Executive Summary / Key Takeaways

• Green Plains is undergoing a significant transformation from a commodity ethanol producer to a value-added agricultural technology company focused on lower-carbon fuels and high-value ingredients like Ultra-High Protein and renewable corn oil.
• A major cost reduction initiative is underway, targeting $50 million in annualized savings, including significant reductions in corporate and trade SG&A, aiming for an annualized run rate of approximately $93 million exiting 2025.
• The Advantage Nebraska carbon capture strategy is on track for operations in the second half of 2025, expected to generate at least $130 million in annualized EBITDA from the 287 million gallon footprint, representing a key driver for future earnings and valuation.
• While the Clean Sugar Technology (CST) facility in Shenandoah is temporarily idled due to operational challenges, the company remains committed to the technology's long-term potential and is focused on optimizing current assets for profitability.
• Despite recent financial losses and liquidity pressures, management is focused on disciplined execution, asset sales, and strategic partnerships like the Eco-Energy marketing agreement to improve financial health and return to profitability in the near term.

The Transformation Unfolds: From Commodity to Value-Add

Green Plains Inc., founded in 2004, has embarked on a deliberate journey to redefine itself. What began as a producer of low-carbon fuels has evolved into a company striving to maximize the potential of existing agricultural resources through advanced fermentation and patented technologies. This strategic pivot aims to transition from a volatile commodity-processing business to a more resilient value-added agricultural technology enterprise, creating lower carbon, higher-value ingredients.

The company operates primarily through two segments: Ethanol Production and Agribusiness and Energy Services. While ethanol production remains the core activity, accounting for the majority of external revenues ($497.458 million in Q1 2025), the strategic focus has increasingly shifted towards enhancing the value derived from the corn kernel beyond fuel. The Agribusiness and Energy Services segment, responsible for grain procurement, commodity marketing, and trading, supports the production segment and manages commodity risk.

In the competitive landscape, Green Plains operates alongside large, diversified players like Archer-Daniels-Midland (ADM) and Valero Energy (VLO), as well as more direct peers like Alto Ingredients (PEIX). Larger competitors like ADM and VLO benefit from significant scale, broader integrated supply chains, and greater financial resources, often achieving higher revenue growth and profitability margins. For instance, ADM reported revenue growth around 6% in 2024 with net margins of 3-4%, while VLO saw 8-10% growth and 4-6% net margins. In contrast, Green Plains' 2024 revenue growth was lower at 2-4%, with negative net margins. Peers like PEIX operate at a similar scale but may have simpler operational structures. Green Plains' competitive positioning is challenged by its smaller scale, which can lead to higher operating costs per unit compared to larger rivals. Its reliance on commodity prices also exposes it to volatility, a vulnerability shared with PEIX but somewhat mitigated for diversified players like ADM and VLO.

However, Green Plains is carving out its niche through technological differentiation and strategic integration. Its integrated grain handling and distribution network, including its railcar fleet, offers operational efficiencies and potentially faster distribution in regional markets compared to less integrated competitors. The company's strategic response to competitive pressures involves leveraging proprietary technologies to create differentiated products and focusing on cost discipline.

Technological Pillars: Building the Future Kernel by Kernel

Central to Green Plains' transformation is the deployment of advanced technologies aimed at extracting maximum value and lowering the carbon intensity of its products.

The Maximized Stillage Co-products (MSC) technology, developed by Fluid Quip Technologies (FQT), is a cornerstone. Deployed across five Green Plains biorefineries and a joint venture, MSC enables the production of Ultra-High Protein (UHP) ingredients, including the premium 60% protein product branded as Sequence, and significantly increases renewable corn oil (RCO) yields. This technology allows Green Plains to diversify its product mix beyond traditional distillers grains, targeting higher-value markets like pet food and aquaculture. The company's marketed annual UHP capacity is approximately 430 thousand tons. Operationally, MSC has demonstrated the ability to achieve UHP yields of 3.5 pounds per bushel and RCO yields of 1.2 pounds per bushel across the platform. Sequence production involves refining the process through enzymatic and biological enhancements, with ongoing efforts to lower production costs and increase nutritional benefits. The strategic goal is to increase sales in the pet food segment from 60,000 tonnes today to over 100,000 tonnes in 2026 and significantly grow Sequence volumes in 2025 and 2026, particularly in international markets like South America and Asia, where premiums over traditional proteins are more readily realized.

