Green Plains, Inc. 2026 Q2 Earnings Call

Thanks, Will, good morning, everyone. The second quarter marked another period of strong execution for Green Plains. The team delivered adjusted EBITDA of $93.3 million despite downtime for spring maintenance, up from $71.5 million in the first quarter and a significant improvement from $16.4 million in the second quarter of last year. Successfully executing our maintenance program while achieving our strongest quarterly performance in years highlights the strength of our operations and our team. Green Plains today is a fundamentally different company than it was a year ago. We are focused on operational excellence across our platform. We have a growing carbon business that is delivering significant value. We are benefiting from favorable demand fundamentals across ethanol, corn oil, and protein markets. Together, those advantages are creating a business with a higher floor, stronger free cash flow, significantly more flexibility than we've had before.

Before I discuss our outlook, I want to start with safety. Safety is the foundation for everything we do. A safe plant is a reliable plant. A reliable plant is what allows us to consistently deliver for our customers, our shareholders, and our employees. During the quarter, our employees worked safely. We continued to improve the risk profile of the fleet. Recently, our Superior, Iowa facility achieved highly protected status from FM, becoming our second facility to earn that recognition after Central City, Nebraska in Q1. Superior also recently surpassed three years without a recordable accident, which is a fantastic achievement. In June, we held our annual safety week across the organization, with senior leadership team spending time in our plants alongside our teams at Fluid Quip Technologies and Fluid Quip Mechanical.

That kind of visible hands-on engagement reinforces that safety is owned by all of us every day. Operationally, the quarter played out largely as planned. We produced nearly 161 million gallons of ethanol and ground over 54 million bushels of corn while completing our normal spring maintenance. Capacity utilization averaged nearly 90%, reflecting those planned outages, plus a molecular sieve bed change-out at Madison, Illinois. It's a normal course maintenance item, one that typically occurs once in every eight to 10 years. We remain on track for roughly 95% capacity utilization for the full year. These results give us confidence in our sustainability of our operating rates as we move through the back half of the year. That consistency matters because it's the foundation for everything we do: lowering CI scores, improving capture rates, raising yields, taking out costs, finding opportunities through our benchmarking efforts.

Operational excellence isn't a side project here. It's the engine behind our earnings growth and long-term value creation. Nowhere is that more evident than in our carbon platform. Capture performance is at or near our expected long-term rates. The earnings keep building. Our carbon platform contributed nearly $59 million of EBITDA in Q2, up from $55.2 million in the first quarter, bringing first-half carbon EBITDA to approximately $114 million. We are earning 45Z credits as we produce qualifying low-carbon ethanol. The value we generate begins with operational execution. We continue to execute, we increase the value of the credits we earn. We have not monetized any portion of our 2026 credits to date. Staying patient is allowing us to negotiate a deal that generates stable, predictable cash flows.

While we haven't announced a partner for these credits, we're pleased with the progress we've made and believe our approach is positioning us well. Our focus remains straightforward. Maximize value while ensuring we maintain the necessary compliance and documentation to fully monetize the credits. Ann will provide more detail on the accounting and the cash flow considerations in her remarks. Before I hand it over to her, I want to spend a moment on the broader demand outlook for ethanol. We're seeing several demand drivers line up at once. Domestic demand remains healthy, exports are performing well, policy backdrop for the higher blends remains encouraging. Permanent year-round E15 remains an important opportunity, but it's only one part of a larger demand story. On the policy front, the Senate Agriculture Committee is set to formally schedule the farm bill markup later today.

We also see growing interest in ethanol's role in maritime fuel applications, continued discussion around sustainable aviation fuel, expanding international blending mandates, and a broader recognition of ethanol's role in energy security. Geopolitical uncertainty, evolving trade dynamics, and changing global fuel requirements continue to create opportunities for low-carbon liquid fuels. Weather, crop size, and global grain flows will continue to influence feedstock markets, but the demand picture is solid. Importantly, these potential demand catalysts are not embedded in our current outlook, but they reinforce our positive long-term view of ethanol demand and the strategic position Green Plains has built. With that, I'll turn it over to Ann to review the financials.

Thanks, Chris. The second quarter reflected strong execution across the business and continued growth from our carbon platform. For the quarter, we reported net income attributable to Green Plains of $67.1 million or $0.83 per diluted share, compared with $0.42 per diluted share in the first quarter. Adjusted EBITDA was $93.3 million, up from $71.5 million in the first quarter, reflecting improved operating performance and a growing contribution for 45Z. Gross margin for the quarter was $113 million, compared with $41.6 million in the second quarter of 2025. During the second quarter, the carbon business generated $59 million of net EBITDA, which is the net contribution after discounts, incremental electrical expense at the plant, and the transportation and sequestration of the CO2.

