Good morning and welcome to the Green Plains Inc. Fourth Quarter and Full Year 2023 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 will 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, everyone. Welcome to Green Plains Inc. fourth quarter and full year 2023 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 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 statement. 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 reported a solid quarter this morning with $44.7 million in EBITDA and a plant utilization rate of 95%. In addition, this was our highest quarter yet of Ultra-High Protein production, along with our highest ever corn oil yields, but we still have further to go and more to unlock. Our team continues to execute on maximizing the opportunity across our entire platform, and we believe there is additional upside on our portfolio of assets that we aim to achieve as we move through 2024. This quarter and the start of 2024 had many events that has led us to this point, where our structure has been simplified and we are ready to bear the fruits of our labor on the path we laid out a few years ago and feel highly confident in our ability to achieve our goals. Before I dive into the quarter, we also announced a strategic review this morning. As you can see in the 8-K we filed, we have entered into a cooperation agreement with Ancora. Our board believes our company is undervalued, and we will embark on a strategic review to best determine how to maximize our value for all shareholders as we aim to achieve new milestones over the coming months, which I will talk about later in the call. These are, as you know, far-reaching processes, and we will explore all paths to value realization. We will have nothing further to announce or discuss regarding the strategic review at this time. Moving on to the results, we were largely open and unhedged in the fourth quarter, which started out quite strong, as we talked about, and then rapidly tailed off as the quarter progressed. Market fundamentals remained weak…

Thank you, Todd, and good morning. Green Plains' consolidated revenues for the fourth quarter were $712.4 million, which was $201.7 million, or approximately 22% lower than the same period a year ago. The lower revenue is attributable to lower prices for ethanol and dry distillers grains in Q4 of '23 as compared to the same period a year ago. We saw a drop in our commodity inputs with corn and natural gas down significantly year-over-year, contributing to a solid improvement in operating income for the fourth quarter compared to an operating loss in the same quarter of 2022. As Todd stated earlier, our plant utilization rate was 95% during the fourth quarter. That compares to a 93.4% run rate reported in the same period last year and slightly improved from 93.9% from Q3 of 2023. We anticipate our plants to continue to perform in the low-to-mid 90% range of our stated capacity for 2024, barring any events outside of our control. For the quarter, we reported net income attributable to Green Plains as $7.2 million, or $0.12 per diluted share. That compares to a net loss of $38.6 million, or $0.66 loss per share, for the same period in '22. One thing I'd like to note, our diluted share count for the quarter and year was 58.9 million shares. This share count excluded the shares representing our outstanding convertible notes because using the as-if converted method would have been anti-diluted for the periods I stated. EBITDA for the quarter was $44.7 million compared to the $5.7 million in the prior year period. Looking at the last two quarters of 2023, when our platform utilization was strong and we ran at our targeted level, EBITDA for these six months totalled approximately $97 million, a vast improvement over the negative $43 million…

Hey, thanks Jim. And so we have so many game-changing, exciting things happening at Green Plains, I could take a few hours to go over it, but I'll give you some highlights instead. We are in the process of beginning to commission our first, and the world's first, commercial-scale Clean Sugar technology system that enables a dry-grind processing facility to make commercial quantities of dextrose for use in industrial food and chemical processes and this is located at our Shenandoah plant in Iowa, and we believe we will be ready to begin delivering product in the beginning of the second quarter. On the customer front, we continue to have strong interest in our low-carbon intensity dextrose products. Stay tuned for some announcements on commercial agreements as we are in late-stage negotiations with several current counterparties for a significant portion of our production over the next several years. With up to 40% lower carbon intensity than a wet mill, and we validated that in 2023 and continue to with life-cycle assessment for our dextrose compared to life-cycle assessments for U.S. corn wet-milling industry and the other European industries as well and we believe, and it's actually happening, it would be a game-changer for us and could ultimately reshape our entire company. We expect to see results quickly, and our team is already working on a second, even bigger location, where to put it, but we will have further insights on that to share in the future as well. Our protein, we continue to see strong demand for our ultra-high protein products. We are nearing some commercial agreements on 60% protein, but before we get to that, the fourth quarter was our strongest quarter yet on 50% production and sales, and we continue to broaden our domestic and export customer base, yet…

[Operator instructions] We'll go first to Kristen Owen at Oppenheimer.

