Q4 2023 Green Plains Inc Earnings Call
Participants
Phil Boggs; VP IR; Green Plains Inc
Todd Becker; Independent Director; Green Plains Inc
Jim Stark
Kristen Owen; Analyst; Oppenheimer
Jordan Levy; Analyst; Truist
Adam Samuelson; Analyst; Goldman Sachs
Eric Stine; Analyst; Craig Hallum
Salvator Tiano; Analyst; Bank of America Securities
Craig Irwin; Analyst; Roth MKM
Presentation
Operator
Good morning, and welcome to the Green Plains Inc., fourth-quarter and full-year 2023 earnings conference call. (Operator Instructions)
I will now turn the call over to your host, Phil Boggs, Executive Vice President, Investor Relations. Mr. Boggs, please go ahead.
Phil Boggs
Thank you, and good morning, everyone. Welcome to Green Plains Inc's fourth-quarter and full-year 2023 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 the 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.
Todd Becker
Thanks, Phil, and good morning, everyone, and thanks for joining our call today. We reported a solid quarter this morning, with $44.7 million of EBITDA and a plant utilization rate of 95%. In addition, this was our highest quarter yet of ultra-high protein production along with our highest-ever corn oil yields, but we still have further to go and more to unlock. Our team continued to execute and maximize the opportunity across our entire platform, and we believe there's additional upside on our portfolio of assets that we aim to achieve as we move through 2024. This quarter and the start of 2024 had many events that has led us to this point where our structure has been simplified, and we are ready to bear the fruits of our labor on the path we laid out a few years ago and feel highly confident in our ability to achieve our goals.
Before I dive into the quarter, we also announced a strategic review this morning. As you can see in the 8-K we filed, we have entered into a cooperation agreement with Ancora. Our Board believes our company is undervalued, and we will embark on a strategic review to best determine how to maximize our value for all shareholders as we aim to achieve new milestones over the coming months, which I will talk about later in the call. These are, as you know, far-reaching processes and we will explore all paths to value realization. We have nothing further to announce or discuss regarding the strategic review at this time.
Moving on to the results, we were largely open and unhedged in the fourth quarter, which started out quite strong, as we talked about, and then rapidly tailed off as the quarter progressed. Market fundamentals remained weak and it started the year with higher stocks numbers and production, and has remained stubbornly high with the exception of some weather-related slowdowns. Although this cold snap tempered this weakness, it may have been the recipe we needed to change to 2012 for our outlook back to a more normal environment and more positive as we get into spring maintenance and summer driving season.
We anticipate that the base margin could strengthen as it has historically. With our strong run rates and simplified structure, we are well positioned for this opportunity. Our team has done a great job, bringing consistency back to our operating metrics, but we still operate have opportunities to further improve efficiencies and bring our operating cost per gallon down as inflation is tempering across our plants. Plants. Stack plan to place across the industry are getting older, which we believe we've been and we've been articulating for the last year. More and more, we believe others in the industry are experiencing as run rate seem unable to sustain the peak at 1.1 million barrels per day. We believe this represents a great opportunity to drive additional margin to the bottom line. We are really excited for our protein production in 2024 and the fourth quarter was another good quarter of production with 66,000 tons of sales and a bit of a build on inventory because we produce 60% protein at a commercial scale in Wood River and we have now just started to ship some early adopters, some volumes. I'll get more into that after Jim's comments, but great progress is being made looking forward. We are excited for the opportunity to add these volumes with our JV entities via their JV at Marathon ethanol, beginning commissioning as we speak and set to start protein production in the next couple of months. This will be the world's largest Fluid Quip MSC system, and we are eager to apply our learnings from prior startups to this partnership.
The conversion of 735 million gallons of capacity, including that their Olson JV to ultra-high protein has set us up well to service the global demand base who disease demand has not waned or wavered one bit. Our renewable corn oil production saw another impressive quarter with the highest yield for our platform. Yet we benefited from pricing some of our fourth quarter early before veg oil prices came under further pressure as well started to have been slower than expected from the new RD. capacity coming online, but we still expect them to start or ramp production over the next quarter or two. Liquidity in the fourth quarter improved again as our platform and consistently we are able to capture the available margin. In early January. We completed the acquisition of Green Plains Partners. In all, we issued 4.7 million shares of Green Plains stock and 29 million in cash, which included the $2 per unit in cash plus the unpaid distributions in exchange for the outstanding public units of the partnership. We will also look at the assets in this portfolio to determine the right mix and opportunity to strengthen the story and balance sheet and drive value to our shareholders.
And now I'll hand the call over to Jim to provide an update on the overall financial results.
I'll come back on the call to do a deeper dive on 60 Pro, the start of our dextrose facility and Shell project, as well as the exciting carbon opportunity shaping up in Nebraska.
Jim Stark
Thank you, Todd, and good morning. Green Plains consolidated revenues for the fourth quarter were 712.4 million, which was $201.7 million or approximately 22% lower than the same period a year ago. The lower revenue is attributable to lower prices for ethanol and dried distillers grains in Q4 23, as compared to the same period a year ago. We saw a drop in our commodity inputs with corn and natural gas down significantly year over year, contributing to a solid improvement in operating income for the fourth quarter compared to an operating loss in the same quarter of 2022. As Todd stated earlier, our plant utilization rate was 95% during the fourth quarter. That compares to a 93.4% run rate reported in the same period last year and slightly improved from 93.9% from Q3 of 22 to 23. We anticipate our plants to continue to perform in the low to mid 90% range of our stated capacity for 2020 far, barring any events outside of our control. For the quarter, we reported net income attributable to Green Plains of 7.2 million, or $0.12 per diluted share. That compares to a net loss of 38.6 million or $0.66 loss per share for the same period in 22.
