GPRE - NASDAQ

Good morning, and welcome to the Green Plains Inc. Fourth Quarter and Full Year 2024 Earnings Conference Call. Following the company's prepared remarks, instructions will be provided for Q and A. At this time, all participants are in a listen-only mode. I will now turn the call over to your host, Phil Boggs, Chief Financial Officer. Mister Boggs, please go ahead.

Thank you, and good morning, everyone. Welcome to Green Plains Inc. Fourth quarter and full year 2024 earnings call. Joining me on today's call is Todd Becker, President and Chief Executive Officer. There is a slide presentation available and you can find it on the Investor 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-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 Todd Becker.

Thanks, Phil, and good morning, everyone, and thanks for joining our call today. As part of our ongoing strategic review, as you can see, we have executed a number of actions designed to improve our operating performance going forward, and set ourselves up for when carbon comes on later this year in order to realize the maximum benefit from our protein oil and carbon footprint. Over the last several years, we invested significant capital to get our new products to market and the time has come to rationalize those costs among other decisions we have made. Accomplish significant cost savings and margin expansion, we took the necessary step of reorganizing our corporate and commercial functions to streamline and enhance our agility and resilience and to improve alignment around our core strategic focus. We have identified up to $50 million in annualized cost savings, and based on the action we have already done this week, we executed on the first $30 million of improvements already. This included a move to a smaller corporate workforce, winding down some of our innovation platform, attacking SG and A expenses, having a smaller executive leadership team with a number of executive departures, and lastly, looking at everything we do across the board, it does not make us money. This was our natural move from innovation to commercialization including rationalization. We knew this day would come. As a result, we may encourage a small one-time restructuring charge in the first quarter which we do not believe will be significant or material. As part of this as well, in January, we made the difficult decision to shut down a 120 million gallon facility in Fairmont due to market conditions. It is not just the macro ethanol market, but the acute issues stemming from the flooding last spring in southern Minnesota which resulted in a short corn crop and elevated basis levels in that area which we think will last throughout the year. We are keeping a skeleton crew to perform maintenance on the facility, while it is in cold idle for the foreseeable future. The plant also needs a new upgrade to the grain handling and drying systems. And permitting in Minnesota is just a long slog. If market conditions dictate, we can always bring this production back online. But we will be careful and thoughtful on this decision and we are still planning for carbon capture to be in place at this plant, but we will talk more on that with regard to carbon later in the call. Now on to the quarter. We reported a net loss for the quarter of $54.9 million or $0.86 per share. One thing I want you to notice though, is we took a non-cash income tax charge making our number look worse. And Phil will talk about the settlement later in the call, although we were disappointed that our EBITDA was negative for the fourth quarter. Yet in full 2024, the company earned $44.7 million in EBITDA positive for the year. Still a disappointing result. Phil will review all the specifics shortly. Again, when we look at EBITDA for Green Plains, the SG and A that plagues us is being attacked as we speak, and we cannot continue to be set up to burn our SG and A like we did this quarter. Our standalone assets performed to the market standard at many of our locations, or even to sit at the top of the market stack, yet our centralized structure was too large for a smaller production footprint. And that is why we announced the restructuring today. Well, I can spend all day talking about the deterioration of the ethanol margins. You have heard it many times across industry earnings calls already. Market fundamentals were weak with high levels of production and elevated stocks with the one bright spot being strong exports as we are on pace to set a new record this year of approximately 1.9 billion gallons and we expect 2025 to exceed that. We were largely unhedged and open to the crush going into the fourth quarter. Which was wrong the wrong choice to make. As many of our shareholders have voiced concerns with our hedging programs, this quarter would have been to hedge. As we enter into month two of 2025, the market has remained under pressure. Yet, when you look at where we have been historically, in Q1 at this time, the forward curve is in better shape and positioned than is typical for this time of year. But we need to see either an increase in demand or a decrease in supply or both. We are watching planting attentions closely and we believe the setup for favorable industry fundamentals is in place, although the US global the global market remains very tight on corn. So the US farmer will need to act on putting serious acres in the ground. Otherwise, we are setting up for higher priced corn market in Future. Despite having extended seasonal maintenance at Mount Vernon during the quarter, which we said was coming on the prior call, we achieved an operating rate of 92% and expect to continue to operate in the mid-nineties after the exclusion of Fairmont. Our plans continue to operate better and better every month, and we are also focused on reducing our opex per gallon as well as with many programs that are being kicked off as well there continued to track record for strong corn oil yields and yields at our MSP plants continue to push the upper end and what is possible with corn oil even exceeding 1.2 to 1.3 pounds per bushel. Ultra high protein yields were also in line with prior quarters and we are constantly making improvements the process at our MSC location. The overall volumes were lower than the record levels due to the decision to take protein downtime in the quarter at Wood River, to rebaseline that plant in anticipation of carbon capture coming online later in the year. While the overall protein complex is under significant pressure from oversupply, due to expanded domestic soy crushing capacity and it's becoming a bit ethanolized in that industry. There are definitely some bright spots as we move from innovation to commercialization. Just last week, we sold one of the largest aquaculture companies in the world the largest amount of quantities we've sold to date. Will be converted to both vessel and is repeat best and is repeat as we expect. Into South America of 50% protein which is the result of three to four years of work. We see growing interest in our 60% sequence product from those same customers and others abroad as global tightness in corn, has resulted in a tightening corn gluten meal market into destinations, and the replacement product is guess what, sequence. And we are determined to keeping this position as a premium product and not let it be commoditized and we are pricing it accordingly. Our legacy pet food customers extended their contract with us once again and we continue to focus on the growing market share in premium markets with our team our distribution partnerships on pet food, The progress on carbon has been exceptional. The rule making is supportive to our company and shareholders, and we remain on track to begin capturing biogenic CO2 in the second half of this year. With these policies in place to support not only our decarbonized ethanol, but our low carbon renewable corn oil as well. We continue to believe that the value of our net Nebraska assets are not reflected in our current share price. Carbon earnings are to begin later this year and will fundamentally transform the earnings power of our business and our valuation. We are hearing and seen individual transactions at a much higher multiple and per gallon valuations than traditional generation one plant without carbon capture. Without reduced enterprise value based on the potential market for our decarbonized gallons, the Nebraska assets are more than our market cap alone and it makes absolutely no sense in between that and our SG and A rationalization. It sets us up for a significant rerate once again and we are looking forward to that. And I'll hand the call over to Phil to provide an update on the overall financial results, I'll come back on the call to provide additional color and outlook on what we just discussed. As there are really few there are a few really important factors to consider as we move forward together. Phil?

