Good morning, and welcome to the Green Plains, Inc. Third Quarter 2024 Earnings Conference Call. Following the company's prepared remarks, instructions will be provided for Q&A. At this time, all participants are in a listen-only mode. We will now turn the call over to your host, Phil Boggs, Executive Vice President, Investor Relations and Finance. Mr. Boggs, please go ahead.

Thank you, and good morning, everyone. Welcome to Green Plains, Inc. Third Quarter 2024 Earnings Call. Participants on today's call are Todd Becker, President and Chief Executive Officer; Jim Stark, Chief Financial Officer, and several other members of Green Plains Senior Leadership Team. There is a slide presentation available and you can find it on our investor page under the events and presentations link on our website. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's press release and the comments made during this conference call and in the risk factors section of our Form 10-K, Form 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement. Now I'd like to turn the call over to Todd Becker.

Yes, thanks, Phil. Good morning and thanks for joining our call today. We reported $83.3 million in EBITDA for the third quarter, inclusive of a $30.7 million gain on the sale of the Birmingham Unit Train Terminal. Our EBITDA from normal operations was $53 million and our standalone consolidated crush margin was $58 million. Before I get too deep into the numbers, I'm sure you saw the announcement this morning regarding Jim Stark retiring from Green Plains and the promotion of Phil Boggs to Chief Financial Officer. These two guys are really well known to all of you, which should make for a seamless transition. When Jim returned to Green Plains and subsequently named CFO, I always knew this day would come, as his goal was to get back to Nebraska and spend more time with his grandkids. One of the things that was part of this succession planning was to set Phil up for success and Jim lived up to his end of the bargain and more. Jim and I spent many years together at Green Plains and he is one of the many who will have made a long-standing impact on the company and I'm proud to have worked with him. I'll let Jim tell you a bit more, but he will be exiting the public company world to focus on the next stage of his career with smaller private companies and spend more time with his family. Thanks again, Jim, for your dedication and loyalty. So let's get back to the quarter. Our ethanol operating rate reached nearly 97%, and we also delivered a record quarter of ultra-high protein production, as well as maintaining a strong corn oil yield in line with our record rates achieved in the second quarter. Our operating results are demonstrating the success…

Thank you, Todd, and good morning, everyone. Green Plains consolidated revenues for the third quarter were $658.7 million, which was $234 million or approximately 26% lower than the same-period a year-ago. As it has been in the last couple of quarters, the lower revenue is attributable to lower prices experienced for ethanol, dry distilters grains and renewable corn oil in the third quarter of 2024 as compared to the same period a year-ago. As Todd mentioned, we also saw a drop-in our commodity inputs with corn and natural gas down significantly year-over-year, resulting in a stronger margin opportunity in the quarter compared to the prior quarter and prior year. Our plant utilization rate was 97% during the quarter compared to 94% run-rate in the same-period last year. The year-ago quarter of 2023 included production gallons from the Atkinson plant that was sold-in third quarter of last year. So utilization actually increased despite production gallons declining slightly year-over-year. For the trailing four quarters, we have averaged a 94% utilization rate and we anticipate our plants to continue to perform in that mid-90% range of our stated capacity for the fourth quarter, barring any events outside of our control. For the quarter, we reported net income attributable to Green Plains of $48.2 million or $0.69 per diluted share. That compares to a net income of $22.3 million or $0.35 per diluted share for the same period in 2023. I want to point out that the diluted share count for the third quarter for both the current and prior year third quarters include the dilutive effect of the 2027 converts due to the accounting treatment of the as if-converted method, so long as the effect would not be diluted -- anti-dilutive for which it was not. EBITDA for the quarter was $83.3 million,…