Great, thank you for taking the question. Todd, I realize the answer to this is probably all of the above, but I want to start here with your comments on just all of the milestones that you're expecting in 2024 on track to the 2025 EBITDA run rate. Given that the stock is now trading below your replacement value, I want to ask you, what's the fulcrum that tips the balance for GPRE into this 2.0 transformation? We've kind of seen what is to come on protein. Is it sugar? Is it carbon? Like, what really tips the scales here, and how do we think about that in the context of this replacement value, sort of valuation discussion?

I think when we look at what's the fulcrum, it's really going to come through free cash flow generation and when we think about how we've cleaned up our structure, and we look at the opportunity in '25, and that will begin to start generating significant free cash flow and by '26, you're not just zero net debt, you're negative, you're in the positive situation from the standpoint of you continue to build cash. And I think that's what we really set ourselves up for, because when we kind of look at our ability to get to where we want to go, a lot of the capital has been spent, some left to be allocated, but there's also some upside as well. So when you look at all of the segments, the IRA Act obviously is a big deal since we started this, and we think that carbon alone has increased in the opportunity. Our ability to commercialize 60-Pro is also a big, big opportunity for us and then lastly, when we look at our clean sugar technology, and our corn oil on top of that, all of that, when you add it all together in '25, it starts to generate significant free cash flow returns and that's really what we set this up for, which is why we simplified this structure. Where before it was a bit convoluted in terms of how do you get the money to the bottom line, and instead of just focusing on EBITDA, we're going to focus on EPS and free cash flow generation, but look, some things have to happen. We've got to get clean sugar up and running, we've got to think about where number two is going to be, we've got to continue to build out our protein systems, and continue to commercialize 60-Pro and we would like to see a bit of a recovery in value-added prices, but that advantage that comes in is something we're looking forward to in '25, but I think the bigger thing really is this base ability to get a return on carbon capture is something we didn't really plan on being this interesting and I think when you add all that together, that's why I think at this point, not including the base fuel, which by the way, we believe will be more valuable as you decarbonize. When you -- that's why we at this point, we think that '25 range of guidance that we have put out there is still solid, but it all comes down to the structure of income statement and I think the structure of income statement is changing dramatically with our ability to get money to the bottom line very easily now.

So then I want to ask my follow-up question a little bit more granularity on the carbon side, since that seems to unlock so many of these sort of lists for you. You've talked about the advantaged facilities in Nebraska. You've outlined the EBITDA potential there. Can you get a little bit more specific on the milestones? Maybe once we get past that Class VI well approval, what needs to happen next? And maybe talk about your structure of that participation relative to what we've seen in your structure with Summit.

Yeah, we can't really get into because of some of the agreements that are in place with each of the different structures, except to say that what we've laid out in terms of Nebraska, what are the milestones? Their ability to get the Class VI well permits, which Wyoming has started to issue and this company is next in line for that. Our ordering of compression equipment, which we are in process of finalizing what is needed and then the construction of that. Couple of things we'll have to do in Nebraska in terms of upgrading their pipeline, which I think they're doing anyway. It's a very solid company and then I think when we have all that, it looks like a mid-25 startup and we're not that far away from that, because a lot of work is being done already. They already have been building new laterals for their natural gas to move off of different pipelines. So all of it's happening. The money's being spent. The difference in this project is the pipes in the ground already. So that's where you think, when you look at Nebraska, it's in an advantaged situation in a much earlier starting point, but that doesn't mean the rest aren't going to come as well. It's just timing at this point, but the econs in Nebraska, what we've laid out, is as we start up mid-year '25, hopefully, which I think we're on track at this point for somewhere in that range, you start generating base load earnings over $100 million a year annualized, just on the three Nebraska plants. So when you look at that, and I'm looking at it very carefully, when we look at capital allocation, the fastest paybacks, quite frankly, are trying to get more volume out of some of those sites. It doesn't mean I'm going to do a double or anything like that of our sites, but adding a fermenter or adding some grind or adding to some capacities to take advantage of these fast-paying projects, you could supercharge those earnings out of Nebraska pretty fast and that's what we're looking to do. Those base earnings are so strong and so powerful that those first couple years when they're in 45Z, and hopefully we get 45Z extended, that's some serious cash generation. That's what we're going to go after pretty hard.

Thanks so much, Todd. I'll take the rest offline.

We'll move next to Jordan Levy at Truist.

