GPRE - Earnings call transcript Q2 2018

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Operator

Good morning. And welcome to the Green Plains Incorporated and Green Plains Partners Second Quarter 2018 Earnings Conference Call.

Following the company's prepared remarks, instructions will be provided for Q&A. At this time, all participants are in listen-only mode. I would now turn the conference over to your host, Jim Stark, Vice President of Investor and Media Relations. Mr. ahead. go please Stark,

Jim Stark

John Chief to quarter Briggs, Plains, on XXXX corporate Becker, Executive find slide & can Officer. are There Welcome presentation Financial Plains today's and Presentations the Partners websites. Events on the link Officer; presentation our Todd Officer; Chief is and and both available second earnings President our and the Latif. Operating Chief Jeff Inc. Green under on Green you call Neppl, the Thanks, call. a Investor Participants page

in differ During press which our and of this statements filings other future reports comments forward-looking factors call subject with results morning's call, we and expectations will materially conference this and These the that of assumptions be other statement and Commission. are during XX-K, making in statements, releases the risks Factors because and are Securities events. current Actual and XX-Q and made discussed to Risk the or predictions, on are Form section based projections this Exchange uncertainties. about could

two also We the any to to undertake do page forward-looking different about of could may You information not website presentation outcomes. any update duty factors that refer statements. for cause

Becker. turn call to like I'd Now, over to the Todd

Todd Becker

million gallon and which our led EBITDA. the slower. for a was financial related and and The crush expense call by to improvement small performance $X.XX million quarter the $XX $X for $X.XX absorption QX. generated Thanks, of for of running quarter reported a We Jim, and was approximately our in $X.XX good platform a morning, second We share good approximately EBITDA today. consolidated approximately of $X.XX or negative food thanks the The of record segment, million reported affected everybody a crush our to joining gallon a ingredients net of by $XX saw second quarter. a loss to margin

That and for million in the Plains XXX energy services in of for is the XXX a was produced capacity past. ethanol our operating same to a thing segment. year-over-year recorded second quarter. XXXX. production our agribusiness slower million period gallons strong Ethanol gallons the XX% in quarter also be We versus improvement which in quarter the now of Green ran second of going the

going approach to run be forward or of will Our our to XX% capacity. our higher operating plant

Green July, and rates data little our scheduled export regularly for benefiting reminder, we going products unintended an rather than with and late. for have forward, the margins Plains levels consequences But which has quarter. our a overall. of the down, not can of benefit will As production we which production of month amount during maintenance the We've effect impact to had others on produce very any of our of our flex shareholders increased as production EIA

made priority the While can inconsistent us higher we on are we produce we seeing a million necessary and the rates which an of costs up paper market in ethanol to X.X have day, believe and as trend production as and industry maintenance easily conditions. repair broadly, any ramp per allows barrels more maintenance overall top repairs run of

Midstream. for our related company, the acquire the growth Texas obstacles overcome opportunities could ownership on was other the terminal terminal FTC's by decided assets Commission the other XX% We Delek our the AMID to we us from through no venture disappointed JGP Partnership. We to proposed venture are as dropdown JV Trade and decision our and joint Beaumont, with to agreement to initiatives For terminal acquire Logistics assurance regulatory to believe second Federal the review. into say placed of there have resources should along Delek acquisition have from the joint our because through I of be such put GPP, terminate request assets to we American the the

great were or second export Beaumont. Our moving the million We numerous XX.X ethanol disputes outcome majority gallons for our of XX% trade await of production, volumes the through which company terminal quarter upside with our the total to export provide Partners times $XX.X four ratio Plains and coverage and adjusted Green reported EBITDA of believe for of the we our last volumes. quarters. X.XX the quarter for a times million X.XX

higher, EBITDA. capturing our position good production the in this to storage we of piles Partnership of volumes This The As a believe and quarter market rest be expect performance with ratio energy a effort by agribusiness be for $XX.X and the over to year. the in capitalize ongoing later X driven quarterly the lifting ramp on will the carries coverage in we time we segment was million our grain and turned of strategy the year.

for locations crops. another bean and have While inventories in year corn location, our the these large actually is farmers we space before making and of to are reduced all coming of commercial opportunity grain companies as refill harvest

term allowing average More the market those Food above quarter ingredient had on space. space segment earn best its have importantly, to-date. to the who and is structure that of return

both We operation quarter. to cattle the but our particular in continue was feeding see Fleischmann's Vinegar, in second solid cattle and strong results from

the see certainly a in of have Our our feeding to normalized the quarter capacity strong to benefits expect EBITDA continue margins starting over performance articulated our expansions. we to the to head the averaged Fleischmann from cattle $XXX very feeding in per past. of year are expectations and return see we above we the deployed margins rest while

vinegar see to apple vinegar and Our business cider along with distilled growth white continue both organic non-GMO.

our of growth industry Cattle X% will and cattle our the business. be the forward. growth believe we of term feedlots acquisition and as from from to the XX%, long demand help Since Fleischmann's, of food see seen acquired EBITDA we case cumulative have announced we to starting in well Bartlett of and that we which annual Yesterday respectively, expect revenue are Company. going the two industrial business, We fast

and purchase to of capacity, ensure capacity existing as will to this the are between We are baseline total inventory, have well us purchase year going about cattle excited provide adds very a maintained. marketing and for head a and head each which run of cattle this XXX,XXX well are be we acquisition, margin. $XX XX,XXX feedlots the purchasing the giving head. this us at With We This the is immediately XXX,XXX business line per believe accretive. XXX,XXX head forward transaction will $XX opportunity of base feeding been

segment normal certainly higher feeding volatility have success to capital four the single-digit good that returns we have had equity. We we know achieved you teens on over with this high in return goal invested in margins of look past, pretax our continue the As cattle notwithstanding on high than last and as growing years.