Yes, thanks, Jim. And again, thank you and good luck in the future. So let's talk carbon. Our advantage of Nebraska strategy to decarbonize our 287 million gallon footprint in the state remains on-track. And along with our pipeline partners, we have made great progress again this quarter. Of note, Wyoming, which is one of three states with primacy for issuing Class 6 permits approved the first sequestration well for the Trailblazer project in September, and we expect additional well approvals for the project to follow in the coming months. The long-lead time carbon compression equipment has been ordered and is on schedule for delivery in Q2 of 2025, and we expect to begin construction on these facilities in the next month or so. [indiscernible] is on track for the second-half of 2025 operations and cash flows. This is another game-changing and differentiating project for Green Plain shareholders that we will be one of the earliest and largest platforms sequestering carbon. Our carbon earning estimates remain intact with the expectation we will generate $130 million or so per year starting in the second half of 2025, assuming 45Z values and the $70 ton carbon credit or LCFS credit even after discounting the value of the tax credits. Nebraska as an asset alone with this type of base earnings is not at all reflected in our share price of our company in my opinion, in our opinion as well. During the quarter, we saw a decarbonized ethanol production facility exchange hands for the price over $3 per gallon, so you could do the math. The value of our 287 million gallons in Nebraska would be higher than our current market cap those plants alone. While the Summit Carbon Solution projects continues to make progress with permitting right away, we anticipate that…

[Operator Instructions] Your first question comes from the line of Jordan Levy with Truist Securities.

Good morning, all. And Jim, thank you for everything and best of luck in the next venture. And Phil, congratulations on the new role. All right. Todd, you mentioned it on the call, but your equity value here is certainly not reflecting the value of Advantage in Nebraska on the CCS side and maybe even more so the other initiatives in protein and sugar. Can you just talk to outside of the strategic review process you have, what you think the market needs to see from you all to get more value reflected there on what the work you guys are doing?

No, I think that obviously, the milestones, there's a couple of big events, the milestones in carbon are going to be really critical and we should be able to break ground here in the next 30 to 45 days on that project. And I think once we do that, you're going to start to see a quick ramp-up in the interest in the credits that we are going to produce both 45Z and voluntary and/or low LCFS credits for California. And I think what's really important is that those are programs that are in-place. And I think that once that starts to kick-off just from that alone, the value of our company will begin to adjust higher, if not sooner than that. Obviously, we've gone through some ups and downs as an industry. I think broadly as an industry as well, whether it's going to be in ag or renewable fuels or ethanol or anything in-between. We've seen compressions across-the-board in overall values as an industry. I think a little bit of that is overblown, especially the value of our asset-base. If you look at a per gallon value of our asset-base today, it's just significantly too low. But we have -- we've had a few challenging quarters. And I think what we were able to show this quarter in a normal margin environment, we can certainly deliver free-cash flows. I think when we look at things like sugar that was delayed, it's not going to be an immediate impact to earnings, but what it is, we believe and we've always have believed is that our CST technology developed at Fluid Quip and now producing at Green Plains is a game-changer, but it's a longer-term process that will take place, but we have significant interest in those products. So I think just overall, it's a little bit of everything. We've had ups and downs as a company and I think the margin environment continues to be very, very volatile in this industry and we're just going to have to watch that closely. But our financial position remains strong. Our per gallon just generally on a generic per gallon valuation is too low relative to replacement and relative to other transactions. And I think just overall, it's just a step process to get ourselves revalued back into where we need to be.

I appreciate that. And then maybe just kind of building on the CSP side that you mentioned, I don't think it's quite as well of an understood market certainly as ethanol, but even as much as protein. But maybe just help differentiate about the long-term value you see from that business and from some of the more near-term challenges we've seen in protein and maybe just give a little more detail on how you view the sugar dextrose market evolving?

