Gevo Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 13, 2025

There are 10 speakers on the call.

Operator

Good day, and thank

Speaker 1

you for standing by. Welcome to the Gevo Incorporated First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

Speaker 1

You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Eric Fry, Vice President of Finance and Strategy. Eric, you may begin.

Speaker 2

Good afternoon, everyone, and thank you for joining us on today's call to discuss Gevo's First Quarter twenty twenty five Results. I'm Eric Fry, Vice President of Finance and Strategy at Gevo. With me today, we have Patrick Gruber, our Chief Executive Officer Lynn Small, our Chief Financial Officer Chris Ryan, our President and Chief Operating Officer and Paul Bloom, our Chief Business Officer. Earlier today, we issued a press release that outlines our first quarter twenty twenty five results and the topics we plan to discuss. A copy of the press release is available on our website at www.gevo.com.

Speaker 2

Please be advised that our remarks today, answers to your questions contain forward looking statements within the meaning of the Private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. Those statements include projections about the timing, development, engineering, financing and construction of our Alcohol Projects, our recently executed agreements, potential contracts for carbon credits, our Gevo, North Dakota and RNG projects and other activities described in our filings with the Securities and Exchange Commission, which are incorporated by reference. We disclaim any obligation to update these forward looking statements. In addition, we may provide certain non GAAP financial information on this call.

Speaker 2

The relevant definitions and GAAP reconciliations may be found in our earnings release, which can be found on our website at www.gevo.com in the Investor Relations section. Following the prepared remarks, we'll open the call for questions. I'd like to remind everyone that this conference call is open to the media and we're providing a simultaneous webcast to the public. A replay of this call and other past events will be available via the company's Investor Relations page at www.gevo.com. I'd now like to turn the call over to the CEO of Gevo, Patrick Gruber.

Speaker 2

Pat?

Operator

Thanks, Eric. What a change since the last quarter of twenty twenty four. In this first quarter of twenty twenty five, we generated $29,000,000 of revenue. Now this is only with two months of operations under our belt at Chivo, North Dakota. The ethanol and carbon sequestration are working well, contributing value as we expected.

Operator

Our RNG revenue and profitability has also improved. We believe our growth strategy reflected in our acquisition of the plant in North Dakota is going pay off and help drive us to be an EBITDA positive this year. This plant not only produces ethanol profitably in a tough market, it also has one of the three operating carbon sequestration operations in the country. We have received approval from the IRS to apply for the 45Z tax credit. So once we monetize that tax credit, it should further help our EBITDA growth.

Operator

I know this is contrary to the noise in the market, but in fact, we believe these 45Z credits are monetizable now. We expect that we will be able to see the benefits in our p and l starting in the next quarter. By the way, it's worth noting that we are only aware of two ethanol plants in the country that will benefit from 45z as it currently stands, and we own one of them. That's Chivo, North Dakota. We don't need clarification around agricultural benefits.

Operator

Our carbon intensity score is already low at about 20. The more we learn about the Chivo, North Dakota site, the more we like it. It has an ethanol plant with 67,000,000 gallons per year of capacity, and the site has room to expand ethanol further, expand the corn supply, and add additional plants like alcohol to jet. We have good railroads, good roads. The sequestration operation has had a few years of operation without issue.

Operator

The carbon sequestration well is probably one of the best, if not the best in the whole country, given its geological structure and size. It's certified as a thousand year well. We own it. Being vertical is an advantage. We've run into a pleasant surprise too.

Operator

North Dakota, its governor, legislators, and leaders in agriculture, gas and oil and energy more broadly, have all been very welcoming. They're interested in growth in North Dakota, well, so are we. We believe the North Dakota site is ideal for an alcohol jet plant. We have a great corn supply, land sequestration, an already well run, well built ethanol plant that's working great. In fact, we think we can get that NATG plant built faster up there in North Dakota than in South Dakota, leveraging design and engineering we've already done for our ATJ 60 plant.

Operator

We believe we can keep the capital cost down too, making the ATJ project at Chiba, North Dakota even more attractive. Part of this can be done by starting with a smaller plant in the first place, in this case 30,000,000 gallons per year of ATJ, maximizing the modularization, which reduces risk at the project and lowers labor costs. It's exciting enough that several companies from around the world have approached us for plants in their countries. In fact, we're on the right track for growth. We've also made progress in selling voluntary carbon abatement.