Thank you, Todd. Green Plains consolidated revenues for the fourth quarter were $584 million which was $128.4 million or approximately 18% lower than the same period a year ago. As it has been the last couple of quarters, the lower revenue is attributable to lower market prices experienced for ethanol, dried distillers grains, and renewable corn oil, in Q4 of 2024 as compared to the same period a year ago, while we have seen a decline in our commodity inputs with corn and natural gas down significantly, the margin opportunity was significantly weaker for the quarter compared to the prior quarter and the prior year due to market oversupply as Todd has talked about. Our plant utilization rate was 92% during the fourth quarter, compared to the 95% run rate reported in the same period last year. For the trailing four quarters, we have averaged a 94% utilization rate, and we anticipate our operating plans to continue to perform in the mid-ninety percent range of our stated capacity for the first Order. Excluding the impact of Fairmont being idled and barring any events outside of our control. For the quarter, we reported a net loss attributable to Green Plains of $54.9 million or negative $0.86 per share, per diluted share compared to net income of $7.2 million or $0.12 per diluted share for the same period in 2023. As Todd mentioned, we had negative noncash tax adjustments to the quarter that impacted EPS. EBITDA for the quarter was negative $18.9 million compared to $44.7 million in the prior year Period. Depreciation and amortization expense was lower by $2.9 million versus a year ago. At $21.4 million. For the fourth quarter, our SG and A costs for all segments, including our plants, was $25.6 million, $7.2 million lower than the prior year due to lower personnel costs and adjustments to incentive accruals. Remember, this includes our plant assets, and the rationalization was almost all around our nonplant costs. Interest expense of $7.7 million for the quarter. Which includes the impact of debt amortization and capitalized interest, was $0.9 million favorable to the prior year's fourth quarter. This decrease compared to prior year was primarily due to lower loan balances associated with the payoff of the Green Plains Partners debt retired in the third quarter of 2024. Our income tax for the quarter was $7 million compared to a tax benefit of $0.3 million for the same period in 2023. As both Todd and I outlined in our earlier comments, during the quarter, we reached a settlement in principle with the IRS Independent Office of Appeals regarding our R and D tax credit, for the tax years 2013 through 2018. Due to the agreement, we booked $6.2 million of tax for the year to increase our reserve for unrecognized tax benefits related to the R and D tax credit issue, net of our valuation allowance. At the end of the quarter, the federal net loss carryforward available to the company was $124.3 million which may be carried forward indefinitely. Our normalized tax rate on a go forward basis is around 23% to 24%. Our liquidity position at the end of the year included $209.4 million in cash cash equivalents and restricted cash, along with approximately $200.7 million available under our working capital revolver. A bit weaker due to the margin structure in the quarter. For the fourth quarter, we allocated $27 million of capital expenditures across the platform, including $6 million to our clean sugar initiative, about $7 million to other growth initiatives, and approximately $14 million toward maintenance, safety and regulatory capital. On a year to date basis, we have incurred capital expenditures of $95 million in line with our prior estimates. We anticipate plant related CapEx for 2025 will be in the range of $20 million to $35 million as we have most of what is needed at this point for our platform. This range excludes the remaining balance of the approximately $110 million in carbon capture equipment needed for our Nebraska initiatives as we have financing in place to cover those needs. Now I'll turn the call back over to Todd.

Thanks, Phil. And so let's walk through high points for our 2025 initiatives that we want you to focus on. In carbon, major milestones continue to be hit. Tallgrass Trailblazer Project has acquired all the necessary rights of way reach our three Nebraska that we anticipate will be capturing carbon in the second half of this year. Construction of pipeline laterals commenced 2025. and they remain on track to be completed late in the third quarter or early fourth quarter. We have spent significant time and effort to outline to you the financial benefit of this project which continues to hold and could be better under the new rules. So let me focus on some of the recent highlights. That are important for you to understand the significant reality of this project. First, the proposed rule could not have come out more favorably for Green Plains. Had we been drafting it ourselves. While not a final rule, it was printed in the IRB, the Internal Revenue bulletin, and taxpayers can rely on it until such time treasury or congress would act. Our DCO has the lowest score among all the feedstocks for renewable diesel, Used cooking oil imports are no longer allowed for surface transportation fuels such as hard renewable diesel, biodiesel, And with fin and with import of finished fuels also not qualifying under this producer credit. Which is approximately one billion gallons annually. We anticipate a material appreciation in domestic vegetable oil values related to oil. Had to become the seat of had it begun? To see this premium materialize for our corn oil. As we have a lot of it, the clear winner here is ethanol with carbon capture. A thirty two point reduction for plants that are able to execute near term which a clear advantage for our Nebraska footprint as we have reiterated to you and this translates to significant cash flow materializing later this year. With narrow margin in the house and senate, we believe it is unlikely to forty five z is eliminated in a reconciliation package, and a lot of work is being done to get it actually extended. Green Plains has completed the facility registrations for our clean fuel production credit. For our advantage Nebraska strategy. So to close, our outlook for the annualized run rate financial contribution for Carbon across our 287 million gallons in Nebraska footprint. Is on track for at least $130 million using a $70 per ton private credit carbon credit value. This is net of operating expenses and the tolling fees on the pipeline as well as we are continuing to discount even for monetization. We have seen the strengthening in the distillers corn oil market since mid December since the guidance and the model were released. That is it as it is given its beneficial treatment, under forty five g and LCFS programs. We have the capacity to produce around 300 million pounds of corn oil annually with Fairmont down to every ten cent move in its value is another $30 million in EBITDA. And we have seen that help our forward margins. The state of Minnesota has granted the permits for the summit pipeline to reach our Fergus Falls. Sorry. Even though they won't grant us a permit to build temporary grain piles. But we remain optimistic and hopeful that that project will make progress on permitting in 2025. Let's talk about clean sugar. Exciting project can now make InSpec sweeteners for use of across a wide variety of food and industrial products. The wastewater channels remains as we have outlined, and we can only run the planet about a thirty capacity while we design a solution for either dealing with it on the back end, the front end, selling all industrial products that skips CI and exchange process. Yet leaves beneficial nutrients for fermentation. The meantime, we have received kosher and halal certification The food production license has been license has been approved in the state of Iowa. And that was the major hurdle to finalize our FSS or food safety certification certification audit. We expect approval any day now. The technology is disruptive and breakthrough. The next build will either be standalone, co locate, either at a wet mill or a dry mill, expansion of what our current wet mill can do, or all of the above. We're also testing a front end system used globally in order to not be wastewater solutions over the next a few months. At which time we can choose our best path to a hundred percent capacity. Again, it is not a technology issue. This has the same potential we have discussed in the past. We continue to remain very excited on our successes so far. Unlike many technologies that have been developed around our whether around alcohol to jet fuel, or cellulose gas. No. We can actually make product. We can sell. Once we get once we get our last certification. Few technologies, as you know, are not easy to stand up, yet our team has done an amazing job getting to a point where we are very close and know where the last step has to be addressed. But we need to be certain of that step before we put the last capital in. As noted earlier in the call, we had lower production volumes of ultra high protein during Q4 at our Green Plains plant due to the major project at the Mount Vernon ethanol facility we told you about last year. As well as taking down with the river to baseline the plant so we can understand the true total plant opportunity when carbon starts up. Margins remain under pressure in the protein space due to the availability of cheap competing project ingredients. Yeah. We did generate positive EBITDA at all of our plants last year in the protein investment. While paybacks are taking a little longer than expected, we know that markets move over time. We are starting to see a better uptake of our products globally that traded a premium or potentially get sequenced off the ground, as discussed earlier. Continue to increase our sales to domestic pet and inter international aqua customers, our key target growth areas. While we are still making adjustments to our production process for sequence, We started to increase production due to the demand and anticipate growing our sequence business substantially in 2025. We have also debottlenecked the ability to make sixty percent protein on the fly as our last run and current run that's taking place at Central City. Has little or no impact to plant operations as we have cracked the code on the biological formula to do this, and we'll try and roll out these findings across the platform. What we learned in Q4 last year was that it's time to move on from investing and getting products to market acceptance and now try to fully monetize what we have done. This cannot be done without making the hard decisions on SG and A and assets like we have announced as we have set ourselves up for the remaining 2025 and the imminent start up for Carbon. Our investments have been made and we have very limited CapEx going forward other than Carbon, which does not use our balance sheet cash. We will focus on executing on the total $50 million of savings identified monetizing carbon, simplifying our structure, reducing or eliminating term debt, reducing our OPEX per gallon, and continuing our strategic review as our complexity will be significantly reduced, and we will be a much leaner, and simpler company as carbon and protein earnings along with baseline corn oil cash flows repositioned our company for the future. Let me reiterate on the last point. When we look at our current asset based most of our plants stand alone generate EBITDA positive or significant positive EBITDA at places like Central City, Obai and Shenandoah and that Wood River as we had carbon. Adding carbon to Nebraska and those plants will be some of the highest margin plants in the country starting around Q4. Or late Q3, has been shut down for now, which will position our stack better. And Mount Vernon and Madison are now once again back at rates even record rates after significant improvements. As we look forward, we must look at back we must look back at what worked. We focused aggressive we focused on aggressively driving significant efficiencies across the org. We are focused on aggressively driving significant efficiencies across the organization, including in our corporate and trade SG and A as we work to deliver the $50 million in cost savings we outlined this morning and we will once again be targeting two to three cents a gallon as per gallon of SG and A at corporate and trade as we are taking action to get there from our current eight to nine cents per gallon. And took our first steps this week and expect to be aggressive in the next sixty days to of our goals. Add it up, we will use 2025 of the year as the year where we position Green Plains for earnings power. As we've outlined the past, thank you for calling thank you for joining our call today. We can now start the Q and A session.