still off this Additionally, explore plan future. to business the sheet in we taking balance

year, segments have million. our of the For the first generated half $XX non-ethanol EBITDA of

track We achieve million. previous $XXX on are guidance our of to and EBITDA million non-ethanol $XXX between

to the the both Plains, review John of to year Plains like Green later the for turn the call the our I'll Inc. Green outlook to of and over and I'd Partners to call plan. financial optimization performance, discuss on rest back Now and come portfolio status

John Neppl

loss cattle driven an million from by attributable net offset of second ethanol the gallon XXXX. by sold million we higher X% operations Thank from consolidated the The were ago. revenue year our primarily ago. was the decline quarter, Revenue partially to in $XXX in quarter quarter the in revenues a a declined XX% in you, acquisitions net $XX.X made a feeding Green growth our Inc. second Todd. sales. segment X%, was ethanol loss million versus up Consolidated increased for Plains, the DDG production $X in year

for million and the recognized of and credits prior During R&D to a the quarter, tax $X.X related Company federal benefit state periods. net current

Excluding a for effective rate compared the the million was $XX.X second XX%. quarter second EBITDA quarter benefit tax of of last $XX.X for million net resulting year. impact with million our R&D in the tax credits, was consolidated $X.X

incentive variable million driven as in quarter, roughly compensation part average driven inventor higher cattle entirely year-over-year For growth almost rates. increased the XX borrowings related cattle expense of basis primarily our the in Interest $X.X by million and SG&A feeding increase interest our point by as from operations. for well $X.X timing increased

Plains, plants. we feedlots being DDG project, protein the for $X CapEx quarter, with in was the across anticipate maintenance XXXX of $XX majority capital million of in will remainder Green vinegar spend about high numbers engineering the For cattle second in is our which assets, These that production capital. million exclude was and We our still the about maintenance most of which the capital related phase. to capital contracting any ethanol and

debt in of will credit end the $XXX senior revolvers, Green ratio XX readily collateral facility decline under up from our the million the million. and the agreement you by The times our in Total of have just of This is B X.X of requirements. XX quarter marketable balance convertible months Bartlett secured to of and presentation, second note increased including This facility, versus million. is feedlots, capital the ago. enables the the Our primarily facility our approval. the debt term accordion an second to X.X the commodity million leverage Because $XXX Slide IR the of amended including was be was $XXX $XXX includes capital increasing $XXX term working working on our term loan debt and secured at includes Cattle Cattle debt fund our that $X.X year million debt of credit revolving feature at amended term an year-over-year. which On a EBITDA end commitment maximum inventory we total $XXX quarter trailing was additional that increase to credit million times acquire the the results age loan million by to to Plains balance billion. with $XX

quarter. ratio versus Our did improve term debt last leverage

in remained end liquidity approximately available the revolvers million Our the of $XXX with solid along $XXX at million on with quarter. cash

the quarter. increase to XX, July a an resulted of the of based coverage The flow the On our $XX.X basis, of unit inventory throughput XX-month Green we Partnership's over flow Partners the EBITDA million quarter was a Green cash which was XXX million of storage for year For incremental of second $XX than ethanol reported CapEx slightly its in $X.XXX ratio cash amount quarter, liquidation primarily a a flow times in affected during interest ratio. $XX.X rate We was Plains on gallons by higher and $XX.X $XXX,XXX million, credit $XX.X declared just of distributable was Partners resulting X.XX adjusted facility. distribution declared assets from million XXXX. had in LIBOR volumes. Distributable coverage to of X.XX an XX included EBITDA better million of volume for Plains transload had Distributable per at cash which times and million gallons quarter. million the ago. related negligible due was reported were $XX million second expense distributions down

back Now, call I'd like to turn to over Todd.

Todd Becker

John. Thanks

As track we our in portfolio the morning, release we is optimization indicated communicated strategic in plan objectives this the on with May.

plant we in and specific the a year. or plants, even so a related the process. occur, number we well. our need valuations and how holders. or that communicate this are debt gallons, Once as values Board believe our end of proof both between reduce robust of Partnership plants us the We as private information other which they of we level of certainly and at are than reverse not middle liberty public Plains unit inquires are comment significantly or or which discount when believe understand to the by say there allow process and the ready significant by shareholders of to will process Green We again, encouraged many the do and the eliminate developments assets to on the we we for will term to interest or on of in across we to our is assets, plan, I'm

improving said value remain shareholders. I earlier, we As on focused our will for

have some are some to for start made also this all we controllable made will segment plan not in our plan activities of in although reduce expenses future. work line, our progress starting these come good to have the as and quarter. some point to our out through I'd like reductions we of workforce with We corporate that for reductions expense

in Our high protein full initiative swing. is

this continue engineering work Shenandoah through preparation location. at We technology and of our to permitting, the installation site for

we industry excuse deploying we in reevaluation deploying we process we this all-things progress a technologies. that processing more make – remain through made produce demand and margins for this believe in product we technology, As should technology revolution. more various and we through protein as in the the level participate proteins the going strong as on Global ethanol the believe we technology, process industry forward, the – progress will the of me, this raise for in very

next to deploy our several we where determining, technology locations product. the increase would of are value We