One thing I'd like to note, our diluted share count for the quarter and year was 58.9 million shares. This share count excluded the shares representing our outstanding convertible notes because using the as if converted method would have been anti-dilutive for the periods I stated EBITDA for the quarter was 44.7 million compared to the $5.7 million in the prior year period. Looking at the last two quarters of 2023 when our platform utilized utilization was strong and we ran at our targeted level. Ebitda for the six months totaled approximately 97 million, a vast improvement over the negative 43 million in EBITDA recorded in the first half of 2023. Depreciation and amortization expense was lower by $2.4 million versus a year ago and came in at 24.3 million for the quarter for modeling and 2020 for depreciation and amortization should average approximately $24 million a quarter and realized 49.7 million and consolidated cross for Q4 2023 compared to 0.9 million in the prior year. Again, when you add in Q three of 23. Consolidated crush for the back half of the year totaled $98.2 million for the fourth quarter. Our SG&A costs for all segments was 32.8 million compared to 28.9 reported in Q4 22. The increase was driven by higher consulting, professional fees and higher stock-based compensation. Interest expense was 8.7 million for the quarter, which includes the impact of debt amortization and capitalized interest. It was $2.2 million higher than the prior year's fourth quarter. This increase was primarily due to capitalized interest being recorded in the prior year period as our MSC projects were under construction.
Our income tax benefit for the quarter was 0.3 million compared to tax expense of 4.9 million for the same period in 22. At the end of the quarter, the Federal net loss carryforwards available to the Company were $37.3 million, which may be carried forward indefinitely. A normalized tax rate. Normalized tax rate for the year, including minority interest was around 28%. We do anticipate that our tax rate for 2024 will be around 24%.
Our liquidity position at the end of the quarter increased from the prior quarter due to continued strong execution and favorable industry fundamentals, leaving us well positioned to achieve the next steps of our transformation plan. Our liquidity included $378.8 million in cash, cash equivalents and restricted cash, along with approximately $251 million available under our working capital revolver. I want to note that our acquisition of Green Plains Partners closed in early January. The final vote was supported by 92% of the unitholders that took the time to vote. This provides us with the opportunity to simplify our corporate structure and governance to generate near-term earnings and cash flow accretion and reducing our SG&A expenses related to the partnership to improve our credit quality of the combined enterprise as well as streamlining our reporting structure in 2024. Going forward, net income from noncontrolling interest will be will no longer be included in anything from the partnership since we now own 100% of it, which represents about 5 million a quarter. Our noncontrolling interest on the balance sheet will be adjusted as well. I do want to give you a reminder that we have no debt maturities until 2026 and our average cost of borrowing during the quarter was approximately 7%. For the quarter, we allocated 31 million of capital across the platform, including 17 million to our clean sugar initiative, about 6 million to other growth initiatives and approximately $8 million toward maintenance, safety and regulatory capital. Our total capital spend for 2023 was approximately 109 million as of today. And considering the strategic view Todd spoke of earlier in this call, when you anticipate CapEx will be in the range of 125 to $150 million this year. Our plan is to deploy capital in highest and best returning projects with shorter term paybacks.
Now I'd like to turn the call back over to Todd.
Todd Becker
Thanks, Jim. And so we have so many game-changing exciting things happening at Green Plains that could take a few hours to go over it, but I'll give you some highlights since that we are in the process of beginning to commission our first and the world's first commercial scale clean sugar technology system that enables a dry grain processing facility to make commercial quantities of dextrose for use in industrial, food and chemical processes. And this was located at our Shenandoah plant in Iowa, and we believe we will be ready to begin delivering product in the beginning of the second quarter.
On the customer front, we continue to have strong interest in our low carbon intensity dextrose products. Stay tuned for some announcements and commercial agreements as we are in late-stage negotiations with several current counterparties for a significant portion of our production over the next several years with up to 40% lower carbon intensity than a web mail. And we validated that in 2023 and continue to pay for it with lifecycle assessment for our dextrose compared to lifecycle assessments for US corn, wet milling industry and the other European industries as well. And we believe and that's what that's actually happening is to be a game changer for us and could ultimately reshape our entire company. We expect to see results quickly, and our team is already working on a second, even bigger location where it is where to put it. But we will have further insights on that to share in the future as well.
Our protein, we continue to see strong demand for ultra-high protein products. We are nearing some commercial agreements on 60% protein. But before we get to that, the fourth quarter was our strongest quarter yet on 50 Pro 50% production and sales, and we continue to broaden our domestic and export customer base. Yet we feel the international markets are proving to be more valued valuable to us for realization of better pricing. And we expect that in the future, a larger share of what we do will be in the 50 Pro markets and that will be offshore. We have sold some 60% protein commercially in smaller beginning quantities and are in the process of finishing some commercial field trials with some larger potential customers and have begun price negotiations for a larger share of the recipes and rations that they have as with any new product brought to market, we are executing the necessary steps to develop a large-scale program, including setting up a global supply chain. And importantly, we are making sure we get paid for what the product is worth. We continue to believe we are on track to convert 20% to 30% of our portfolio to 60 Pro sales as we exit 24 and expand it in 25. Our current discussions are indicating strong demand for these higher protein levels. While we all want it to happen today. We believe this is not a matter of if, but a matter of when. Additionally, our innovation team is focused on developing new and exciting product attributes commonly unaddressable by macro ingredients such as both proteins. For example, the team is in advanced stages, very late stage of some novel product enhancements and expect to start customer-specific specific validation work later in the year, meaning the innovation team is also implementing a new research solution to accelerate fermentation recipe developments for both our core products and our ingredient platform.