Thank you. We will now begin the question and answer session. We ask that you please limit yourself to one question and one follow-up. Your first question comes from the line of Craig Irwin from Roth Capital Partners. Line is open.

Good morning, and thanks for taking my questions. So, Todd, the last several years, you've had a bunch of initiatives to take out cost, like project 24. I know there's we we I guess, we don't have have to go through the list. This $50 million is a big move, and $30 million already implemented this week. You know, can you can you maybe get granular for us? Where this is coming from and, you know, how this cuts in to the overall profitability of the platform.

Well, what it does is increases the over over the overall profitability, you know, listen, we spent the last four years focused on innovation and getting our products to market. And we have reached the point where we have penetration in the markets that we want to go, and now it's more around commercializing and marketing and trading those products correctly and then obviously rationalizing those costs. You know, we really don't need to feed fish anymore. Our our customers, they have accepted our products. They've used our products. We've had great with a great trial in in Norway with salmon, those were great results. We consider this to be a gold standard product. Once that was to finish or getting close to being finished. The market understood the premium of our products. And I think another thing that's really helping us right now is is the global tightness in corn where corn gluten meal prices have continued to increase globally. But look, you know, what we did is we invested a lot of money to get our products to market. We invest a lot of money in innovation Research? And, when won full swoop this week, we decided we were going to move on from that and just focus on expanding our margin structure, reducing our SG and A costs all around that. While keeping a core group that is focused every single day on making money.

So then just just to follow-up on on aquaculture. Right? This This was one of potentially most attractive markets you could sell High Pro into. Over the next number of years. We always expected it to take a while to get in there. You know, can you maybe talk a little bit about your projects in South America? You mentioned in the in the prepared remarks Do you need to feed fish yourselves to to continue to penetrate these customers?

No. In fact, we've made the penetration has been made. We have sold our first largest quantities. We which could be actually converted now on a little bit more volume into bulk quantity shipping on a in in a vessel, which is the first time we've been able to achieve that. If we can get some of our products out of the United States in a week, protein market we have here to service customers that are looking for different characteristics and feeds than traditional soy proteins or soy protein isolates. It's really what we're replacing now in the world as well as the corn gluten meal market. But it took us three to four years to get to this point. And I would say while certainly in a weaker global protein market, we would we would like seen it higher than we are today, will start to pay dividends for us and our shareholders in the future. You know, this is took a lot longer than we thought, but, again, we had to be patient. We had to invest the capital to get there. We had to to show our customers we understood what the use of our products would be for them, and they had to do their own testing You have to go through a two year full cycle to grow salmon. And those are some of the things that we we we were dealing with. And and while frustrating to all of you and to all of us, you know, we're starting to feel better about this this opportunity, and we felt at this point, you know, we basically won full swoop. Took care of the or or or closed on much of our innovation and research platform. As we know now that our products are commercialized and and we're really excited about the the future of that. We have a great team that positions us for that. But I think at this point, we're gonna focus on making money.

That sounds good. So my last question, if I can squeeze another one in. CCS sounds like it's it's tracking right to schedule. Can you maybe talk a little bit about where we stand with the delivery of equipment and the pipeline interconnects When could we possibly see first EBITDA off these projects? Other details you could share with us would be helpful.

Yeah. Look, our current service date is somewhere in late Q3, very early Q4. Chris and the team are heading out to Ohio next week to take a first hand look at our compression equipment being built. Make sure that we remain on track. We're not the general contractor on the project. Our partners at at Tallgrass who own the Trailblazer project are They're fully focused on, on breaking ground very soon and getting the building stood up. And if you come across Nebraska and you drive around our plants and other plants, you'll see that laterals are being laid right now, and construction is fully underway. So we could attack the first couple years of forty five z. Thank you.

Thanks again for taking my questions. Your next question comes from the line of Jordan Levy from Truist Securities. Your line is open.

Morning, Alan. And thanks for all the details. Maybe just following up on Greg's question. Just now, I'm kind of level setting where you all stand. I appreciate kinda the commentary you gave on the protein side of things. But if you could just talk to that in reference to sugar, given or or CST given it's it's still kind of earlier in the kind of rollout of that. I'm just curious how you're thinking about that in terms of the cost initiatives?

Can you can you follow-up with some clarification on what you're looking for in the answer?

Maybe a little more Yeah. Yeah. Yeah. Just kind of the level of detail you gave around protein. I'm just looking at something similar in terms of where about where market development is in CST.