industry exemptions. hear Appeals remains of be XXXX behind agreed of position. Margins in but time basis, the and to X.X% is percentage litigated large overall three view last can EPA in last EPA's potential July with work some in This retailers as XX, in on Tenth looking the continue but days flat as this margins. selling attributed improvement, the on footprint, to refinery issue still from selling Prime lagged year overreach retailers ahead expanding however domestic store and the and ethanol averaged group's to challenging is have Our blend lower approximately oversupply ethanol their demand lawsuit the in granting an two on of granting X.X% Pump, a ethanol XXXX blend the Circuit and – from this a same EXX perspective, will percentage number the with to last we levels supply year has the shown product. the XX% is be mid-cycle ethanol fuel of XXXX to-date blending ethanol on Through of Friday, year action XXXX. Court The gallons smaller to begin the new exemptions. Gasoline

for is retailers periods. of RIN aggressive run remains higher President. strong roll strategies Spot in the X% they same production future rate, supporting Some the the of get independent implementing from wide running ethanol. locations across discount from biggest at our to of costly. of than recent million out benefit are is and a EXX EXX more the ethanol refinery still are their high industry have X% very can additional the and Green XXXX's next as through RVP gasoline saw prices be the by from industry on the the blending assertions of the a as Plains the waiver Exports and exemptions in $X.XX areas prior getting some as blend on ethanol previous strong that country. for pushing the than remained of White XXX reallocated evidenced EXX end focused We phase margins support for That through XXXX. the to higher comments The is gallons House debottlenecking May totaling period XX% XXXX. blend

to exports X.X the tariffs but XXXX is ongoing lower have could Our export to hope end of gallons, do the expectation for volumes of increase discussions that of closer we range end X.X billion toward year. the

low than to of four XXX%, in second XXXX, the which quickly. to Japan, averaging in on revision Currently a per acre areas trade no averaging upward good was better is an we is growth focused be could with China, really corn are weeks. balance XX%. main the EU, of much there We QX crop believe for could XX% of global replacement the the is value yield industry RVP coming The the waiver of from and around but change environment. in XXX% to along the distillers very shape the Mexico tariff down or which quarter and which corn

relates Plains pleased it look to partnership welcome Board. Salinas of a to MLP General I'm with. Martin experience brings working Green to As I Partner the to wealth to forward He and the Partners,

we'll and completed XX attention Beaumont to acquisition terminal our the have we AMID next terminal XX work dropping the on the in that have refocused With terminated, to days.

well the to what refocused want has and efforts earnings call. communicated for capacity look the to as have happen. it I reiterate our GPP I last needed transaction We for on again a acquisitions to is capitalized

of the achieve coverage Partnership plan the maintain our and use strategy. distribution this concerning to plan take Our to long-term to is to proceeds times. We necessary manner ratio portfolio cash the steps and any appropriate goal the in X.X optimization with execute we'll this

We remains support Overall, balance credit flexibility on our the Green the the the term have of improves Partnership. that improve a its I'd start recreate for Green we on goal future. the reduction session. to also ask as thank their capitalization, our Q&A call which debt sheet want like Plains believe on focus Latif market the quality improve to and to delver for listening today impact as our positive financial I Plains. to we everyone should

Operator

[Operator Instructions].

line comes Samuelson question from Goldman first of Sachs. the Our Adam of

Your line is open.

Adam Samuelson

change just structure your of First really you tariff see and mind change of that oversupply. ethanol to that more on mean the Todd, some market, export could anything else that the back fair this near get a market the some is tightened the need is I question, on the sort you bit sooner? market term or a the in comments on given in up characterization the there A there year that subdued would in of half

Todd Becker

I going end I to the don't think lot market think also the up to to here. tighten of from a here of much the going don't year. out stocks is necessarily it's grow

at we're excellent. where even we're right gas we've today produced, what reported basically think that's I demand, was using now,

a needed Chinese these hold. where the have And put We'll as I and think market expecting numbers, that some X being Brazil, a on a barrels recent to million we so, of demand we comes from come draw see potential Obviously, program. going gasoline believe discussions. happens a We'll what's need impetus well. wait from with finish bit which that would strong through that's continuing discussion X see in. to wait strong and do thought we're strong bunch are or least and to what but impetus stock, start to is to a I growing at keeps

at of kind being – reported. being on domestic we're what's half we we well. last are as be to them in of what's So, we're where kind are standpoint, from counting – a From

of you then we potentially will of shut quarter just stay general industry, and into on in at So, we'll well, and some margins execution and quarter, the saw go strength least know obviously throughout with down depending right programs coming week at and steady. – how in we're this some heat these into just the probably the as now some next export coming levels

Adam Samuelson

provide Okay, you and you as – you could then process ongoing. on to mean of position plan, helpful? additional be a something mean switching timeline I for gears still where characterized portfolio on guidepost kind themselves? I it's plants when would and you the any could just to, you speak robust, can but the What think in optimization really or that know businesses ethanol color to I that else make it the announcements, is table ethanol the only beyond any be

Todd Becker

goal significant Our should a some in close there, is anything then quarter, fourth the to quarter. fourth the close have piece sales And early that of completed of has that. in not if to process from left

We early business segment ends mainly We've on announcements We we portfolio as there certainly well are and the believe this people in but inquiries, see other portfolio. the announced in third what a I for we in fourth process the MDA you their than, is as be ethanol believe quarter – as every looking what the potential general know quarter basically we how reverse haven't this then call involved about a had had for the assets, But we've operate. are said, thing across there that we're at we lot like at are our specifically we're is of value and closes. the – and some whole value on the we value talked of looking we the track past we focused across up. on of we'll focused assets rest a interest had on improve to have that in proven point that or to improving the on so late

Operator

Thank you.