Yes, that market and demand remains strong for dextrose overall, but even more so for low-carbon dextrose as CPG companies continue to remain focused on lowering the carbon score of their products and that's where we see interest everything from a pancake syrup to industrial chemicals and everything in-between. I think that's a misunderstanding that that's -- a lot of that happens in fermentation or sweeteners are used in many other areas. And that's really what we're producing. We have started to receive our certifications and now that we are producing product, our goal now is to get our food grade certification, so we can begin to sell into the consumer markets as well. And I think that's just the first step of many steps that we want to do to monetize this product. The margins remain strong. If you make dextrose instead of alcohol, your margin is significantly higher. And I think that's still proven by results that you see from the others in the space that make dextrose in wet mill to those margins continue to remain strong, especially on that product. So we have an interesting technology. We have interest in the technology from around the world right now from Blue Equip continues to get calls in and the work that they've done. And what we're proving out in the United States where we're going to -- we're really going to focus our efforts is that there's significant demand. People have waited for us and it's from food all the way through chemicals. And I think you'll start to see us deliver on some commercial volumes to customers and also some offtakes as well during the kind of next 30 to 90 days. So we're really excited about that. The team has worked really hard, but. The margins have maintained themselves throughout this whole process and have not compressed relative to everything else that we have seen. And we're really excited about it. It's a long game on this one, but owning and controlling this IP and this technology and proving at commercial-scale that we can make low-carbon dextrose and sweeteners. This has never been done before in the history of agriculture at this type of scale and this type of level where you can take a dry grind facility and make dextrose to be used in food and industrial products. So it's really exciting it's a great testament to our team.

Your next question is from the line of Lawrence Alexander with Jefferies.

Hey, good morning. This is Kevin [Esnak] (ph) on for Lawrence. I've got two questions. One on clean sugar and one on ethanol margins. I guess, I know that you said that margins don't really reflect current conditions. And I guess just given the direction that ethanol prices have moved in the last like several weeks, months, I mean, could you foresee producers possibly lowering rates like timber production to sort of lift pricing? And just curious how your outlook has changed from margins and prices into last earnings. And I guess, I think you said last call that the corn basis was coming down into Q3. Just did that play-out as expected.

Yes, This is a little bit of a wait-and-see on margins this quarter. I think what we saw was a compression late in the quarter. You all saw that. You've all talked about that late in the 3rd-quarter and it continued a little into October. But I think as we leave October and these numbers that we saw yesterday prove that what we produce is being absorbed withdraws at a 1,080 run-rate yesterday. And I think the market is going to have to adjust that. I think we were dragged down by this weakness in oil and gasoline prices that we saw in the quarter and ethanol took to hit as well. But overall, I think hopefully we're going to -- we're bottoming out here and we saw -- again, we saw some increase yesterday and we'd like to see that continue and see what happens over the next coming weeks. But we still have turnarounds in the industry and we still have some other areas where I think we're going to take some stuff offline naturally. But I don't know yet today that we're at a point where anybody is going to significantly reduce production. And as we go into next year, if we can maintain these stocks and get-out -- get through the first quarter and get into driving season again, I think that will be a very positive for next year margins. And we do believe exports will remain strong through the rest of the year and hit those numbers. So generally speaking, we're using what we're producing, but it would be nice if we can get even a larger draw. But with days of demand less than 20, typically we see an expansion back into normal margin structures. On a corn basis, we've definitely come out of harvest firmer than I think anybody really thought the farmer was able to put some of this away. But we are -- the corn basis in Q3 was at least $0.50 a bushel, better than the prior three years. So we saw that market come down, which obviously helped the margin structure for everybody in the industry, including ourselves. And as we come out of -- as we come out of harvest, our basis is still lower in areas than traditional last couple of years, but it's definitely firmer than we thought. But we're not having any trouble buying corn. It's just a matter of -- at these flat prices with futures pushing towards $4, the basis is going to remain firm, I think, throughout the year.

Understood. Thank you. Understood. Thank you. And then just on clean sugar, as you announced earlier this week, the first commercial clean sugar tech deployment examples going to customers. Just curious what your feedback has been from those customers? I mean whether or not you've received feedback on those samples? And I guess, just curious about the geographic makeup. I mean, are most of them North American customers or any color there would help be helpful. Thank you.

