility or About 20% dedicated capacity to 60 Pro. So can you just talk us through what you're hearing in the market that's giving you the confidence that you can allocate that capacity to that higher level protein.

Speaker 2

What we're hearing is really preparing for shipments hopefully in September to satisfy Q4 demand that we're working on today in late stage negotiations. So we can't just turn it on overnight. It takes about a week or 2 just to start to Get the plant fully switched over from 50 to 60 Pro. We got to make sure that we work with our biology partners to make sure we have the adequate Inputs that we need in fermentation that just takes time. So a little bit is you have to anticipate what stages you are in discussions.

Speaker 2

And when we look at the size of the discussions we have to convert one of our plants fully to 60 Pro It's going to be the best outcome so we can satisfy it. It's a bit of chicken and the egg. When they want it, you better have it. And I think We learned that in our 50 Pro is that we built inventories on 50 Pro And it took a little time to work through those inventories. But because we had those inventories, we were able to really start to get traction in the 50 Pro market.

Speaker 2

We're going to have to do the same thing in 60 Pro, Start to build inventories later this quarter so that we can satisfy what we believe is demand. And we're not just seeing demand from a standpoint of ship me a truck or ship me a Or even a container, we're actually starting to see enough volume that we're potentially starting to ship pieces of vessels as well around the world. So There's enough it gives us enough confidence that it's time to make a switch to one of our plants and have the product available in the market.

Speaker 7

And just a clarifying question on that. We're talking multiple customers in multiple end markets or just a little bit more color that you can provide on the customer standpoint?

Speaker 2

Multiple customers, multiple end markets, multiple geographies, some as big as vessel holds, not vessel quantity, not a full vessel. And even down to 1 truck at a time and we just want to be prepared to ship and be ready to go. We've been in significant trials, evaluations. You can go on and on tests, labeling, all the things that are really important To our customers, we've been working on that for well over a year as we had been indicating to everybody. It takes It's a long process to get here.

Speaker 2

We thought it would take us 3 to 5 years and it's as we said it took us 3 to 5 months to make it. Now we had now it takes about another year kind of get through all of the evaluations because once we made it, it's been in the supply chain. It's been in evaluation. And so far, We haven't really seen any market that has come back to us to say, hey, that didn't work for us. And so our opportunity and what we can propose to customers around everything From performance taste as well as carbon intensity is extremely beneficial.

Speaker 7

That all sounds very positive. One follow-up Question unrelated, just given some of the discussion around rerating of the asset footprint and replacement cost, Any indication that you can give us on the transaction value for Atkinson? What we should anticipate in terms of cash on the balance sheet from that? Thank you.

Speaker 8

Yes.

Speaker 2

We're in confidentiality with both sides of this transaction and it's it was a smaller site And from that and it didn't have rail. I mean there's a lot of things on this site that didn't match what we wanted. So relatively speaking where It's not really a material transaction, but it's definitely enough cash for our balance sheet that makes a difference as well. So but we're in really great financial strength without this as well. I mean That's just one more step.

Speaker 2

As I indicated, our free cash flow generation at least based on current markets should pretty much cover a lot of our CapEx In terms of our growth initiatives, which really just leaves us in a very similar financial position at the end of the year going to 2024 with potentially Madison or Fairmont getting their permit later this year. So especially Madison, Fairmont will take a little bit longer than that. So we just want to make sure we were positioned From the standpoint of being able to execute on where we can really make the money and be accretive and that's why we executed on this transaction. But We would not have put any of our technology at this site. So it really didn't match our long term needs.

Operator

Next question from Manav Gupta, UBS. Please, Manav, go ahead.

Speaker 5

Hi. I wanted to understand a little bit better. We are seeing A rebound in corn oil prices, but we're also seeing rebound in animal tallow, soybean oil. So it appears all pretty much all RD feedstocks Are on an uptrend, help us understand what's driving it. Is it a function of the plants running a lot more reliably now ramp Or does it have something with the supply side also Argentina just not being able to supply enough soybean oil?

Speaker 5

So the whole market is tight. If you could just talk about the Dynamics of the R and D feedstock market?

Speaker 2

Yes. It's interesting when the market was in the 40s 50s, we were selling we are still selling our oil at kind of 5 to 12 over that market. So that was just the market for corn oil distillers renewable corn as we call it renewable corn oil. Now that the soybean meal market has rallied on the front end a little bit, those sales obviously from the standpoint of doing basis sales are beneficial But beyond that, we are still selling at a premium to that. I mean, I think there's just multiple factors.

