Morning, and welcome to the Green Plains Inc. First Quarter 2025 Earnings Conference Call. Following the company's prepared remarks, instructions will be provided for Q&A. I will now turn the call to your host, Phil Boggs, Chief Financial Officer. Mister Boggs? Please go ahead.

Thank you, and good morning, everyone. Welcome to the Green Plains Inc. First Quarter 2025 Earnings Call. Joining me on today's call are the members of our executive committee, Michelle Mapes, Interim Principal Executive Officer and Chief Legal and Administration Officer, Jamie Herbert, Chief Human Resources Officer, Chris Ossowski, Executive Vice President Operations and Technology, and Emre Havasi, Senior Vice President, Head of Trading and Commercial Operations. 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, 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 this morning's press release, in the comments made during this conference call, and in the Risk Factors of our Form 10-Ks, 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 Michelle Mapes.

Thank you, Phil. To be direct, our performance has not met the expectations of this investment community or our own. And that is changing. As an executive committee and as a company, we are fully aligned and deeply committed to disciplined execution supported by the clear and objective measurement of our progress every day. Our team members at Green Plains understand not only the goals but their roles in delivering against them. We are focused on returning this company to sustained profitability and with that earning back your confidence. Over the past few months, we've executed a zero-based approach to cost structure, leading to decisive actions across the organization. We've exited noncore operations, launched the sale of nonstrategic assets, and focused on a culture of operational excellence throughout the platform. These changes are driving meaningful efficiencies that position us to compete with greater focus and agility. On our last call, we committed to $50 million in cost reductions. I'm pleased to report we are well on track. We noted before we already achieved $30 million in annualized cost savings, and our recently announced ethanol marketing partnership among other internal initiatives has unlocked another $15 million in annualized savings. Beyond strengthening our working capital, the ECO initiative delivers scale, market access, and logistics efficiencies that would have been very difficult to achieve on our own. We expect these gains to show up in the bottom line going forward, especially through transportation and marketing synergies. Also, we have a clear line of sight to the final $5 million of targeted savings, which we expect to come not only from SG&A but also from process improvements and commercial execution. We are empowering our top performers with clear goals, met and accountability, and they are delivering. As a result of this effort, we anticipate our consolidated SG&A run rate to decline meaningfully from the $118 million recorded in 2024 to exit this year at an estimated $93 million annualized run rate. Corporate and trade functions are expected to be reduced to $12 million to $13 million per quarter for the remainder of this year, with the line of sight to reducing that to the low $40 million range on an annualized basis by year-end, which is much improved compared to the $73 million corporate and trade SG&A incurred in 2024. This is a company that is focused, aligned, and committed to continuous improvement and a return to profitability. We're just getting started. Let me now hand it over to Chris Sasowski to talk operations.

Thanks, Michelle. Overall, our platform continues to perform operationally at a high level. Our nine active plants achieved a % utilization in Q1, our highest rate on record. Driven by increased discipline, accountability, and daily measurement of key operating metrics. We were achieving an overall reduction in OpEx per gallon of more than 3¢ since Q4 of 2024. The sense of urgency across the organization is tangible, and it's making a difference. Looking ahead, the RTO project in Obine is nearing completion. Once fully online, we expect protein yields to exceed three and a half pounds per bushel. With ethanol capacity returning to over 20 million gallons annually. With Q2 crush margins strengthening, we're actively hedging our production to secure value. Execution and performance measurement remain daily imperatives for our teams. Institutionalizing a culture of operational excellence across Green Plains where every process, cost, and decision is underpinned by discipline and data. Our approach is very clear. Safety first, no waste anywhere, every dollar spent must earn a return. And every role must justify its value. This mindset is being driven across five core areas. First, commercial discipline. We're actively and aggressively pushing price terms and volume across procurement, logistics, and sales while upholding standards. Second, cost ownership. Each cost is being scrutinized as if it was its own P&L. We're laser-focused on reducing variable cost per gallon and improving our fixed cost absorption. Third, capital efficiency. All capital, both fixed and working, is being held to strict ROI standards. Value creation is the only justification for our investments. Fourth, people accountability. We're applying a true zero-based approach to roles and responsibilities, every function is rebuilt from the ground up based on what the business needs today, and what delivers measurable value. And then last, KPI-driven execution. We manage by…