I'll answer your last question first. They're all North American customers today. It's really where sugar is going to. Our dextrose is going to travel. We are seeing global demand for the technology from customers. I want to talk to Fluid Quip about bringing their technologies to other countries. And again, we're not opposed to that. And I think it's going to be a very big value creator for them and for Green Plains as well. Relative to customer feedback, they've seen product already out of our York Innovation Center that is structurally similar to what we're going -- we're producing in Shenandoah and the product we'll have in Shenandoah will be even better. So for us, it's really a matter of time now. You have to make product before you can get food grade certification started the process and that's where we're at today as we're going to start that process. But you saw we had GMP approvals, we got other approvals pending. I think you'll start to see that our product will become a very well-accepted product. Our first goal is to ship our products into industrial markets today because they're not food grade markets, although they do need some of their own certifications and -- but early feedback and stuff that we have shared has been good. But again, we're just starting to ship it out now. So it's going to take a little bit of time. This is a long game, but owning and controlling this IP and this technology that is such a disruption and game-changing and we have proven now that it works and it works at-scale, but there's still some things we're going to have to continue to work-through in Shenandoah. But as we think about number two, it will be better engineered and better constructed in terms of cost and cost per pound and cost per ton and those type of things. I think we're on our -- it's just a long path, but this is absolutely a disruptive technology that has never -- this has never been done before in history and we're very proud of the team that has done it. Thanks.

Your next question is from the line of Sumara Jain with UBS.

Hi, hey guys, congrats on the quarter. I guess I just wanted any color on how the partnership with Shell is progressing and if you guys have any updates on Tharaldson as well?

Yes, I'll let Leslie comment on our SFCT partnership. There's some exciting things going on there. Leslie, you want to comment on that to start?

Sure. So the process has successfully started up in New York and the first cellulosic ethanol has been produced. The process will now switch to really a one-of-a-kind opportunity, the DCO or what we call the second-gen DCO is the next in-line to line out. So that's basically the previously unattainable corn oil. And then the last piece is going to be the alignment of protein. Once that all is up and running, then the process will switch to campaign mode and that's when we'll be producing more products for validation efforts on the protein side.

Thanks, Leslie. And then also then -- what was the second question that you had?

Any update on Tharaldson?

Yes, Tharaldson startup, obviously it took a little bit longer than we wanted, construction took a little bit longer and we continue to debottleneck there, there, but we're starting to push towards the upper end of the rates that are available of the production capacity there bringing on that much protein on the market. We had to wait for customer approvals, but the quality of the protein is excellent. The toxin levels at Tharaldson are the lowest in the country, which is nice because there are certainly customers that wanted North Dakota product because of the absolute zero toxin in corn that is there. And so that's getting opening us new markets as well as the West Coast where we really did not have a freight advantage out of our terminals or out of our facilities to get to the West Coast. We're seeing some new demand out of there as well. So again, these are long games, but I think as we go to max production over the next several quarters, we're just excited about the fact that we have a really great product and as Sequence starts to kick-in 2025. So more on that next quarter.

Your next question is from the line of Andrew Strelzik from BMO Capital Markets.

Hi guys, this is actually Ben on for Andrew. I just want to say congratulations Jim and to Phil as well. Jim, wish you all the best of luck there. So my question has to do with carbon capture. Can you just walk-through the key milestones that we should be tracking in order to hit the second half 2025, $70 a credit target? Thanks.

So what we're watching very closely, obviously is the lead-time -- our equipment order, that is all on-track and we've been talking to the manufacturer and they believe they are on-track for our second-quarter delivery. We expect to break ground on the structure in the next several weeks or less than a month from now. And that will really be the first milestone. I think that will be important to everybody. Most of the engineering has been done already. We have the credits or the permits to operate in all of the counties, where we are located. Nebraska is very different than other states relative to carbon capture and approvals and permits. And so very supportive from the state. So we'll wait to see when Trailblazer starts to build their laterals as well. And so we'll know at that point. I think we'll watch that closely. We do have some air permits just to start to construction -- start construction, which we expect to receive shortly. And those are just permits from the state as we receive in every other construction project that we do and there doesn't seem to be any delays receiving those relative to the start of construction. So that's really up to our partner to make sure the pipeline is in-service and the laterals are built and the continuation of Class 6 wells in Wyoming. All this has been laid out in the past and I think each of those are going to be really important. I think what also is important is the rules on 45Z as they roll-out early next year sometime. And we believe those will be positive relative to what we've seen in the past and expect certainly by the third quarter of next year to have those full rules outlined by…

Hey, thanks guys. I'll leave it there.

