Gevo, Inc. (GEVO) Earnings

Management highlights

- Core Business Performance & Strategy Alignment - Core low-carbon ethanol and renewable natural gas (RNG) businesses showed durable strengthening, with 7% quarter-over-quarter revenue growth and 70% first-half gross profit growth year-over-year, partially driven by a full six months of contribution from the acquired Red Trail assets. - Jibo repositioned its growth platform around the Jibo North Dakota complex, discontinuing the non-core ATJ60 project in Lake Preston, South Dakota, and other outdated non-core initiatives. Jibo North Dakota offers strong on-site carbon capture and sequestration (CCUS), advantaged local feedstock access, established logistics, available expansion capacity, and policy support that outperforms the former South Dakota development site. - Jibo follows a three-stage growth plan for Jibo North Dakota: (1) stage one de-bottlenecking to increase low-carbon ethanol capacity to 75 million gallons per year by end of 2026; (2) stage two capacity expansion to 150 million gallons per year of low-carbon ethanol with associated CCUS; (3) stage three conversion of 30 million gallons per year of capacity to sustainable aviation fuel (SAF) via the ATJ30 Project North Star. - Key Q2 2026 Operational Milestones - De-bottlenecking work at Jibo North Dakota remains on track and on budget, with planned maintenance completed during the quarter. The project will increase capacity 10-15% by end of 2026. - Jibo received Canada Clean Fuel Regulation (CFR) pathway approval for its low-carbon ethanol with CCUS, which is retroactive to banked credits from 2025 sales. Jibo has already sold ~17 million of these banked credits, to be recognized in Q3 2026, and gains access to a 1+ billion gallon per year compliance market to diversify international cash flows. - For the ATJ30 SAF project, FEL3 engineering estimates were completed on schedule. The updated total capital estimate of $600 million remains within the prior expected range, with underlying process modules within 2% of earlier projections. Site and logistics costs increased, but project ROI remains attractive. - Over 50% of 30+ identified operational efficiency opportunities from the company's EBITDA challenge have been implemented, with most low-hanging fruit already in process. - Carbon Business Update - Excluding retroactive banked CFR credit sales, Jibo expects its carbon business to deliver a run rate of over $30 million in annual revenue based on current capacity and market conditions. The carbon business model Jibo is building will also support future products including SAF and isobutanol, and leverages the company's Verity Carbon Accounting digital platform. - Jibo expects to generate and monetize more than $70 million in 45Z tax credits in 2026, up from $52 million in 2025, driven by updated policy guidance and operational efficiency improvements that reduced carbon intensity.

Guidance

- Full-year 2026 non-GAAP adjusted EBITDA is now guided to be more than $60 million, which is double the company's prior estimate of $30 million. The upward revision is driven by the new Canada CFR pathway, higher 45Z tax credit monetization, strong core low-carbon fuel sales, and ongoing fiscal discipline. - Full-year 2026 operating cash flow is expected to be neutral to positive, with meaningful positive operating cash flow in the second half of 2026. - Stage one de-bottlenecking at Jibo North Dakota remains on track to be completed by end of 2026, on budget. The capacity uplift is expected to drive enhanced revenue, adjusted EBITDA and margin expansion in 2027. - Financing for the stage two capacity expansion to 150 million gallons per year of low-carbon ethanol remains on track to be completed in the second half of 2026 per the Aura Energy partnership timeline, with engineering, permitting and initial procurement underway. Completion is targeted for 2028. - Jibo continues to target a final investment decision (FID) for the 30 million gallon per year ATJ30 SAF project by the end of 2026. - 2027 adjusted EBITDA is currently expected to be broadly flat relative to the 2026 run rate excluding one-time retroactive CFR credit gains, with uplift from de-bottlenecking capacity offsetting non-recurring items.

Segment performance

Jibo only reports consolidated financial results in this earnings call, with no breakdown of segment-level performance. Consolidated Q2 2026 revenue was $47 million, a 7% year-over-year increase from $43 million in Q2 2025. Gross profit in Q2 2026 was $20 million, with a gross margin of 43%, compared to $19 million gross profit and 44% gross margin in Q2 2025. For the first half of 2026, total revenue grew 23% year-over-year to $89 million, and gross profit grew to $36 million from $21 million in the first half of 2025. Non-GAAP adjusted EBITDA for Q2 2026 was $11 million. On a GAAP basis, Q2 2026 net loss attributable to Jibo was $177 million ($0.75 per share), which included a $176 million one-time non-cash impairment charge for discontinued non-core projects. Excluding this charge, non-GAAP adjusted net loss was $1 million ($0.01 per share). End-of-quarter cash, cash equivalents, and restricted cash totaled $58 million, not including $16 million in post-quarter 45Z tax credit monetization proceeds.