As Chris noted, the improvement reflects the value of credits earned through our operations, supported by strong capture performance, lower carbon intensity, and continued improvement across the platform. Cash generation was a highlight. We generated nearly $87 million of operating cash flow and ended June with over $243 million of cash and cash equivalents. Our total debt for the quarter was approximately $484 million. We received the final cash payment related to our 2025 45Z credits during the second quarter, totaling $41 million. That relates to prior year credits and is separate from the 45Z EBITDA we recognized this quarter. As we continue to generate cash, our priorities remain straightforward. We will continue to invest in safe and reliable operations, maintain a strong balance sheet, and allocate capital to the opportunities that create the greatest long-term value for shareholders.

We're focused on generating increasingly predictable free cash flow and deploying that capital in a disciplined manner. Chris will discuss our capital allocation framework in more detail later on the call. Turning to expenses, SGA totaled around $21 million for the quarter, a reduction of 21% when compared to Q2 of 2025. We remain on track to finish the year at approximately $90 million of SGA expense. Interest expense was $8 million during the second quarter, and depreciation amortization was $23 million. We continue to expect full-year interest expense of approximately $35 million. Capital expenditures were around $11 million during the quarter. Given the opportunities we're seeing to enhance reliability and operational performance across the fleet, we expect sustaining CapEx near the top of our range, about $25 million for the year. With that, I'll turn it over to Imre for the commercial update.

Thank you, Ann. The commercial environment was strong in the second quarter, with historically high crush margins and firm co-product prices. Q3 margins are only a touch below Q2, and the setup into the second half of the year is solid. Margins were supported by several factors working together. Energy prices moved higher during the quarter, with geopolitical volatility in the Middle East contributing to strength across the broader energy complex. Favorable corn values helped reduce feedstock costs, while ethanol demand remained solid both domestically and in export markets. Co-product values also contributed, with corn oil benefiting from renewable diesel demand and protein markets remaining stable. Industry production remained elevated, but demand kept up across both domestic blending and exports. The long-term outlook remains positive, particularly on the export front, driven by higher ethanol mandates overseas and expanding low-carbon fuel programs.

U.S. ethanol will need to remain competitive with Brazil as production expands. However, global demand continues to grow, and policy developments, both internationally and domestically, remain supportive of long-term ethanol consumption. Corn prices fluctuated during the quarter, and that volatility has continued into Q3. Planting season was off to a good start, and yield expectations were initially high enough to offset lower planted acres. Most recently, hot and dry weather has raised uncertainty around yield potential, bringing weather back into focus as the key variable. Current expectations continue to point to a favorable overall outlook. Corn oil prices increased during most of Q2, driven by high demand from the renewable diesel industry. Protein and distillers grains also remain stable contributors. High protein demand remains strong, while DDGs values are trending lower in Q3 due to normal seasonal factors.

On natural gas, prices have remained manageable, our realized cost was down from the first quarter, providing an additional tailwind to margins. We continue to manage that exposure actively as part of our overall hedging program. Finally, from a risk management perspective, hedging costs were generally consistent with the first quarter. We recorded mark-to-market losses at quarter end as corn prices moved lower late in June. Prices have since recovered. We continue to manage commodity exposure through a disciplined and consistent hedging approach. What encourages us the most is the forward setup. Demand fundamentals remain supportive. Feedstock economics continue to be favorable, and co-product values remain healthy. The markets will continue to move, we believe the overall commercial environment remains constructive as we move through the balance of the year. Our philosophy remains the same.

We are protecting the margin while maintaining the flexibility to participate in improving market conditions. With that, I'll turn the call back to Chris.

Thanks, Imre. As you've heard this morning, we're seeing strength across the business. Operational performance remains solid, the carbon platform continues to perform well, and the market backdrop for our products remains constructive. The question for Green Plains today is no longer whether we can generate earnings and free cash flow. The question is how we allocate that free cash flow to create long-term shareholder value. We believe a clear capital allocation framework is important, let me walk through how we're thinking about it. First, we'll continue to invest in a safe and reliable operation of our assets. Plant reliability is how we capture margin, and sustaining capital will always be our highest priority. Based on what we're seeing across the fleet, we expect sustaining capital to be approximately $25 million annually. Second, we will continue to strengthen the balance sheet.