Kristen Owen: 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.
Todd Becker: 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.
Kristen Owen: Thanks so much, Todd. I’ll take the rest offline.
Operator: We’ll move next to Jordan Levy at Truist.
Jordan Levy: 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?
Todd Becker: 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, on top of carbon capture and on top of the other things that we’re doing.
But think about it like this, Jordan. We have plants that may not be on a pipeline. Well they may be clean sugar plants and that’s really how we’re thinking about this at this at this point. So they may be a full or partial conversion to clean sugar at that point, and we’re going to increase our dextrose capabilities. We are months away from showing the naysayers who said you can’t make dextrose to be used in industrial production at a dry grind ethanol facility. We aren’t years away, we’re months away and we’re highly confident that we will be able to compete and ship product. On top of everything else that we’ve outlined, look, we’re well positioned. I wish I had more, actually I wish I could actually have more plants at this point and more production within our platform.
We had as many as 17 plants in the past, but I think within our platform we could see some expansion opportunities or repurposing some plants as well. So net, we don’t see a gain in production overall, but we see a gain in our earnings opportunities at 2025 and beyond. So I think we own a very powerful portfolio of technology that is undervalued as well.
Jordan Levy: 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.
Todd Becker: 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.
Jordan Levy: Right. Absolutely, thanks for that.
Operator: We’ll move next to Adam Samuelson at Goldman Sachs.
Adam Samuelson: 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?
Todd Becker: 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?