Lastly, we are excited to be launching our branded products for 60% protein later in the first quarter. So say stay tuned as we move through 2024. So to reflect that what we have accomplished. We have increased 50% protein production and sales in Q4. Broadening our domestic and export customer base completed a commercial run of 60% protein have verification of great digestibility and excellent amino acid profiles and have started to sell 60% protein to Europe, Middle East and Asia with South America as the final price, let's not forget it is a brand-new product and we are also a new as a supplier. So a lot of things have to be set up to do a large-scale program, including a brand new end to end supply chain on this product. And we continue to work hard, very continue to work every day, very hard on this with the team we put in place beyond dextrose and protein. Probably the most important part of what we are trying to do is focus on the opportunities to decarbonize our platform and produce low-carbon alcohols. We have diversified our carbon strategy across multiple Carbon Capture System pipeline projects and continue to explore alternatives for our non pipeline locations. Our three Nebraska plants, which represent 287 million gallons of our production should come online in mid 2025, and we anticipate having some additional updates on the progress of the well permitting and compression equipment in the coming weeks and months, given this product project already has its main trunk line in the ground, the repurposed natural gas pipeline and that sequestration would occur in Wyoming, which has primacy and has already begun to approve Class six wells. We are highly confident that Nebraska biofuels will have an early advantage over ethanol plants that are positioned for carbon capture at this time decarbonized decarbonizing these plants and the industry as a whole enables the production of lower carbon intensity, ethanol positioning to eventually be a feedstock for sustainable aviation fuel production, but also to have lower carbon intensity facilities that still make valuable animal feed ingredients and renewable corn oil. Our two, Iowa and two Minnesota plants, which represent 316 million gallons of production are on the Summit Carbon Solutions project, which we expect to get state level approval in Iowa, North Dakota early this year. They continue to work on a path forward in South Dakota, and we expect this project for us to be operational in late 2026. That's still in time to participate in the 45 the clean fuel production credit the Treasury Department has indicated that an updated version of the Greek model will be utilized for SAF tax credits. And importantly that CCS. and Climate Smart Ag practices, Flipkart will count towards lowering CRP. We expect the updated agreed model in early March and then we will have a better sense of our role of our decarbonized ethanol can play in a growing market for alcohol to jet sustainable aviation fuel. Today, Brazilian ethanol and so-called used cooking oil from China qualify to be imported for sustainable aviation fuel and receive US tax credit. So it's only right that American corn farmers and soy farmers have the same opportunity after billions of dollars of investments they have made over the years to grow the US biofuels industry. Remember that under 45, the our renewable corn oil would be advantage to other vegetable oils rather than the dollar per gallon blenders credit for every RD. or biodiesel gallons. These fuels will soon be judged on the CI. of the feedstock, and we anticipate our corn oil will be in high demand as a low CI feedstock for producing our DE and sustainable aviation fuel. With the latest decline in veg oil prices, we have seen those revenues under pressure with current pricing in the mid to high $0.4 per pound for 2025 and when we are in advantaged feedstock in totality.
So to recap this section, we are very excited about the opportunity right in front of us starting for our first clean sugar facility, 60% commercialization for protein, bringing on our sales and JV online and positioning our Nebraska assets for decarbonization.
Finally, another important milestone upon us is the upcoming commissioning of the collaboration with our Fluid Quip MSC technology, combined with Shell's fiber conversion technology at our York, Nebraska location. We haven't talked about this much since we announced it last July. So we are excited about the long-term potential that this game-changing collaboration can have combining Shell's fiber conversion technology with MSC. from Fluid Quip technologies. We expect to be able to extract all available renewable corn oil from the kernel produce cellulosic sugars from the fiber that can be made into low CI cellulosic ethanol and reduce further our production and are further enhance our production of high-protein feed ingredients more to come on this as we bring the facility online beginning later this quarter. But now it's really worth paying attention to when we set out on this transformation several years ago, we had a 2025 target laid out, and this remains intact with some variability on how we get there some basis, some based on the pricing like veg oils, some based on the timing and some based on allocation of capital to the best returning projects. A lot has happened since then the biggest thing is the inflammation implementation of the inflation Reduction Act and how products are treated that we produce, but more importantly, the incentive programs. So when we look at 2025 full year and exit rate. We remain in the guidance ranges we had originally laid out with an upside case as well. The opportunity to achieve early decarbonization, particularly in Nebraska, leading us to rethink our capital allocation strategy. We are in the process of reviewing additional opportunities to more efficiently decarbonize and even expand production in Nebraska are three sites more to come on this as these projects come into view. But with the incentives that are now in place, how do we not participate with the advantage we have geographically at Green Plains as we exit 25 carbon alone in Nebraska represents over $100 million a year opportunity, and we can reduce our carbon intensity even more. And then when some it's carbon comes online, watch out what the earnings power will have in our carbon strategy business. So think about the business and platform this way with a cleaned-up structure, it's very easy for our depreciation and interest are approximately 130 million per year at this point. So looking at our 2025 opportunity to meet and beyond free cash flow generation could be significant with the capital invested in MSC and additional TST. facility. Expanded carbon capture in Iowa and Minnesota gets activated and renewable corn oil is further advantaged for 45 Z, not including the potential upside from our low CI alcohols and RSFCT. additional ability to grab to grab more of the high-value products. We are close and getting closer every day to our goals set out a few years ago. The value of our technology portfolio is next, and we believe we have a significant upside there as well.
So with that, I'll leave it there, and thanks for joining the call today, and we can start the Q&A session.
Question and Answer Session
Operator
Thank you.
At this time, I would like to remind everyone in order to ask questions, press star, then the number one on your telephone keypad. We'll go first to Christine Owen at Oppenheimer.
Kristen Owen
Thank you for taking the question. And Todd, I realize the answer to this is probably all of the above, but I wanted to start here with your comments on sort of the milestones that you're expecting in 2024, they're on track to the 2025 EBITDA run rate. And given that the stock is now trading below your replacement value, I want to ask you. What's the fulcrum that tips the balance for GPRE. into this 2.0 transformation, we've kind of seen what is to come on protein? And is it sugar, is it U.S.? Is it carbon like what really tipped the scales here?
Todd Becker
And how do we think about that in the context of this replacement values sort of valuation discussion yes, I think when we look at what's the full term, it's really going to come through free cash flow generation. And when we think about how we've cleaned up our structure and we look at the opportunity and 25 net wells begin to start generating significant free cash flow. And by 26, you're not just zero net debt. You're negative. You're in the positive situation from the standpoint of continuing to build cash. And I think I think that's what we really set ourselves up for because when we kind of look at our ability to get to where we want to go. But a lot of the cost of capital has been spent some less to be allocated, but there's also some upside as well. So when you look at all of the segments, the IRAC. obviously is a big deal since we started this. And we think that carbon alone has increased and the opportunity, our ability to commercialize 60 Pro is also a big, big opportunity for us.
And then lastly, what do we look at our clean sugar technology and our corn oil on top of that, all of that when you add it all together and 25, it starts to generate significant free cash flow returns. And it's really what we set this up for, which is why we simplified the structure where before it was a bit convoluted in terms of how do you get the money to the bottom line. And instead of just focusing on EBITDA. We're going to focus on EPS and free cash flow generation, but look at some things have to happen. We've got to get clean sugar up and running. We got to think about where number two is going to be. We've got to continue to build out our protein systems and continue to commercialize 60 growth, and we would like to see a bit of a recovering recovering valuable prices. But that advantage that comes in is something we're looking forward to in 25 finding the bigger thing really is based ability to get a return on carbon capture. It's something we don't really plan on being this this interesting. And I think when you add all that together, that's why we I think at this point, not including the base fuel, which by the way, we believe will be more valuable as you decarbonize when you what that's how why we are at this point, we think that 25 range of guidance that we have put out there is still solid and but it all comes down to the structure of our income statement and I think the structure income statement is changing dramatically with our ability to get money to the bottom line very easily now.