Operator

Now this is separate than the LCFS credits in California, the 45Z tax credits, or other carbon credits. These are actual downstream customers who buy carbon abatement in dollars per metric ton. Paul Bloom, our chief business officer and chief carbon officer, will talk about in a few minutes. Here's something to think about. The recent volumes of carbon sold and with other fuel contracts, we think we have about half of the potential Gvil North Dakota alcohol to jet plant sold out.

Operator

The traditional commitment from the Department of Energy is still in place for our ATJ 60 project in South Dakota, and we expect it to stay that way, eventually making progress and eventually closing it. The DOE is still putting people in place. We know that there's work to do on their side, but we have work to do on a variety of fronts too, changing certain off take terms to make contracts more amenable to the DOE. And we still need to learn what the plan is for the Summit pipeline. I am low, for example, to spend capital to develop a virtual rail pipeline to our North Dakota site, only to find out that Summit, as they continue to expect, have solved their pipeline issues.

Operator

While we expect that we will get the DOE loan done eventually, we aren't waiting around to get ATTA capacity deployed. Hence, you can see why we wanted that GGO North Dakota site with all of its advantages. As you have said over and over, Gevo is not a one trick pony. We don't even need to depend upon alcohol to jet to be cash flowing. However, that ATJ, that alcohol to growth opportunity is a great opportunity for the future and its growth.

Operator

Jet fuel in fact is gonna be needed in this country going forward from a basic supply and demand point of view. Shall we import the jet fuel or make it right here in The USA? Well, we believe that ATJ should be made here in The USA. We believe that alcohol to jet is the most economically advantaged way of adding jet fuel capacity in this country. HEFA, that jet fuel made from vegetable oil, used cooking oil, or animal fat, is the second best way economically.

Operator

Making more jet fuel from fossil oil in this country would require a new petroleum refinery to be built. Now, could that happen? I suppose it's remotely possible. However, if you actually look at full cost reduction, I think that an ATJ plant may using ethanol as a raw material, it would be a similar cost to the jet fuel made from oil on a cash cost basis. We actually think it would be cheaper to deploy alcohol to jet overall.

Operator

Now add to all of this, that we can reduce and even eliminate the carbon footprint and that there are markets and customers that are willing to pay us to do so, we think it provides a tremendous opportunity. We calculated over the next decade, The USA could use more than 30 alcohol to jet plants if they were 60,000,000 gallons each. And of course, that means more if they're a little bit smaller. There's enough ethanol capacity to pull this off. There's also enough corn capacity with no expansion of farming land use.

Operator

All of us across the whole value chain are getting this figured out. Yes, we recognize that there's a lot of noise in the market, but we like the fundamentals, and the fundamentals indicate that this is an exciting time. I'll turn it now over to Lynn to go over the numbers.

Speaker 3

Thanks Pat. Let's go over the numbers. We ended the quarter with $135,000,000 in cash, cash equivalents and restricted cash. Combined operating revenue and other net income was $30,900,000 for the first quarter. Our RNG subsidiary generated $5,700,000 in revenue during the quarter.

Speaker 3

This reflects an increase of $1,700,000 compared to the previous year, primarily driven by the increased LCFS credit generation due to our improved carbon score in that program, partially offset by lower RIN prices. Regarding our income from operations and non GAAP adjusted EBITDA numbers, at GIVO North Dakota or GIVO ND for the two months of February and March, income from operations was $500,000 and adjusted EBITDA was 1,800,000.0 This does not include expected growth this year from monetizing the ethanol 45Z. At Gevo RNG, income from operations was $1,100,000 and adjusted EBITDA was $2,700,000 last quarter. This also does not include expected growth this year from monetizing the biogas 45Z. So we have positive momentum with adjusted EBITDA in those two segments.

Speaker 3

Turning to our Gevo and Gevo Fuel segments, which include R and D, project development and other operating costs, including the development of our ATJ projects, combined net loss from operations was $21,700,000 and adjusted EBITDA loss was a combined $19,900,000 last quarter. Company wide consolidated loss from operations was $20,100,000 last quarter with non GAAP adjusted EBITDA loss of $15,400,000 We expect continued adjusted EBITDA improvement throughout the year, driven by the monetization of 45Z, increased RNG value from our new negative three thirty nine CI score and ongoing performance at Gevo North Dakota. With that, I'll turn it over to Chris.