The Clean Sugar Technology (CST), also from FQT, represents another potentially transformative technology. The world's first commercial-scale dry grind CST facility in Shenandoah, Iowa, is designed to produce low-carbon intensity glucose and dextrose syrups for food, renewable chemicals, and synthetic biology applications, with a capacity of approximately 60 million pounds per year. The technology has proven its ability to produce high-purity dextrose with a lower carbon intensity, offering a potential competitive advantage in markets increasingly focused on sustainability. However, the Shenandoah facility's commissioning has faced challenges, primarily related to construction, equipment, and external wastewater management. This led to a strategic decision in Q1 2025 to temporarily pause operations to optimize the site's profitability by focusing on ethanol production and to address the technical hurdles. While this delays the full commercialization of CST, the company remains confident in its long-term potential and is using learnings from Shenandoah to inform future deployments.

Driven by the Inflation Reduction Act (IRA), carbon capture and sequestration (CCS) has become a critical pillar. The "Advantage Nebraska" strategy involves connecting three Nebraska biorefineries to the Trailblazer CO2 Pipeline, with construction underway and operations anticipated in the fourth quarter of 2025. This initiative aims to significantly reduce the carbon intensity (CI) of Green Plains' ethanol, potentially by 32 points according to the updated GREET model. This lower CI ethanol is expected to qualify for valuable incentives like the 45Z Clean Fuel Production Credit and position the company as a key supplier for the emerging Sustainable Aviation Fuel (SAF) market via alcohol-to-jet (ATJ) pathways. The company projects this initiative could contribute at least $130 million in annualized EBITDA from its 287 million gallon Nebraska footprint, assuming a $70 per ton carbon credit value. While other ethanol producers are also pursuing CCS, Green Plains aims to be among the first to bring significant volumes of low CI ethanol to market, potentially gaining a first-mover advantage. The company is also pursuing CCS projects at other facilities with Summit Carbon Solutions and exploring opportunities in Indiana.

Beyond these core technologies, Green Plains is exploring further innovation, such as the collaboration with Shell Fiber Conversion Technology at its York facility. This project aims to liberate remaining corn oil from fiber and generate cellulosic sugars, potentially enhancing both RCO and protein products and opening new avenues for low-carbon ethanol production.

These technological advancements are crucial for Green Plains to differentiate itself in a competitive market. While larger players like ADM and VLO have scale and integrated refining capabilities, Green Plains' focus on extracting higher-value co-products and lowering the CI of its ethanol through proprietary processes provides a unique value proposition. The success of MSC, the potential of CST, and the near-term impact of CCS are key factors in determining Green Plains' ability to improve margins, generate free cash flow, and enhance shareholder value against its rivals.

Performance and Financial Health: Navigating the Transition

Green Plains' recent financial performance reflects a company in transition, grappling with volatile commodity markets while investing in and commissioning new technologies.

For the three months ended March 31, 2025, Green Plains reported a net loss attributable to Green Plains of $72.906 million, or $1.14 per basic and diluted share. This compares to a net loss of $51.412 million, or $0.81 per share, for the same period in 2024. The increased loss was primarily driven by lower margins in both the Ethanol Production and Agribusiness and Energy Services segments, coupled with significant restructuring costs incurred in Q1 2025. Consolidated revenues saw a modest increase to $601.515 million in Q1 2025 from $597.214 million in Q1 2024, primarily due to higher natural gas prices and margins in the agribusiness segment and higher weighted average ethanol selling prices, partially offset by lower volumes and prices for distillers grains and renewable corn oil.