Good morning, all. Todd, I know it's difficult to really give any concrete outlook here with the volatility and crushing all of that, but I'll ask you anyway. You've got Clean Sugar and Beryltone starting up. You're getting going on 60 pro sales. Utilization generally appears to be trending better. Maybe just help us walk through how you're thinking about the high level 2024 EBITDA trajectory here?

Yeah, The base fuels started out weak, so we have to deal with that, but I think overall, it started out weak last year, but actually at this point this year, we're better on the market than last year, if that makes any sense. So, and this cold snap was actually a little bit of what this industry needed to draw some stocks pretty hard and get production offline, and it's taking a little bit longer to come back online. That doesn't mean it won't come back online, but we're also seeing an uptick right now in blending in some markets. We're also seeing an uptick right now in some export takeaways with some new interest coming in as well. We're trying to assess that to determine on that base fuel and what we do and what the opportunity is. But when you look at it year-over-year at this time, it looks better than it did last year, but again, as we all know, that's a very volatile part of anybody's portfolio. Our key milestones, as I kind of referenced here, was we want to be able to make Dextrose -- ship Dextrose in commercial quantities and while the contribution may take a little while, once we prove that we can do that, we can do it at scale, and we could ship it to customers being used globally or domestically, so not globally. We know that we're off to the races because the margin structure there exceeds everything else that we would be doing in totality. So we think that owning and controlling that technology, proving it out at full commercial scale and you can kind of see it online occasionally when we show pictures, this is a game-changing technology that I think redefines Green Plains in the future,…

Thanks for that and maybe just to kind of hit on something you said about wishing you had more plants or whatever, I'm just curious how you're thinking about the portfolio at this point. You have, as any portfolio has better and worse plants. I'm just curious, your thoughts around downsizing to scale up to your more premium plants or how you're thinking about the portfolio overall at this point, given the opportunities you see out there.

We're going to look at our plant stack. We do all the time. We have some work to do. I think we have some areas that we wouldn't mind looking at a different opportunity there, like the east where we would probably put a sugar build out there, and then the west wherever we can take advantage of some of these opportunities. Some of our plants, these plants are getting older. So we have some CapEx to do to improve these plants, but once these carbon initiatives come into play, there'll be plenty of opportunities to make sure that we can upgrade so that we can make as much product as we can. And so I think over the next couple years, we're going to look at our plant stack to determine what fits, what doesn't, what can we go elsewhere, what can we expand, what can we divest of to earn more offered money in other areas and so we're continuing to look at that and that's one of the areas that, when we think about the future of Green Plains, we have some fantastic locations and some fantastic plants that, quite frankly could produce more and we have other locations that depending on, that may not fit the future of Green Plains, depending on how we think about our technology deployment, but as of right now, we're going to keep the stack we have. You can't buy an ethanol plant. It's not like you can go out and say to the market, I'd like to buy one. The values are significantly higher than our stock price represents in a replacement perspective. You cannot buy a plant in the market of high quality for the value of what our overall stock price represents today or the value of many portfolios. So while they certainly have pressured us lately, we believe that's unfounded because just the base value of our assets alone, we believe are worth more than what the market's giving us credit for, before you even talk about the additions of MSC, the additions of clean sugars and the additions of carbon capture equipment as well.

Right. Absolutely, thanks for that.

We'll move next to Adam Samuelson at Goldman Sachs.

Thank you. Good morning, everyone. So maybe just coming back to kind of the framing on 2024, and I appreciate there's a lot of moving pieces between the underlying ethanol market and kind of the different plants that are commissioning, Todd, but can we just maybe zero in on the contribution from HiPro and I believe in your script you said you expect to exit the year kind of with 20%, roughly 20% of HiPro sold at 60%. What proportion of actual 2024 volumes are going to be sold at 60%? And can you kind of help frame the premiums that you're seeing today? And as we think about '25 volumes, is it only 20% of 25% HiPro volumes that are 60% or is it a substantially larger number than that?