Thank you, Chris, and good morning, everyone. Ethanol market fundamentals saw typical seasonal weakness through Q1, driven by the industry's high production levels and elevated inventory. However, US ethanol exports continue to be a bright spot. We expect that 2025 volumes could surpass last year's record of nearly 2 billion gallons. Encouragingly, ethanol margins have strengthened heading into Q2 and Q3. With positive contributions now forecasted for a network. This improvement is supported by firmer corn oil fundamentals driven by widely anticipated increases in renewable volume obligations. Drawdowns in ethanol stocks due to the spring maintenance season, stronger seasonal blending demand, and a good start to 2025, 26 corn planting, anticipated to result in the largest acreage since 2013 currently estimated at 95.3 million acres by the USDA. We have secured a little more than half of our Q2 crush margins at favorable levels. This is consistent with our new disciplined and proactive approach to hedging and margin management. You have heard Michelle and Chris talk about the strategic shift we are executing and the actions we are taking to significantly increase our productivity and cost competitiveness. As market conditions improve, along with our actions, Green Plains' bottom line is showing notable improvement. Already in Q2. Last month, we announced a long-term strategic marketing partnership with EcoEnergy. This collaboration enhances our scale optimizes transportation and marketing economics, and positions us to fully capture the value of our future ultra-low carbon ethanol production. For our protein business, we've also made great progress. Commercial shipments of sequenced 60% protein have started. The product is starting to be included in salmon diet with our South American customer base. We have also expanded our sales of 50 protein ultra-high protein product. To for shrimp feed applications. Between these two products, we expect to have volume growth from 20,000 tons in 2024 to over 80,000 tons in '25 shipped to the South American market. These new shipments will be aided by efficiency improvements gained through bulk shipping which will start in Q3. We're also gaining momentum in pet food, which is a key strategic growth area. Trials are underway with two major manufacturers who are not yet customers. And early feedback is very promising. Our high protein product works very well in pet food diets. We expect these opportunities to convert to commercial sales by Q4 of this year or early 2026. We plan to increase our sales in the pet food segment from 60,000 tonnes today to over 100,000 tonnes 2026. And with that, I'll hand the call to Phil for a financial update.

Thanks, Emre. For the first quarter, we reported a net loss attributable to Green Plains of $72.9 million or a loss of $1.14 per share. Which included $16.6 million in one-time restructuring charges tied to the closure of Fairmont, the exit of other noncore operations, cost reduction programs, and leadership transitions. While these actions impacted the quarter, they were necessary steps to realign the business and accelerate our return to profitability. By comparison, we reported a net loss of $51.4 million or 81¢ per share in Q1 of 2024. We are supremely focused on improving these numbers as they are not acceptable. These results are the reason why we have materially changed our go-to-market operating strategy and the human capital we are using to execute our plan. We are moving with a keen sense of urgency and precision to reshape our financial profile. We are executing a clear plan to improve operating leverage, lower our cost base, and position the company to benefit fully from the carbon and protein opportunities in front of us. Revenue for the quarter was $601.5 million, up 0.7% year over year. While Q1 market conditions were challenged, we've taken proactive steps to secure better margin performance going forward. Including reducing our costs, locking in favorable crush margins for Q2, and expanding our commercial reach through our partnership with EcoEnergy. On operations, as Chris mentioned, achieved a record 100% utilization rate across our nine operating plants, demonstrating strong asset performance and operational discipline. Including the Fairmont asset, total fleet utilization was 87.7% compared to 92.4% last year. We anticipate maintaining a mid-90% utilization for the remainder of Q2 even with scheduled maintenance underway. Adjusted EBITDA excluding restructuring charges, was a $24.2 million loss. Compared to negative $21.5 million in Q1 last year. These results reflect a…