Aslam from Stephens comes question next Farha Incorporated. Our of

please. Your question

Farha Aslam

time? capacity, Green when Todd, up does kind rate. that full for full million say at you XXX mean of this you decide gallon capacity did as run to Plains What you

Todd Becker

day-out view is things bring the as repairs speak, low and our view will shutdowns and in platform up it of that. basis run we'll but and Our is like a – we maintenance now and so, XX% day-in because on our

it other of for repair which could just happened somewhat would certain the quarter It a it's XXX than are impact that be just be happening long-term that million plant rate higher normal things and believe shutdown couple could but million we and well. it, – the depending of those to a maintenance days, during XX% run things gallons schedules. as at XX% So, XXX on. and between There

most Hopewell beat to quarters Coast anything Some that and swing with able say that then start and will that come of than I'd push to there will the the quarters lower, down, going the It of back to bring assets. start harvest seasonal plants opportunities will and run other be normal one is some harder but are volume else being to in be higher, buy other that else, normal asset. and to cheaper point this will corn up everything up of we pull a will more at XX% has East is fixes, in our plant but out happening more probably than capacity. turnarounds to only XX%

Farha Aslam

with at And look ethanol your helpful. that we of you're lackluster sort basis or realizing oversupply on of highlighted the in in said then Should release pretty that June down the spot when the market, how it you last on But should robust line think or because we year. margins of producing? is call what you're this you quarter are That's better. you from think gallons about the

Todd Becker

it still it, XX so of we was in than far we've a to start bit been market. From the that some inverted where now low line better highly see margins in last a where first And we started to days. we're saw through month averaging Plus the the we finish double-digit XX or to out quarter out, little quarter.

other has market United and States. last towards hard what and years priced where will end August markets did in there the of starting day quarter to really of out. see and the first around every we the Chicago what between the it's tightness ultimately September is, predict gets So, But a been the disconnect

did significantly of sold basis significantly levels that and but all was which higher very not we we value year, So, index weak. last or have

between to markets certain number. demand structure be and any have there this On that's plays disconnect see really when the that driven tightness we'll overall gas day how to So, really market in given margin out of there certain remained is lot the is ethanol while of but market of markets $X.XX firm. around, in benefit else a still tightness blend has the has trying everything spot, a one to been get by that seem and Chicago been good a and very the the has weaker the

Operator

you. Thank

question of Our comes line Ken of next the Montreal. from of Zaslow Bank

Your is open. line

Ken Zaslow

question of why strategy. fully my and thought first So to exit decided the disparate I last a not is And days strategy couple in this actually must intention you the What think cattle business. actually feeding is. understanding be, strategy? the the to acquire I I businesses. was

Todd Becker

this a in the income an to ability a We was good to ethanol to our we on diversify from private see are Well, and more valuation ethanol is between disconnected away invested predictable going continue we our operating assets cattle. it and standpoint non-ethanol We a from non-ethanol from public shareholders the believe manage more on it's is for small than ethanol business reduce in are to the we what but had we've that investment, exposure return we had said saw and volatile a to opportunity across increase forward that to capital where valuations. our capital volatile think going operating what opportunity income. much opportunity a risk

and able but are general margins growth are years averaged in years that those market on while time announced yesterday a strategy. by ethanol that Cattle for spot over in those being achieve puts certain don't that we've four Bartlett a to quarters type Over anticipate a all-things in growth better we in believe excited from see would consistently That point. price this a are the assets quarters that, last brought that significant I that achieve head capital and a earnings been some standpoint. always acquire we've very an the all good we three-four divesting gave our at the reason we've which some been Company numbers, for to are we of area the and able return good we're income predictable that XX into $XX about. any have to the cattle and us XXX, I as that acquiring and we've say than this on business. us the But still initiatives we fed We are protein we to not

Ken Zaslow

So, it's say that feeding buying divesting to right. your going cattle fair itself, safe that not be be a to would Is you're You conclusion? business?

Todd Becker

to it we a lot a our take see is Well focus talking if some off it off help transaction are to our said have is balance are balance of thing our a that. That's that there focused there the ratios our is to off sheet. cattle that so we on sheet that skew we because does is at way it of get does sheet balance that on numbers balance potential sheet and debt with partners on looking

Ken Zaslow

for the is sales, the non-ethanol it, were there was if there other be that price that well up thought assets that also could I for right that case? were

Todd Becker

is case. the That

Ken Zaslow

is. next my Then Okay. question

I is a What the margins you expect basis that fundamental were weak, little mentioned think cattle to but recovery. on you that?

Todd Becker

some that we said of It's again normalize we head we a because where to of just coming market. be on to of marketed placements kind to the be back get new when No, see $XX And is they're such focus in what year is going buy that have the little cattle more head are some in cattle. a lower, $XXX a harder higher. say tightness. with would that $XX we returning overall. structure what that strong margin we But some head in will starting quarter last to will of second so a buy margin half as well the are It's we to of now feeders beginning of change cattle year, the as the the to

are just to remain we still robust level. has levels on I a certain that have cattle want think from we conduit continued won't just cattle and firm. capital Demand margin and basis a buy for demand a minimum we for overall our been and earn standpoint Our under – to our

And so, the investment relative low the very is opportunity. to fixed still

we levels, negative cattle if so one it cattle what make think overall certain that I decision we Ken, reduces that. comment you're And seeing our to the it's for the has business. but necessarily on consolidated. level, And not at don't a The margin want industry feeding last debt not feed

largest cattle the saw year, You in feeder. the the big of the one earlier acquisition

acquisitions ourselves of You making are the three coming to of well. see around smaller at need what more always much is feeder companies and seeing market lots smaller number buy number cattle. as acquisitions disciplined and you that in make number daily four, And two

while so were anymore feeders packing of that own focused directly that the packers those demand by feeding And the a is on care operation. was of owned cattle a lot past, lot companies. taking There not cattle of in

disciplined been their on And so the approach have in more to much past in more cattle. feeding than operations the feeder cattle can are bit little a predictable returns. buy become It they