Speaker 2

I think There's not a I don't know that the supply is the issue. I think demand is just becoming so robust that we're starting to see really good uptakes of oils into renewable Diesel, more importantly though, when you kind of look at some recovery in LCFS, when you look at the value of CI points For what we produce and even tallows, when you look at the low CI feedstocks, we have not really seen anywhere where those will trade anywhere the discount to soybean oil anymore and in fact as we move towards 2025 which is just not that far away, We have a benefit to the end users because of the IRA To use more corn oil. So we're really in a really good position. What we didn't mention at Manav as well is that FluidQuip continues to see in their technology expanded yields before we even get to SFCT technology. We are implementing one of their technologies, new technologies in Wood River over the next several months, which we believe has the capability to increase our yields At an MSC facility to kind of 1.3, 1.4 and they've already seen those results at an earlier application At a non Green Plains plant that they had a different system running already.

Speaker 2

They upgraded it. So now we're going to take those findings and apply it. So we're very confident in our ability to produce oil, but I think it's really just demand is finally showing up. And I think supply has not really grown, Quite frankly, I mean we're not making any more oil as an industry. We're not making it soybean oil.

Speaker 2

There's not a bunch of new plants that started up in soy crushing that's coming. But So the supply hasn't really expanded while demand is finally kind of exceeding it again.

Speaker 5

Okay. And a quick follow-up here is the Wood River outage kind of hit you multiple ways that hit your ethanol production, corn oil, Also your Ultra High Pro help us understand a little bit better during the OSHA investigation or otherwise What are some of the lessons learned here and what can be done to make sure something like this does not happen again? Thank you.

Speaker 2

Well, we don't want to ever want it to happen. I think it was an unfortunate event. It was during the shutdown. We can't really get into a lot The details, OSHA has released the plant back to us and we're already preparing during the end of that To bring that plant up as fast as we could. Took a little while to get protein and oil running.

Speaker 2

We just want to make sure the team was good and stable. But look, These are incidents that we never want to happen. So I mean we learn from every incident like this. It's unfortunate. It is hard on the team.

Speaker 2

It's hard on Company overall, it's not just the Wood River facility. We are certainly cognizant of what it can do To our employees and I think it just had multiple effects across the company. But it's there is as we move on we'll just take our learnings. But I think overall We are running that plant full out again and the team is in good shape and OSHA Has released the plant back to us. So we'll move on and learn from that.

Operator

Next question comes from Salvator Tiano, Bank of America. Salvator, please go ahead.

Speaker 8

Yes. Thank you very much. I actually want to get a little bit more color on the rest of the outages. So firstly, if I understood correctly, given the $0.15 to $0.20 impact that you said on consolidated margins. It seems to us that it's probably another $10,000,000 to $20,000,000 impact that you saw in other facilities besides Wood River.

Speaker 8

And does this make sense? And also, What type of outages were they? Did you uncover essentially things during plant turnaround that needed to be repaired? Or were they Or simply things broke down throughout the quarter?

Speaker 2

Yes. I think it was a little bit everything you're talking about and on top of that, you have the domino effect of having good hedges on in an expanding market, having good sales on Of high protein in a decreasing market, which then you lose those and you have to exit some of those opportunities. And so It was yes. It was a combination of the fact that we were in shutdowns that took significantly longer to bring back up as we found more Areas that we needed to repair. And then overall, we had some significant Unplanned downtimes of things that just happened during the quarter.

Speaker 2

It was a bit of a perfect storm. We weren't expecting it. But what we were able to do then is during those, our operations team again, we brought in a new head of operations. He's built team around him, they got their head around it. We are highly skilled and highly competent across that team.

Speaker 2

We brought in people across Industries from refining all the way into wet milling all the way into dry milling and built a really new team as we had turned that team over. And they had kind of hit it hard and set us up so that during that time at least we were able to quickly mobilize, take advantage And get through some of the things we would have done in the last half at our normal shutdowns, fall shutdowns and we cannot have we're not going to have to do some of those now, which going to be helpful. So it was just a bit of a perfect storm that hit us. Unfortunately, we had ourselves set up for a pretty good quarter. And then between Wood River, the spiral effect of locking things in and then having unplanned downtimes Just hit us hard and we'll move on from that and just run full out as best we can during the last half And show everybody what this is capable of because we could have shown it in the Q2 and just it just was not able to execute because of those couple of reasons.