Okay. Yeah. Thank you. Now look, I mean, I don't think we're gonna be short of customers. You know, we are waiting for food safety certification that we have already sent some of our products to beverage makers food makers, industrial users, everything from insulation to pancake syrup and everything in between. I think you could you could I assure you our sales group and our marketing group has spent significant time with customers, and now it's just really waiting for us to get the the proper certifications. And with our partners, get the comments for yeast so that we when we make halal and kosher as well, We're we're inspect and that's coming probably in the next week when we start using the yeast and in our process. Look, I think one thing we have to realize is that running at a third is not the best economic thing for our shareholders. So we will probably move to more of a campaign program where when we make a sale, we'll make the product and we'll start it back up and running it twenty four hours a day, three hundred sixty five days a year. You know, at that rate, we can make more money making, running Shenandoah at full rate on the on the grind side to make alcohol and sugar and or, sorry, alcohol, protein, and and oil. So we're gonna go more in a campaign mode here. And and because we know we can make it. We gotta get that food safety certification, but I think the last clear path on that was getting our Iowa food processor certification. That is That has been approved, which I think continues to show the validation of our technology and that it works. And that we make products on spec that can be used and everything from beverages to pancake syrup to industrial products and we're there. It's really now just a function of what we expected the capability of the local wastewater treatment plants to be able to take our products They they're they're focused on building a new one right now, and so we have to focus on how do we get this plant up to a hundred percent. In the meantime, we're in significant discuss we're in discussions with other potential users of this technology, both domestically and global. We have interest in collocating or or licensing our technology globally in countries like Brazil and Europe. As well as with even in the United States, you know, since the beginning, even before we acquired FlueEquip, you know, they had interest across both wet milling and dry milling for their technologies as a bolt on to expand their capabilities. As you see with other results that are out there, sugar margins and sweetener margins have not really gone down. With everything else, it's not an oversupplied market, nor do we anticipate that anytime soon.

Appreciate that. And then just for clarification, $30 million of the restructuring this week. If I I'm sorry if I missed it, but did you you kind of give a timeline to get to that $50 million? Is it should we think year end or something like that?

Star, we wanna try to be there within ninety days on an ongoing $50 million run rate. So our phase two starts Monday. You know, phase one was this week. We we resized our corporate and trade infrastructure and and SG and A. We've several senior executives have departed the company as as we had indicated. In addition, Oh, with the significant downsizing of our innovation platform at the York Innovation Center, our optimal feed mill, our labs, as well as our our aqua lab. You know, I think the most important thing is you know, we had to get our products to market, and that all cost a lot of money, call it sales and marketing or marketing, advertising, promotion if you were a food company, maps spend, but we're not spending any more on that at this point. I think our products have have gotten what we needed to this point. So no. We we were that was our first our first action this week. And we start on plan b or the phase two on on Monday. It's try and get this all wrapped up within ninety days.

Thanks for all the details. Thank you.

Your next question comes from the line of Sumara Jain from UBS. Line is open.

Hey. Good morning, guys. So DCL getting a score of thirteen, soybean oil getting thirty eight, and we expect corn oil to trade at a you know, four to five cents per pound premium to soybean oil? Or how are you guys looking in the past?

Yeah. Thanks for that question. And and by the way, that is the bid today. Mean, I think we would have no problem selling four to five cent premium to soybean oil, or for the ongoing market at this point based on the value of the advantage feedstock that we have today. So we're seeing we're seeing indications like that already. We're seeing the market trade like that already with an oil at forty five cents. I think fifty cents is not a a a hard value to trade today for our product. If you think about it, even since the last call. We are probably in In in the high thirties, low forties over the last couple of calls starting to increase the bottom of or off that market in the soybean oil. Look, that soybean oil market is tight globally. We just have to rationalize some things going on here. But for us, you know, we've seen you know, our our our view is it should trade at a seven to ten cent premium. And I think that that will ultimately come to to bear with with our products across not just us, but the industry in general. You know, we are we are seeing opportunities like that, and I think think one thing is also really important for our product, every one of our plants now is now Corcea certified, and we even get a premium for that. That means you can use our products to produce products for for European jet fuel markets and fuel markets. So that is another thing that we were able to achieve during late last year and early into this year was all of our plants are now Corcia certified, eligible for even more value. Including even Shenandoah. So yeah, we're excited about this opportunity, which we wish was eighty cents a pound. It would change the margin structure significantly, but I think that you know, we we're seeing these the soybean oil market bottom out. Just based on on what we're seeing globally in in domestic vegetable oil pricing. But overall, we're really, we're really optimistic about, our placement of our low c I product into into markets like renewable diesel and Corsia markets.

Got it. Thank you. And then how are you guys considering tariffs under Trump and the impact on your production maybe with BCO and Chinese Pride Eagle in particular? You know, if you look at the first action, which is the Chinese Yuko, situation. You know, I think that is a really beneficial thing first and foremost and that was a good thing to happen for for our industry. Yeah. We're gonna have to take it, you know, day by day, step by step, you know, Canadian fuel market's an important market for us, but if you looked at some of their real their proposed retaliation, did not include ethanol. I think when you're talking about motor fuels around the world that has certain requirements, a a lot of times when you blend ethanol, you've changed the base fuel around. And you just can't change that overnight. So put the tariff on or not put the tariff on. People are still gonna buy our alcohol to go around the world. We have a low CI product. And I think we're gonna still start to see even more interest in our products as we sequester carbon. And even getting a lower c I ethanol and continue to focus on that as well. So you know, we'll take it day by day, you know, if we put tariffs on on our products and then we get a tariff on Mexican you know, Mexico to take our corn, obviously. We'd have to weigh that. But, you know, a a cheaper corn market wouldn't be so bad for green plants today or in as we've seen the corn market rally. That's all hasn't been able to keep up. We gotta get through this winter doldrums of high stocks, and we've been here before. We we're starting to see a little bit of of a slowdown, although we had elevated production this week, maybe catching up a little bit. But we're gonna have it flow and you know, the tariff situation is, you know, we've been doing this a long time. And know, ultimately, it becomes a zero sum game.

Got it. Thank you.

Your next question comes from the line of Adam Samuelson from Stephens Inc. Your line is open.

Morning. This is Adam Shepherd on for Peron. Thanks for taking the question. Thank you. Just in terms of the updated greet model, and you mentioned it's essentially, like, y'all wrote it for your assets. You just give some more color in terms of how much of an incremental benefit you expect to see versus your previous expectations. And how that might impact your, you know, longer term margin potential.