Thank you.

Your next question is from the line of Salvator Tiano with Bank of America.

Thank you very much. Firstly, I want to check a little bit on any update on Blue Blade energy. I think the plan was you test the SAF technology and if it works, you start construction of the power plant this year 2024. So where do we stand-on that?

Yes. I think from a Blue Blade standpoint, what we've done is we had a partnership and we looked at several different catalysts or we looked at a catalyst that we had control of and at this point, we've decided not to proceed with that catalyst. I think there's other things with the other technologies that are out there that are much quicker to get to-market. When you bring a new technology market as we learned in Clean Sugar and even in sequence and other proteins, it just takes a long-time to scale-up. And since there are other technologies much like a UOP, Honeywell or others that are out there, we think that that's a much faster path-to-market for alcohol-to-jet. Our focus from that standpoint is we want to be a provider of low-carbon fuels, energy and ingredients and that's where we're spending our time to -- before anything happens in sustainable aviation fuel with alcohol-to-jet, you have to be able to decarbonize the alcohol. And being a significant advantage for Green Plains is we will have some of the largest quantities in the United States and globally on decarbonized alcohol middle of next year. And that's where we're going to focus our efforts today. I think for Green Plains to build a jet -- alcohol-to-jet plant is probably not something we focus on today because I think we can earn a significant return for our shareholders by just making sure that we're a great supplier of low-carbon ingredients and fuels.

Perfect. And I wanted to ask also what's kind of your view for ethanol exports next year and essentially demand from some key end-markets or key producing markets like Brazil and India given what's happening in sugar production among others.

We think this trend is going to continue down the road relative to us finding our path into global markets as they have increased their blend rates. You saw Brazil did that. You saw other countries have done that. We are going to -- we're hitting some of the European markets as a country as well that the EU is very strong and we continue to think that will continue to gain momentum, especially if we see positive news out of for U.S. ethanol and the way they model that relative to 20-year-old modeling that's been in-place. I think they've realized that we grow more per-acre than 20 years ago and that reduces our overall carbon scores. Generally speaking, the demand remains robust globally and I think that's going to continue because I think we are a value molecule. We're $0.40 or $0.50 less than wholesale gasoline today at a minimum, plus in the United States with the RIN. But globally, we are very, very competitive as a molecule. And I think we've shown that we can ship significant quantities and I don't believe next year will be any different than this year. And I think we need that. And I think we also continue to see blends increase in the United States, especially as we go through quarter-after-quarter of driving demand, which doesn't seem to be going down right now, but we've seen good driving miles in the last couple of months and we saw great demand this week relative to the blend rate. So, if you add all that up together and if we can keep these stocks at check as we move into the end-of-the year, I think we have a really good shot at a good margin environment in 2025.

Perfect. Thank you very much.

Your next question is from the line of Kristen Owen with Oppenheimer.

Hi, thank you for taking the question. A couple here that I wanted to ask on. First is the protein margins. You touched on this being a little bit lighter than what you were hoping for that spread over traditional soybean meal, not quite where you want it to be yet, but as we look at some of the soybean crush capacity and the transition in the policy in 2025, how are you thinking about the premium for ultra-high protein as we come into this transition year next year.