Thank you, Phil. Let's start with carbon. Our carbon strategy remains on track and is central to unlocking our long-term value. Construction of carbon compression infrastructure to support our Advantage Nebraska initiative is advancing on pace. Equipment deliveries are on schedule and remain on track to initiate operations across all targeted sites later this year. Lateral pipeline construction is well underway, and all key milestones point to a start-up in early Q4. In parallel, we're actively engaged in the marketplace to monetize our 40 and Q credits with good interest in early momentum. We expect to provide a meaningful update on these efforts at our next quarterly call. We remain encouraged by ongoing policy discussions in Washington regarding a potential extension of 4D5Z and the possible elimination of the indirect land use change from the GREIT model. These policy shifts, if enacted, could significantly improve our CI scores and further enhance the value of our carbon platform. As it relates to our strategic review, we continue to work closely with BMO and Moelis. All potential paths remain active and under consideration, including a company sale, asset divestitures, or other material transactions. We firmly believe the market is undervaluing our platform particularly the long-term opportunity associated with carbon monetization. We've also strengthened our board. Welcomed Steve Furchich, Carl Grassi, and Patrick Sweeney to our board. And we thank Einar Knutson and Elan Trauart for their service as they step off the board at the upcoming annual meeting. Our new directors are already contributing meaningfully to our strategic direction. In closing, are some key takeaways I'd like to leave you with. Based on current market conditions, actions we have taken, and our focus on execution, we are currently positive EBITDA for the remainder of the year. Our carbon platform construction is progressing as planned with compression of pipeline infrastructure on schedule for early Q4 start-up. Active monetization of our 45Z and Q credits is underway. An update is expected next quarter. Operational excellence is driving measurable performance gains. Our $50 million cost reduction target is nearly complete with the remainder in sight. Our strategic marketing partnership with EcoEnergy is active, providing scale and logistics efficiencies for our ultra-low CI ethanol. Our sequence protein platform is scaling, with expanded agriculture and pet food demand. And we are executing disciplined risk management daily. Our non-core asset monetizations are progressing and supporting liquidity as well as improving our focus. The strategic review is active and ongoing to unlock long-term value, Our executive committee is executing, and the board is refreshed. And have strengthened governance, strategy, and risk management oversight. With that, we'll now take questions.

At this time, if you like to ask a question, it is star followed by one on your telephone keypad. If for any reason you would like to remove that question, it is star followed by two. Again, to ask a question, it is star one. As a reminder, if you're using a speakerphone, please remember to pick up your headset before asking a question. All questions are limited to one question and one follow-up. I'll pause briefly here as questions are registered. Our first question comes from Florian Sharma with the company Stephens. Florian, your line is now open.

Thanks for the question. Just you know, I thought it was interesting. And in the release, you talked about the risk committee and the hedging framework and I know that you've had hedging practices in the past. And you've you know, you took it off recently. So just would like to, you know, hear the kind of the thesis as to, you know, why you're putting it back on. It looks like you've booked about half of Q2. That was actually gonna be when my questions. In this hedging practice, are you layering in longer-dated positions? Or kind of expanding the type of instruments being used? Any kind of color you could share about how you're approaching hedging would be helpful.

Yeah. This is Emre. Start with the answer. There's can add to it. Mean, in general, hedging or managing risk for a business like this is good practice, and you do these things when the market opportunity presents itself. And so we did some of this before And, you know, with my background, we reestablished some of these processes. We do a lot of analysis, support and demand fundamentals, technical analysis. We're looking at our business needs, of course, policy changes. And, you know, historical data And so as we go through that analysis day by day, when there's a market opportunity, we do lock in some of those margins. Both at the simple crush, the board crush level as well as some of the, you know, co-products or whatever see we see that opportunity. So I think it's just in general good practice. To manage risk, reduce exposure if needed. And, yes, we, you know, we lock in Simple Crush. We potentially hedge DCO soybean. Oil futures. We hedge in mill. Of course, we have strict limits, and monitor value at risk. So it is a it is a systematic approach supported by analytics and fundamentals, and we do it when the opportunity is there.

And I would just add that at the board level, the risk committee was formed here in the last forty-five days or so. We have very seasoned and experienced folks on our board that are on that committee. And they're actively meeting, with the team monthly. If not more frequently.

Great. Thank you for the color there. And my follow-up would be, just in regards to the CEO search Just wanted to ask how, you know, how that's going, if you can give us an update. Should we expect someone with a background in biofuels? Maybe somebody in industrial transformation, or maybe somebody with a bit of a finance background. Would just love to hear what type of attributes you're looking for. In the next CEO. Thanks.

Thanks for the question, Florian. At this point, in time, the process is ongoing. It's what I would call a pretty standard process, for a public company. Looking at, all candidates who have applied But we are nearing the final stages of that process, and we hope to have something, that we can announce here in the near future.

Next question comes from Jordan Levy with the company Truist Securities. Jordan, your line is now open.

Hi, all. It's Henry on for Jordan here. Thanks for taking my questions. Maybe to start with on carbon capture. It's great to see compression equipment construction underway and the 4Q start update. Could you just give us any color at this point on when we should expect that construction and the lateral pipe construction from Tallgrass to be completed ahead of that start-up date?

Sure. So we are working closely with the Tallgrass team. We have weekly calls, and we are very engaged in the process. That team is indicating that all signs point to early Q4. And actually late Q3 in terms of finalizing construction. In a couple of the locations. And we don't anticipate a major time, lapse between construction completion and start-up, Chris, would you like to add anything more to that?