Yeah. I think when we look at our assets and we look at the new modeling, and and and we've kinda got really excited about it because the starting points are lower. And in fact, even York, which has has a a different type of plant is eligible for forty five z now and not forty and it is leaving the forty five q behind for a second here. So that gives us courage. To even look at low energy distillation there as well, which which is something we're we're focused on. And so the starting point was was even better than expected, which gave us more confidence that that we'll be able to achieve our numbers, and we haven't really changed so much with the guidance that we have. Except to say that if you actually did the math, you would see that those numbers are even higher basis degree model. But I think we wanna be conservative and say, look, you know, this is just a validation what we have been saying. We even have more confidence in our numbers today We are working on now finalizing agreements to get our credits and our voluntary Credits are voluntary carbon offsets to market as well. In addition to looking at the tax situation, tax credit situation where we can help to use use those forward cash flows to help monetize. Again, our goal also when we look at all of this, is to get our term debt paid off sometime here by either looking at you know, that the situation we're in with carbon or or or other aspects of cash flow generation as well as looking at our stock price as well, I think that's gonna be important. As we start to generate free cash flows from these projects and look at to say, you know, where where where is the best place to allocate capital, and what's the most accretive to our shareholders as we get to later in the year. But the overall is it was a positive both from corn oil and carbon. And when you add those two together, know, I think it's very beneficial for Greenpoint shareholders. It doesn't show up this quarter because we had a really weak ethanol market that we were coming off of with a bunch of oversupply, but this is why we're doing what we're doing. And by the way, part of the $50 million we identified was shutting shutting Fairmont down. Fairmont Fairmont would have cost us almost $10 million if not more. And part of that was we have to make decisions to our best for our shareholders. And in the past, maybe we would have run a plan like that to wait for a better margin structure. Know what? That that game's up, and we're gonna we're gonna focus on absolutely every aspect of what we do, every line item on what we do. Starting with SG and A, going through our cost to get products to market, looking at our assets to say what's gonna run or not run, we're not gonna run and lose money anymore. So know, we're just gonna we're gonna take actions and we're gonna make them swift and very quick.

Okay. Thank you. That's very helpful. I'll I'll hop back in the queue. Thank you very much. Appreciate it.

Your next question comes from the line of Matthew Blair from TPH. Your line is open.

Thank you, and good morning. Had a few questions on the forty five z Good morning. I have some questions on the forty five z in regards to your carbon capture efforts The one you mentioned that it's unlikely the forty five z will be repealed. You know, is it fair to say that that's a a shift in sentiment? Relative to perhaps earlier in the year? And if so, could you talk about, you know, what gives you confidence in that And then two, to monetize the forty five z, you'll need to find a buyer on the other side. Right? And and so could you talk about, you know, are there any concerns that the forty five v would technically be in place, but it might be hard to find a buyer How would you go about monetizing those credits? Thanks.

Yeah. I mean, it's it's a it's a tax credit. So I think, you know, finding buyers who can buy tax credits and and we've seen some potential opportunities that allows them to, you know they're they're gonna trade at a at a bit of a discount anyways and they have, but we've seen a good market for these type of credits start to start to avail and we've seen those marketed today You know, part of it is it's a combined package between credits and offsets, and I think we have both. I think it'll be really interesting because the market hasn't been able to source these high quality gold standard credits and volume to and carbon offset programs are still active at companies no matter, you know, what what what we think about some of these programs. People are still have their targets And and certainly, there's still there's still a market for these. These are tax credit offsets. So I mean, really, when you're looking at and they're trading not at a hundred percent. So, I mean, in our models, don't show them trading at a hundred percent. Percent. So we're being conservative from that perspective. Look, we had a lot of profits we would have to find markets for our tax credits. We just use them. We don't have those today, but we expect to have those in the future. So we gotta work through our NOLs first, But, ultimately, you know, some of those could be used ourselves to to offset tax obligation. So that I don't think that'll be a hard thing to market and then we get the offsets. You know, look at LCFS markets today. California, in Oregon, and other places. Oregon already has a CCS pathway for LCFS. But that'll be an important market especially for early gallons that come off and and California will take a couple years after that. So we have kind of a baseline market for what carbon offsets are worth, and that's in the LCFS market. And we also have customers that wanna buy the tax credit and then buy the offsets and using those savings to buy the offsets and achieve two things. You gotta remember, forty five z is not necessarily reducing your carbon offset. It's just reducing your tax liability if you buy it. So tax credit markets are very active. In our view, I don't think we'll have any trouble from that perspective.

Sounds good. And thanks for the commentary on just the current margins and trends into the first quarter. We're looking at head to ethanol utilization that last week was ninety five percent. The three year average for this time of year is closer to eighty seven, eighty eight percent. So is it fair to say this is more of a supply problem and are you aware of any industry upcoming turnarounds that that might help knock down this utilization figure?

Yeah. I mean, this is the this is the time of the year that, it's nice and cool out and we could run the whole industry could run their plants full out Cooling capacity has always been a bit of a bottleneck here, which is during the hot months and the summer months during driving season. Which is why you see a little bit down a little bit of a downtick in utilization only because you know, there it when it gets warmer and hotter out there, you can't run your plants as efficiently So know, where we're at right now, blends work really good. Gas demand's pretty good. We just need to get through this. Get to driving season, Come out of these winter doldrums. Keep exports, and we think they could exceed two billion this year. As long as obviously, we'll have to watch tariffs and everything like that. But demand for our products is really good. E fifteen potentially as well will give us a little bit. Look, that's that's gonna be a long game. We finally have what we need, but it's still gonna be a long game to get to full full utilization, one percent. E fifteen uptake in addition to everything else would be taking us to an e eleven point would clear the clear the clear the surplus. So it just takes a little bit of moves here on top of everything else but I think when you kinda look at where we're gonna yeah. Even though we're in the middle of the winter doldrums, getting the driving season will be great. Guest demand is good. Weather has been, you know, been pretty clear for people to drive. We saw that in in the blends. I think you're right to look at it that way. And I think if if that was happening in May or June or July, margins would be significantly different than they are today. Just because we're in the middle of winter, it's running at a at a, you know, ten fifty to eleven twenty pace. It's gonna be a little bit hard to to draw stocks yet, but when we draw, we should we expect them to draw fast and furious, especially with ramping up this export program in twenty five.

Sounds good. Thanks for your comments.

Thank you. Thanks.

Your next question comes from the line of Salvator Tiano from of America line is open.

Yes. Thank you. Firstly, I want to ask about the high protein business. I mean, the, you know, the production level was pretty much the lowest I think quarterly since you you added capacity in earnest. And you you mentioned the Wood River with baselining, but I'm not really sure understand what that means. And given all the discussions about the ramp up of demand throughout the year, I'm still not really sure why things shouldn't have been much more favorable. That you should have increased your production rather than you know, as you said, do this rebaselining. So kinda explain to us this. And, also, how are sales actually in the quarter? Because, obviously, you report the production, but were sales actually higher q on q? Did you actually bring higher premiums for the past as we're expecting earlier in the year?