The Ethanol Production segment reported a gross margin of $5.692 million in Q1 2025, an increase from $2.643 million in Q1 2024, but an operating loss of $39.550 million, wider than the $33.653 million loss in the prior year period. This reflects the challenging margin environment for ethanol despite operational improvements. The Agribusiness and Energy Services segment saw increased revenues but a decreased gross margin ($8.731 million vs. $11.010 million) and an operating loss of $1.533 million, albeit narrower than the $6.004 million loss in Q1 2024.

A key factor impacting recent results and the path forward is the aggressive cost reduction initiative launched in early 2025. This initiative targets $50 million in annualized savings, with $30 million already achieved and a clear path to the remainder. This includes significant reductions in selling, general, and administrative expenses. Consolidated SG&A totaled $42.912 million in Q1 2025, up from $31.769 million in Q1 2024, primarily due to $16.6 million in restructuring and severance charges. However, management expects the consolidated SG&A run rate to decline to approximately $93 million annualized exiting 2025, down from $118 million in 2024. Corporate and trade SG&A is specifically targeted to reach the low $40 million range annually by year-end, a significant reduction from $73 million in 2024.

Operational performance has shown resilience despite market pressures. The company achieved 100% utilization across its nine active plants in Q1 2025 (87.7% including the idled Fairmont plant), demonstrating strong asset performance. Operational costs per gallon have seen a reduction of over 3 cents since Q4 2024.

Liquidity remains a critical focus. As of March 31, 2025, Green Plains had cash and cash equivalents of $98.610 million and restricted cash of $27.993 million. Total corporate liquidity was $48.6 million, increasing to $89.2 million by May 7, 2025, supported by non-core asset sales and new financing. The company has $125 million in junior secured mezzanine notes maturing on May 15, 2026. Management is actively evaluating strategies, including refinancing, asset sales, or other financing arrangements, to address this maturity, acknowledging there is no assurance of success on acceptable terms. The recent $30 million secured revolving credit facility with Ancora Alternatives, maturing July 30, 2025, provides near-term flexibility. The company was in compliance with its debt covenants as of March 31, 2025.

The sale of the Birmingham Unit Train Terminal in Q3 2024 and the subsequent retirement of high-priced partnership debt were important steps in streamlining the balance sheet and reducing interest expense, which is expected to decrease by approximately $1.8 million per quarter starting in Q4 2024.

Outlook and Strategic Execution: A Path to Profitability

Management's outlook is centered on returning to sustained profitability, driven by aggressive cost reductions, operational efficiencies, disciplined risk management, and the monetization of its value-added products and carbon initiatives.

A key near-term target is to achieve positive EBITDA for the remainder of 2025, quarter by quarter. This is expected to be driven by the realization of the targeted $50 million in annualized cost savings, continued operational improvements leading to lower OpEx per gallon, and disciplined hedging to lock in favorable margins when market opportunities arise. The company has already hedged over half of its Q2 2025 crush margins at favorable levels.

The carbon capture strategy is a significant component of the future earnings outlook. With construction of compression infrastructure for the Nebraska plants on track for an early Q4 2025 startup, Green Plains anticipates generating at least $130 million in annualized EBITDA from this initiative. This figure is based on a $70 per ton carbon credit value and is net of operating expenses and pipeline tolling fees. The company is actively engaged in monetizing the expected 45Z and 45Q credits and expects to provide a meaningful update at the next quarterly call. The favorable regulatory guidance for the 40B SAF tax credit, which included a pathway for corn ethanol with CCS, is seen as a positive indicator for the upcoming 45Z regulations.

In the protein segment, the company expects significant volume growth in key markets. Sales to South America are projected to increase from 20 thousand tons in 2024 to over 80 thousand tons in 2025, aided by bulk shipping efficiencies starting in Q3 2025. Sales in the pet food segment are targeted to grow from 60 thousand tons today to over 100 thousand tons in 2026, driven by ongoing trials and expected commercial sales conversions by Q4 2025 or early 2026. While protein margins have faced pressure from competing products, the focus on higher-value segments and the ramp-up of Sequence production are expected to improve profitability.