Yes. So let's start with what we believe the demand for 60 pro can be. We are in enough discussions right now and I've identified enough demand that would take all of our product if we can get them to buy it and that's really what it comes down to and it just takes time and so whether it's going to be starting in the middle of this year, which is kind of what we're hoping for is to start getting one of our plants sold out for the next 12 months. That's really what. We're in negotiations around the world at this point on values, but also in the fact that we're getting a lot of conclusions on some testing that's been taking place over the last several years as well. So it's hard to predict when it will start. We say this year we want to have 20% to 30% of our production sold at 60 Pro and that's what we're shooting for every day and we want to have much more than that in 2025 is what we're shooting for every day. But I can assure you and I can say this, we are in enough negotiations that could eventually take all of it. We just have to get the buyer on the other side to execute and with the changes what we're watching here, which is very interesting, which is the changes in the ratios between corn and soy, when you have soy coming down and soy going up and all of a sudden soy meal coming down and corn staying strong and those ratios have played with buyers' minds a little bit. Like how do they put on something versus a kind of corn-gutton meal replacement all the way to a fish meal replacement? It's a long answer to say that we have enough demand identified that could take all of our product. It's just a matter of time now and so I can't -- we believe this year we're going to start the program and we think in 2025 it will be much stronger. Jim Stark Okay. And then included in the release and a separate 8-K this morning you kind of announced that the board is going to initiate a strategic review process, a standstill agreement with kind of a major shareholder. Can you talk about what is elaborate a little bit on what you're going to be doing now from a strategic review perspective that the board and yourself and the management have not been doing over the last two years just to clarify what's changing?

Yeah, that's a great question. I think from the standpoint of where we're at in the evolution of our cycle, we're not very happy with this latest share price decline, but we also want to do its best for all of our long-term shareholders as well, and a lot of people have been in the story for quite a while. As we said in our release, it's not limited to acquisitions, divestitures, merger sales, partnerships and financing. It's all of those we work on all of the time, plenty of those other than the sale process and the merger process per se. We just think there's a lot of value to unlock here. We talked to a lot of our shareholders and Cora was one of them and I think we came to a good conclusion on how we're going to approach the future. I think they want to achieve as high of a value as they can for how they're thinking about it, but so do all of our shareholders. So it's not like we haven't done some of these things, but I think when we look at Green Plains, we have a very powerful platform that we believe today is significantly undervalued versus our future cash flows and we're going to have to test the market on that a little bit and more to come on that, but really at this point, I think what's in the press release is what we're going to say at this time, but being on the board and being a large shareholder myself, I strongly believe that there's a lot of value to still achieve out of our platform and Green Plains, and we're going to test that out.

Well, Adam, I jump in and add one thing. I think what is different coming into '24 than previous year is bringing in the partnership really is going to allow us to have more flexibility in what we want to do, particularly as Todd said, if we want to reposition our assets from an ethanol perspective, it's much more easier for us to move forward. So the fact that that's tucked in now and we're back to a whole Green Plains corporation, I think it's going to help streamline us how we can move forward on a variety of different things to me. So that's what's probably different today than maybe over the past two years.

Okay. And if I could just squeeze one more in on decarbonization and think how you talked about a $100 million plus annualized run rate from the Nebraska plants once the pipeline started up next year. So am I interpreting that that you think that the net value from 45Z to your Nebraska footprint is something on the order of $0.30 to $0.40 a gallon and if that's correct, kind of what are you assuming the CI score for your ethanol would be next year?

Yeah, we have a couple of different plants. Some actually go right onto the 45Z, but one of our plants still stays on 45Q in those calculations. So there's an upside because we're looking at York and what to do is an old plant with a higher CI score. So they qualify for 45Q plus any carbon credits as well. So what we're looking at first is York to say, how do we first decarbonize that plant and we think we'll probably do it through distillation and significantly drop that. Carbon score, so we can actually earn more on top of that. So yeah, as a starting point, that's what we're putting out there with upside from there and some of it will be driven by 45Z, some of its driven by 45Q to start going to Z later on so those aren't in the numbers and then on top of that, the more interesting thing that we're seeing is the interest on top of LCFS because LCFS will see where that market goes to, but the interest in the voluntary credits from high quality carbon sequestration and we're just kicking that off, but right now we're seeing values in that $30 to $50 ton range just for good high quality credits from new projects like this. But I think when you looked at what Summit was able to achieve at $100 a ton, I think there's upside from there as well. So we'll put a little bit out in those numbers, but overall you're right to think about that, but if we can and so when we're done, we think that like a central city's carbon score will be somewhere in the mid-20s before you even get into pharma carbon and before you get into post-combustion carbon or some other areas. So that gives you an idea of our lowest plant. We'll probably be in the mid to low 20s to start, but York will take a little bit more time to get there. So it'll be a range, but mid-to-low 20s, absolutely we believe is a qualifier for anything that comes out of greed for SAF modelling.

