Gevo, Inc. Q1 FY2025 earnings call

• Patrick Gruber mentioned that in Q1 2025, Gevo generated $29 million revenue with two months of operations at Gevo North Dakota, where ethanol and carbon sequestration are working well, RNG revenue and profitability improved. Gevo North Dakota has an ethanol plant with 67 million gallons per year capacity, received IRS approval for 45Z tax credit, and has a favorable carbon sequestration well. They believe the North Dakota site is ideal for an alcohol jet plant and have progress in selling voluntary carbon abatement with about half of the potential ATJ plant sold out. • Lynn Smull went over financial numbers, ending the quarter with $135 million in cash, cash equivalents and restricted cash, combined operating revenue and other net income was $30.9 million. • Chris Ryan expanded on operations, since acquiring Gevo North Dakota in January, working on integrating the site and engineering an ATJ plant leveraging design from Lake Preston site. Operations at Gevo North Dakota were exceptional with good volumes and yields, and GevoRNG produced renewable natural gas. • Paul Bloom talked about commercial progress, negotiating 45Z tax credit sales, developing carbon removals sales market, signed offtake agreement with Future Energy Global for SAF emissions credits, and actively pursuing ATJ plant deployment with partners worldwide.

In the first quarter of 2025, Gevo generated $29 million of revenue. RNG subsidiary generated $5.7 million in revenue, an increase of $1.7 million compared to the previous year. At Gevo North Dakota for February and March, income from operations was $0.5 million and adjusted EBITDA was $1.8 million. At GevoRNG, income from operations was $1.1 million and adjusted EBITDA was $2.7 million. Company-wide, consolidated loss from operations was $20.1 million with non-GAAP adjusted EBITDA loss of $15.4 million. Gevo North Dakota produced over 11 million gallons of low carbon ethanol, sold over 40,000 tons of high protein animal feed, 3 million pounds of corn oil, and captured and sequestered 29,000 metric tons of carbon dioxide. GevoRNG produced about 80,000 million BTUs of renewable natural gas, and across operations, over 100,000 metric tons of carbon abatement was generated last quarter.

• Expect continued adjusted EBITDA improvement throughout the year driven by monetization of 45Z, increased RNG value from new CI score and ongoing performance at Gevo North Dakota. • Plan to monetize 45Z tax credits sooner rather than later, aiming to be EBITDA positive this year. • ATJ30 project expected to be same or sooner than ATJ60 due to copy, edit, paste approach and already having designs worked out. • 45Z tax credits extension is positive, with support seen in Congress, and expectation of monetizing them and being in good shape.

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from anticipated, such as timing, development, engineering, financing and construction of alcohol projects, contracts for carbon credits, etc. • DOE still has work to do on offtake terms and Summit pipeline plan, which could impact ATJ project timelines and deployments. • Noise in the market could potentially mislead or create uncertainty, but Gevo believes in the fundamentals. • Transferability of tax credits after 2027 could have implications, but Patrick Gruber sees potential for industrial investment and growth with it.

Q: Hey, team. This is Whitney Mutalemwa dialing in for Dushyant Ailani. Congratulations on a solid quarter despite a weaker than expected crush margin environment. You ended the quarter with, $135 million in cash equivalents and restricted cash. I'm aware you don't normally provide guidance for cash, but given the Gevo North Dakota acquisition, the $40 million CapEx spend for ATJ60 and just some other general maintenance spend. How should we think about the cash cadence for the year?

A: Sure. Well, we are going to be spending $40 MILLION this year on ATJ60. We've dialed back the spending on that, although, we are doing some work in shifting resources into the ATJ30 as we're waiting for the timelines to sort out for the DOE. So that'll be less. I think we also -- well, I know for a fact we're also planning on refinancing our RNG plant. We'll announce that shortly as to what we're doing there, but that'll also free up some cash. So you're right. We don't give guidance on cash, but we're we should be in pretty strong shape through the rest of the year.

Q: Thank you. Good afternoon, everyone. Congrats, Pat on all the progress. Great to see the operating revenues and EBITDA starting to come through. I'm just curious, with respect to the carbon abatement product, right, it looks very interesting. Is there an established market for this already that you can tap into immediately or will there be some work required to be done to build that product and create a market for it?

A: Yes, sure. Thanks, Amit for the question. There is already a market that's growing for these durable carbon dioxide removals, right? And so, if we choose to take that value and sell it separate from the fuel, they're traditionally classified as BECCS CDRs. So that's called bioenergy with carbon capture and sequestration. So that's really the market that we're in today and continuing to grow our presence there, which again was really started with the work that the Red Trail owners did before we acquired Gevo North Dakota. Now we're really going to grow that business and look at it as the optionality between selling that carbon value with the fuel or separate from that fuel depending on what we see in the market.