Speaker 4

Thanks. I'll expand a bit more on operations this past quarter. Since completing the acquisition of Gevo North Dakota at the January, we've been working towards integrating that site into the overall business of Gevo and laying the foundation for growth of the site. We're evaluating a number of great opportunities, and we've made progress on engineering of an ATJ or alcohol to jet plant that we could deploy there. This engineering effort has leveraged our ATJ design from our Lake Preston site, which is saving us time and money for development.

Speaker 4

And this is all part of our copy paste approach to building out ATJ capacity for ourselves and for others. Regarding operations at GIVO North Dakota, GIVO's first quarter twenty twenty five results reflect the impact of just two months of February and March from GIVO North Dakota. During those two months, GIVO, North Dakota operated exceptionally well, producing over 11,000,000 gallons of low carbon ethanol while selling over 40,000 tons of high protein animal feed and 3,000,000 pounds of corn oil, all from less than 4,000,000 bushels of corn ground. That's a yield of about 2.9 gallons of ethanol per bushel, which we're really happy with. We see those as strong volumes and yields during two months of production, and this reflects the consistent operational excellence of the facility.

Speaker 4

In addition to producing those value added energy and food products, we captured and sequestered 29,000 metric tons of carbon dioxide at the site. And with an estimated CI score of 21 for our ethanol using the 45Z GREIT model, we've avoided an 7,000 metric tons of carbon emissions as a result of the use of our low carbon fuels. At Gevo RNG, where we convert dairy manure into renewable natural gas, we produced about 80,000 BTUs of renewable natural gas last quarter. So across the Gevo operations, including the two months from Gevo, North Dakota and three months of RNG, we generated over 100,000 metric tons of carbon abatement last quarter. With that, I'll hand it over.

Speaker 5

Thanks, Chris. On the commercial front, we continue to make solid progress for our adjusted EBITDA generating businesses that Chris just discussed and our alcohol to jet growth projects. Let me start with GIVO North Dakota and RNG as we are negotiating our first 45Z tax credit sales. Back in December, we received our Form six thirty seven approval notifications from the U. S.

Speaker 5

Department of Treasury and Internal Revenue Service, which are required for Section 45Z credit generation. The team has been working to put all the necessary pieces of these agreements in place, and we anticipate finalizing them in Q2. As Pat mentioned, we're also developing our market position for the sale of durable carbon dioxide removal credits or CDRs. Gevo North Dakota is actively generating high quality carbon removals via CCS from biogenic carbon. Under the previous owners, our Gevo North Dakota facility was the first ethanol plant in the world to list CDRs on a public carbon registry, and they made initial sales.

Speaker 5

Now we're in the process of expanding sales into that market and structuring the team under the leadership of our Chief Business Development Officer, Alex Clayton. We expect to share more announcements soon as we help meet the needs of global customers looking to reduce their carbon footprint with high quality CDRs. On the SAF front, we signed a groundbreaking offtake agreement with Future Energy Global. Under this deal, FEG will acquire Scope one and Scope three emissions credits tied to 10,000,000 gallons per year of fuel from our future ATJ production. That value is in addition to and separate from the physical fuel, RIN value, and other state and federal tax credits we expect to obtain.

Speaker 5

And it shows the market value of our carbon attributes. By separating the carbon attributes from the physical fuel, we anticipate this unique book and claim approach with FEG will be a market accelerator that will expand as we work together to provide greater flexibility for corporate customers, airlines, and airline lessors to access the solutions they need. Finally, we're actively pursuing opportunities to develop and deploy our ATJ plant designs and business system with partners around the world. We have the IP, engineering playbook, commercial capabilities, digital supply chain tracking solutions through Verity, and the network of partners to derisk and scale this new industry. We don't plan to own 100% of every plant.

Speaker 5

In many cases, we'll be developers, licensors, and strategic investors. We'll have more to share in the future as these opportunities to develop. And with that, back to you, Pat.