Yeah. I think we feel really good that we have construction in progress at all locations going in parallel. The major compression equipment has been built, and it's just waiting to be delivered when we get, foundations, put in place for the buildings to house that equipment. And, feel really strong about our team's readiness in the ability to operate and maintain those assets, once they're up and running.

Great. Thank you for that. And then maybe just a quick one on tariffs. Could you just talk to any impacts for potential retaliatory tariffs on any of your product exports? And do you see this as a meaningful risk kinda moving forward?

So far, no impact. I mean, where we would be exposed as an industry, of course, if there were tariffs on ethanol. It exports into Canada or The UK, So that would be industry impact. We have not seen evidence of that, although, you know, Canada flagged that at one point. The other would be also industry level impact you know, relative to China that would impact the soybean complex. So some of those things, you know, if they happen at the same time, they're offsetting impacts on tariffs. You know, some might lower cost. Domestically, but also restrict market for us. In terms of our protein exports, that would be specific to us. Those exports are happening Our shipments are going to Asia. We're locking in contracts and prices down to Latin America with no actually, no tariff discussions around it. So so far, we have not seen any impact. And, of course, things are somewhat unpredictable when it comes to tariffs. So things can change. But, you know, if I wanna be an optimistic maybe there's a there's an upside there too in instead of the tariffs, you look at trade. And see if this administration can open up new markets for us. So if we were able to sell more protein vegetable protein into some of those deficit countries, in Asia or down to South America, through some of these trade agreements, that would be actually an uplift for our platform. So that can go both ways. Of course, everybody's rightfully so talking about the risk, which are probably you know, have higher probability. But to summarize it, so far, we have not seen adverse impact on our business.

Our next question comes from Sonia Jain with the company UBS. Sonia, your line is now open.

Yeah. How are you guys looking at care particularly with used cooking oil and Chinese biodiesel in mind? And what's your outlook for ethanol crush margin and margins given all that in four?

Yeah. Sorry. It was the line was breaking up. Was that the end of the question? Just Yeah. Just about the tariff You go and impact on special margins? Yeah. Yeah. And how your how that's affecting your outlook for the year.

Yeah. So, of course, the components of how our cash crash or consolidated crush comes together it's in pieces. Right? And the impact of DCO which is driven by you know, RVOs, and 45Z and a couple of other things. Is a big component of our total margin. We're optimistic on TCO for two reasons. One is the premium it carries to other feedstocks. Just in general because of the low CI score. And then secondly, the overall context you know, with the restrictions on imported EUCO the rumored or anticipated higher RVO levels. They're going above 5 billion gallons. You know, there's a little tight little bit tighter soybean oil. SMD as soybean oil got became a discount or got the discount point early in the year, encouraging exports. So there's plenty of tailwind for our DCO product. We're putting together pricing and hedging structures to maximize that opportunity. But overall, for sure, going into Q2 Q3, and maybe even Q4, And as long for sure as 45Z is around, we're very optimistic about the DCO market, and we consider that as a significant contributor. And I know this was not part of your question, but the operations team is very focused on maximizing DCO yields. Not just through the core operation, but also where we have these MSC plants. We have a significant uplift of DCO. So overall, DCO production should be up and with higher prices, that we're anticipating that will contribute greatly to overall crush margins.

Great. Thank you. And then I guess how are you guys looking at the local protein markets as well, or how about protein margins?

Or Did you say local or global? total or Ah. It's both. I said local, but yeah, I said local. Okay. Yeah. So protein of course, is you know, it has been protein's been weak, and it's been under pressure just in general. Right? But that includes DDGs and other vegetable proteins, huge pressure from soybean meal. You know, Q1, we've there was an abundance of soybean. We did I think the industry worked through that clot. In general, the domestic protein market will be probably flat, muted. Of course, you know, when you look at oil share, that's part explained. Oil carries the premium, and meal has to be formulated into diets both domestically, but we also need an export market to get rid of the surplus. Higher industry run rates, of course, increased DDG supplies as well. In the domestic market. So when it comes to our own protein platform, of course, DDGs, we're extremely focused on our local customer base. And enhance value that way. We're you know, when warranted, we're putting on forward sales and stay ahead crush. That's part of risk management. Terms of the ultra-high protein, we in our strategy, a few years ago when we built all these facilities, was to supply higher margin markets. But, unfortunately, a lot of production came to the market, so we had to sell our highest our protein to all sorts of species and all and with different kind of margin structures. So we're past that, and you know, of course, customer development in some of the higher value in the higher value segments like pet and aqua has been taking longer than just, you know, selling to poultry or swine. But those are coming to fruition, as I mentioned in my script. We're actually making a lot of breakthrough sales recently. And selling to Aqua and Pet are probably I'm just gonna throw out a number. About $45 to $60 per ton higher of FOB margins when I add in the supply chain solutions as well. So the strategy will remain, you know, protein in itself as going to be flat. Going forward. But our book will and our margins will improve as we execute those higher margin segment sales.

