Gevo Q2 2026 Earnings Report

Gevo EPS Results

• Actual EPS: -$0.01
• Consensus EPS: -$0.02
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Gevo Revenue Results

• Actual Revenue: $46.50 million
• Expected Revenue: $46.40 million
• Beat/Miss: Beat by +$101.00 thousand
• YoY Revenue Growth: N/A

Gevo Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 4:30PM ET

Gevo (NASDAQ:GEVO) is a renewable fuels and chemicals company that develops alternatives to petroleum-based products. Its technology platform is designed to convert renewable carbohydrate feedstocks into alcohols and hydrocarbon-based fuels and chemicals, including sustainable aviation fuel, renewable gasoline and other low-carbon products.

The company also produces ethanol, animal feed and corn oil through its Gevo North Dakota operations. Gevo has pursued technologies and projects intended to reduce the lifecycle carbon intensity of its products, including the use of renewable energy, carbon capture and sequestration, and renewable natural gas. Its projects are primarily focused on serving the transportation fuels, aviation and chemical markets.

Gevo was founded in 2005 and became a publicly traded company in 2011. The company is headquartered in Englewood, Colorado, and has developed projects in the United States, including renewable fuels and chemicals facilities in the Midwest. Patrick R. Gruber has served as Gevo’s chief executive officer and has been associated with the company’s development of renewable fuel technologies.

Gevo Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Gevo more than doubled its 2026 adjusted EBITDA outlook to above $60 million, supported by Canada’s Clean Fuel Regulation credits, higher 45Z tax-credit monetization, fuel sales, and cost efficiencies. The company expects neutral-to-positive full-year operating cash flow and meaningful positive cash flow in the second half.
• Positive Sentiment: Canada approved Gevo’s low-carbon ethanol pathway with carbon capture and storage, opening access to a compliance market of more than 1 billion gallons annually. Gevo expects to recognize sales of approximately 17 million banked credits in the third quarter and sees its carbon business reaching a run rate above $30 million in annual revenue, excluding those sales.
• Positive Sentiment: The Gevo North Dakota debottlenecking project remains on schedule and budget to raise low-carbon ethanol capacity to 75 million gallons per year by year-end 2026. A larger expansion to approximately 150 million gallons per year is targeted for completion in 2028, with financing expected in the second half of 2026 and a non-dilutive, project-level structure under discussion.
• Negative Sentiment: Gevo formally exited its South Dakota ATJ-60 project and recorded a $176 million non-cash impairment charge, producing a GAAP net loss of $177 million, or $0.75 per share. Management said the charge does not affect liquidity or operating cash flow, but operating expenses excluding the impairment rose 18% year over year.
• Negative Sentiment: The $600 million ATJ-30/Project Northstar estimate remains within the expected range, but securing bankable, multi-year offtake agreements is still required before a final investment decision. Gevo continues to target FID by year-end while pursuing project-level lenders and equity providers.

Presentation

[Operator]

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Gevo, Inc. Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. If you'd like to withdraw your question, simply press star one again. Thank you. I would now like to turn the call over to Eric Frey. Eric?

[Eric Frey, VP of Finance and Strategy at Gevo]

Good afternoon, everyone, and thank you for joining us on today's call to discuss Gevo's second quarter results. I'm Eric Frey, Vice President of Finance and Strategy at Gevo. With me today, we have Paul Bloom, our Chief Executive Officer, and Leke Agiri, our Chief Financial Officer. We also have Kyle James, our Chief Commercial Officer, and Greg Hanselman, our Executive Vice President of Operations and Engineering. Earlier today, we issued a press release that outlines our second quarter 2026 results and some of the topics we plan to discuss. Copies of the press release are available on our website at www.gevo.com. Please be advised that our remarks today, including 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.

[Eric Frey, VP of Finance and Strategy at Gevo]

Those statements include projections about the timing, development, engineering, financing, and construction of our potential expansion and debottlenecking of our Gevo North Dakota plant, our expected future cash flows and adjusted EBITDA, our expected carbon business revenues, our expected future tax credit monetizations, 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. 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.