Q: Thank you. Good afternoon, Pat and team. Maybe staying on 45Z for the first question. Clearly, some positive news yesterday on the extension of the credits to 2031 removal of indirect land use, but also the creation of a dairy RNG pathway. Could you speak to the amount you expect to receive for ethanol and dairy, RNG molecules?

A: Well, it's a -- it's proportional to the CI scores. So, when you have -- we're already at about a 20. Chris mentioned in his comments a 21, and he rounded upward. I'm rounding downward because I think there's a couple other things we can do still. But so, we'll be down in the 20s before taking out indirect land use. So that puts us down, what, another 8, 10 points. That will be the lowest CI score ethanol plant. And so when you figure they're worth, what a couple cents -- you got to get below 50 per -- you got to get a 50% reduction before you get the money, okay. And then we should be it's $0.02 per CI point. So it's going to be pretty healthy. Now what they're trying to do is sponsor economic development, growth, investment, jobs, that's actually what they're trying to do. We are firm believers that, tax credits have to have a sunset. They should not last forever because that creates wrong behavior. Everything's taken when you do that, it really people get starry eyed in what they think they can do. No. They actually should help pay for a plant and its capital and the jobs that are created, and that's the right idea. And that is the approach that we're seeing this congress take in their attitude. It's great. So it's significant. And then on the RNG side, that was fascinating and caught me by surprise. I was shocked that they included that because I wasn't expecting them to. The issue had been that they -- one of the things when you're using a biogas or making a biogas, you can do it rather than letting, whatever the raw material is just digest and spew methane into the atmosphere. You can -- by using the, RNG techniques or the processing, you can collect that, and you will also avoid then methane. It's a methane avoidance factor that goes into the LCA calculations. They punted it in the original 45Z calculations, and they just average everyone together whether it was landfill or dairy or whatever. And what that means is, for instance, if he was worth I don't remember exactly, Derrick, it was, like, 20 points or something. It was a -- it was only, like, a negative 20 or something. Very small, but they averaged all types -- all RNG methodologies altogether. What they're calling out here now is that you've got to do it discreetly. So it'll look probably more like a California where we're at a minus 330, 339 score. So they have work to do to go figure that part out. In the meantime, that doesn't stop us from already monetizing that RNG credit. But I'll be very keen on seeing how all that does settles. The argument that the IRS had last time was that there's too much work in the working group. In the prior administration, there's just too much work to keep track of it all, so they just averaged everything. Well, this one calls out that they got to go calculate it. That's very good for us because we have one of the best RNG facilities in the country. So like I say, I was -- this was a good week in terms of what I'm seeing in these bills. And what's fascinating and good is that the Republican leadership, they understand what we're doing. They know us pretty well. And they know that we're abating carbon, but they also know we're doing cost effective products and creating jobs. And it helping agriculture and rural development. It's all of those things together that matter.

Q: Thank you. Thanks for the presentation today and congratulations on your progress. You've got some great momentum here. Just three questions, I have about ATJ30 in North Dakota. First of all, it's great to hear that you have more than 50% of that capacity that's sold for ATJ30. Are these that entirely new discussions你're having or does this 50% reflect some excess demand perhaps from your volumes at ATJ60? So effectively, are these customers you already have in tow in South Dakota, and now you have the additional volumes that you can give them in North Dakota?

A: They're different. And the reason they're different is because the contract structures are different. And the contracts for the DOE have to be done in a certain kind of format to lend itself to financing. We think it'll be more equity financed up there in North Dakota. And so, it's a different kind of a contract. FEG is representative of it. And there's other deals that we've done where we've sold, the jet fuel和part of the carbon to somebody else, and we keep the carbon and sell that to some yet again on a third-party. So it's pretty darn interesting. We're on the right track. It's about time we figured this out. And part of it is because the DOE was, the DOE process is onerous. I mean, it's onerous. There's no question. They're very thorough. They're very good. They have a huge success rate with their 97% track record of success. Awesome. But my god, it's tedious. And it's got belt braces, suspenders, and protections, and blah-blah, blah-blah. And one of those things is how contracts are written. Here, we can do we have a wider range of latitude of what we can do. And so that makes it and that makes more sense. We'll eventually, I think, get that roped into ATJ60 as well, but we got to get it going first and make it happen. So we don't tie our contracts to one location. We can go make it anywhere and I mean, move contracts around. We have the ability to do that. It's just that here, we didn't have to start with the burden constraints.