The next question comes from Salvador Tiano with the company Bank of America. Salvador, your line is now open.

Yes. Good morning. Firstly, I want to ask on the ethanol commercial strategy. So you have the offtake agreement which, if I understood correctly, it's for pretty much all your volume unless I'm missing something. So why the change, and what does this mean for your own trading operations? I think you had a pretty substantial trading team And how should we think about how the realizations will move forward compared to ethanol margins? Will they track them more closely, they an index, or will there still be an opportunity to trade around it?

Oh, absolutely. The latter. So we make all sales decisions pricing decisions, and risk management decisions. EcoEnergy is a marketing partner, so they execute they manage the customer relationship and they manage logistics. So all sales are basically back to back except for a few opportunities where ECO would have infrastructure, and that would apply to maybe some of the California markets. Where they would support us with last-minute logistics. Through a terminal. So it is the execution part is what we outsourced. And not the risk management part. So we manage all risk. What we expect from this relationship other than a smooth operation, of course, on the logistics side, is leverage the scale. So we lost scale over the years, and that way that's why it made sense for us to combine our volumes with ECOs volumes. So their volumes increased 50% through our contribution. And they also, of course, have a very good infrastructure in the country. For, as I mentioned earlier, for distribution in California, but as but also for exports. And we expect to leverage that scale. Leverage that scale in terms of market access, arbitrage opportunities, exports, and improve our so where we expect the improvement is really on that basis level We manage we're going to be managing, as I mentioned earlier, SimpleCrush, co-products, everything else. But where Eco can help us is that basis, improve that basis by maybe a penny or 2 when it comes to logistics and supply chain opportunities. Or finding us better maybe ship to locations or customers so we can optimize our portfolio. And, of course, the export opportunity is gonna be good. So that's on the marketing side.

Yeah. And, Sal, I would just like to add that the ECO relationship also improves our working capital efficiency levels. With one customer we believe that we will be able to reduce our working capital by somewhere in the neighborhood of $50 million. Through faster, AR turn times and lower inventory levels of the relationship of when ECO buys that ethanol inventory from us out of our tanks. And so there's a working capital efficiency to this as well that will reduce our working capital revolvers.

Thanks. So the second one is on liquidity, the balance sheet. So can you clarify a little bit the corporate liquidity you mentioned? I don't think that's something that has mentioned before to your press release. What's the difference or what the cash there and why is it just $49 million including the any credit availability? And why get the $30 million loan from an that matures in I guess, less than three months? What's the rationale for that?

Well, Sal, so we included the corporate liquidity numbers just to give some additional clarity. And we do have cash across the organization and various subsidiaries that's not available to corporate. But this $30 million loan from Ancora, I mean, one, it's it demonstrates that we have a supportive shareholder who not only has some members on the board now, but is also putting cash to work in support of the company. But that enhances our flexibility and really just allows us to execute on our focus for maintaining liquidity and you know, we're focused on cost reductions. We're focused on working capital efficiency. We're focused on exiting noncore assets. And, really, this is all about maximizing our flexibility as we pursue various options.

Thank you.

Next question comes from Matthew Blair with the company TPH. Matthew, your line is now open.

Great. Thank you very much. Know, Phil, maybe just to stick on that, you mentioned that you're executing on noncore asset sales. Could you give us some more details here and a sense of the scale of the opportunity and what type of assets are these? Logistics assets or you know, what general type of assets are you looking to sell here?

So, I mean, we're really looking at you know, anything that's what we would call non-core. And so what is that? I mean, we have we've closed some businesses. So we have working capital and equipment and businesses that we've sold. So that's one of it. We have various, smaller JVs from over the years that we're looking at exiting or in the process of exiting. So we're really focused on that from a noncore standpoint and looking at, you know, how do we narrow the focus of what it is that we're trying to do every day, and that's really focus on the core, which is running our assets well, lowering our costs, and improving our margin capture through these efforts.

Sounds good. And then Emre, I think you mentioned that you're currently EBITDA positive for the remainder of the year. Does that apply to each quarter And is that based fully on what you've hedged, or is that a combination of the hedges and the future scores?