Yeah. Thanks for the question. So let's address the first question. As we indicated to you, our modernization program at Mount Vernon was underway in in early into the first in early in the fourth quarter, which reduced That plant was almost fully offline. For about half of the half of the month in October. And then we didn't bring the protein system on back until we brought the full plant back online. We modernized all the conveyor systems, all the several several of the older bin systems. Lots of upgrades around the plant to get that plant modernized as we as we go into the future. As we as we look at what we needed to do there. And so protein was down there for significant significant part of the month. On top of that, what we wanted to do when we talk about re baselining a carbon plant, we have to run it with and without the drying system. That that we run-in our in our protein operations that that does cause a change potentially in carbon score, but you have to you have to take the hard decision to rebaseline that plant. Because it's it's really our our central city plan is a little bit different animal. So, you know, we we may have to do that at some point here before we go back online, but but it took a it it takes quite about ninety days to rebaseline a plant to look at all the aspects and all the calculations, to understand when carbon hits, we will do what's most profitable for our site and for our company. And if that means to run the plant full out and not run protein so we can make more make more relative to the forty five z and and offset programs, we'll do that. If it means make more protein, we'll do that. Those plants is a a plant that you may not be able to take protein down because they'll lift because of the drying capacity in the local market for feed. So we made the decision this quarter and it was it was the right decision from a market perspective. You saw that we in soybean meal, And soybean meal physical is even weaker when you look at the middle of Iowa trading at fifty fifty under soybean meal futures. And and weaker than that. So it was the right quarter to do that. We continue to ship to our best food customers, but we had to compete as well in some of the pork and the poultry markets that are a bit weaker based on some of the physical soybean meal basis that we've seen out there. But, you know, we're basically running everywhere at this point, running back at at at all all all of the operations and protein are turned on. And again, we're very and we're in our next sixty pro run and in Central City. We just did one last month as well. So these are multiple runs in a row. And multiple months that, I think is would give us confidence that we're gonna start to hit some of the targets of of sixty Pro and Sequence Again, just starting to see some really interesting opportunities there that we've been waiting for. And and some of it's about again, what we talked about. If you look at the global tightness in corn, other than the United States, which by the way, which has become tighter as well, Corn gluten meal has become tighter in the world as well. And again, a replacement for corn gluten meal is our sequence product and we're seeing that both domestically and globally.

K. Thank you. And also on On the I guess. The SG and A, I mean, you you got a few questions earlier. You addressed it, but what I'm trying to understand is why now? I mean, I understand the the concept that we reached, you know, another phase, but based on, you know, your earnings, the volumes doing, it doesn't seem like we've reached, you know, full commercialization and that there's not a lot of work to do be done there. So I'm not really sure what what has changed. At the the start of twenty five versus twenty four, twenty three. That it would warrant these actions now as opposed to, for example, one or two years ago. Or it said continuing the same path for another one or two years. So why now exactly?

Well, I can only say why not. Know, I think when we look at SG and A, we've invested a lot in everything from taking trout and salmon to full full weight, and feeding the fish, through making feeds that we wanted to use in testing and show our customers what capable and we did that for them, all the way through our innovation center, and doing things around getting Dextrose to know, you you can't just do everything on the fly while you're building a commercial facility. York Innovation has a full operating dextrous facility there as well as fermentation facility, all that costs a lot of money. On top of that, when we look at some of the systems that we have in place, you know, we look at what we'll be doing, you know, we have a little less volume in in our biggest product, which which is ethanol because we shut down our York facility. And that saves us a minimum of ten million a year just in market savings, well, not including in savings and SG and A. And so when we look at all of that, why not? And I think and and it's great for our shareholders, and it's great for our stakeholders. It's good for cash flow generation. And and we're gonna continue to let be laser focused on it. You know, you invest you we had to over invest in SG and A to get products to market. Well, we just sold one of the largest, if not the largest aquaculture company in the world our fifty percent protein product and and potentially our sixty percent protein product may go there as well. You know, they don't need to see us doing this anymore. It was a it was a bit of validation of our products, They'd never seen products like this before in the market. Yes. You could buy fifty pro soybean meal. But, no, you could could not buy you could not buy fermented proteins with significant palatability uplifts in in pet and aqua, that do things differently than in the past, and we had to use our research to get into the door and yeah, if I if I could even go back, I probably would have spent less doing it. But I can't go back. So now I'm gonna spend less doing it going forward, and and it's time to do that. And I think even looking at all the way to the top of the house and saying to ourselves, what do we need going forward in the future? We need finance. We need we need commercial. We need operations. And also our flu our Fluke business is starting to kick in Again, as well, eighty five percent of their business was done outside of our company. They are not relying on Green Plains for their revenues and they were and they're generating positive cash flows and positive bottom line earnings, and that's something we're gonna focus on as well. So when we look at it, we're setting ourselves up for when Carbon comes online to have the maximum ability to generate free cash flows And having all that extra SG and A does not give us that maximum capability, we could decide what to do with those free cash flows and ultimately have the luxury of making those decisions. And that's focused on debt, as well as getting our share price higher.

Great. Thank you. And you you did make the comment that perhaps if you could go back, you would have spent less. So I I want to to ask on the clean sugar initiative where, you know, it wasn't even mentioned, I guess, on your expectations for earnings. You mentioned the hundred and eighty million EBITDA from SG and A and carbon, then ethanol, high propane, and corn oil, but not not cream sugar. So how would you judge the success of this initiative at this time, and what would you do differently? Know, if you could go back two or three years ago. Yeah. If I if I could go back two or three years ago, the next time we build clean sugar, it will be at a site that has on-site wastewater treatment. Whether it's one of our sites or somewhere else and set it because we don't you know, the last thing you wanna do is invest in a wastewater plant. And I think when we relied on local communities to take our wastewater, you know, a lot of what happens is is during that time of build, that capacity potentially becomes stressed or older, and and they just weren't able to take it. If we could if we get to get all of our wastewater today, to go somewhere, we would be running at a hundred percent. And so that's something that we have to focus on. But with the team, it's actually focused on there are technologies running all over the world to clean up what goes in it so you don't generate the wastewater that comes out of it. So sure, we could have you know, we could have looked at it, you know, build wastewater right to the front, but then think we would have built it in Shenandoah. We would have built it somewhere else that has wastewater alongside of it. I think when we look going forward, that's that's probably the one thing that I think is is the biggest challenge. But in the in the end, we can make product can make it on spec. It's an exact duplicate that what comes out of another sweetener facility around the world. You know, we know that we can scale this. There's probably a couple of things we would do around IX exchange a little bit better as we told you early on. But that system is working as well. And and, you know, number two will look different than number one, but you know, at this point, you know, we've gotta get this thing running at full rate. And if we don't get it running at full rate, you know, we'll have some contribution. But it's it's not where we want it to be, but it's also it's not a technology that doesn't work, and I think that's the most important thing. We have customers in food, beverage, and industrial that want our product The last certification should come here in the next couple of weeks.

Okay. Thank you very much. Thank you. Our next question comes from the line of Eric Stine from Craig Hallum.