Kristen Owen
And so.
So then I wanted to ask my follow-up question, a little bit more granularity on the carbon side since it seems to unlock so many of these this sort of list for you. You've talked about the advantaged facilities in Nebraska, you've outlined the EBITDA potential there. Can you get a little bit more specific on the milestones, maybe once we get past that Class six well approval, what needs to happen next and maybe talk about your your structure participation relative to what we've seen in your structure with Summit.
Todd Becker
Yes, we can't really get into because of the some of the agreements that are in place with each of the different structures, except to say that what we've laid out in terms of Nebraska, what are the milestones, their ability to get the classics well permits, which they've already, which is why only has started to issue. And this and this company's next in line for that, our ordering of compression equipment, which we are in process of finalizing what is needed. And then the construction of that be the couple of things left to do in Nebraska in terms of upgrading their pipeline, which I think they're doing anyway, it's a very solid company. And then and then I think when we look when we have all that experience, we would it looks like a mid 25 starter, and we're not that far away from that because a lot of work is being done already. There already have been are building new laterals for their natural gas to move off of different pipeline. So all of it's happening. I mean, the money is being spent and the difference in this project is the pipes in the ground already. So that's where you think you can only look at Nebraska and an advantaged situation at a much earlier starting point. But that doesn't mean the rest aren't going to come as well as just timing at this point for the e-com in Nebraska. What we've laid out is, as we start up mid midyear 25, hopefully, which I think I think we're on track at this point for somewhere in that range, you start generating baseload earnings or over 100 million a year annualized just on just on the three Nebraska plants. So when you look at that, and I'm looking at it very carefully. When we look at capital allocation, fastest paybacks, quite frankly, are trying to get more volume out of some of those sites. Doesn't mean I'm going to do a double or anything like that of our sites, but adding a fermenter, adding some grind or adding to some capacity to take advantage of these fast paying projects that you could, you could supercharge those earnings on the rescue pretty fast. And that's what we're looking to do Of note, base earnings are so strong and so powerful that those first couple of years when during 45 Z and hopefully we get 40 by the extended has some serious cash generation. That's what we're going to go after pretty hard, I think, to an extent I think are suffering.
Thanks.
Operator
We'll move next to Jordan Levy at Truist.
Jordan Levy
Cordoned off, like I know it's difficult to really give any concrete outlook here with the volatility in Crossmann, I'll ask you anyway. You've got clean sugar barrels and starting up, you're getting going on 60 gross sales utilization generally appears to be trending better maybe just help us walk through how you're thinking about that high level 2024 EBITDA?
Yes. Yes.
Todd Becker
I mean, the base fuels started out weak. So we have to deal with that. But I think overall, it started out weak last year. But actually at this point this year, we're better on the market than last years. If that makes any sense so I mean and if this cold snap was actually a little bit of what this industry needed to draw some stocks pretty hard and get production off line and it's taking a little bit longer to come back online. That doesn't mean it won't come back online, but we're also seeing an uptick right now in blending in some markets. We're also seeing an uptick right now in some export takeaways with some new interest coming in as well. And we're trying to assess that to determine on that base fuel and what we do and what the opportunity is. But when you look at it year over year, this time, it looks better than it did last year. But again, we as we all know, that's a very volatile part of anybody's portfolio. Our key milestones, as I kind of referenced here, was we want to be able to make the extra ship dextrose in commercial quantities and while the contribution may take a little while once we prove that we can do that, we can do it at scale and we could ship into customers may use globally or domestically. So that globally, we know that we're off to the races because the margin structure there exceed everything else that we would be doing in totality. So we think that owning and controlling that technology, proving it out a full commercial scale. And you can kind of see it online occasionally, which when we show pictures, I see this is a game changing technology that I think redefines Green Plains in the future on top of carbon capture on top of the other things that we're doing. But think about it like this, Jordan, we have plants that may not be on a pipeline. Well, they may be they may be clean sugar plants. And that's really how we're thinking about this at this point. So they may be a full or partial conversion to clean sugar at that point. And we're going to increase our dextrose capabilities. We are months away from showing the naysayers who said you can't make dextrose to be used in industrial production and at a dry grind ethanol facility. We aren't we aren't a years away. We're months away, and we are highly confident that we will be able to compete and ship product on top of everything else who and what we've outlined. Look, we're well positioned. I wish I had more actually, I wish I could actually have more plants at this point and more production with our platform. We had as many as 17 plants in the past. And I think within our platform, we could see some expansion opportunities for repurposing some plants as well. So net, we don't see a gain in production overall, but we see a gain in earnings opportunities as 2025 and beyond. So I think we own a very powerful portfolio of technology that is undervalued as well.
Jordan Levy
Thanks for that. And maybe just to kind of hit on something you said about wishing you portfolio two or whatever. And I'm just curious how you're thinking about the portfolio at this point you have because any portfolio has better and worse. Curious your thoughts on that subject downsizing to scale up to your more premium plants or?
No, you've got the portfolio over.
Todd Becker
We're going to look at our plants that we do all the time we have we have some work to do. I think we have some areas that we wouldn't mind. We're looking at a different opportunity there like the East where we would probably put a sugar for sugar build out there and then the West, wherever we can take advantage of some of these some of these opportunities, some of our plants, these plants are getting older. So we have some CapEx too to do to improve these plants. But once these carbon initiatives come into play, there will be plenty of opportunities to make sure that we can operate so that we can make it and make as much product as we can. And so I think we'll see over the next couple of years, we're going to look at our plant stack to determine what fits, what doesn't what can we go elsewhere? What can we expand? What can we divest out to earn more offered money in other areas. And so we're continually look at that. And that's one of the areas that when we think about the future of Green Plains, we have some we have some fantastic locations and competitive plants that quite frankly, could produce more. And we have other locations that, depending on it may not fit the future Green Plains, depending on how we think about our technology deployment. But as of right now, we're going to we're going to keep the stack we have. You can't buy an ethanol plant. I mean, it's not like you can go out and say to the market I'd like to buy when the values are significantly higher than our stock price represents a replacement perspective. You cannot buy a plant in the market of high quality for the value of what our overall US stock price represents today core or the value of many portfolios. So and while they certainly have pressured us lately, we believe that's unfounded because just the base value of our assets alone and we believe are worth more than what the market is giving us credit for before you even talk about the additions of MSC., the additions of clean sugar and the additions of carbon capture equipment as well.