Ken Zaslow

small getting It's all a refiner the and from you it like the somebody year underneath How work? exemption final everything of will small pulls the seems question How be get the with in When the setting well resolved? That rug the debottlenecking, a refinery out does like What's China. my everything that is. was last actually on does exemptions? this year – always the And refiners seems story – issue cusp to small that guys. you're good sudden stop? up of

Todd Becker

and right Well that driving why has what it you it's refinery of especially on think blending we go-forward, certainly disappointing exemptions anymore now. know happened full not not number perspective at XX% lot making, is that a are the We with a from of our the to hardship and have RIN and refiners down the a are past small the there money is $X.XX. in prices come reason

do exemptions So reallocated issue as to going see many forward the past. are how very don't at hard small the they nor can industries under they in them law, the this see be. to issue point we we EPA those should get could fight going how The refinery

have Champions our we contact are making deal in to are we continuing D.C. with are having our exemption this a bit I that refineries we deal administrator that the of really in sure not the our having small and that year believe granted are them and companies balance. to to the think in out that that taken fight fact D.C. D.C. should battle. whack are what we with gotten market – to But has

the so, $X.XX. it industry issue, be as I be more it's the will believe of know gift to of and I think till as going to don't But And we as more of think are hovering to was continue an will get relocated. every are impact you – be is on and a we think day so to reversed of don't in it those as a will prices try much the refining there we big forward, parting as fight robust, or there don't go Brent forward, past

that of that get at of factor our should forward. we mix least going So, out out the

Operator

Capital of ROTH Our next comes from Irwin Partners. question Craig

question Your please

Craig Irwin

industry you outcome with the finding country of and look the outcomes plays that do if refineries know – to that With waivers. the refinery here? Tenth that we was small know ask the this range exemptions there? at, way the being remediation to you can in in expect about prove you of think see largest ask assume you Circuit, pursued for opportunities are you know are Would the you in that's refinery moving pathway what to do the being the the potential You want you illegal for? and forward giving small did should a inconsistent discuss reallocated precedent of the this case the past the courts, know of I what scenarios some that litigation waivers law, maybe the Todd, what out, as So, you the other a

Todd Becker

not It's its way short term a on a I the rulings. this long-term outcome. through thing It's courts the ultimately outcome. multiple year will And depending process. it's make will – probably a mean

where something we House this So, pushes a understand even even point don't that reallocation the a to at not and to necessarily short-term we issue. for necessarily reallocating believe happened see that point that's EPA's the what unless that, go is White

– and hard has of living lot to a deal for case long-term reallocation it that that's waivers very something the small a market I the if be So, down immediate of in I hard is will it's court is – then road for asking impact statute. out could of which the it's kind those from potentially, and the to small it's see and were how term. more through given the what least this by perspective, the written now happen, have think say how the road, is refinery would the down of that we reset to the really say road, don't a what way, we're at over waivers when reallocation refinery be. happened year will the remediation down asking either the think the court's I what were but We rule and and

something we want that to for. fight that's continue So, to

Craig Irwin

going going if issues want their conversations get that agree they've their are the the mandate us XX% describe demand think sort industry can buy they big second population, macro maybe outreach in of that, world's of the they I ag Can blend for of the improve going the a about reach the but U.S. of XX% China. The comments made customer Then, are corn on having that forth? available of maybe to of you would this mean you of today trade going the world's put forward, ethanol, everybody inspire a half, with quality to U.S. they Chinese back update have and to obviously in, going and they're cautious in ever there. lot to are to them land, call forward XX% living, you if to U.S.

Todd Becker

Yeah.

by don't continue the meet they today. war on gallons of a trade impact basically that, XXX the said potential need were is and U.S. the administration and of this expecting today. we had XXXX different to it mandate and we and situation I would market we XX% discussion very to agriculture. a can reps be we in is You would of would they be it. gallons the most million of think If And different which to mean We very what trade that. industry the and import that this there tell economics whole change will internally ethanol a do XXX industry just to not

to up starting markets hit, these in of whether it's to it's know XXXX, to japan one need you start believe XXX it's opening XXXX, XXX we million small, we but longer-term Mexico could open it's potentially gain, So, Mexico gallon a up. market in whether

the opening world, lower looking well, in the we things these but like could took at because and now there markets. years their EU right they lot we're is numbers into decarbonizaiton we And particular, – the that we're we of the their Brazil, closed look California several can we – our out situation, see tariff hoping EU year, bio ones import a ethanol over around – obviously focused thing so the we'd we're actually U.S. the import the more tariff, of take of we $X.XX you the hit in as Philippines like big LCFS continued in positive off, as doing get tariffs think much the but really and and that if work India $X.XX benefit long-term like is really Indonesia, to market If be density much to an there. a that it's things be the end are next some carbon to renewable strength the of and on then margin

Japan at right off X.X to barrels so take stock. lot pretty pending quick growth, So, in in of off point a that XXX care big of position. a sudden almost just we're take all three is another the four next could year, it opened way, If if those oversupply we it's day that's million X.X markets days any hitting now, and there this of not up of

really as it's So, one on starting I think as few have and time came, always this up of issue, a for of verge and cost, war just on just If the the the I fuel. earlier up. that things trade function a opens we to but think at it's – our it's happen, world can point get to the to have we shape president always it's we but