All right, that's super helpful. I'll pass it on. Thanks.

We'll move to our next question from Eric Stine at Craig-Hallum.

Good morning, everyone. Just a few questions on my end. Maybe just starting on clean sugar; obviously, Shenandoah coming online, that's a near-term event. I'm curious what that does for commercial discussions. Do you have customers that are waiting on that and they need to see it? It's rather short in terms of the time period and then they get going and take volume pretty quickly? Or is this something where you have a trial period and it'll take some time.

Now our product, it's a little bit of both of what you're saying. So for the food guys, we got to wait to get some of them want to see the plant, the product, what's it running, get our final certification. So that always takes a little bit longer because what we can show them out of York isn't necessarily what they're going to buy out of Shenandoah. So food takes a little bit longer. On the industrial side, we have already been approved as a product in industrial processes with some of the customers we're talking to and others are in final stages as well, and there has not been any negative feedback from the standpoint of anything industrial which is the largest quantities that we'll start with that this product won't work in their processes. Obviously they want to see the first product out of Shenandoah but we are negotiating for shipments this year and much larger shipments in '25 and '26. We're on multi-year negotiation taking place and we think we'll get some of those completed in the next kind of 30 days to 45 days and it's a little bit different, I think, than when we started out on protein because protein we were kind of bringing a new product on. It wasn't soy 548, it wasn't corn-gout meal somewhere in between, nobody's ever used it. So that one took probably a little bit longer. On Greek sugar, on dextrose, it's a carbon copy of what you buy every single day except you get a lower CI and even though maybe sustainability has taken a backseat in some stories, the buyers still want to buy a low CI feedstock because they're still getting, for example, in industrial products, they're still getting requests for them to lower their carbon score of their product as well so the retailer may be able to lower that. So it's a very different process for us. We just have to make the product now. It's a 200 million plus capability per pound per year. We'll start it up slow, but we'll immediately go to 50% and then work to get to 100%. That's kind of our plan. So this is the year where we kick it off and then as soon as we see that product come out, I think that gives us the confidence to say that we're going to go full bore on where do we go with number two.

Maybe just turn it into high pro. You mentioned that the international demand for 50 pro is quite high, but also talking about there's enough demand that eventually you could be completely at 60 pro. So just thinking about that dynamic as the market kind of evolves and as you look at the market, do you think that those foreign markets will pay for 60 pro or is that more of a domestic sale when all is said and done?

Well, first of all, on the 50 pro, what I said is we're earning higher returns internationally than domestically at this point, but we're selling to both markets as we develop our 50 pro market globally, but we definitely get a higher value for the product when it goes offshore. On the 60 pro market, I would say it's a mix of domestic and export to achieve success. The active member that a lot of aqua is done globally, not necessarily in the U.S., so most of everything we do aqua other than some areas in the U.S. is going to be foreign. In terms of pet, it's a combination of both domestic and foreign export markets and then also when we look at kind of, those are really the two big markets that were focused on 60 pro, but we have enough identified demand and in discussions that could take all of it. If they all call today, we have some work to do to ramp up, but that's actually, as we often laugh to ourselves, what if they all call today, right? So we have 50 pro on for the rest of the year. We've got things committed in pet for the rest of the year. So we have a team that constantly works every day with global demand to play 60 pro and again, it's not a matter of if, it's going to be a matter of when and it's going to be a matter of how fast and as I said, I'll say it one more time, we have enough identified demand to take all of our product. We just got to get it to that next point.

We'll take our next question from Ben Bienvenu with Stephens.

So network capacity utilization at 95% in the quarter, very strong. It seems like the network is running efficiently now. I know you guys have had a lot of work that you've been doing through the transformation. As you look forward to 2024, should we expect a similar run rate as we move forward to absent seasonality and maintenance and the like? Or should we expect more variability as you commission or ramp new projects?

No, our goal is to have this or better as we move forward. We think there's more to unlock in our platform still. The January freeze, we slowed down a little bit, but it might cost us a point or two, but generally we're back up and running this morning with everything running, every dryer running, every system running this morning. So, we had a team very -- and we're not done. We still have, we find things every single day. These are getting older, but we are pushing these assets as hard as we can and we think there's more breakthroughs to come to unlock, more capacity just that we even have today, whether it's moving enough corn, conveyors are getting old, those type of things. So we're not done with achieving run rates. Could there be a down quarter here and there? Sure, but generally speaking, from where we started the year to where we ended the year, made a lot of progress, but there's a long way, still a long way to go and Chris and the operations team across the whole company understand that and are fully focused on getting the most out of our assets every day, but I don't think you should expect that. Our utilization will go down.