Thanks for that right.
Operator
We'll move next to Adam Samuelson at Goldman Yes.
Adam Samuelson
Thank you, everyone, and everyone's morning.
Morning.
So maybe, Tom, just coming back to kind of the framing on 2024, and I appreciate there's a lot of moving pieces the underlying ethanol market and kind of the different plants that are commissioning, Todd. But can you just maybe zero it on the contribution from hydro and I believe in your script you said you expect to exit the year kind of a 20%, roughly 20% of high pro-soluto, 60% from what proportion actual 2024 volumes are going to be sold of 60%? And can you kind of can help frame the the premiums and that you're seeing today? And as we think about 25 volumes, what is it only 20% to 25 hyper volumes that are 60% OR, it's a substantially larger number than.
Todd Becker
Yes. So let's start with what we believe the demand for 60 Pro can be we are in enough discussions right now and have identified enough demand that would take all of our product if we can get them to buy it. And that's really what it comes down to. And it's just it's just takes time. And so whether it's going to be starting the middle of this year, which is kind of what we're hoping for is to start getting one of our plants sold out for the next 12 months. I mean, that's really what we're in negotiations around the world at this point on our values, but also the fact that we're getting to a lot of conclusions on some testing that's been taking place over the last several years as well. So it's hard to predict when it will start, we say, yes. Look, we say last this year, we want to have 20% to 30% of our production sold at 60 Pro, and that's what we that's what we're shooting for every day. And we want to have much more than that in 2025 is what we're shooting for every day. But I can I can assure you and I can say this, we are in enough negotiations that could eventually take all of it. We just have to get the buyer on the other side, executing with the changes what we're watching here, which is very interesting, which is the changes in the ratios between corn and soil when you have soy coming down. And so going up and also soy meal coming down and corn staying strong. And those ratios have played with buyers' minds a little bit like how do they put on something versus a kind of corn gluten meal replacement all the way to efficiently replacement. It's a long answer to say that we have enough demand identified that could take all of our product. It's just a matter of time. And so I can't you know, we believe this year we're going to get we're going to start the program. And we think in 2025, it will be much stronger.
Okay.
Adam Samuelson
And then included in the release and a separate eight K this morning, kind of Alista forward is going to do us initiated the strategic review process in a standstill agreement with kind of a major shareholder. Can you talk about and what just elaborate a little bit on what you're going to be doing now from a strategic review perspective, at the Board and yourself and the management have not been doing over the last two years. Just to clarify what's changing?
Todd Becker
Yes, it's a great question. You know, I think from a standpoint of where we're at in the evolution of our cycle. We're not very happy with this latest our share price decline, but we also want to do what's best for all of our long-term shareholders as well. And a lot of people have been in the story for quite a while. As we said in our release, it's not limited to acquisitions divestitures, mergers, sales, partnerships and financing is all of those. We work on all of the time of plenty of those other than the sale process and the merger process per se we just think there's a lot of value to unlock here. We talked a lot of our shareholders and Coral was one of them. And I think we came to a good conclusion on on how we're going to approach the future. I think they want to achieve as high a value as they can for that for how they're thinking about it. But sort of all of our shareholders. So it's not like we haven't done some of these things. But I think when we look at Green Plains, we have a power very powerful platform that we'll do, we believe today is significantly undervalued versus our future cash flows, and we're going to have to test the market on that a little bit and more to come on that. But really at this point, I think what's in the press release, it's what we're going to say at this time, but being on the Board and being a large shareholder myself, I strongly believe that there's a lot of value to still achieve out of our platform and Green Plains, and we're going to we're going to test that out Well, Adam, I'd jump in and add one thing.
Jim Stark
I think what is different coming into 24 than previous years is bringing in the partnership really is going to allow us to have more flexibility in what we want to do, particularly as Tom said, if we want to reposition our assets from an ethanol perspective, it's much more easier for us to move forward. So the fact that that's that's tucked in now, we're back to a whole Green Plains Corporation. I think it's going to help stay in line of how we can move forward on a variety of different things to me. So that's what's probably different today than maybe in over the past two years.
Okay.
Adam Samuelson
And if I could just squeeze one more in on decarbonization and things like you talked about a 100 million plus annualized run rate from the Nebraska plants once once the pipeline start up next year. So am I interpreting that that you think that the net value from 45 Z to your Nebraska footprint is something on the order 30 to $0.4 a gallon, if that's correct.
Todd Becker
Kind of what are you assuming the CI score for your ethanol would be next year?
We have a couple of different plants. Some actually go right out of the 45 Z, but one of our plants still goes stays on 45 Q. in those calculations has an upside because we're looking at York and what to do as an old plant with a higher CI. score. So they qualify for 45 to plus size any carbon credits as well.
So what we're looking at first is York to say how do we first decarbonize that plant, and we think we'll probably do it through distillation and significantly drop that carbon score. So we can actually earn more on top of that. So you as a starting point. That's what we're that's what we're putting out there with upside from there. And some of it will be driven by 45 Z, some of it's driven by 45 Q. to start going to Z later onto. Those aren't in the numbers. And on top of that, the more interesting thing that we're seeing is the interest on top of LTE advanced LTE. That's we'll see where the market goes to for the interest in the voluntary credits from high quality carbon sequestration, and we're just kicking that off. But right now, we're seeing values in that 30 to $50 ton range, just for good, high-quality credits from new projects like this. But I think when you looked at what Summit was able to achieve at $100 a ton. I think there's upside from there as well. So we'll put a little bit in those numbers. But overall, you're right to think about that, but if we can and so when we're done, we think that like a central City's carbon score will be somewhere in the mid 20s before you even get into farmer carbon and before you get into post-combustion carbon or some other areas. So that gives you an idea of our lowest plant will probably be in the mid to low 20s to start, but New York will take a little bit more time to get there. So it will be a range. But mid-to-low 20s, absolutely, we believe is a qualifier for anything that comes out agreed for SAF. modeling at that, Sam.