Speaker 8

Perfect. And as a follow-up, you mentioned you're in the final stage of negotiations for the 60 Pro volumes in Q4. I personally at least was under the impression things were more firm in terms of sales there. So is there any risk that Negotiations may not yield the outcome that you would like and you may actually not sell 60 crores volumes here. And It's been a while since you announced obviously the official partnership with Reburn.

Speaker 8

So, how are things progressing there as well?

Speaker 2

Yes. So I don't think we gave anybody a certainty of sale, but what we did say is we're negotiating in the Q4. We feel like now we're in such late stages that We're even negotiating destinations, price, all those type of things. So we know we'll make it into some rations into the Q4 and that's why we're now starting to ramp up. It takes It will take us a good 30 days to get into full production rate even though we can start to hit it within a few days, but just to get consistent and make sure that the plants lined out running well.

Speaker 2

But that's why our confidence has gone up relative to starting up one of our 60 Pro plants even earlier than probably we thought We're going to do. Our RiverFront partnership remains strong. We are already in one of their rations through one of their 3rd party suppliers. We know that for a fact. Working on getting into another ration of theirs.

Speaker 2

We know that our product is very valuable. Our partnership has remained strong. We're looking at Their volume going forward and what we can do together and where we should really place our asset, it's a long game When you think about the feeding cycles for what they do and what the other salmon producers do around the world, this is a 2 year cycle almost From the time you start till the time you harvest an end product. And so we have plenty of time, but The partnership remains strong. The asset base is starting to be thought of.

Speaker 2

There is an asset in the middle of that already. And we hopefully will start to The benefit, the full benefit of that partnership over the next kind of year or 2. But it's a long game when you think about the speeding cycle of these companies and the growth cycle of these Not many better than Riverrents in the world and I can only assure you that our partnership It's strong in place and looking for where we're going to continue to expand it.

Speaker 8

Thank you very much.

Operator

Next question comes from Laurence Alexander, Jefferies. Please go ahead.

Speaker 9

Hi. This is Dan Rizzo on for Laurence. Just a quick question. Are there any lingering costs associated with the combination with GPP that's going to occur later in the next couple of months?

Speaker 2

Yes. I would say there's depending on where we get to in the transaction, there's still absolute merger costs That could happen. We need shareholder votes. We need there's lawyers. There's several things in terms of filing.

Speaker 2

So, yes, I would say There's deal fees, all those type of things have to happen. And but overall, we could break those out. And they're all one timers, but I think the overall benefit of bringing them in would greatly exceed that if we can get this deal done.

Speaker 9

And I'm sorry if I forgot this, but have you quantified what the synergies are With doing this, the cost savings are?

Speaker 2

Yes. I mean, what we said is, number 1, By bringing the partnership back in, obviously, we don't send some of Our money out the door in terms of fees, we get that back in, but we're paying for that, some savings in SG and A and So overall interest savings as well potentially as we will look to do see what we do with that piece of debt. So but we're still negotiating with the complex committee and we should have more on that During the quarter.

Speaker 9

All right. Thank you very much.

Operator

Next question comes from Jordan Levi, Trist Securities, please go ahead.

Speaker 10

Hey, all. I appreciate all the commentary and the improved outlook you talked to in The back half of the year, maybe if we could just unpack that a little bit more and help frame up how we should be thinking about What run rate EBITDA might look like given the levels you're running at on protein right now and what you're seeing in crush and DCO?

Speaker 2

Yes. I mean, I think when you kind of look at it, it's on paper similar or better to the margins We locked in during Q2 overall. And depending on where we see ethanol perform, we got to watch the corn market closely. I mean Bombing a Black Sea port from the Ukraine to Russia doesn't help our crush, but overall the crush expanded. The numbers came back in line.

Speaker 2

Run rates were overly stated in our opinion last week at 10.90. It's probably not possible, just doesn't stay there very long. And I think we'll get some better EIA data going forward. I think we're below last year's stocks levels. Blending continues to increase.

Speaker 2

RIN values have not broken since the Updated RBOs at all. So if you look at kind of retailers are making plenty of money blending ethanol. We're seeing more and more E15 type, 88 octane sales happen to the consumer. We've even seen uptick in E85 sales, which We didn't know how much traction that will continue to maintain over the years. But when you look at corn oil alone, Relative to the first half, just take prices where they're at today.

Speaker 2

I mean that alone is in that 70 $5,000,000 to $80,000,000 range just contribution where the first half was more of a because of prices and the volatility is more in that $50,000,000 to $60,000,000 range in the first So that alone gets us back. We got the question once.