Operator

Thanks, Paul. I want to conclude by saying that we are showing that domestic energy production can go hand in hand with economic growth, carbon reduction, production of food. You can get all of these things together if it's done right, and that's what we're all about. It's more than about just fuel. It's about creating American jobs, supporting farmers, strengthening the real economy.

Operator

And unlike a lot of others in the space, we don't have to sit around and wait for government guidance on how sustainable agricultural impacts the 45Z tax credit. We plan on monetizing the 45Z this year because we've already got an attractive CI score even without the sustainable agriculture. Sustainable agriculture will be a further upside potential for us if that happens. We believe that our Verity business, where we can track and trace land use ag practices, carbon footprint crops and other raw materials, in addition to we can track the process energy needed to produce the products and consider all the impacts across the whole of the life cycle, making it all auditable by anyone, ideally, visible, and most importantly, all based on science and data. But this is gonna be extremely important in the future.

Operator

We want customers, consumers to know that they're getting something real for their money. We know that with data, we can push back on the false narratives around land use. Yes. We can measure land. Any of us can.

Operator

Anyone in this industry can if they desire to do so. It's a fallacy that they can't. We have the ability to do so. We can push back on the food and fuel narrative. Real data shows that by using row crops, that adds protein and nutrition to the food chain.

Operator

It's more economical, and yet you can still produce raw materials to make energy products. The right paradigm is about producing energy and food concurrently. It's better for the world, better for economic development. Verity will help make this all clear. There's certainly more to talk about, but that wraps up our prepared remarks.

Operator

We're now ready to go to the open line for questions. Operator, please go ahead.

Speaker 1

Our first question comes from Dushant Ilani with Jefferies. Your line is open.

Speaker 6

Hey team, this is Whitney Motilemma dialing in for Deshant Eilani. Congratulations on a solid quarter despite a weaker than expected crush margin environment. You ended the quarter with $135,000,000 in restricted cash. I'm aware you don't normally provide guidance for cash, but given the Gevo North Dakota acquisition, the $40,000,000 CapEx spend for ATJ-sixty and just some other general maintenance spend. How should we think about the cash cadence for the year?

Operator

Sure. Well, we aren't going to be spending $40,000,000 this year on the ATJ-sixty. We've dialed back the spending on that, although we are doing some work in shifting resources into the ATJ 30 as we're waiting for the timelines to sort out for the DOE. So that'll be that'll be less. I think we also well, I know for a fact we're also planning on refinancing our RNG plant.

Operator

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, pretty strong shape through the rest of the year.

Speaker 6

Got it. I understand. And then just as a follow-up, relating to ATJ 30, I don't believe there is a timeline disclosed on this project. Obviously, it's smaller and modular. How would the time frame compare to ATJ 60?

Speaker 6

Yeah. That will be all. Thank you.

Operator

Same or sooner than ATJ 60 is my guess. Yeah. We have been working on the ATJ 30 for for a time for quite a time here, and it is a it's a copy edit, paste type of an approach in that we already have these designs worked out for the ATJ 60. This is about making it smaller. And, but the concepts are the same, which is, that's actually the harder part, you know, getting a lot of companies are gonna fail because they simply don't know how to design a commercial plant.

Operator

Well, we do that's our background. So those kinds of things have already been thought through. So we expect it to be more straightforward. We also expect that, it's gonna generate a lot of interest because it's gonna be a lot cheaper to build than an ATJ 60 that has project financing. So that's gonna be very interesting.

Operator

We'll talk more about it once I have more numbers baked and then who also is gonna participate with us up there. But it'll, it'd be a project level game again for us in that, except for it's going to be adding onto our site. So it's a pretty, it's actually quite exciting up there between the all that's happening around the 45z, I don't know, in the Ways and Means Committee and stuff and what's being proposed. You know, it's like, all right. This is going our direction finally.

Speaker 1

Thank you. Our next question comes from Amit Dayal with H. C. Wainwright. Your line is open.

Speaker 7

Thank you. Good afternoon, everyone.

Speaker 5

Congrats, Pat, on all the progress.

Speaker 7

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?

Operator

Paul, why don't you go ahead and take this question? This is your this is your work.

Speaker 5

Yeah, sure. No, 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 BECs CDRs. So that's called bioenergy with carbon capture and sequestration.