As it relates to the review of strategic alternatives and kind of broadening the scope of what you look at, does that preclude you from, continuing to advance any of these transformational initiatives in terms of, hey, sugar, this first ramp in sugar is quite successful and you want to do a second one? Or is that not the case and it's more a context for thinking beyond maybe some of the things that you've been doing already and it's incremental, not constraining.

But we're not -- its business as usual on every single thing we've laid out. There's nothing changing from that perspective. It's just to make sure that we believe, the board believes, I believe, some of our shareholders believe that we're just undervalued first versus replacement value, second versus the value of our future cash flows. Third, versus the simplification that Jim, outlined and when you -- it's very simple now to get money to the bottom line. We need the market to help us with that. But we're -- no, nothing's changing in terms of its business as usual. If we are already looking at clean sugar number two, we want to make sure we can make it in clean sugar number one. We got to make sure we pick the best sites, make sure we have the utilities, the wastewater, all the things that we need, that we discover. We are still fully focused on 60 Pro. We are still fully focused on decarbonization. It's business as usual, but I think this is a good time sometimes to also pause to make sure that, what else should we be looking at from a portfolio mix, from the location of our company, from the value of our company, from everything that we've outlined in the press release.

Okay, very good. Thanks so much, Todd. Best of luck.

We'll go next to Salvator Tiano at Bank of America.

Yes, good morning. So, firstly, I want to come back to the Nebraska project and understand a little bit some of the economics. You mentioned the $100 million, which certainly sounds pretty good, but I think for the Summit pipeline, you had disclosed a little bit some information. How would it work here in terms of, 45Z and 45Q that you mentioned will benefit you? Do you have to actually share these with the pipeline operator and who is incurring the cost of the carbon capture equipment that you said you're ordering right now? And the last part is here, just a little bit on the timeline. You said you're finalizing the order, and I was under the impression that usually the backlog wouldn't allow something to be ready within a year, but you seem to have a start update in May 2025. What gives you confidence that you will receive equipment and be able to install by that timeframe?

Well, that backlog, first of all, it's addressed the backlog. That backlog has certainly come down a lot just because of the different delays and different projects around the United States. With Navigator not building anymore, as well as some of the enthusiasm that was early enthusiasm, I think when we look at start updates for all the different projects that are out there, Nebraska project being the first, earliest start update, compression equipment is available and so, we're confident that as we put the order in, we'll be able to be up in time for the start-up. The e-cons, we can't, and the different contracts, we really never put out there what each of those would represent, nor at this point, would we do that except to say that we're giving you a range of what Nebraska is capable of in terms of starting points, with upside from there. The key is, no matter what project is, get it in the ground to earn some 45Zs, try to extend 45Z if we can, and then you move to 45Q and then carbon credit values. So generally speaking, the e-cons for Nebraska are what we've outlined. The total e-cons, kind of when we look forward for '26 and beyond, and especially when you get into the 45Qs era, they'll come down a little bit, but generally speaking, you want to attack anything you can to get on in the 45Z area. If we were today fully operating across the Western plants that we have on different pipelines, we would be significantly higher than that relative to our carbon earnings for that, not on top of the fact that we strongly believe that those earnings are going to come, and they're not being appreciated quite frankly in the valuation of our company and the reason I say that is because three years ago nobody wanted to talk about it, nobody believed it. We're a year away from the first project coming online. So when you look at carbon strategies, earnings, as you get into just on 45Qs, based on the end of 45Z, you're talking about full rate at Green Plains in the 150 rate to 200 rate for the first couple years of Z when all the projects are online in terms of EBITDA, and then dropping a little bit after that when 45Q takes over. So there's some serious earnings power that I think nobody wanted to talk about a year ago, but it's definitely worth talking about today because we're only one year away or so from the first project starting up. And by the way, lastly, that's a long answer, but there is a project already operating at an ethanol plant in a direct inject that is earning all of the money that we talked about relative to Zs, or relative to the 45Q today where 45Z comes online, but it's happening. Money's being earned already on some of these projects.