Let me just first address the quarterly part. Yes. It does mean quarter by quarter. We are currently, EBITDA positive. Much of that is from the actions we have taken. It's a combination of cost reductions, disciplined risk management, obviously, market conditions. I'll let Emre touch a bit on the hedging piece of it. But, we're, you know, pleased to be where we are and committed to doing all we can, assuming what the market will give us.

Yes. I mean, most of our hedges are obviously Q2. We started locking in margins for Q2 as those opportunities as crush margin improved at the March. So we entered the quarter with hedges already and added to it as those opportunities presented ourselves. There's a lot less liquidity in especially when you go out to Q3, Q4. So Q3, Q4 are still very much open. Most of our hedges are in Q2.

Our next question comes from Laurence Alexander with the company Jefferies. Laurence, your line is now open.

Good morning, and thank you for taking my question. This is Carol Zhang on for Laurence Alexander. Could you help us understand the current ethanol inventory level and the dynamic of the export demand?

The current inventory level is 25 million barrels. And that's sort of a point that we're looking at you know, trying when we stay under that level and we just came off of 27 million barrels that we printed maybe six weeks ago. Course, spring maintenance helped that. Export was we don't have March data yet, but census indicated a 95. And was this was this I mean, sorry. Census data indicated a significant improvement in March, that has to be confirmed. So, you know, you could say that you could say that yeah, we are on track on hitting the 2 billion mark. For the year, but Q1 was very, very strong. And what we could say what I mean, you could say that some people pulled forward some of these shipments because of tariff considerations. But as we expect tariffs to be sort of a lesser of a risk, we're gonna hit over 2 billion gallons now. That doesn't help if domestic consumption doesn't pick up. So inventory levels are sitting at 25 million barrels today. We think they're going to drop towards 23 as the driving season and higher blending kicks in. Our risk there, of course, is that we'll maintain production. But if we enter a recession or we don't have that demand, from the consumer, then those inventories will not drop down towards those 23, 22, billion levels, but they will continue to, you know, stay around 25 and eventually build up as we head into the winter. So our risk today is lower blending demand and lower gas demand going into the summer.

Thank you for that. And can you add a bit more color on the corn business? Like, the profit contribution of corn oil and protein platform? Year to date and how you expect that to evolve for the year-end?

Corn oil? Yes. The profit contribution corn and also protein. Yeah. And, you know, we touched on this one during, you know, the previous question or the answer to it to the question earlier in the call, We started the year Cornell was at very low levels, right, in the low you know, in the mid-forties. High forties, we're at 55¢ fallback to our plan today. So that's a dime improvement per pound. We think those levels will hold. Throughout the year supported by a restriction on used cooking oil imports as a feedstock that's used in the biodiesel production. And you know, as we also mentioned that corn oil carries a premium because of the lower CI score, relative to soybean meal. So we're very we're friendly. That contribution has increased, of course, with this 10¢ per pound improvement over the last three months. So that is supporting our margins going forward. Some of our the way we sell corn oil also allows us to capture margins in an upmarket. About 50%, give or take, depending on our market view, is index priced. So we're benefiting from an upmarket. And, of course, if we that's within the quarter. And if we have a different bias, of course, we can hedge that and by selling the soluble futures or through options there. But we remain friendly corn oil, and it's been very beneficial to the overall margin structure For sure, for Q2, but we expect that to continue in Q3 and Q4.

Our next question comes from Andrew Sprelzik with the company BMO. Andrew, your line is now open.

Good morning. Thanks for taking the question. I guess I kind of wanted to zoom out, and I was hoping that maybe you could reflect on the existing strategy that's been in the works over the last several years. So not the strategic review, but kinda just the existing strategy that's been put in place over the last several years. Over that time, you know, the operating environments evolve, the regulatory environments evolve, and, frankly, the conversations with the investment community have shifted from you know, more high pro to more clean sugar and carbon. So you kinda take a step back, I just would love to get your perspective on the strategy at a high level and your confidence kind of in the different pieces of the plan. To drive the EBITDA build over time.

Sure. Appreciate the question. This is Michelle Mapes. So you're right. The strategy has evolved over the years, As we originally talked about some years ago when we launched upon our protein strategy, and our pillars of corn oil in particular, we were very focused there. And then along came, to our surprise, the IRA. Which then did cause us to pivot slightly and add the carbon pillar to our focus. We remain very constructive on protein. It's taken longer than we had anticipated. It's been harder than we've anticipated. It's been harder than what we previously communicated. But we're committed to making sure that we're executing going forward. And I think Emre has shared with us some numbers that are reflective of we are now getting that penetration, and our products are turning the corner there. We obviously we still remain constructive on corn oil. And as it relates to carbon, we are very bullish. We continue to be excited about where we are, where we're going. I think, you know, when you look at our company today, we're pausing a bit. Not that we don't support all the initiatives. We are cleaning some things that we can be positioned for profitability to move this company forward on solid footing executing on those same pillars and those same strategies but we're gonna take a few months here, and we're gonna get things moving in the right direction. And that's really where our focus is now. It's not a shift in strategy.