That's super helpful. I'll pass it on.
Thanks.
Thanks.
Operator
We'll move to our next question from Eric Stine at Craig-Hallum.
Eric Stine
Good morning, everyone. Just a few questions on my end. Tom, maybe just starting on clean sugar. Obviously, Shenandoah coming online, that's a near-term event. I'm curious what that does for commercial discussions, do you have customers that are waiting on that and they don't need do they need to see it? It's rather short in terms of the time period and then they get going and take volume pretty quickly or is this something where you have a trial period and it's going to be, you know, it will take some time to our product a little bit of both or what you're saying.
Todd Becker
So for the food guys, we have to wait to get some of them want to see the plant, the product. What's running get our final certification. So that always takes a little bit longer because what we can show them out of York isn't necessarily what they're going to buy out of Shenandoah So food takes a little bit longer.
On the industrial side, we have already been approved as a product in industrial processes for some of the customers we're talking to and others are in final stages as well. But and there's not been any negative feedback from a standpoint of of anything industrial, which is the largest quantities that there will start with at this product won't work in their processes. They obviously they want to see the first product, got it out of Shenandoah, but we are negotiating for shipments this year and much larger shipments in 25 and 26 were on multiyear, negotiate, negotiate deal, sorry, negotiations taking place. And we think we'll get some of those completed in the next kind of 30 to 45 days. And it's a little bit different, I think, than when we started out on protein because protein, we were kind of bringing a new product on. It wasn't soy FIN 48, it wasn't corn gluten meal is somewhere in between nobody's ever used it. So that one took probably a little bit longer on creature of dextrose. It's a carbon copy of what you buy every single day, except you're going to lower CI. and even though maybe sustainability has taken a backseat and some stories, the buyers still want to buy low CI feedstock because they're getting still getting, for example, in industrial products, they're still getting requests for them to lower their carbon score of their of their product as well. So the data so the retailer may be able to lower that. So it's a very different process for us. We just have to make the product now. It's a $200 million U.S. capability per pounds per year will started up slow, but it will immediately go to 50% and then work to get to 100%. That's kind of our plan. So this is a year where we kick it off. And then as soon as we see that product come out, I think that gives us the confidence and to say that we're going to go full full bore on where do we go at number two.
Got it.
Eric Stine
That color is helpful. And maybe just turning to hydro. You mentioned that the international demand for 50 Pro is quite high, but also talking about there's enough demand that eventually you can be completely at 60 per barrel. So just thinking about that dynamic of the market kind of evolves. And as you look at the market, I mean, do you think that those foreign markets will pay for 60 Pro? Or is that more of a domestic sale when all is said and done?
Todd Becker
Well, first of all, on the 50 Pro, what I said is we're earning higher returns internationally than domestically at this point but we're selling into both markets as we develop our 50 pro market globally, but we definitely get a higher value for the product when it goes offshore and a 64 market, I would say it's a mix of domestic and exports to achieve success of the ag. Remember that a lot of Aqua is done globally, not necessarily in the US. So most of everything we do Aqua, other than some some areas in the US is going to be is going to be foreign in terms of PET. It's a combination of both domestic and foreign export markets. And then also, when we look at kind of what those are, the really the two big markets that we're focused on 60 Pro, but we have enough identified demand and in discussions that could take all of it, if they all it, they'll call today and we we have some work to do there to ramp up. But that that's actually as we as we've often left to ourselves, what are they all call today, right? So I mean, we have 50 Pro on for the rest of the year we've got, you know, things committed in the past for the rest of the year. So but we are we have a team that consists constantly works every day with global demand two place 60 Pro. And it's again, it's not a matter of if it's going to be a matter of when it's going to be a matter of how fast and as I said, and I'll say one more time, we have enough identified demand to take all of our product. We just got to get it. So that's to that next point.
Okay.
Thank you.
Operator
We'll take our next question from Ben B&Q, STEPHEN.
Thanks.
Good morning.
Morning.
So network capacity utilization at 95% in the quarter, very strong. It seems like the the network is running efficiently now. I know you guys have had a lot of work that you've been doing through the transformation as you look forward to 2024 should we expect a similar run rate as we move forward at absent seasonality and maintenance and the like, or should we expect more variability as you commission our ramp of new projects No. I mean our goal is to have this or better as we move forward. We think there's more to unlock in our platform. Still from the January freeze, we slowed down a little bit, but it might might cost us a point or two. But generally, we're back up and running this morning with everything running every dryer running every system running this morning. So, you know, we had a team very and we're not done. We still have we find things every single day. These are getting older. So but we are pushing these as pushing these assets as hard as we can and will we would think there's some more breakthroughs to come to unlock more capacity, just that we even have today, whether it's moving enough corn conveyors or getting old those type of things. So we're not done with it achieving run rates yet.
Could there be a down quarter here and there?
Todd Becker
Sure. But generally speaking from where we started the year to where we ended the year made a lot of progress, but there's a long way. It's still a long way to go and Chris and the operations team across the whole company understand and are fully focused on getting the most out of our assets every day. But I don't think you should expect that our our utilization will go down.
Okay.
As it relates to the review of strategic alternatives and kind of broadening the scope of what you look at and does that preclude you from continuing to advance any of these transformational initiatives in terms of a sugar, this first ramp in sugar, it's quite successful and you want to do a second one or is that not the case. And that's it's more a I'm a context for thinking beyond maybe some of the things that you've been doing already, and it's incremental, not constraining, but we're not it's business as usual on every single thing we've laid out. There's nothing changing from that perspective. I'd say just to make sure that we believe the Board believes, I believe are some of our shareholders believe that were just undervalued first rate first versus replacement value, second versus the value of our future cash flows.
Third, versus the simplification that we have outlined. And when you it's very simple now to get money to the bottom line, we just we need to mark-to-market for two to help us with that. But we're no nothing's changing in terms of it's business as usual. If we are already looking at clean sugar, number two, we want to make sure we can make it and clean sugar number one we got to make sure we pick the best sites, make sure we have the utilities, the wastewater, all the things that we need that we discover. We are still fully focused on 60 Pro. We are still fully focused on decarbonization and it's business as usual. But I think this is a good time sometimes to also pause to make sure that we what else should we be looking at from a portfolio mix from the location of our company from the value of our company from and everything that we've outlined in the press release.