Speaker 5

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 Chico 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.

Operator

Understood. Thank you.

Speaker 7

And then, you know, with respect to 45z, it looks like, you know, you're getting an extension on that in at least what has been proposed so far. So that's really good news for you guys. Are you potentially gonna start monetizing this right away in 2Q, Pat? And, potentially, you know, just wanna see if I heard it correctly, are we getting positive EBITDA in 2Q potentially or later in the year? Just wanted to get a little bit more concrete color on that.

Operator

Yeah. So, yes, we expect to monetize it sooner rather than later. These are credits that exist, you know, and they're already proven. Our CI scores are solid enough that unlike most companies, ours are really solid. I mean, we're metering carbon going down a hole.

Operator

So, yeah, we expect to monetize it, and that'll surprise the heck out of people. Right? And then as far as the EBITDA positive go, so that should, that should be overall for the year. We should be EBITDA positive is what we'd expect. That's what we're shooting for.

Operator

We're managing the cost side of things carefully. We see that we have these, streams of money that can come into us and we'll use those. But that's our goal is to do this. Because one of the questions that people always have, they always ask me, when are you gonna raise more money, Pat? You know, you're gonna run out of cash.

Operator

No, we aren't. Sorry. That's not the plan. The plan is we already have enough operations to be self sufficient. That's the idea.

Operator

And we can execute projects. We have a well developed intellectual property portfolio, engineering portfolio, project portfolio, mature projects. It's time to go execute those things. But the idea of big burn with no outcome, no, we'll have to still get money for projects to execute, whether we expand ethanol or we do a, but you know, when we, or we do ATJ, but we expand ethanol. Well, that's what OIC said they were interested in.

Operator

Great. We'll find out. So we are pretty, we feel pretty confident in where we are. Now in terms of the 45Z, I was in DC all last week talking to senators, representatives, and their staff. And I gotta tell you, it's pretty strong support for 45Z.

Operator

So I think they're gonna get it done. If they get the big, the big, beautiful bill done, I think we're gonna be in good shape. The principles in play, I think are paper for pay for performance. You gotta do something in order to get into the money. It's a very, it's more narrow rather than wide, meaning you have to actually do something in the, in the criteria remains stringent.

Operator

We are in good shape. I think that, extending it through 02/1931 was at least a year better than I was expecting. So I was kind of excited to see that. The rest of it, you know, well, I like one of the really important ones. They're getting rid of the indirect land use as a component of measuring CI outstanding because that's bogus anyway.

Operator

There's not any data that science based that supports that. And so that is one of the problems that in games that people play is they say, well, gosh, I gotta, I gotta waste feedstock. It has a zero. Well, no, they don't have a zero. Not really.

Operator

That's bogus. They have a, they have a charge just people don't want to look at that. Well, guess what? Now they said, well, corn doesn't have it. Has a zero feedstock.

Operator

I look score as well. Cool. That'll make it an improve in the future, the CI score, even at, Arjiva North Dakota plant and any of our other operations. And it also will help benefit the soybean people. And so this is one of the big, there's been a lot of game playing.

Operator

And, in the, in the Yuko area, you use cooking oil and half, where people are using counterfeit or the claims that people are using counterfeit, oils and stuff. So it just goes along. It's a brilliant idea. They did a good job. It makes sense.

Operator

It levels the playing field. I think they still should go pound on Corcia and Europe, on because of their biases against Us Agriculture. But overall, I gotta say, I was like pleasantly shocked, surprised. It's great. It's really good.

Operator

I hope they get it done. Hope the whole bill works and they, make it all happen. But and even if they don't, we're in good shape. We're in the we're in the money for 45 z already.

Speaker 7

Understood. Good to hear that. Congratulations, That's all I

Operator

have. Thank you. Yeah.

Speaker 1

Thank you. Our next question comes from Derrick Whitfield with Texas Capital. Your line is open.

Speaker 8

Hey, good afternoon, Pat and team.

Operator

Hey, how are doing?

Speaker 8

Maybe staying on 45B for the first question. Clearly, positive news yesterday on the extension of the credits through 02/1931 removal of indirect land use, but also the creation of a dairy RNG pathway. Yes. Could you speak to the amount you expect to receive for ethanol and dairy RNG molecules?