Okay, perfect. And I wanted to touch base a little bit on your corn costs. Clearly, the market has not been very tight recently and we're still going to get a lot of big corn harvest probably in 2024. What are you seeing in terms of the corn base you're paying this year, what you're expecting for 2020? Sorry, what are you seeing about the corn base you're paying right now and for the full year and generally, what we're thinking about paying $0.18, $1 more in corn bases in the past year in 2023, shouldn't that be a very meaningful tailwind for your core ethanol margins this year?

Well, it's a combination of everything. Ethanol is down significantly as well. So while the corn basis is down year-over-year, ethanol is down, but flat prices down, which means the storage grains are down. But generally speaking, we just manage the margin. If you take a look at some of the big processors, and I'll give you the generalities, not necessarily what we're at our plant, Nebraska is a 10-over to 20-over basis market today; Middle Iowa processors is a 5-over to 15-over basis market today and Central Illinois is about 10-over to 15-over. So a lot of people are modelling much lower corn costs generally because they're going back to historical basis in some areas, but generally across the bigger processor market. We're still sitting a little bit over corn, but that's still significantly lower than $1 or $1.50 over corn we were a year ago or two years ago. So that is a nice thing to have, but generally speaking, it all just goes into the equation to come up with a margin and that's really how you achieve your goals.

Well, I guess what I'm trying to understand if I'm missing is, as you said, $0.10, $0.20 versus $1 before. So if we think about the $0.90 improvement in your corn cost setting aside the actual corn price, which is also declining, that would seem to add a very, very meaningful amount to your development, which I don't think we saw in your court. So that's why I'm trying to understand what you're saying.

Yeah, but you're not -- again, it's four components; its natural gas, it's corn, it's ethanol, it's distillers grains. And you can't just look at one of those components to think just because there's a dollar less corn cost, which is $0.30 a gallon, ethanol has adjusted for that. It's not like they -- what corn give it, ethanol can take it their way. So that's kind of what happens is the market is just, you don't just get to earn the full dollar or gallon or dollar or bushel gain just because your input cost dropped. It all goes into the margin. Its corn, ethanol, natural gas and distillers grains, less your operating cost gets you to an EBITDA margin. So it's all just part of the calculation.

I know that that's exactly what I'm trying to get to because when we do get the corn price and the ethanol price, if you add the base that you said $0.30, for example, band [ph] per gallon, the ethanol profits appear to -- they probably should be stronger than they are. That's what I'm trying to get to and that's why I'm trying to figure out what I'm maybe missing here.

Yeah, but remember, often what you see is, we take a -- we look at our EBITDA, we take our -- we adjust for our SG&A because we are an independent company and while you may see others that don't have to necessarily adjust for SG&A, our plants, right now because we have a different type of plant stack than maybe the best producer, it costs us a little bit more, but generally speaking, a little more OpEx, but generally speaking, it's all a combination of and you're not going to gain -- you're not -- the market is not getting the full benefit of this corn input cost breaking hard because everything else has adjusted around it.

Thank you very much.

We'll move next to Craig Irwin at ROTH MKM.

Good morning and thanks for taking my questions. So most of what was top of mind has already been put out there. So maybe Todd, can we talk a little bit about private market transactions and really what's going on around some of the plants that are being offered out there. So we've heard that there's actually a pretty intense level of interest because of SAF and the anticipated language this March, ethanol to aviation fuel is something that's pretty simple by a couple of pathways. I like the pathway you're working on. But I understand that the asking price for a lot of these plants is pretty rich and they also have demands for tails on carbon, etcetera. Can you maybe just update us on what you're seeing in the private market and we did mention the strategic review so that that always does include a potential sale. Would you expect those conditions to maybe be a part of the consideration for green plants as well?

So the private market isn't really existing today. There's definitely a lot of interest for plants, but we have a good operating, high quality plant in a good location, it's above -- it's in that $1.80 to $2.00 range before you can even get somebody to even talk to you, a gallon of replacement. To replace a plant today, it's in that $1, well, probably $2 to $2.50 a gallon range to build a plant today from scratch. When you look at our -- what we think is $950 million gallons or so of capacity and you look at that without, that's without protein, without dextrose, without carbon, without anything today, that's what it would take, I think, in the private market to even think about clearing a plant of any good quality. I think that's some of the bigger issues that we see. When you look at that compared to our market cap and our net debt position, which is lower, the public markets are a significant discount and it's not just us, it's others that are in public, our significant discount to the valuation of the private market, but that's been going on really since the beginning of time. So we see that, we see that often and so we're well positioned, but when we look at it from the perspective of decarbonized alcohol, that isn't even being valued yet. So, absolutely the calls come in to say, how do we partner with you? How do we look at your decarbonized alcohol? How do we get supply agreements? Those are just starting, but they want to see, obviously, the carbon capture happen, but decarbonized alcohol will be a very valuable asset and that's why we believe we're well positioned in Nebraska.