Craig Irwin

if are the more what blend Great. I And come you likely can question or representatives waiver year then place have Trump's whether from talk an your or fairly for up you how it this this next hearing impact not year. last in about would may, support Can take of ethanol. there. strong And

Todd Becker

trying you $X.XX to Their President ordeal know and think to come if you're I that. no has waiver, was range and the in importance which range He too RVP I as real was the to table have so has to significantly win trying waiver that's is table Pennsylvania we're deal out. obviously on think higher, and negotiate. a to – come that with the to back We're refinery motivation – the – mean coalition doable on with the of now business, and up state well, have come the get of he's the EXX farm but there. I we

is Now, the on and path. said, lower yet industry the I no from get really so in these the focused the think return, always we much gone effort line get realizing in go Obviously have except at refinery to RIN respect it's RVP. didn't the cap the a you have at is the and just – the we But, that. a function price that industry, today, are of anyways, to $X.XX the the irrelevant, why between support RIN fine because $X.XX is would the ethanol states think states been there is administration ethanol oil the I President in we going market RIN and and more a to blend past And RIN it. to EXX that's continuing farm are walk that very in but lower as EXX, any a

for growth all – getting agriculture. the to put continuing this single waiver. our and industry line. the into resources long-term They the important that I most open all fine its in ethanol think was are we we're he's think Obviously, to EPA this I It and administrator last do and more walk can both administrator could push. it is event to have continuing RVP and the have than

Operator

comes Eric Craig-Hallum. of next our Stine from you, Thank question

Eric Stine

larger. mean want of of a potential there mean to standalone, do part you number included new here happen clear thing just I or leadership the unless I little under question other that that got it forward nothing mean going that the I stick under think to waiver grand of to to pretty compromise. bit, was I that, move of for it it's as on be a is that something just obviously think you part was a do with Pruitt kind waiver, still

Todd Becker

of both refineries administration call now and exemption can EXX while the RIN everything an that the benefit should I of given refinery on the small prices waiver end And to this make the low we're already This the they go one. stick give right have the ways. us I think mean needed. getting low

work. the to so, right now, past they very of well new do them similar it it. understands And administrator importance understands industry things, could it. we're of pressing ethanol the from the some his do The past He

very they like what he get We'd and on clarity to call on general Iowa, on that. the in EXX. he says as in as we're soon tomorrow mind President's close it's them So, some do. can lands the that's asking we're make to Obviously

very I Senators, are to hard I the pushing farm we're on are Champions a our from to other Dakota, trying between Nebraska, get important South and think and think clarity states admiration Iowa states our path. that very and this

gotten everything think really the return, gotten nothing we given is and going side it's have you the on the trade need billion and the this as during necessarily the to that's agriculture what refineries make we've rubber subsidies. is is of the far answer – have realizing really to road, so to if not from spend I big that, up $XX a really where that's meet to the RVP a pitch and want war, in administration

Eric Stine

remind think similar to transitioning that changed about maybe there quarters, Okay, that? size we acquisition, operation were it how the me, cattle. this versus from mean me just given the on we should the has Plains of or Should one own about last to Green just acquisition think four I just Cargill Cattle

Todd Becker

a is bit This one little different.

a and With got fed their acquisition, cattle we paid the fee Cargill that. to do

is as margin will immediately earn and going that With acquisition, lots we forward. of be accretive the all we and we'll own a the cattle in why it now we on right the believe which said Bartlett

circulate an in So, so head it's just small and standpoint. QX a standpoint of should little starting number feeding from EBITDA bit our margin QX different they a transaction, per instead

Operator

Our Akyol Stifel. next question comes from the Selman of of line

open. line Your is

Selman Akyol

clarification on if points of could. Couple

still off American Just with we're since Delek, the to pursing not start dissolve or other with, inforce, terminals JV you the JV from is that assets? looking did midstream, but for

Todd Becker

we was JV know to no mean place. Yeah, JV forward pursue going you a I we'll for had put or the it is in do we out have with assets that. just in what still place to and figure separately. together that

We have well a every great we believe together in worked relationship with we situations. and them

the this with Oklahoma. in mean left have we anyways, point. so I JV in those with them are we a at how that's JV So, do guys And we in that other general

Selman Akyol

at to? and Then, items sheet maybe referring further just were it look previously what along had you off to give Can you Partners. balance some you color some pushing mentioned, that,

Todd Becker

it's that capital sheet ready that's capital bundled in it throws when Our financing cattle-off working that debt the off marketable getting because is terms inventories. and looking sheet, numbers size the straight takes of off really in working by balance balance and our – we're gets at just of we backed

most that's that, of standpoint off And a focus so, of transaction. from sheet our balance where we

John Neppl

we moved for push the of to terminal year still we done quarter, the Yeah, October earlier we on to working to last year. Partnership deadline we're and are announced Beaumont in was that this get getting down been you the middle on you the know yet have – that scheduled so, know and that target we had and – do still

Selman Akyol

we go have you the on partners kind guys in should as may with what can being at give also any terminal board, all or here, Salinas are you just thing Then, invest you on being color search Martin assets else board just related? level, would of or for you where it your broadening

Todd Becker

we for enhance of strong terminal that goes this instead supply That's the and through really that sense profitability paying obviously that to our those least JV volumes and then profitability flowing FTC was look that goal get on by believe based keeping through of can well supply Little volumes we as didn't using terminal as their go that as in our Texas the At things owning American been for there through can if of we we the the this the volume the can both chain party with goal into do terminals. looking others pushing third to well. down just the point enhance piece at the in our point. own acquisitions, we And acquisition Rock of what is in we see Midstream enhance of at we're that

strength and achieved what carrier at he in for Martin's partners it was downstream, acquisitions what ability in the So, looking Green but nothing helpful using of from standpoint is will use what it and that his and for meant vehicle a believe future. as we and still we in is growth Plains still a

have through now we And is so do back deal that so get a but and hasn't changed a transaction done. getting Obviously bit of extra capacity to not set much. this

every We as will we for day. do search transaction continue to

Operator

question next James. of Our from comes Molchanov Pavel Raymond

Your question please.