Operator

Well, it's a you know, it's proportional to the, you know, the CI scores. So, you know, when they when you have we're already at about a 20. You know, Chris mentioned in his comments a 21, and he rounded upward. I'm rounding downward because I think there's a couple of other things we can do still. But so we'll be down in the 20s before taking out indirect land use.

Operator

So that puts us down, what, another eight, ten points. That will be the lowest for ethanol plant. And so when you figure they're worth, what, a couple cents, you got to get below 50%. You got to get a 50% reduction before you get the money. Okay.

Operator

And then we we should be you know, it's 2¢ per CI point. So that's a it's gonna 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. The we we are firm believers that, you know, tax credits have to have a sunset.

Operator

They should not last forever because that creates wrong behavior. Everything's they can when you 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.

Operator

And that is the approach that we're seeing this Congress take and 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.

Operator

The issue had been that the, one of the things when you're using a biogas or making biogas is 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 also avoid then methane, the methane avoidance factor that goes into the LCA calculations. They punted it in the original 45Z calculations and they just averaged everyone together, whether it was landfill or dairy or whatever. And what that means is, for instance, I think it was worth, I don't remember exactly, Derek, it was like 20 points or something.

Operator

They, 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 three thirty, three 30 nine 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 I'll be very keen on seeing how all that dust settles.

Operator

The argument that the IRS had last time was that there's too much work in the, 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 gotta go go calculate it. That's very good for us because we have one of the best RNG facilities in the country.

Operator

So I, 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 helping agriculture and rural development. It's all of those things together that matter.

Speaker 8

Completely agree, Pat. And we're hearing from ministry that you're potentially gonna see a repeal against the transferability that was stated in that House bill. From a Senate perspective, what would you guys mean? Would you expect this to be very similar to what we saw from the House? Are there things that you're looking for out of that side that may be more favorable or less favorable for that matter?

Operator

No, I thought it was about I honestly, the only the thing that you're right on the transferability after 2027 of the tax credits, I actually think that that's a good thing. And here's why I think it can be a good thing. And this is this is a can be a good thing is that it forces investment in plants. If you want that to take advantage of that. So someone who has a tax burden needs to put up capital into a plant in order to get that tax credit.

Operator

That actually makes a lot of sense from if that's the intent is build capital, deploy plants. So I kind of liked that. And of course the alternative was that you can just sell the tax credit to anybody while that is convenient, but it, I like from a policy standpoint, I kind of favor, I like these things that favor industrial investment and growth. I also like the, the other language and some, I forget what bill it was. I just looking at it today where it was talking about depreciation and all that kind of stuff.

Operator

They're trying to make it favorable for investment in America. Outstanding. Good guys. This is a good thing. So I like that quite a lot.

Operator

So it's pretty good. Now remind me of the second part of your question there, Derek. I lost track of my mind.

Speaker 8

I think you covered it well. Relates to if any changes you would expect coming out of the Senate side versus the House.

Operator

You know, I think I expect noise in the Senate side. And the reason I expect noise is there's a fight that's afoot. And it's not in the it's not a, it's not a Senate fight. It's a fight of people. And it's, you know, there's a group that wants blenders credit.

Operator

Well, the blenders credit benefits, narrow group of people where a production tax credit benefits, a whole huge number of people. And so there's strong for a, a, a producing a producer's tax credit versus a blenders tax credit. And, you know, heck people like us are the ones doing the work anyway and taking the risk. The guys downstream blending aren't doing that. They're just blending.

Operator

So they, so there's that noise that's going to create some noise. It's going to show up in the form of maybe some alternatives, but I think they'll get beat back. So we've heard strong support on the Senate side, same way as on the house. However, you know, it's all gotta go through markup. There'll be twists and turns.

Operator

And in the end, I think it's gonna look a lot what we just saw from the house, maybe with a couple tweaks, but nothing substantial. This getting rid of leveling the playing field to indirect land use is a huge deal. This is the main way. Indirect land use is the way that enviros penalize US Agriculture and raise money for themselves. And, it's not okay.

