Green Plains Inc. Q1 FY2025 earnings call

• Cost reductions: Well on track to $50M in annualized cost savings, with $30M already achieved and another $15M unlocked, aiming for final $5M. SG&A run rate expected to decline from $118M in 2024 to $93M annualized by year-end.
• Operational excellence: Nine active plants had highest utilization on record, RTO project in Obine nearing completion, focus on commercial discipline, cost ownership, capital efficiency, people accountability, and KPI-driven execution.
• Strategic partnerships: Long-term marketing partnership with EcoEnergy to enhance scale, transportation, and marketing economics for ultra-low carbon ethanol. Protein business making progress with shipments and expansion into new markets.
• Carbon initiatives: Construction of carbon compression infrastructure for Advantage Nebraska on pace, aiming for Q4 start-up, and active monetization of 40 and Q credits.

For the first quarter, revenue was $601.5 million. The ethanol segment had 9 active plants with a record % utilization in Q1. The protein segment saw commercial shipments of sequenced 60% protein start, with plans to grow volume from 20,000 tons in 2024 to over 80,000 tons in 2025 for the South American market, and pet food trials progressing. Revenue contribution details weren't explicitly broken down by percentage, but ethanol was a key segment with operational focus on utilization and margin improvement.

• Cost reduction: Well on track to $50M annualized savings, with $30M already achieved and $15M unlocked, expecting final $5M. SG&A run rate to exit year at ~$93M annualized.
• EBITDA: Currently positive for remainder of 2025. Carbon platform expected to start up in early Q4, contributing to EBITDA.
• Hedging: Disciplined hedging of margins, locking in opportunities when market presents, with systematic approach supported by analytics and fundamentals.

• Wastewater issues: Clean sugar technology initiative in Shenandoah paused due to wastewater challenges outside the company's walls.
• Tariffs: Potential retaliatory tariffs on ethanol exports could impact business, though no adverse impact seen yet.
• Market conditions: Ethanol market seasonal weakness, inventory levels, and blending demand risks.

Q: Asks about hedging practices, including layering in longer-dated positions and instrument types.

A: Emre Havasi says hedging is good practice, done when market opportunity presents, with systematic approach using analytics and fundamentals, locking in simple crush and co-product margins with strict limits.

Q: Asks about CEO search update.

A: Michelle Mapes says CEO search process is ongoing, nearing final stages, looking at all candidates with attributes to be determined.

Q: Asks about carbon capture construction timeline.

A: Michelle Mapes says construction on pace, early Q4 start-up expected, with weekly calls with Tallgrass team. Chris Ossowski adds on progress of compression equipment and team readiness.

Q: Asks about tariffs impact on exports.

A: Emre Havasi says no adverse impact seen yet, but tariffs on ethanol exports could be industry impact, with protein exports not currently affected by tariffs.

Q: Asks about ethanol commercial strategy and realizations.

A: Emre Havasi says ECO partnership is marketing partner for execution, not risk management, leveraging scale for market access, arbitrage, and exports. Phil Boggs adds on working capital efficiency from the partnership.

Q: Asks about noncore asset sales details.

A: Phil Boggs says looking at non-core assets like closed businesses, JVs, focusing on core operations.

Q: Asks about EBITDA positivity quarterly and hedging basis.

A: Michelle Mapes says EBITDA positive quarter by quarter, Emre Havasi says hedges mostly in Q2, with Q3/Q4 still open.

Q: Asks about ethanol inventory and export demand.

A: Emre Havasi says current inventory 25 million barrels, export demand strong with potential to hit over 2 billion gallons in 2025, but risks include lower blending and gas demand.

Q: Asks about corn business profit contribution.

A: Emre Havasi says corn oil contribution positive due to premium and index pricing, expected to continue in Q3/Q4.

Q: Asks about existing strategy reflection and hedge pacing.

A: Michelle Mapes says strategy remains on protein, corn oil, carbon, with Emre Havasi saying hedging depends on market opportunity, not a fixed percentage.

Q: Asks about clean sugar initiative pause and asset value.

A: Chris Ossowski says clean sugar initiative paused to maximize Shenandoah site profitability, Michelle Mapes says asset replacement cost varies but assets expensive to rebuild.

Q: Asks about liquidity and cash stability.

A: Phil Boggs says focused on maintaining liquidity, aiming for cash positive in Q2, with carbon and crush opportunities to drive cash generation.

Q: Asks about asset replacement cost per gallon.

A: Michelle Mapes says replacement cost varies by asset, but assets expensive to rebuild, Chris Ossowski adds on different plant designs and performance improvements