Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pekin campus increased production capabilities and uptime, improving profitability despite fluctuating market conditions.
- Consolidated gross profit improved to $6 million and adjusted EBITDA was $12.2 million in Q3 2024.
- Finalized a CO2 transportation and sequestration agreement with Vault, marking a significant step towards sustainability.
- Increased production of specialty alcohols, reaching 42% of total Pekin sales volume, a 7% increase from the previous year.
- Completed upgrades to Magic Valley's technology system, achieving full capacity ethanol production and expanding corn oil yields.
Negative Points
- Net sales decreased to $252 million in Q3 2024 from $318 million in Q3 2023 due to lower market prices.
- Western facilities experienced a gross loss of $2.3 million, driven by downtime and costs associated with Magic Valley upgrades.
- Ethanol production outpaced demand, leading to higher inventory levels and lower ethanol prices.
- Carbon prices dropped significantly, impacting revenue, with an 80% decrease in Oregon and Washington and 20% in California.
- Magic Valley facility faced margin compression due to increased regional corn basis and declining protein and corn oil market prices.
Q & A Highlights
Q: How should we be thinking about Magic Valley's targeted annual uplift of around $9 million that was originally outlined? Does that outlook still stand given what's been demonstrated so far?
A: Bryon McGregor, CEO: The original expectations were based on market conditions that have since changed, particularly around corn oil and protein values. While there are significant benefits from improvements, the current market deterioration offsets these gains. The outlook is difficult to ascertain at the moment.
Q: Do you envision any change to the moratorium timeline for new permits given the recent ADM leaks?
A: Bryon McGregor, CEO: We haven't seen any response from the EPA yet. However, there have been significant changes in well work quality and safety since ADM's original completion, which may not affect current projects.
Q: Have you considered seeking recourse against Harvesting Technologies for potential losses at Magic Valley?
A: Bryon McGregor, CEO: We are exploring all options, including potential recourse. The fundamentals of the technology and its application at Magic Valley remain sound, and we expect future benefits despite current market challenges.
Q: Could you provide more details on the engagement with Guggenheim and what they are evaluating?
A: Bryon McGregor, CEO: We are considering all options to maximize returns, including partnerships, asset sales, or further improvements. Each site has unique qualities and untapped opportunities that we aim to evaluate thoroughly.
Q: Would the review with Guggenheim also consider the sale of the entire company?
A: Bryon McGregor, CEO: We always consider all options, including the sale of the entire company, as part of our responsibility to shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