Speaker 4

How did you come

Speaker 2

up with $0.70 or $0.70 a pound in your long term view Of oil and I think it's taking shape nicely. And so protein as well, we've got to deliver on some of these 60 Pro sales, but overall We should start to really see a nice protein uplift. And we're not we are looking forward to the day, which is It's going to come soon. We'll be able to really break out last half protein numbers for you, but I can tell you that it's on pace with what we had previously indicated. On top of that, Flukekit will start to gain some traction on some of the sales that they start to make.

Speaker 2

Remember, when we make a sale in Flukekit, it actually increases EBITDA at Green Plains, there is a margin on technology and they're working on incredible technology opportunities well outside of protein what they do. And so they have a much bigger engineering and construction and technology business as well. So we're looking forward to their contributions and we'll just have to wait and see where ethanol comes in. And even the last half on Ag and Energy is usually stronger than the first half than we because 3rd and 4th quarters is really we start to kick in on And that as well. So overall, when you kind of look at it, on paper, it's greater than what we were logging in, in the second quarter and we'll have to see where it goes from there and

Speaker 10

Think gears over to the regulatory front. Looks like the administration is working through how to think about Ethanol as a feedstock for SAF, just curious how what your thoughts are there and how they might look to approach That and what implications that might have?

Speaker 2

So I have Devin here with us who you guys met on our IRA teach in except to say and I'll just lead it and I'll let Devin give you A little more color. We're very focused on making sure that the regulations are in place that give ethanol as good of a shot as anything And alcohol, first step is to decarbonize, which is why we're very happy with the choices we've made around our decarbonization strategy and being up what we believe will be earlier than a large part of the industry because of the choices we made. But overall, it looks like we're Good bipartisan support for making sure that the modeling is thought of correctly and I'll let Devin comment on that a little bit.

Speaker 11

So like we said on the IRA teach in, we want to see the Department of Energy's argon to serve as primary feedstock for Alkaldajet saff. We saw some encouraging comments from the President just last week in Maine, Where he said that farmers have a vital role to play in producing staff. So that was encouraging. We expect to see regulations put out by Treasury As early as next month, September, on the current 40B SaaS tax credit and then shortly thereafter for 45Z. And there's a lot of discussion, but as Todd mentioned, tremendous amount of bipartisan support from both the House and the Senate to continue to encourage the administration To allow for decarbonized ethanol to serve as a feedstock and help to meet the SAAF Grand Challenge goal of 3,000,000,000 gallons by 2,030, Which we don't believe is possible unless you use these agriculture row based feedstocks.

Speaker 10

Very helpful. Thank you.

Speaker 2

Thank you.

Operator

Next question comes from Eric Stine, Greg Hallum. Please go ahead.

Speaker 3

Good morning, everyone. Good morning. Good morning.

Speaker 2

Hey,

Speaker 6

just going back to 60 Pro, I mean, is this a matter more of Just the market or your place in the market developing, I mean is there any reason as we think long term That your entire platform isn't 60 Pro? And just to confirm, I believe you said that in the near term, you're hoping 20% to 30% would be 60 Pro?

Speaker 2

It's why we built them, Eric. I mean, we didn't build our systems to run 50 Pro. We built them because we knew with our partnership With Fluidip and our investment there that we've made and the amazing technology they have and the consistency of their product and the way it flows and the way it looks and the color of it, It's very different than anything else available on the market, the way we dry it, the way we process it. It's just consistent. We have no problem consistently $50,000,000 $52,000,000 anything we want to make on demand and gaining large yield increases, which is why we did it as well.

Speaker 2

But we bought FluEquip And we invested in FluEquip with our partners to make 60% protein and more and greater. And so Our whole platform and our whole marketing efforts over getting into 2024 and 2025 have been to maximize our Market penetration in 60% protein. And that's where we believe we're heading. When we look at a new plant where we want to build the next one, we basically have to say if we push yield and we push protein, We also know that what is our fiber product going to look like as well because we are creating new products. We are creating yeast products.

Speaker 2

We're Fiber products when we make 60 Pro, it's a very different outcome. But yes, our intent and our plan is to go as far, as fast and as Quickly as we can in the highest amount of volumes to move to a 60 Pro market and we are focused on doing that. It will take a while Because it has to be a global outcome. And so now we're working with partners globally as well for distribution and talking with potential partners And distribution as well because you're going to have to this is a global product and we think that's where the best place is To really get max penetration against products everything from corn gluten meal to soy protein concentrates all the way to what we're doing On our biological opportunities in terms of taste and texture and profiles to even start to think about Things like fish meal replacement as well. And that's really where that's the ultimate Pandora's box that we continue to try to solve for every day.