Hi, Todd. Hi, Phil. K. Hey. Just wanna just sneak one in here at the end. Good morning. You know, I know you've talked about it's unlikely that the forty five z is repealed, but, you know, obviously, there are ongoing questions and regulatory uncertainty. So just I mean, when you look across your business, and I know that that some of these areas are are impacted by varying degrees, but do you kinda have a plan b, or is there, you know, the the potential that in some of these areas, it may change your plans based on the changes that potentially you see or are possible coming down the road.

Yeah. I think there's always plan b on carbon. That's forty five q. That's not gonna go away. It really that's been in place. It's a long standing rule. And it's a cash pay for the first five years. So there is always a backstop, and then we'll have to determine the value of the credit. From that standpoint. But our view is forty five z is gonna continue to hold. We have strong support from our Midwest Republican senators and congressmen. I don't think that they would vote for a repeal. I think we have strong strong support from our interior secretary who's also, you know, in has the energy committee that that he's also chairing. I think that when we look at the investors in some of these projects, and and and who's really interested in seeing these successful. I think we just got very, very strong support for everything across the board. Look, they might repeal a bunch of other things in IRA. But our view is forty five z continues to make the cut. And and even then, it's a little bit like the the Affordable Care Act. Continues continue to try to get repealed, but in the end of the day, that's kinda what's in law. I think what really gave us great confidence last week. When the IRS put out their guidance in in the IRB. That's what people are are are going off of. And and when that usually happens, not much changes from that point forward. So will they look at the forty five c? Sure. Will they look at the IRA? Sure. And they should look at the IRA. But but we've already spent the money and there's a lot of a lot of capital being spent from large companies across the United States based on this forty five c tax credit. So this is a this is a equal opportunity making sure that we at least get the attention from ourselves all the way through the largest companies in the world that are investing in behind this initiative as well.

Alright. Thank you.

Thank you.

Your next question comes from the line of Kristen Owen from Oppenheimer. Line is open.

Hi. Good morning. Thank you for taking my question. I wanted to ask, as you're going through this sort of strategic review process and and understanding the asset footprint in in sort of a different light, You idled the the Fairmont facility just wondering how you're thinking about maybe go forward. What are the options for that asset? Would you maybe look to monetize that? Just help us understand how to how to think about your production capacity with that that facility down what the options are going forward.

Yeah. I mean, we're we wanna get our permit from the state of Minnesota to build drying a new drying system and a new grain system. We put the money into the middle of the plant, and that all operates at standard. And so yet, after seventeen years or twenty years, these plants being built, things things wear out. We've done that's one plant that we under invested in because it was a lower lowest margin structure. In our plant stack. You know, one thing we were counting on is obviously the carbon pipeline. To go up there, and we still count on that. And that will give us the confidence we need to invest behind that plant the meantime, sure. We have we could always monetize that plant if we want to, That's something that we we've looked at in our strategic review, but it is a carbon Pipeline. Capable plant. And we're counting on the on that project to to to make progress this year. And if that were to happen to makes that that plan very valuable as well. So you know, we look at all of our assets like that. You know, this strategic review that we're under, you know, we are you know, when we kinda have embarked on this over over the last year, what we're trying to do is uncomplicate our our the middle of the house, which is our SG and A, both in corporate and trade, as well as some of things that we do around you know, some of these innovation assets that we put in place and make it very, very simple. When you look at our plant stack, generally speaking, most of our plans are always EBITDA positive, if not very positive. Central City, Shenandoah, Even Otter Tail up in Fergus Falls. That is one of our it's a seventy million gallon plant that competes with a hundred and forty million gallon ICM structure. But in the end of that, we have plants like Fairmont that was a cash burn for us, and we have the SG and A that we're rationalizing that was a cash burn for us. And we're just not gonna do it anymore, and we gotta focus now on our products are at market, Krishna, and they're and they are they are we are selling them today, and now we gotta be able to realize instead of spending six or seven cents a gallon on on SG and A to do that, know, we're gonna go we're gonna take that SG and A right out and get back down to a little bit of Back to the Future where we have a smaller middle of the company less complicated, and and our clients get to show what they can really do because I don't think we've been able to do that in order to get new products to market. As we're getting new product products to market along came fifteen million twenty million more tons of soybean meal, that kind of derailed twenty five years of backtesting. So we'll have to work through that. And as we know, commodity markets ebb and flow, and We we will work through this excess protein. It might take a little bit longer than we think, but but hopefully hopefully, we get paid through some of the other things that we're doing.

Understood. And and recognizing that today's announcement is not new, it's it's a reflection of all of the reflection that you've had. Over the last year. But the the question that I have for you is as you're kind of going through this process, hindsight twenty twenty, Now that you've cleared the debts on SG and A, are there also some some new implementation, maybe some hedging strategy, hedging governance And you mentioned in your prepared remarks, this would have been the the quarter to hedge. I'm just wondering how you're structurally addressing that that that feedback that you've received.

Listen. We listen to our shareholders, and I think that we came into middle of last quarter and the fundamentals look looked very solid and we kinda remained on hedge all of last year and put some put a little bit on every quarter. And, again, we did it this quarter as well. The market moves so fast more than everybody was anticipating. I don't think it would have mattered It would have certainly would have would have given us some extra cash, but you know, the market moved very, very fast. And you know, from the top to the bottom and you know, we're we're staring at very good margins the the last you know, at least better margins last time we talked, and and, you know, you gotta you gotta also manage your balance sheet and manage your cash and sure you can make margin calls, but you know, look, I think we will assess it quarter by quarter and what's best for our shareholders, but you know, when we see some bigger numbers again, obviously, we'll have to look at those decisions. Our board is involved. We we we talked to our board a lot. On what we're going to do relative to our overall programs, and and as we kinda get through the year and get our SG and A down, get, carbon working, Corn oil contributions continue to go up. Because of our advantage feedstocks. You know, hopefully, we have to have less and less reliance on on stuff like that, but but I think generally speaking, you know, we've done a good job over the years when we have hedged maybe one quarter was standing the largest margins in history that nobody ever expects either, but know, we'll assess it quarter by quarter, and we work with our board and and and management and our and our risk team to determine what's best option is for the company and and we'll just we'll just continue to take it on a on a case by case basis relative to the markets that we're in.

Thank you, Tess.

Thank you.

Your next question comes from the line of Laurence Alexander from Jefferies. Your line is open.

Good morning. Could you just help on two things? One is the free cash flow impact or the cash charges for the restructuring and any other impacts on the cash flow bridge for this year and next year. And then separately, after the restructuring, how you're thinking about based on kind of market feedback on the likely kind of equilibrium return on capital of the protein and the clean sugar sides of the business.