Okay. That's helpful context. And then maybe just two follow-ups. One on hedges that you have already talked about a little bit. I guess, how should we just be thinking about your approach over time as we go, you know, into subsequent quarters? Are you gonna be targeting a roughly 50% it depend on kinda what the market environment looks like? And that'll be more variable at this part number one. And two, the pacing of the SG&A declines to that run rate that you talked about a could just kind of give us the cadence?

Yes. I'll take the first one. It depends on market opportunity. We're obviously looking at business need and you know, our EBITDA margins, our cash flow, our OpEx. So there's a lot of things that going in there that would make us pull the trigger. The 50% is not a mark. It might be zero. It may be a little more. We're not gonna be a % hedged. It's not executable. It just you know, in the futures markets. So it is a risk assessment-driven decision coupled with what the business needs. So it can be zero to I don't know what the top end would be but know, maybe 57 to 70% that we can actually execute. But there's no script for that.

Yeah. And, Andrew, this is Phil. So in terms of SG&A pacing, I mean, we are on track. We executed those reductions here in the second quarter, so you won't see it fully baked in the second quarter because of the timing of when we announced ECO and when we took some of those actions. To further reduce our SG&A. But here in the third quarter and fourth quarter, you'll see it coming through. Most of that SG&A is immediate. And while we're still chasing things, we still have contracts that are going to expire that might not be renewed, and we're still working on some things. To further reduce that number. Most of that that Michelle mentioned in her comments that we're corporate trade SG&A in that $12 to $13 million range. For Q3 and Q4. So it's coming it's coming fast.

Our next question comes from Eric Stine with the company Craig Hallum. Eric, your line is now open.

Good morning, everyone.

Good morning.

Hey. So I'm just jumping around calls, so I apologize if I'm covering something that already was earlier. So I did hear, you know, talking about just pausing a bit on other things in and you did list high pro corn oil and carbon as being what you're committed to. I mean, clean sugars, obviously, has been a huge topic over time. Am I right in assuming that that is one of the initiatives that is being paused And do you look at that still as having know, significant long-term potential mean, is this something where you're pausing to say, hey. Do we really wanna push hard here? Or is it potentially something that you just kinda say, hey. Let's focus on our base.

This is Chris Osovsky, and I covered this a little bit in the initial commentary. Yeah. We are parsing the CST initiative, and really, what it's about right now is maximizing the profitability of the Shenandoah site. We're able to run at higher throughput rates on the Ethanol side and take advantage of a better margin environment here in Q2. At the same time, we're able to run a simpler fermentation recipe that lowers OpEx and helps us improve the protein and oil yields out of that plant, and that plant is leading our fleet in terms of the protein yield at over four pounds per bushel. So that's really the focus there. We also have some outside our fence issues with respect to wastewater management. That'll take additional potential CapEx to resolve. And we wanna make sure that we have a very good plan in place before restarting that effort, and we're thinking, end of 2026. As a target.

Got it. Okay. And, yeah, and I know that the wastewater that that's been an issue for some time. Good color on that. I guess Maybe lastly, just on the cost cuts. So you called out the $50 million. You also talked about that you're looking at further opportunities. I mean, it will point is that it seems like what you're doing, I don't wanna say it's easy, but it might be more of low-hanging fruit. Are there areas where it would be harder you know, but you certainly would go down that road if necessary?

Well, I would add on the operational initiatives. You know, we're focused on a couple of different areas where we see opportunity. Specifically on R&M management repair and maintenance. So, you know, our teams are committed to doing more predictive and preventative maintenance as opposed to breakdown type fix at work. And that opportunity is anywhere from $8 to $10 million that's in front of us. And we're starting to see realize some of that now. And then on the chemicals, yeast, and ingredient side of things, you know, we're focused on improving our front-end processes in our fermentation plants. To drive higher yields and lower our chemical yeast and enzyme costs, and that opportunity is somewhere in the $4 to $6 million range.