Operator

Europe uses it as a hammer against feedstocks that could win their business. I mean, from an economic standpoint, they ban it, but then they go ahead and turn around and allow their own farmers to do things. So it's going to be very, very interesting to see let all this dust settle. And the 45z in the grand scheme of things is pretty small potatoes in that bill. It's a tiny, tiny thing at the you know, on the tail of the dog in the grand scheme.

Speaker 8

Pat, I'd be remiss if I didn't ask just one last question on your offtake agreements with Future Energy Global. Could you speak to the amount of value you're receiving for scope one and scope three emission credits in dollars per ton? And again, just in generalities here, I'm not looking for the exact number, just so that we can start to think about that incremental value from a voluntary perspective. And then just confirm that it's driven by additional requirements for the production of SAF.

Operator

Yeah. So I'm going have Paul answer this question. But Paul, if you give it to us, give a range of what's out there in the marketplace of the kind of credits and just kind of what you're seeing and what's happening. Because I think this is an important question because it is you know, I know that the analysts in general, they're always looking at the, LCFS or the 45Z, and they know what those are. This is a new thing, though.

Operator

So you kind of got to give them guidance on the dollars per ton.

Speaker 5

Yeah, sure thing. Great question and appreciate that. And I mean, these values are, well north of the types of carbon value that we see in LCFS markets today. So we can't give you well over in the hundreds of dollars a ton type of range. So we're pretty excited about that and really makes the case for the value of the carbon abatement and the book and claim case, because you're not going to have SAF at every airport, but you've got customers who want to access SAF.

Speaker 5

And that's where Future Energy Global can really help customers by taking these Scope 1s for airlines or the operators and the Scope 3s for the customer and basically giving them options to do this in booking claim style. So it really expands the capability and the market reach. And that's why we've got not just this first deal, but we hope that it's a series of deals that turn out this way.

Operator

Yeah. And the other thing that is a we're trying to make sure that we have access to that market directly rather than losing it to somebody who's blending in the middle. Because that's in historically what's happened with some of our competitive companies is that those scope threes in particular get lost in the channel somewhere and then someone else monetize them. We're going to try to keep that for ourselves. And it's an important part of the strategy.

Operator

And that's, of course, the whole reason of Verity and all the rest, and that really does help us.

Speaker 8

Extremely helpful. Thanks for your time, guys.

Speaker 5

You bet.

Speaker 1

Thank you. Our next question comes from Peter Gastrich with Water Tower Research. Your line is open.

Speaker 9

Thank you. Thanks for the presentation today. Congratulations on your progress. You've got some great momentum here. Just three questions I have about the ATJ30 and North Dakota.

Speaker 9

The first of all, it's great to hear that you have more than 50% capacity that's sold for ATJ30. Are these the entirely new discussions you're having? Or does this 50% reflect some excess demand perhaps from your volume to ATJ60? Effectively, 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?

Operator

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 financing. Where we're for we think it'll be more equity financed up there in North Dakota. And so it's a different kind of a contract.

Operator

FEG is representative of it. And there's other deals that we've done where we've sold, the jet fuel and, you know, part of the carbon to somebody else, and we keep the carbon and sell that to some, yet again, a third party. So it's pretty darn interesting. We're on the right track. It's about time we figured this out.

Operator

And part of it is because the DOE was you know, the DOE process is onerous. I mean, it's it's onerous. There's no question. They're very thorough. They're very good.

Operator

You know, 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, 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.

Operator

And so that makes it and that makes more sense. We'll eventually, I think, get that roped into ATJ sixty as well, but we gotta 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 move and move contracts around. We have the ability to do that.

Operator

It's just that here, we didn't have to start with the burden constraints.

Speaker 9

Okay, got it. Thank you. Second question is, how much expansion is theoretically possible North Dakota side? I know you can get up to 1,000,000 tons for the CPS capacity, but have you done any preliminary work on how much further you could scale up on ATJ if you wanted to go beyond ATJ 30?

Operator

Yeah. So here's how we're thinking about is that we've had people know about this. People in the industry, so colleague companies know that we're working on the ATJ 30 plant. And the economies of scale for an ATJ 30 are still pretty good. They're way, way, way better than a smaller plant.

