Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Increased production at the Pekin Campus, generating over $10 million in gross profit in Q2 2024, up from $4 million in Q1 2024.
- Average Chicago crush margin improved significantly, rising to $0.21 per gallon in Q2 2024 and further to $0.48 per gallon in July.
- Successful completion of biennial wet mill repairs and maintenance outage at the Pekin Campus, leading to improved operational performance.
- Received the 2024 Bronze Medal Sustainability Rating from EcoVadis for the ICP and Pekin Plants, placing them in the top 35% of companies assessed.
- Strong balance sheet with $27 million in cash and $95 million in total loan borrowing availability as of June 30, 2024.
Negative Points
- Consolidated Q2 2024 net loss of $3.1 million compared to net income of $7.6 million in Q2 2023.
- Adjusted EBITDA for Q2 2024 was negative $5.9 million, including $3.6 million in costs related to the wet mill outage and $2.9 million in realized losses on derivatives.
- Q2 2024 net sales decreased to $236 million from $317 million in Q2 2023 due to lower market prices.
- Historic low carbon market pricing negatively impacted renewable fuel revenue and bottom line results at the Columbia plant.
- Realized derivative losses for Q2 2024 were $2.9 million compared to $5.5 million in realized derivative gains for the same quarter in 2023.
Q & A Highlights
Q: What is the rest of the CapEx slated for in the second half of 2024?
A: We have a variety of CapEx projects planned for later this year, including increasing plant efficiencies and upgrading various systems. Additionally, $3 million is allocated for the new alcohol loading dock. - Robert Olander, CFO
Q: Can you quantify the expected levels of capacity utilization for Q3 and Q4 after the upgrades?
A: We are seeing overall improvements of 10% to 15% in production. For example, ethanol production has improved by about 10%, and essential ingredients have seen up to 15% improvements. - Bryon McGregor, CEO
Q: Why was there a slight bump in OpEx and SG&A?
A: The increase is partly due to upfront costs related to our carbon capture and storage project, which are running through the OpEx line item until the path forward is officially approved. - Robert Olander, CFO
Q: How are you managing the timeline and risks associated with the carbon capture and storage project?
A: We are working diligently with our partners to address issues as they arise, such as the Safe CCS Act in Illinois. Decisions on purchasing and other steps are made carefully to balance risk and return. - Bryon McGregor, CEO
Q: What do you need to see to be convinced that the Magic Valley restart is on the right track?
A: We need to achieve maximum capacity and meet the targets established with our technology partner. We are currently running at around 70% capacity and are taking a measured approach to ensure success. - Bryon McGregor, CEO
Q: Will there be an update on Magic Valley before the next earnings call?
A: If there is material information to disclose, we will provide an update before the next earnings call. Otherwise, it may align with the third-quarter call. - Bryon McGregor, CEO
Q: Can you quantify the impact of Magic Valley being idled on the Western gross margin?
A: We don't typically provide those specifics, but the decision to idle the plant earlier this year offset operating losses due to unfavorable crush margins. - Robert Olander, CFO
Q: Why guide towards positive adjusted EBITDA instead of positive net income given the strong July crush margins?
A: We aim to be conservative and transparent. While July was favorable, we operate in commodity markets, and various factors can impact net income. - Robert Olander, CFO
Q: How does the success of Magic Valley impact the potential monetization of Western assets?
A: Success at Magic Valley would certainly help, but we aim to maximize value for shareholders whether we keep or sell the assets. - Bryon McGregor, CEO
Q: Are you confident in your partners' ability to handle the flexibility needed for the carbon capture project?
A: Yes, we believe we have the right partners who are willing to deal with the needed flexibility given the situation. - Bryon McGregor, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