It's really going to depend on what market we go to. When we are going sending our product internationally as we continue to grow those markets, we see -- we realize the full spread and more many times or at least within plus or minus 5 or 10 points of that. Our pet food demand remains strong. We've just renewed with our long-term customer and increased volumes during the first quarter of next year. On our 50 Pro product and continue to get full access to that with a new plant coming on next year as well. But I think, look, there's a lot of protein coming. So we've seen a lot of protein hit the market already and we've settled out at these type of spreads. Demand remains really good. We'll have to wait-and-see what happens out of South America. Look, 14 million or 15 million tons sounds like a lot. And if it all comes at-once, it is a lot of soy meal hitting the market. But when ethanol came on, we brought 40 million tons of distillers onto the market as well. And so I think we are going to absorb much of that. It may take a few more quarters or at least another year or so. But look, we still earn a margin. It's not like we don't earn a margin and a return on our investment. It's just that we've seen some compression relative to the soy against corn. And I think that's probably -- that is most likely stabilizing at this point. I don't think that -- I don't think we're going to see much more compression against those spreads and we continue to make our products and sell everything that we produce. And one of our past and one of our things that we've always talked about is our way to get-out of that is we can make 60% protein products and higher even and we're working on even some of those products today and Leslie's team is making great progress. And we're learning how to reduce the cost of producing sequence, which I think drives a bigger margin contribution as well as we go into next year with the improvements we're making and some of the other technology improvements we made in the cost of production coming down. So it's a little bit of learnings, but I think in the next 18 months, a lot of this protein will just get absorbed into the market. There's not a bunch more soy crush capacity to come on and it seems to be coming out in a in a more methodical pace and you start to see investments being made in export capacity as well to get some of this protein out-of-the country.

Okay. That's helpful. I was actually thinking there's some soybean crush capacity that's not coming on and potentially flowing. So that could be a tailwind for your margins next year as well.

Yes. We've seen some of that where projects were abandoned because of the cost versus the overall margin structure and we believe that's happening as well that it will come on slower or not come out at all. And I think that will be helpful overall. And then we get into next year and let this RD market settle out and see where that settles out from the oil standpoint as well.

Super. So then my follow-up question, as you said, the $250 million to $300 million run-rate value of carbon just from those Nebraska assets, probably not baked into most folks models at this point in time. Help us understand now that is becoming much more within the next 12 months timeframe, help us understand the mechanics of those credits, how you think about monetization of them, like what sort of tolling fees you might have to pay to use that pipeline? Just give us a little bit more granularity so that we can build that into our forecasts.

So let's start from the pipeline standpoint. We have an agreement with Trailblazer on transport and injection and that is just a fixed-fee and there's no sharing of our upside and our credit values from the revenue side. So we just pay a standard transport midstream relationship that we have with Tallgrass and-or with Trailblazer owned by Tallgrass. And that's really -- it's very simple. And then what we generate is revenue from 45Z, 45Q and either voluntary credits or LCFS credits. And that's the revenue side of the equation. And I think we've outlined in the past our carbon score reductions at Central City, Wood River and York, which will be on the pipelines to start. And I'll get into York in a second. But when we look at the revenue side of the reduction, which is $0.2 per gallon per point from our starting point, it's everything below 50 carbon score. That's on the revenue side with the 45Z. On-top of that, we'll be generating over 800,000 tons of high-quality carbon credits that either will flow into California or will -- from the fuel standpoint and will monetize LCFS and/or from voluntary markets. So monetizing the 45Z and monetizing the carbon credit will be something that there are well-developed markets to do that. We've seen those trades in that 90% 95% of faced value happen and that's in our numbers as well. So we're going to sell those credits and monetize them and not use them internally unless we need to down the road from a standpoint of then we can realize 100% monetization of those credits. So we add all that revenue up, we discounted by somewhere between 5% and 10% to get to our net revenue, deduct our transport fees, a little bit of operational cost…

No, we must-have lost her. Operator, time for the next call.

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

Thanks, and good morning and congrats Jim and Phil on your respective moves here. I wanted to ask about the election risk to the IRA and the associated credits like 45Z and Q. I think the Wall Street Journal had a story yesterday talking about how a potential candidate for Treasury Secretary was talking about scrapping the entire IRA. What do you make of that? And how much does that concern you? And is there anything you can be doing today to potentially mitigate some of that risk?

I'll let Devin comment on that first and I'll close off after that.