Speaker 6

Got you. And then, I mean, I guess not to totally try to pin you down, but I mean in terms of timing, you said it will take a while. I mean Is that 2, 3 years out or is that it's going to take 5 plus years?

Speaker 2

No, it's not 5 years. I can assure you I can assure I mean I can almost assure you of Every time I say I can assure you it's probably not the best thing to say, but it's not 5 years out. I mean our program has fully been designed and the people we brought in To help market this product and sell it, all have experience at the higher protein levels and customer base. So it's just time. It's not going to be matter.

Speaker 2

In our view, it's not a matter of if. Can we do the whole thing? We should be able to. I mean, there's 10 10,000,000 tons of demand globally, if not greater than just for things like corn gluten meal and more for soy protein isolates and so protein concentrates and those type of things. And we brought a new leader to the team that came out of Cargill that spent his time globally In different protein and aquaculture businesses and he's now running our protein marketing As well.

Speaker 2

And so we're tracking that type of talent to this company so that when they show up at the door, they have Great customer relationships, but also a lot of credibility from where they came from to where we're going. We've built teams around all of our products, clean sugar and protein. Cornell is a little easier. They just call and they buy it. But in those products, We want to make sure that we staff those with deep technical and marketing experience And that just really didn't exist in the Gen 1 industry.

Speaker 2

So we're tapping that from all of our larger counterparts In Agriculture and Energy.

Speaker 4

Okay. Thank you.

Speaker 2

Thank you.

Operator

Our last question comes from Andrew Strelzik from BMO Capital Markets. Please go ahead, Andrew.

Speaker 12

Hey, guys. This is Ben on for Andrew. Just one quick one on the ultrahighprotein EBITDA build. Todd, I think you alluded to this earlier, but you guys seem to still be on track for $150,000,000 run rate by the end of 2020 4, if you could just briefly kind of walk us through the path as to how that looks. Obviously, we've heard a bunch on 60 Pro at the beginning of the year, but just trying to bridge that gap into 2025?

Speaker 12

Thanks.

Speaker 2

Yes. So when we look at it, basically when we think about it, today we have 560,000,000 gallons converted And we're going to have half the Thiralson JV, half of our turnkey. So that's has about 85,000,000 gallons converted. And then when you add at least 1 of the 2 Fairmont or Madison that's 760,000,000 gallons converted. When you look at how much corn we grind there at in terms of a yield And then you take that times what we believe will be by the time we get there 4.5 to £5 a bushel And then you're hitting higher targets volumetrically than what we had outlined.

Speaker 2

And then when we look at 2024 And as we leave 2024 with 20% to 30% of our capacity in 60% from going to 25%, when you put all that into the calculator and we'll be very happy to do that. Can't do that right now on this call. It meets or exceeds those targets relative to $0.15 to $0.18 a gallon uplift on 50 Pro, $0.30 to $0.40 a gallon uplift on 60 Pro, not including all the other opportunities that our innovation team works on to increase value of our products even further In terms of that product suite and things like dry yeast and 60 dry yeast, 60 Pro Yeast, those type of things. And when we've kind of put that all in, we are even more confident today with the things that we're seeing driven by yield, Driven by protein, driven by price spreads, driven by innovation that we can hit that $150,000,000 to $200,000,000 A mark that we laid out and then build from there.

Speaker 12

Awesome. Thanks Todd. Have a great weekend.

Speaker 2

Thank you very much.

Operator

I will now turn the call back over to Mr. Becker, CEO for closing remarks.

Speaker 2

Yes. Hey, thanks everybody for being on the call. A lot of questions, a lot of great questions. We really appreciate it. As you can see, we're making great progress across our product suite.

Speaker 2

Challenging Q2. We appreciate that. We've come out of it better than where we were in it. Plants are running better. Protein is running great.

Speaker 2

Sugar is on track. Oil markets have recovered significantly From the quarter lows where we're down into the 40s, now we're up into the 70s again, high 60s. So overall, we think in a good place to show what the opportunity is in the last half and deliver a few quarters and make sure you're confident that we can deliver on 2024 and 2025. And Our takeaways from 2023 going to 2024 and our exit run rate in 2024 goes into 2025 and that's why we're extremely confident between decarbonization which those numbers have only gotten better To hit those 25 numbers that we laid out and begin to hit those in 2024 as well. So we appreciate your support and we'll talk to you next quarter.

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Earnings Conference Call
Green Plains Q2 2023
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