Risks & headwinds

- Final investment decision for the ATJ30 SAF project is contingent on securing additional financeable offtake agreements, which are complex multi-year commitments and remain the primary gating item for project progression. - External commercial adoption of the Verity Carbon Accounting platform has been slower than initially expected, limiting near-term external revenue growth from this offering. - Voluntary carbon dioxide removal (CDR) markets have large committed volumes but very low actual delivered volumes, creating uncertainty for near-term growth of Jibo's voluntary market carbon credit sales. - Cash proceeds from 45Z tax credit monetization can lag the quarter in which credits are generated, leading to quarter-to-quarter variability in operating cash flow. - Project capital costs for the Jibo North Dakota expansion and ATJ30 project could increase above current estimates as engineering and planning work continues.

Analyst Q&A

• Q: How much of the new $60 million+ 2026 adjusted EBITDA target is one-time from retroactive Canadian CFR credits, and what is the underlying repeatable earnings power for 2026 and beyond? /

  A: Management states the core carbon business already has a $30 million annual run rate going forward. Most of the $60 million 2026 target is repeatable, with only a small portion as one-time. Upcoming de-bottlenecking will add sustainable production volume uplift, and higher 45Z tax credits are also durable. The new Canadian market enables Jibo to maximize returns by directing carbon value to the highest-priced market with no current volume limits on how much product Jibo can send to Canada. 2027 EBITDA is expected to be broadly flat to the 2026 repeatable run rate after removing the small one-time retroactive gain.

• Q: What are the capital expenditure requirements for the 150 million gallon ethanol expansion at North Dakota, and what financing partners will be used for the ATJ30 project? /

  A: Management has not yet finalized and disclosed the full CAPEX estimate for the ethanol expansion, with more detailed updates expected in a future earnings call (most likely Q3 2026). The $24 million CAPEX for the smaller de-bottlenecking project is already public. For ATJ30, Jibo is engaged with multiple project-level lenders and equity providers beyond its existing partner Aura Energy, and existing operating cash flows from Jibo's core business can fund development and Jibo's share of construction capital. Securing bankable long-term offtake agreements remains the key prerequisite to finalizing financing and reaching FID.

• Q: What is the latest update on commercialization of the Verity Carbon Accounting platform? /

  A: Verity is already a core internal tool that powers Jibo's own carbon business, enabling carbon tracking, substantiation, and optimization across multiple regulatory and voluntary markets, and it directly contributes to the strong carbon business results Jibo is reporting today. Externally, Jibo retains its existing eight customer partners and continues to develop the external portfolio, but adoption by third parties has been slower than expected, as few other companies operate a comparable end-to-end carbon business to Jibo at this time.

• Q: How will climate smart agriculture (CSA) policy impact Jibo's 45Z tax credit generation, and what is the capital structure plan for the ethanol expansion? /

  A: Jibo already has one of the lowest carbon intensity (CI) scores in the industry, so there is limited room for further CI reductions from CSA/regenerative agriculture practices. Management estimates CSA benefits will only add a few million dollars in additional annual 45Z value, with larger gains coming from volume expansion and ongoing energy efficiency improvements. For the expansion, Jibo plans to retain a controlling interest, will consolidate the project on its balance sheet, will operate the facility, and will use non-dilutive project-level debt as part of the capital structure alongside Aura Energy.

• Q: What is the update on the EBITDA efficiency challenge, and are there cost savings from exiting the South Dakota project? /

  A: Management has identified more than 30 separate efficiency opportunities, half of which qualify as low-hanging fruit. Around 50% of all identified opportunities have been implemented to date, most of which are recurring operational efficiencies unrelated to the South Dakota exit. Benefits from these implemented changes will start to appear in Q3 and Q4 2026 financial results. The EBITDA challenge combines unlocking new revenue pathways (like the Canadian CFR approval) with disciplined cost control.