Okay.
Very good.
Thanks.
And lifestyle vessel.
Yes.
Operator
We'll go next to Salvator Tiano of Bank of America.
You have Good morning.
Salvator Tiano
So firstly, I wanted to come back to the Nebraska project and understand a little bit some of the economics. I mean, you mentioned the EUR100 million, which it certainly sounds pretty good. But I think the solid pipeline you have disclosed there will be some information. How would you to work here in terms of and, you know, 45 and 45 to that you mentioned or benefit you do have to actually share these the pipeline operator and the who is incurring because of the size of the carbon capture equipment that you said you're ordering right now and the last part is here just a little bit on the time line. You said you were finalizing the order and I was under the impression that usually and the backlog wouldn't allow something to be ready within a year, but you seem to have a start-up date of May 2025. What gives you confidence that you will receive equipment and be able to install by that timeframe of that backlog.
Todd Becker
First, let's address the backlog. That backlog has certainly come down a lot just because of the different delays and different projects around the United States of what Navigator not building anymore as well. Some of the enthusiasm that was the early enthusiasm. I think we look at start-up dates for all the different projects that are out there. Nebraska project being the first earliest start-up date compression equipment is available. And so we're confident that as we put the order in, we'll be able to be up in time for the for the startup, the E cards we can't and the different contracts we really never put out there what that each of those would represent, nor at this point, would we do that except to say that we're giving you a range of what Nebraska is capable of in terms of starting points with upside from there?
The key is get it no matter what project is get it in the ground to earn some 45, these trading extend 45 Z, if we can. And then you move to 45 Q. and in carbon credit values. So generally speaking, the e-com for Nebraska are what we've outlined to totally fund kind of what we look forward for at 26 and beyond, especially when you get into the 45 Q's era because it will come down a little bit. But generally speaking, you want to attack anything you can to get out get out into 45 zero zero. The area if we were today fully operating across the western plants that we have on different pipelines, we would we would be significantly higher than that relative to our carbon earnings for the for that not on top of the pack, we have we strongly believe that we strongly believe that those earnings are going to come and us and they're not being appreciated any or quite frankly, in the valuation of our company. And the reason I say that is because three years ago, nobody wanted to talk about it. Nobody believed that we're a year away from the first project coming online. So when you look at carbon strategies, earnings, you get into just on 45 Q.s based on the input and the end of 45 Z, you're talking about full rate at Green Plains in the one 50 to 200 rate for the first couple of years of Z when all the projects are online in terms of EBITDA and then dropping a little bit after that when 45 key takes over. So there's some serious earnings power that I think do you want to talk about a year ago, but it's definitely we're talking about today because we're there to one year. We're only one really only one year away or so from the first project starting up and there are and by the way, lastly, a long answer, but there is a project already operating at an ethanol plant in direct inject that is earning all of the money that we talked about relative disease and or relative to the 45 Q. today, we'll have 45 Z comes online but it's happening monies being earned already on some of these projects.
Okay. Perfect.
Salvator Tiano
And I wanted to touch base a little bit on that on your corn costs. Clearly, the market has been has not been very tight recently, and we're still going to get a lot of the corn harvest probably in 2024. What are you seeing in terms of the cost base you're paying this year, what you're expecting for 28, sorry, what are you seeing?
They have other candidates you're paying right now and for the full year and generally when we're thinking about, say $0.8, $1 more income basis in the past year in 2023, should that be a very meaningful tailwind for your SA core ethanol margins this year?
Todd Becker
Well, it's a combination of everything. I mean, ethanol is down significantly as well. So while the corn basis is down year over year, ethanol down and flat prices down, which means distillers grains are down. So but generally speaking, we just manage the margin. If you take a look at some of the big processors and I'll give you the generalities initially what we're at our plant, Nebraska is a 10 to 20 over basis market. Today, middle Iowa processors is a five to 15 over basis market today and central Illinois about 10 to 15 over. So a lot of people are modeling have much lower corn costs generally because they're going back to historical basis in some areas. But generally across the bigger processor markets, we're still sitting a little bit over corn, but that's still significantly lower than $1 $1.50 over corn. We were a year ago or two years ago. So that is a nice thing to have. But generally speaking, it all just goes into the equation to come up with a margin. And that's really how you achieve your goals?
Salvator Tiano
Well, I guess what I'm trying to understand is on Nielsen's, as you said, 10 $0.2 and versus $1 before. So if we think about and maybe cent improvement in your corn calls, setting aside the actual corn price, which also this slag, that would seem to have a, you know, a very, very meaningful amount of or the Beltone thing we saw in Q4.
Todd Becker
So that's why I'm trying to understand whatever you have. And again, it's always a work is for components with natural gas as part of ethanol and distillers grains, and you can't just look at one of those components. I think just because there's a dollar less corn costs, which is $0.3 a gallon. Ethanol has adjusted for that it validates what what corn give us ethanol can take it a way. So that as that's kind of what happens is the market adjusts, you don't just get to earn the full dollar a gallon, our dollar a bushel gain just because of your inputs costs dropped. It's all goes into the margin. It's corn, ethanol, natural gas and distillers grains lesser operating costs gets you to an EBITDA margin. So it's all just part of the calculation.
Salvator Tiano
I know that, and that's exactly what I'm trying to get to because when we do get the corn price and the ethanol price. If you add the basis that you said $0.3, for example, Benergy per gallon, you know, the ethanol profits appear to should have a you know, they probably should be stronger than they are. That's what I'm trying to get. And that's why I'm trying to figure out what I'm maybe missing here.
Todd Becker
You have a memory of what you see is we take a look at our EBITDA. We take a are we adjust for our SG&A because we are an independent company. And while you may see others that don't have to initially adjust for SSG. and A. our plants right now because we have a different type of plant stack than maybe the best producer. It costs us a little bit more, but generally speaking, a little more OpEx. But generally speaking, it's all a combination of and you're not going to get you not the market is not getting the full benefit of this corn input cost breaking hard because everything else has adjusted around it.
Yes, you very much.
Operator
We'll move next to Craig Irwin at ROTH MKM.