Renewable corn oil is also expected to remain a significant contributor, with market fundamentals supported by anticipated increases in renewable volume obligations and restrictions on imported used cooking oil. The company anticipates a material appreciation in domestic vegetable oil values related to corn oil due to its lower CI score and beneficial treatment under clean fuel programs.

The Clean Sugar Technology (CST) project in Shenandoah, while temporarily paused, remains a long-term strategic asset. The company expects to resume commissioning in late fiscal 2026 once wastewater challenges are resolved. In the interim, the Shenandoah plant is operating with a simplified fermentation recipe, which is expected to provide a $10 million annualized positive impact through improved ethanol, oil, and protein yields and reduced OpEx.

Overall capital expenditures for the remainder of 2025 are estimated at approximately $20 million, excluding the fully financed carbon capture equipment. This reduced CapEx profile, combined with expected improvements in operating performance and new earnings streams, is aimed at increasing free cash flow generation and rebuilding structural cash on the balance sheet.

The strategic review process, initiated in February 2024, is ongoing, exploring various opportunities to enhance shareholder value. The recent Board refreshment and leadership transition are part of this broader effort to realalign the company and improve execution.

Risks and Challenges: Navigating Volatility and Execution

Despite the clear strategic vision and planned initiatives, Green Plains faces significant risks and challenges that could impact its ability to achieve its objectives and return to sustained profitability.

Commodity price volatility remains a primary risk. Fluctuations in the prices of corn, natural gas, ethanol, distillers grains, Ultra-High Protein, and renewable corn oil can significantly impact margins and profitability. While the company uses hedging strategies, sudden and rapid price movements can still lead to losses or require substantial margin calls, potentially straining liquidity.

Regulatory uncertainty, particularly surrounding federal renewable fuel policies and tax credits, poses another significant risk. Changes to the RFS, the outcome of legal challenges to SREs, and the final regulations for the 45Z Clean Fuel Production Credit could impact demand and the value of low-carbon fuels and credits. While management believes a repeal of 45Z is unlikely and recent guidance is favorable, the regulatory landscape remains dynamic.

Execution risk is inherent in commissioning new technologies like CST and ramping up production of new products like Sequence. The challenges faced at the Shenandoah CST facility highlight the potential for delays, cost overruns, and technical hurdles that can impact timelines and expected financial contributions. Resolving the wastewater issue at Shenandoah and successfully scaling Sequence production are critical execution milestones.

Liquidity and debt management are also key concerns. The $125 million debt maturity in May 2026 requires substantial liquidity, and the success of strategies to refinance or extinguish this obligation is not assured. While recent asset sales and financing have improved corporate liquidity, a sustained period of unprofitable operations could strain resources.

Competition from larger, more diversified players with greater scale and financial strength could limit Green Plains' ability to gain market share or maintain price premiums for its differentiated products. The increasing production of competing proteins, particularly from expanded domestic soy crushing capacity, puts pressure on Ultra-High Protein margins.

Finally, the strategic review process may not result in a transaction or outcome that enhances shareholder value as anticipated.

Conclusion

Green Plains is at a pivotal juncture in its transformation journey. The company is actively shedding its identity as a pure commodity ethanol producer and striving to become a leader in value-added agricultural technology and low-carbon ingredients. The strategic pillars of Ultra-High Protein, renewable corn oil, Clean Sugar Technology, and particularly carbon capture represent significant potential drivers for future earnings and valuation.

While recent financial performance has been challenged by market volatility and the costs associated with this transition, management is implementing aggressive cost reduction measures and operational efficiencies aimed at returning the company to profitability in the near term. The anticipated startup of the Advantage Nebraska carbon capture project in late 2025 is poised to fundamentally alter the company's earnings profile, offering a substantial, potentially undervalued, source of EBITDA.

The path forward is not without its challenges, including execution risks related to new technologies, ongoing commodity price volatility, and the need to address upcoming debt maturities. However, the company's focus on disciplined execution, strategic asset management, and leveraging its technological differentiators provides a clear narrative for investors. The success of the carbon capture initiative, the ramp-up of high-value protein sales, and the effective management of liquidity will be critical indicators to watch as Green Plains seeks to unlock the value embedded in its transformed business model.