Operator

So it's already in the flat part of the curve, and we've made some optimizations. So the economics look pretty good compared even with an eight comparing it to an ATJ 60. So we see the opportunity to do an ATJ 30, but then do carbon copies of them in other places and other locations in The U S and around the world. And remember, our paradigm is we're building these in a factory with garage. And so that de risk the living heck out of it because everything will be known to work.

Operator

By the time the modules show up on-site, they have to be assembled and you can do, regional, contractors to put it together and avoid these lump sum turnkey EPC project financing projects that really just add a lot of cost. So we like it a lot. We would see that the site up there has room to expand ethanol as well. Now that's an important thing because it's actually ethanol that generates more CO2 that we put down a hole. And so that's something we're looking at too.

Operator

And I got to say it's pretty darn exciting. I like it a lot. And so you can imagine that we do this in a series of things. I want that ATJ 30 because I think that's the commercially viable plant that we can sell around The US and around the world. We have other opportunities for ATJ 60 that are copied from a, from the one in South Dakota.

Operator

We have a couple sites that that'll play really well. We could expand that ethanol plant up there and then add yet another ATJ 30 up there. So it's, I think that's more how the business will unfold. And in the meantime, we'll have parallel projects where we've sold the plant to somebody else for the deployment, or we've licensed the technology to them. One of the things Paul mentioned in local property, people forget that we have a hundred plus patents or so that cover the supply chain.

Operator

You will first to do ethanol to jet, even though other companies claim to have done so. We have the technologies that work. It's with our partners with Accents. We have a lower cost technology in the future, or even Accents believes that we can win. So people forget that part of it, that intellectual property is a key component.

Operator

We'll use it here along the way too. So it's a very interesting game. I'm so glad and thankful that we're on solid financial footing. It's really good. And I like what I'm seeing coming out of Congress.

Speaker 9

Okay, great. That's all my questions. Thanks, Pat. Appreciate it. And again, congratulations.

Operator

You bet. Thank you very much.

Speaker 1

Thank you. This concludes the question and answer session. I would now like to turn it back to Pat Gruber for closing remarks.

Operator

I want to thank you all for, listening in on our call. This has been a very exciting quarter for us. I think next one is even going to be better is that, oh my gosh, you know, we're putting, we're getting revenue up. We're going to get EBITDA contributing. We're offsetting the costs.

Operator

We're going to continue to make progress through the year. It's quite a transformational year actually. And as I just got through saying, we have well developed projects and technologies. He's ready for deployment. And there's many people around the world interested.

Operator

We gotta go make that happen. And it doesn't come at a big cost to us anymore. We've already paid the upfront fees to go and get that done. All the learning curve stuff. We pretty much done it.

Operator

It's now it's all about deploying things. And you know what? We've got a balance sheet that we can live on with along with the income that we expect going forward. It's a pretty exciting time for Gevo best that, sorry. It's the best that I think I've ever seen here.

Operator

The best opportunity. Thank you all for joining us.

Speaker 5

Bye bye.

Speaker 1

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • Gevo reported $30.9 M in Q1 revenue, ended the quarter with $135 M in cash, achieved positive adjusted EBITDA in its North Dakota ethanol and RNG segments, and targets full-year EBITDA positive results aided by 45Z tax-credit monetization.
  • After acquiring the Chivo, North Dakota ethanol plant (67 Mgal/yr), Gevo achieved a 20 CI score, sequestered 29 kt of CO₂ in two months, and secured IRS approval to monetize 45Z carbon credits starting next quarter.
  • Its RNG division generated $5.7 M in revenue (up $1.7 M YoY) by leveraging an improved CI (–339) for LCFS credits, produced ~80 kBTU of RNG, and plans to monetize biogas 45Z credits alongside an RNG plant refinancing.
  • Gevo is advancing its modular ATJ 30 (30 Mgal/yr) alcohol-to-jet design—copy-pasted from its ATJ 60 project—for faster, lower-cost deployment, with over 50% of initial North Dakota capacity already pre-sold under equity-style offtakes.
  • On the carbon side, Gevo signed a book-and-claim deal with Future Energy Global for Scope 1 and 3 credits on 10 Mgal/yr of future SAF, tapping a premium voluntary CDR market (hundreds $/tonne) and expanding its durable carbon removal business.
AI Generated. May Contain Errors.
Earnings Conference Call
Gevo Q1 2025
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