Craig Irwin
Good morning and thanks for taking my questions. So most of what was top of mind has already been put out there. So maybe, Todd, can we talk a little bit about Avon private market transactions and really what's going on around some of the plants that are that are being offered out there. So we've heard that there's actually a pretty intense level of interest because of SaaS and the anticipated languish as March, um, you know, ethanol to aviation fuel is something that's a pretty simple by a couple of pathways. I mean I'd like to pass what you're working on, but, you know, I understand that the asking price for a lot of these plants is pretty rich, and they also of demands for tails on carbon, et cetera. Can you maybe just update us on what you're seeing in the private market? And you did mention the strategic review, so that always does include a potential sale, would you expect? So are those conditions to maybe be a part of the consideration for Green Plains as well?
Todd Becker
So the private market isn't really existing today. There's definitely a lot of interest for plants. But if you have a good operating high-quality plant in a good location, it's above, it's above. It's a net dollar $1.80 to $2 range before you could even get somebody even talk to you a gallon of replacement to replace appliance today, it's in US dollars, while probably 2 to two 50 a gallon range three to build a plant today from scratch. When you look at our what we think is $950 million gallons or so of capacity, and you look at that without that's without protein without dextrose without carbon without anything today. That's what it would take. I think in the private market to even think about declaring a plant of any good quality. I think that's some of the bigger issues that we see when you look at that compared to our market cap and our net debt position, which can which is a lower word, the public markets are a significant discount and it's not just us. It's others that are following our significant discount to the valuation of private markets. But that's been going on really since the beginning of time. So we see that we see that often, and so we're well-positioned. But when we look at it from the perspective of decarbonized alcohol, that isn't even being valued yet. So I mean, absolutely the calls come in to say how do we partner with you? How do we look at your decarbonized alcohol? How do we get how do we get supply agreements? Those are just starting, but they want to see, obviously, obviously the carbon capture happen, but decarbonized alcohol will be a very valuable asset and that's why we believe we're well-positioned in Nebraska.
Craig Irwin
Excellent. And just a macro question around around shafts and the potential dilution or diversion of ethanol corn ethanol capacity into the aviation fuel market. And for many years, we're talking about exports to Canada to Mexico to China, India and potentially tightening tightening economics of the benefit of ethanol producers.
Would you expect no diversion of 1 billion gallons of production into a soft markets, ethanol production and just have markets to have a similar impact to what was optimistically. Fourth are around exports in the last many years?
Todd Becker
Well, if you take a look at SaaS capabilities and a demand for SAP, it could be significantly higher than that. Remember, a gallon of ethanol gets cut down by a third. So it's only it's only two thirds of a gallon of SAF. And when you look at that, take 1 billion gallons of ethanol plants, 600 million gallons of aviation fuel, which is a drop and it doesn't need to be blended in a 30 billion, 40 billion gallon domestic market. I mean, it's a drop in the bucket to get to those numbers against somebody else to build it, they're going to be expensive. You need billions of dollars to build up a I think it's going to come, I think a first comes out of the veg oils, which is what we're seeing. But if you really want to get real scale, it's going to have to come out alcohol, but it starts and ends with decarbonized alcohol. If you don't have decarbonized alcohol, you don't have a discussion. And that's why we believe first and foremost, Nebraska is very valuable within our platform, totally undervalued but it starts with decarbonized alcohol and the first to market will get some of the best benefits. And so that's why we're pushing so fast on these projects. But I think I think it would be right to say that if successful 1 billion gallons would be diverted, I think you'd be billions of gallons and then the market will have to figure out, how do they get to what they need just to satisfy everybody else's needs because it's not like the world needs us to take two or 3 billion gallons of ethanol off the fuel market, that would be have a significant impact to price.
Okay.
Craig Irwin
And then last question, if I may. I guess most investors know you just can't get a catalytic converter on a jet, right? You know that technology would be great, but it's not available. But I think people really don't understand that aviation emissions are not tracked above 2,500 feet.
And can you maybe share with us what you're hearing from investors, you know, are people educated on the fact that you've got five, 600 ppm of sulfur and jet fuel that's needed for the lubricity and while on-road diesel supply.
Todd Becker
Right.
Craig Irwin
So are you hearing a more educated on complete discussion around around this from investors as they look at the responsible ENVIRONMENTAL investment in sustainable aviation fuels.
Todd Becker
In fact, that's just stop me a little bit, but I would tell you the lower the carbon intensity, it's very important. It's my measured and monitored. I think people understand if you make sustainable aviation fuel, you lower your carbon intensity of an aircraft, and it's been a demand pull and not a demand push behind us. Most of somebody's realizing it. I don't know that I understood much of what you were saying was somebody's realized so far because we are getting we continually get calls in for decarbonized asphalt as a how do we commercialize it and how do we get it into into the demand that's there for today and obviously waiting for greed and the government to give us a bit more guidance on it as well.
Craig Irwin
So maybe I can restate it. I do think investors understand how incredibly dirty and jet fuel is versus on-road fuel and take carbon out of the equation and the responsibility we have for equal treatment of the airlines versus, you know, trucking and commercial and retail transportation.
Todd Becker
I don't know if that's the case with us. I do know that it's been proven that ethanol reduces carbon emissions by over 50, almost over 50% in automobiles. And I'm assuming it would be the same and at minimum the same in jet, so in particular, in particular emissions as well.
Great. Hey, thanks very much.
It.
Operator
And that does conclude the question and answer session. I would like to turn the conference over to Todd Becker for closing remarks.
Todd Becker
Thanks, everybody. Look, we're in a really good place financially. We're strong as a company. We remain strong. We're not going anywhere. We continually to prove that we come out of our the first half of the year where our plants definitely had some some some problems and we fixed a lot of those, but we have more to go shore operating run rates continue to to be steady. I think we've shown the market that we are commercializing products. And while some people may have different time lines were right around the time when we thought we would be relative to our initial 25 guidance and where we're sitting for 24 with great products coming. And we've got great technology portfolio. We're excited to realize the value of this company, and we'll keep you informed on the progress that we're making and we've got some great stuff happening this quarter with startup of Shenandoah. We with the CST. system, the startup of SFCT. and continue to work on 60 processes keep watching us. We're excited about the future. Thank you.
Operator
And this concludes today's conference call. Thank you for your participation, and you may now disconnect.