And I would just add to that. Some things just take a little more time. Phil mentioned, like, our contractual commitments. As we act exited the ECO transaction, there are contracts and services that we may no longer need. We're winding out of some of those things. We're in, obviously, some very large space here. We're working on that, but those things just take a little bit longer. And those are the kinds of things that we know we can and are executing on Just gonna take a few quarters to make that happen.

Our next question comes from David Driscoll with the company DD Research. David, your line is now open.

Great. Thank you. Good morning.

Good morning, David.

I just wanted to thank you. I wanna make a statement and then a couple of So I followed the ethanol industry for twenty-five years as a sell-side analyst and now running a family investment office. I do appreciate the comments that the results are not acceptable. I suggest that you do more to highlight the value of your assets and the company's earnings potential. Clear earnings guidance should be given to the street for both near-term and longer-term financial expectations. This was done back in 2021 when the Green Plains two point o idea was, was, put out there. Bottom line, when this doesn't happen, the stock can dislodge to exceptionally low levels, which is what I think is happening today. So to the questions, balance sheet liquidity is the topic Phil, I just wanted to hear your thoughts here. In the fourth quarter, your cash balance was over $209 million. Here after the first quarter, it's down to $126 million, still by around $80 million. Can you talk about how you see the cash balance over the remainder of the year? You commented on, quote, unquote, positive EBITDA for the remainder of '25, but this is really vague. It really plays into this cash question. And my fundamental point here is to get at the finance stability of Green Plains with the stock price suggesting great concerns by the investment community. Thanks, Phil.

No. I no. I appreciate the question, David. You know, it and it's a great question. I appreciate the comments. You know, we are focused on maintaining liquidity. Like we've gone through on this call, we're focused on a disciplined hedging program, disciplined cost reduction programs, and returning consistent profitability. So we did, you know, lose some cash in the first quarter as a result of the EBITDA losses, the CapEx, the interest, and the restructuring charges, But it's our goal that we start to minimize that, and we turn this back to a cash-generating company. We should be cash positive cash generating positive here in the second quarter. And as we look out into Q3 and Q4, you know, Crush still has some work to do. I mean, it's probably still, you know, ethanol Crush by is still probably in the low to mid-single digits and all in terms of consolidated crush. And we've got carbon coming in the fourth quarter as well. So there are opportunities for this to continue to move higher, but know, we've taken these steps to liquidate noncore assets and put facilities in place and extend loans that we can maximize our flexibility and really focus on returning its overall thing to profitability.

And then just as a follow-up, and it's somewhat related here, is this asset value and replacement cost? And how to get better recognition of it. So you know, specifically, how do you guys think about the replacement cost of the asset base with the stock trading at guess, yesterday, three or, $3.80, 570,000,000 of gross debt, I believe that the implied value of these assets on a per gallon basis is less than a dollar. If these assets were built today, what would be a good ballpark figure to use as replacement cost per gallon? $2.50 a gallon, $3.50 a gallon. Where do you guys peg it?

Well, I mean, thanks for the question. David. This is Michelle. Not all assets are created equal, albeit as is expensive to rebuild as you are well identifying. We would peg replacement cost and then probably 2 to $3 a gallon range, depending upon the asset, depending upon, you know, what we choose to rebuild and where, those types of things. You know, one of the reasons for our strategic review process is to ensure that we're getting and maximizing value for our shareholders. And getting out there in the market to identify what's available, one, on a whole company basis, on an asset asset basis. And that is ongoing, and we are committed to ensuring that we're not leaving that value on the table for our shareholders. Chris, would you like to add something that relates to the detail on plants?

Yeah. Specifically related to plants and asset values, you know, we have three different engineered designs of plants, that being ICM plants, plants that were built by Delta T and finally, Vogabush. Each of those plants performs a little bit different in terms of their energy consumption and total OpEx and throughput. And one of the things I wanted to highlight is the improvement specifically related to our Delta T platform over the past let's just say, six to nine months. Our Wood River Otter Tail and Superior plants are performing right now very close to, if not as good as an ICM designed hundred million gallon plant You see it in our total throughput numbers. And you see it in our reduced OpEx per gallon results. Coming out of here out of Q1. And, that puts us in a good spot with respect to taking advantage better margins in Q2 and in the rest of the year. And I think it's important to the industry to start changing the narrative around those delta t assets. And proving that they can perform and create value like those that were built by ICM.

I'd now like to turn the conference over to Michelle Mates, for closing remarks.

Thank you. I wanna assure you we are deeply committed to earning back your trust in executing on our strategy. We thank you all for your participation in today's call. And if you do have follow-up questions, please don't hesitate to reach out, and we'll find a time to connect. Thanks, and have a great day.

That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.