Pavel Molchanov

kind seller looking looking past, a and of to the actually has advantage changed an for of of I'm the that growth say be were let in Thanks feels ethanol to up And rather years were prices net where to we've that it as curious accumulator. headwinds for cycles down what the ethanol. decade, when low, buying you plants guys. But lot response you taking seen questions take obviously Throughout of you like assets? than past shift passed prompted a were upside the from print by

Todd Becker

of the start working again that is debt capital for Yeah, we what locations. be debt world to about debt talked certain in looking we we start ethanol. some want than the convert of we're really cheapest sitting the while under at basically, there to free, today these start at next XX We in between to XX demand free potential at things term RVP is the look XX outstanding But out is global the today, interesting product and and ethanol and cheaper ethanol – XX we in financing. nothing out want years term next molecule years exports in I from free we'll mean while XX certainly gas now think to obviously standpoint to

raise capability capital above protein first refocusing years out and to get gallon every the our if the you about the so, we margins. be the gallon do in or and to multiple which factor DDG the to And of that said the that's an gallon ethanol one different to and to believe key will additional walk what forward, even start and a to $X.XX there distillers industries opportunities that to across grains, know really high paid to but expand ethanol by exist Why while globally our is to going are have we plant excess that, else obviously you of do multiple processing can will increase corn XX on important? start we or ethanol bigger for so world, is before plan on capital past so margin. an day $X.XX gallon I that through oil that's want work high factor to we've those $X.XX see we next what stable an now markets was going really we have in step that or XX% that can making use of look we you a proteins make and agricultural you going distillers fluid are know value it margin in of take and that and which so, is the a on technology protein, plus us protein XX% and getting ourselves that grains can co-products and the distillers with make first push XX Because a chose ton the technologies some XX XX $X.XX

that to want to sure And make we'll over committed but that the so, financial while start still the balance but we our long-term get full sheet. we believe done, still to to industry, we in contract flexibility the have have we're

and by as between we believe improve why also valuations, the mismatch to to the and is We private year. be value of we'll public that's able we and the think well to shareholders a that do there want end our

Pavel Molchanov

depressed is are any exposure but for cellulosic. stayed a still ethanol, part has historically as right the to RINs from that obviously are they company exceptionally pretty now cellulosic corn away kind strong changing for the that regard, thinking in And chain, of anything wanted if, I of to scale your some it's getting in in that value plant whether ask into the development you cellunators know or regard? full potentially

Todd Becker

we will say on. of, there a exist table today that believe – would scale I not the full don't we is we is development that Yeah. terms full to want scale technology in company spend that for plant our wouldn't capital necessarily

your increase you of there generate can some call high that XXs they technology because you make some advanced XXs, you today can some it advanced to that's bolt-on XXs, an the there is volumes. Now where RIN would in protein you gallon out as some can through cellulosic cellulosic increase and

achieve that's So, make of distillers can out that grains. our bit what of the a out highest goal is the our that there, of achieve want we but out there which to is not to protein we commodity absolute going

plus. protein high are you the on it you distiller's focused protein we're increase think soybean to XX below to why it. increase meal soybean not that's if and proteins, value should so, levels going And the We of

focused cellulosic why focused or at that's RIN fully advanced so, all on and on not that And we're generation.

Operator

Wang of Baird. Our next Patrick from comes question

open. is line Your

Patrick Wang

in just clarifying there non-ethanol no talk would question type dropping like has strategy GPP appetite the to about going point. related an for Can than business of first on into rather GPP? focus possibly is change your earlier where you It terminaling cattle? sounds there been assets My generally on

Todd Becker

can anything you Well, under is the an drop MLP cattle not into law. really

are actually like external anything is be anything that would But we our doing base say we beyond we to that have acquisitions can be that there owned we So asset into MLP. would There our if with of much nothing I that can do if qualifying else assets. development. be in dropped, has terminal dropped that

Patrick Wang

the non-affiliate two revenues understood. Or portfolio we work separate optimization previously all Okay. then that does the with Green that just discussed at Inc. think Plains, initiatives at And around score those up as streams. I how process if growing partnership? should about the we

Todd Becker

No.

ethanol that there The divest is have back to we an plant, a is then that we contract partnership. have to I think what get assume partnership grow then cash if one you would with several back monetize thing is maintain that we can invest assets of to that's that they can distribution do them. things. and do. to One in one And levels to

thing to thing is at off pay then that, be other the can we MLP. dilutive. do to share The to the we do steady distribution not our if the is can do And tender then debt there no is to and for other keep opportunity thirdly coverage ratio

down could and do ethanol three So, going there to will financed things. divest make of plan if continue be for the to acquisitions focused search MLP then and as it that to we well plant, we MLP ready be we the the are those in cash will them. fully on obviously And one

Operator

And last line comes of Group. from of Thank question the our you. Jones Heather Vertical

Your line is open.