Sure. So thanks for the question, Matthew. We saw that article and there's been a lot of talk in this campaign of this Republican sweep of trying to eliminate the entire IRA. You recall that they tried to do this with the debt ceiling lift back-in April of 2023 and there were seven Republican House members, all of whom had voted against the IRA who blocked that from happening as it relates to 45Z. So there remains bipartisan support for not only preserving but extending 45Z. Several bills have been introduced with both Republican and Democratic support to extend that credit. And you got to remember that there's now multiple industries that are interested in this. It's not just biodiesel and renewable diesel and ethanol, it's also sustainable aviation fuel because the 40B credit rolls into the 45Z. So we believe that regardless of the election outcome, there will be support for that program. And while some aspects of the IRA may be curtailed, if Republicans control all three corners, we think the prospects are bright for having that extended to have a much longer runway.

And one last thing, Matthew, is the 45Q, let's just say worst-case scenario the 45Q is the remaining program. If that were to happen, which we do not believe that will happen, that is not part of the IRA. So it's expanded during the IRA, but it's not part of the IRA. And I think that that's an important point as well. And it's a 12-year program that has -- that starts when you start sequestering carbon. It doesn't go away from two years ago to 10 years from now. It goes away 12 years after you start to sequester carbon. It's been permanent for a long-time in the program and it's a direct pay program as well for the first five years. So while we certainly would not like that to be the program because I think that's much more opportunities around 45Z. If that were worst-case scenario, then we'd have less revenues around carbon, but it would still be a significantly profitable project instead of paying-off in less than a year, maybe we pay-off in a year in four months. And it's really not that much of a big difference for us, but it certainly is nicer to have the 45Z and we do believe that will stay intact.

Thanks. That's helpful. And then earlier in the call, there was some talk about Mount Vernon and Obion increasing capacity. What's the total capacity increases that you're expecting? And does that shift anything on your product slate? Would you expect to increase your exports as a result of that new capacity?

So Mount Vernon is complete. We've redone all the full conveyor systems among other bins and tanks and systems and processes and that was needed. We're starting to ramp that plant back up as we speak, and that should add about 20 million gallons of yearly production run-rate capacity there. And when we add gallons, we had pounds of corn oil and we add tons of protein on-top of that, that has a protein system down there as well. So it's going to be all three components there. In Obion, we're waiting for a final construction of the RTO or instead of a TO, thermal oxidizer through a regenerative thermal oxidizer and that will allow the plant then to get back to the traditional run-rate. That is another 20 million to 25 million gallons of opportunity per year as well. And that project should be completed in the first quarter of next year. That plant should be running at a much higher rate, but because of the longer-term effects of this piece of equipment, we haven't been able to and then we brought protein on. And now combined, it's just overloading all of the systems and we're going to be able to get that back in line sometime, hopefully early in the first quarter of next year as well. So the two of those combined should add 40 million to 50 million gallons, about 40 million gallons of additional capacity that we bring online. And but it doesn't necessarily change where we ship, it's just shipping more product to the same markets and those markets are ready to absorb everything we bring on.

Thank you.

Your next question is from the line of Craig Irwin with ROTH Capital Partners.

First, I would say, congratulations, Phil, on the promotion, Jim, going to miss you. It's been great working with you these last many years. My question is around Clean Sugar. I wanted to ask for a little bit more color. So Todd, do you feel some of the projected economics that you've talked about these last couple of years are starting to be confirmed by the plant startup and then if we rewind about a year, there was some optimism that we couldn't start seeing additional facilities once this plant was up and running. What do you expect to see out of Shenandoah, what do you need to see out of this plant to make a go decision to invest in the next facility? And can you remind us maybe on the CapEx and project returns that we should be thinking about?