Yeah. Thanks. I think it's gonna be not a huge charge in Q1. Certainly under $10 million if if not under $5 million and some of it, maybe even non cash. To write off. So it's not gonna really be a massive effect to our balance sheet. You know, we are we we we have been somewhat planning for this over the last several months and and really focused on things that we can do very quickly and and had some accruals already in place that we're able to use to offset some of that. So you know, I think overall, it's not gonna have a very big impact. To to our income statement or our cash flows. And then when we look at kinda return on assets, you know, certainly, we wanted them to be better. When we look at, you know, we wanted it to be fifteen to twenty percent on protein. More like you know, four to eight percent at this moment just and that's all driven by market. You know, when we started, we were earning fifteen to twenty cents a gallon uplift on protein, and with the onset of the the amount of soy protein hitting the market, if you look at that margin structure as well, as as I said, it's become a bit ethanolized. They have too much capacity. I'm not sure slowing down is gonna matter at this point, but you know, when we look at when we look at that, certainly, not the returns we wanted, but we have generated free cash flow off of these assets SG and A, ate ate a lot of that up, and then obviously, the ethanol margin came down. So sugar is gonna take a little bit longer as we know, but it's also not the largest part of our investment thesis So when we look at over the last couple of years, we invested in protein, We put some investment in oil yields, which by the way is is continues to make records across many of our plants. We invested in the sugar platform, which we believe we have a working technology that that is at scale. Again, only hampered by one factor, If that factor wasn't there, we'd be running it a hundred percent, all the albeit is there and we have to deal with it, so we're gonna work on that next couple of months. And then lastly, carbon. And when you look at all of those together, carbon, some oil uplift, some protein contribution, and and, you know, even sugar just taking a little bit longer you know, over, you know, a $500 million investment platform generating, you know, over $200 million with protein contribution and and carbon and oil and maybe a little bit from sugar, but probably not a lot. You know, overall, the investment is is our the total investment's working, but it's outsized obviously by carbon at this point. But we anticipate protein to contribute more in the future as well.

Thank you. Thank you. Thanks.

Your next question comes from the line of Andrew Strelzik from BMO. Your line is open.

Hey. Good morning. Thanks for taking the questions. Just two Sorry to have you loud, Andrew. That that that is just fine. Okay. You know, first thing on my side, I wanted to ask about kind of maybe better understand how you're thinking about the base ethanol environment. You know, is it your view that as we get stronger demand over the summer and maybe inventory drawdowns, If that is enough to kinda solve things coming out, of the summer when we when you know, kinda this time next year, we're having a better conversation, or you know, that these production levels is, you know, is that small demand? How much do you think that's gonna be up? I'm just trying to better understand kind of how to think about those the base ethanol margin environment from kinda post the summer.

Yeah. We'd like to understand that as well. I mean, I think we've gotta get to summer driving. It's gonna be I think we're gonna have our peaks and our valleys, and they're gonna be know, and it's gonna move very, very fast. And overall, right now, what we're what we're looking at is is elevated stocks and elevated production cause we're in the middle of winter. And we gotta get the turnarounds, which is should be as somebody asked earlier, should be late in March or April. And and that's right at the beginning of summer driving season. Although, setting ourselves up go up well with demand, but this is gonna be a continued battle between production and and and supply and stocks and demand. And we really need to push for a couple things to happen. Can we can we increase exports more than we think? Our plant in Fairmont going down among about three or four other smaller plants that have gone down. Will that rationalize supply? Will we have e fifteen uptake greater than we think than than we may think with this administration really pressing pressing that point home, and we gotta some of this will take time to play out. Well, how will low carbon fuel low carbon ethanol make its way into certain markets? And so you know, all of that combined, it's a bit of a bit of a stretch to see that we could have an outsized massive uplift in ethanol margins, but we should be able to bounce off the bottom here pretty significantly. But I don't know that we're gonna have a peak margin environment anytime in 2025.

Okay. Alright. That's helpful. And then my my last question, is just on the corn oil side. I'm curious what you're seeing from a demand perspective so far post kind of the guidance from forty five z. Are you seeing either demand or the intention around demands pick up and, you know, what's your expectation for the demand lift and and and and pricing on a go forward basis? Thanks.

Yeah. I think, when you look at Renewable diesel. As it flows, obviously, you know, what's going on in some of the plants getting their SAF up and running, which is fantastic. You know, yeah. And you've heard that through several of the other earnings calls. We are really excited for companies like that to to take to take this half of feedstocks and and generate jet fuel out of that, that is really favorable to us, and then it's also favorable to our Corsia. Opportunity that we have, which all of our clients are Corsia certified. You know, some plants are definitely having some some slow some slow up slow start ups. But generally speaking, when you look at the overall and and we shared some of that with you guys. When you look at the overall balance sheet for veg oils, domestically and globally. If if probably justifies much higher, if not significantly higher prices. But I think oil share versus meal share is something that we're fighting with today, and that's ebbing and flowing a little bit. So as we look at it, we believe demand will continue to especially for our oil demand, especially for our products, continue to be very strong during the year. And we're seeing more interest than we've that we've seen in a very long time for longer term longer tenure contracts, at a premium price to soybean oil. I would say before it was, like, next month. We would be able to sell some good product. But now we're starting to see people approach us to say, can we buy fifty million, seventy million, eighty million pounds from you over a longer period of time? Instead of buying five or seven million pounds of the crack so they can get their hands on low c I advantage speeds dot corcia approved distillers corn oil that is a significant advantage over soybean oil and the fact that used cooking oil from China is not coming in the United States anymore. Well, what's Telo watch Telo closely. Because that's really another advantage feedstock. But that'll get all used up pretty quick as well. And I think that's why when you look at you know, we're watching renewable diesel margins closely. They can expand their margins significantly by buying lower CIB we have some of that, but we're not gonna give it away.

Great. Thank you for all that color. I appreciate it.

Yeah. We appreciate it as well. Thank you.

That concludes our question and answer session. I will now turn the call back over to Todd Becker for closing remarks.

Yeah. Thank you, everyone. As you see, we're we've been pretty busy over the last several weeks. I think our focus on reorganizing our cost and our cost structures and our initiative that we that we that we announced today of which we've already gotten closer to And then with phase two starting on Monday to get to the fifty million dollar number over the next Ninety days? Across the board, we've made significant changes to our platform. Focusing on profitability per site, focusing and reducing our SG and A per gallon, looking at our products where we can we can generate more and higher returns, with with significant less investment in in getting those products to market and then working our way towards the last half of the year, getting Carbon up online as we said. Laterals are under construction just drives through Nebraska. If you don't believe it, come and see it. We'll take you on a tour. That's Tallgrass Trailblazer project. Pro project is an amazing project across the state. Generating significant jobs for the state of Nebraska, significant opportunities for Nebraska agriculture and green plains as well. And we're really excited about that, and I think we have a great opportunity coming out with with significant low carbon feedstocks that have that we believe should trade at a premium to their to the traditional feedstocks. It's what we've been setting ourselves up for. You know, we have to watch global protein markets, obviously, but generally speaking, I think we're well set up. As we get through 2025 and then into 2026. That's carbon really starts to kick in. So we really appreciate your time today, and and we'll talk to you next quarter.