Heather Jones

So estimate I is of infrastructure I place your demand? increase waiver. a current a in the that current to know if question domestic quick if that's EXX. much would able had What on were get RVP that how and given you

Todd Becker

Jim, those you numbers. have

You kind XXXX, XXXX think where we of are different and those XXXX situations? run to want through in

Jim Stark

Right.

based if from summer. this on last off about this having is million year rate we XX first that our XXX somewhere RVP year, around gallons I quarter, doing for comments the think based should million not of on run be

XX, amount over cleared is to we and hope, now cars. get be newer we'll certainly deck come so for our remember will EXX to So, EXX RVP September to model to we in winter it place the to we June back switched the the I XXXX have blends not The of push what into with would interrupted also there have summer XX be believe the Xst. out amount with of waiver be gallon. as going to is put double has next are driving going gallons

station So to locations. we the does we That gallons. be around somewhere looking continue expand assume could XXX million

to going currently to about XXXX are We XXXX stations XXXX.

are As Todd mentioned earlier, we do looking expanding have the a number that existing of retailers footprints.

want that still through going the new we have through to it EXX part the waiver are We of by of in that's economically the a be retailers process potential for where everything continue really are the and driven And a lot being rents spread. plan. to of the push face

question, I answered hope that So your Heather.

Heather Jones

It does. Thank you.

that committing Todd, you're So to was implicitly plant. running the on is your that cautioning inefficiency you it saying when to are XX%, you XX% basically

think don't plot that to inefficient you're enough basically to offset cost Is enough You efficiency. the the running influence get fair? demand the up, prices can and lower

Todd Becker

with hard to today runs costly. below and the thing in at we're your more XX at where has always and day where a really where old think do been pushing happen a industry plant demand industry turnarounds the gas some I harder for

past capacity expect X%. what in versus which what or there year, was the years X% we X% this is what of seeing think are X% to X% was is we creep to several I

Plains' just regulate going And that industry a and steady industry to so it's not to the be now volume. are the we state, jobs Green at

the because we to necessary make going into we made years structure put so money it is our over plant to maintenance we run repairs cost our harder, can that do when increase. and several And sure a we not that

so over structure. three think by last cost we And the $X.XX several our to to that a running is negative $X.XX absorption five quarters of

a While at certainly big we're volumes we ramped or see we really we to starting time is up when going made see this it, our up, back last now did as year to not others our are as that growth which means it to they stocks able in their quite not race under others or to in structure. much thought ramp production are rather growth up margin as or run making decision full all

for upgrading do years. batch idea that feel to need just in point regulate we but in some the we've could we Like as the that as our said, not set down. right we last done low be of change job think that to some of plants. We forward, the continues are benefit up to can from the to that and just the job well. we push So hard things at Plains and going it's of we've going other Green put we were were as new And We plants industry this we volumes are of shareholders. and now we the changing done obviously couple to we're doing us things to from we like

they let chips at fully full fall are are as point to the we as and we hard now where run can ready as so may. we And the

Heather Jones

you two did $XXX Okay. ahead roughly And QX just cattle. quick in One, questions. for

$XX. targeting You're to $XX

So, we should any that QX? does Farm And while deterioration secondly, in margin slowdown seen payments? any you see that anticipate have you QX slowdown those do with a marketing significant bill, or await imply versus Trump's in they pretty farmer

Todd Becker

But we our to drop $XX in $XX we we obviously, consistently happen. quarters a just on we a maintain be some believe but not still be throughout to learn ahead So certainly And maybe some general in $XXX the still making we that made over XX view $XX in that could there our going trailing if and quarters quarter-over-quarter. and QX $XX, again QX, in will maybe our cattle. earnings year

see well basis. QX. yeah, will cattle can and just how is it's QX quarter that sometimes can close they sometime because probably the strong that you necessarily not, in we every obviously off we it So be is margins it's just so did out, in And single volumes replicate sometime high is and

within as So can what still range half indicated half think the the yeah, first exceptionally first probably you to had not strong, year but of the earlier. anticipate as because the that you the last strong was of half I we

farmer our of and we solar piles our storage we that as gain this lifted we have. terms is storage grain interesting and very said, marketing, In because lifted

Well years. on investment refilling that you're needs right a handling a still for storage significant made our – earned had in your what margins. else seeing there grain basis actually the in weakness a last out QX of million the to have the beans. market And to which push we amount Chinese bushels because what do we is we'll in are storage single has to going that corn storage. reason farmer of commercial something now XXX significant that And a to of west of we we program with Expecting without that space coming those know the return every to we corn in November a except tanks. is extra going come make and is on You strong million why big we beans XXX September, harvest have month couple are are rebuild October, now

way for ever are into the that so before starting positive basis that grain come into all are see we ethanol the we commercial a of We fill at to we've could actually are we is next in through that we and corn, harvest will that marketing not and robust come carry farmer harvest And than industry to can levels. lower now full even fact them October, point. you until piles filling this year because filling start more

historical space. will that grain out the a worked handler return be earn than potentially the a if doesn't better So will on program Chinese year get this this

Operator

like any Thank you. turn over sir. back I'd closing call remarks, Becker the this to to time At for Todd

Todd Becker

on call you the Thank the a everybody Green we for today. Plains. coming going have on Obviously lot

optimization Our outlined on track to portfolio fully program you. is program, as

We things on get of better XX discuss May And we some you Xth lot. ahead guys with to to achieve the things we'll to and for hopefully that a expect the some outlined days we'll track. you of quarter. your we in of markets announcements make some and be talk and the remains on goal to And us. you it done next patience to Thank next able these continue to all thank

Operator

Ladies and and for participation have concludes gentlemen, a day. conference. this you today's Thank wonderful your

Green Plains (GPRE) 1 Aug 182018 Q2 Earnings call transcript