Yes, thanks. And we have significant optimism for this product, the production process. And there's definitely things that we will do different in a much larger facility than we did here relative to some of the equipment that we had outlined in the past where we had some early issues that we work-through and have fixed some of those issues. But I think the engineering on plant number two would be different than plant number one, just in terms of improving the capabilities of the asset. And the [indiscernible] are very similar to what we -- when we started this five years ago. We said it's $0.67 to $0.87 a gallon uplift relative to making alcohol and those still exist today even relative to sugar prices and sweetener prices that are out there on top of lower corn and input costs. So from that standpoint, nothing has changed economically on how we think about a full-blown build of a Clean Sugar facility at a plant, either ours or even potentially standalone with support of a Gen 1 ethanol plant. So additional facilities more to come on that. I think what we want to do is, like I said, it's only been a week. We've been at it, give us a little more time. But I think what has been proven is that we can make the product. We can -- we're shipping the product. It's in railcars. It will be shipped in trucks. It will end-up on people's doorsteps for them to analyze. We still have to get food grade certification and we'd like to run it just a little bit longer than a week or two to -- and continue to optimize and continue to drive better and better product quality because I think we continue to do that.…

Thank you for that. So my follow-up question, I guess, is a two-part question, right? Can you maybe share with us the -- well, the housekeeping side is really sales mix on high-pro products, 50 versus 60 Pro. Do you have an estimated mix exiting the year and then comments around what you think is reasonable for Green Plains to target in 2025? And then the second part is the blue-sky economics at high-pro, one of the more exciting parts, the story was always the collaboration with Novozymes for some tailored products that might have improved nutritional profile and make it an even better match for many of the markets that you're pursuing. Do you have an update on the Novozymes partnership? And is there anything we should look for there over the next number of quarters?

I'll start with that and let's talk about -- let me talk about some of the things that we're doing around product quality and nutritional quality and working with other customers on that. But we have resigned our agreement with Novozymes in our partnership. We did it quietly as we were working together on several products and several opportunities. We are -- it's an amazing partnership between Green Plains and Novozymes and what we've been able to accomplish together and especially around development of higher proteins and different nutritional characteristics that we continue to work on. So that has been renewed. On-top of that, we talked about our pet food customer has begun to renew for 2025 as well as we just finished the first quarter at higher volumes in 2025. And so we're really excited to work together on all different types of recipes with Novozymes inclusive of generating these D3 RINs as well. Everything evolved in all of these technologies. When we started out, we thought we put protein everywhere and along came the IRA and now we're going to invest capital into carbon sequestration with significant returns. And someday I'm absolutely confident we'll continue to build protein systems as we absorb this protein into the market because what we have is that depending on the species, it's a very special product that does really interesting things relative to that. We continue to work with some of the largest pet food customers in the world on 60 Pro inclusions in 2025 and we believe we are going to get a significant lift relative to demand from this year to next year. Today, we are making 60 Pro product. We are shipping 60 Pro product around the world. It's always -- as we always say, it always take longer…

Sure. Yes, as Todd mentioned earlier, I think you're kind of looking at a bookend where we're looking at consistency on the product side by really making sure that, that is where our customers can actually go to increased inclusion levels. And then the other side, which was already mentioned is really the cost-reduction. So that's been an opportunity for us to really tailor the use of our biological system to fine-tune it. On-top of that, the team has been working on increased protein concentrations, which is again almost a third-generation product that we're working on. But I think the main focus has been between that consistency and the OpEx reduction side.

Excellent. Well, thanks again for taking my questions and congratulations on the really strong crush margins this quarter. It's good to see those come through.

Thank you.

I would now like to hand today's call back over to Todd Becker, CEO, for any closing remarks.

Yes, thanks everybody for jumping on the call and participating in today's call. Our continue -- our teams continue to execute at a high-rate. We look-forward to sharing our continued progress with you in coming months. We also want to make sure that we provide you with the information you need to make the best decisions around our company. And as you can see with our carbon strategy, which is very unique and very advantaged and very early in the cycle is going to be providing significant what we believe shareholder value creation. On-top of that, all of our products are starting to kick-in and obviously, when strong margin environments exist in the base product of fuel, which we believe will start to ramp back up as we get into 2025. I think we're well-positioned to capitalize on all that we have invested and all the strategic advantages that we have as a company. And again, we wish Jim best of luck. And Phil, best of luck in his new role and we really appreciate your support. And we look-forward to talking to you next quarter. Thank you for everybody being on the call.

This concludes today’s call. Thank you for joining. You may now disconnect.