Excellent. Then just a macro question around shafts and the potential deletion or diversion of ethanol, core ethanol capacity into the aviation fuel market, for many years we were talking about exports to Canada, to Mexico, to China, India and potentially tightening economics to the benefit of ethanol producers. Would you expect, the diversion of a billion gallons of production into shaft markets, ethanol production into shaft markets to have a similar impact to what was optimistically looked for around exports in the last many years?

Well, if you take a look at SAF capabilities and a demand for SAF, it could be significantly higher than that. Remember, a gallon of ethanol gets cut down by a third. So it's only two-thirds of a gallon of SAF. And when you look at that, take a billion gallons of ethanol, 2600 million gallons of aviation fuel, which is a drop and it doesn't need to be blended, in a 30 billion gallon, 40 billion gallon domestic market, it's a drop in the bucket to get to those numbers. Again, somebody has to build it. They're going to be expensive. You need billions of dollars to build SAF. I think it's going to come. I think it first comes out as a [indiscernible], which is what we're seeing, but if you really want to get real scale, it's going to have to come out alcohol, but it starts and ends with decarbonized alcohol. If you don't have decarbonized alcohol, you don't have a discussion and that's why we believe first and foremost Nebraska is very valuable within our platform, totally undervalued, but it starts with decarbonized alcohol and the first to market will get some of the best benefits and so that's why we're pushing so fast on these projects. But no, I think it would be light to say that if successfully a billion gallons would be diverted, I think it'd be billions of gallons and then the market will have to figure out how do they get to what they need just to satisfy everybody else's needs, because it's not like the world needs us to take two or three billion gallons of ethanol off the fuel market. That would have a significant impact to price.

Okay. And the last question if I may is, I guess, most investors know you just can't get a catalytic converter on a jet, right? That technology would be great, but it's not available, but I think people really don't understand that aviation emissions are not tracked above 2,500 feet and can you maybe share with us what you're hearing from investors? Are people educated on the fact that you've got, 500 ppm, 600 ppm of sulphur in jet fuel that's needed for the lubricity while, on road diesel is supplied, right? So are you hearing a more educated, complete discussion around this from investors as they look at the responsible environmental investment in sustainable aviation fuels?

You stumped me a little bit, but, I would only tell you that, look, the carbon intensity is very important. It's measured and monitored. I think people understand if you make sustainable aviation fuel, you're going to lower your carbon intensity of an aircraft and it's a demand pull, not a demand push. I think that's the most. So somebody's realizing it. I don't know that I understood much of what you were saying, but somebody's realizing it, because we are getting -- we continually get calls in for decarbonized outfall to SAF. How do we commercialize it and how do we get it into the demand that's there for today and obviously waiting for greed in the government to give us a bit more guidance on it as well.

So maybe I can restate that. Do you think investors understand how incredibly dirty jet fuel is versus on-road fuel and take carbon out of the equation? The responsibility we have for equal treatment of the airlines versus trucking and commercial and retail transportation?

I don't know if that's the case or not. I do know that it's been proven that ethanol reduces carbon emissions by over 50%, almost over 50% in automobiles. I'm assuming it'd be the same at minimum, the same in jet in particular emissions as well.

And that does conclude the question-and-answer session. I would like to turn the conference over to Todd Becker for closing remarks.

Yeah, thanks, everybody. Look, we're in a really good place. Financially, we're strong as a company. We remain strong. We're not going anywhere. We continually to prove that we've come out of our -- the first half of the year where our plants definitely had some problems and we fixed a lot of those, but we have more to go. We show our operating run rates continue to be steady. I think we've shown the market that we are commercializing products and while some people may have different timelines, we're right on the timeline we thought we would be relative to our initial '25 guidance and where we're sitting for '24. We've got great product coming. We've got great technology portfolio. We're excited to realize the value of this company and we'll keep you informed on the progress that we're making and we've got some great stuff happening this quarter with start-up of Shenandoah, with the CST system, the startup of SFCT and continue to work on 60 Pro. So keep watching us. We're excited about the future. Thank you.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.