[Eric Frey, VP of Finance and Strategy at Gevo]

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, Paul Bloom. Paul?

[Paul Bloom, CEO at Gevo]

Good afternoon, everyone. Gevo is a strong, growing business. Our operating results this quarter demonstrate that our company is set to deliver revenue growth and positive cash flow from operations. Our carbon strategy is working well. We are positioning the business for three stages of expansion that build on our existing operations and capture near and medium-term opportunities. Long term, we believe the businesses we are building today will serve as the blueprint for future growth. Our results also demonstrate that Gevo is not just a future story. Revenue increased 7% compared to the last quarter. Gross profit increased 70% in the past six months compared to the same period last year. Some of that increase reflects six full months of benefit from the Red Trail assets we acquired instead of five months during the same period last year.

[Paul Bloom, CEO at Gevo]

The majority of that increase reflects a durable strengthening of our core low carbon ethanol and renewable natural gas businesses. In the second quarter, our team continued to deliver on critical milestones we've communicated previously. Our debottlenecking activities in our Gevo North Dakota facility remain on target to increase our low carbon ethanol capacity to 75 million gallons per year by the end of 2026. We also advanced new carbon market pathways, identified new cost efficiencies, and optimized the sale of carbon attributes. As a result, we now expect full year 2026 non-GAAP adjusted EBITDA of more than $60 million, which is double our previous estimate. These developments are significant. They reflect a disciplined execution to unlock new revenue opportunities.

[Paul Bloom, CEO at Gevo]

A particularly important milestone is our recent Canada Clean Fuel Regulation, or CFR, pathway approval for low carbon ethanol with carbon capture and sequestration, which was granted in the second quarter. This pathway gives Gevo access to a more than 1 billion gallon per year compliance market for our low carbon ethanol beginning in the third quarter and further diversifies our cash flows internationally. It also gives us another lever to improve returns from our carbon business by directing carbon value to the markets where it is worth the most, whether bundled with our fuels in compliance markets or sold separately in voluntary markets. Importantly, the approval also applies retroactively to credits we banked for low carbon ethanol sold into Canada beginning in 2025. We've already sold approximately 17 million of these bank credits to be recognized in the third quarter.

[Paul Bloom, CEO at Gevo]

Going forward, we believe our carbon business, based on current capacity and market conditions, can deliver over $30 million per year in revenue on a run rate basis, excluding our bank CFR credit sales. We're not simply producing low carbon ethanol co-products in RNG. Those commodity products are a means to deliver energy that drops into supply chains today while also driving down carbon intensity, producing more efficiently, capturing and storing carbon, and selling high-quality credits into compliance and voluntary carbon markets. Importantly, we believe the carbon business model we are building today will be the same durable model we use in the future for SAF, isobutanol, and other renewable fuels and chemicals powered by our Verity Carbon Accounting digital solutions platform. We expect to grow with discipline by scaling the businesses we have today and delivering the products and solutions our customers and markets demand.

[Paul Bloom, CEO at Gevo]

At Gevo North Dakota, we are focused on growing our low carbon fuel and carbon businesses through a three-stage plan. First, de-bottlenecking the plant. Second, expanding capacity to double low carbon ethanol and carbon capture, and third, producing SAF. Stage 1 is our de-bottlenecking initiative to increase low carbon ethanol co-products, carbon capture, and associated incentive volumes by approximately 10%-15% by the end of this year. Meaningful progress was made during the second quarter. We remain on track and on budget to deliver this anticipated extra capacity, thereby enhancing revenues, growing adjusted EBITDA, and expanding our margins in 2027. This near-term expansion is fully funded and budgeted for this year and builds on our asset we already own and operate. We believe our Gevo North Dakota complex can create more value in the near term while also supporting longer-term growth.

[Paul Bloom, CEO at Gevo]

Stronger cash generation from Gevo North Dakota helps us reduce risk and enhances our future financing flexibility. Our Gevo North Dakota complex is better suited to support a strategic platform growth than the Lake Preston South Dakota site we were previously developing. Gevo North Dakota combines one of the strongest active on-site carbon capture and sequestration capabilities in the world, with access to advantaged local feedstocks, established rail and truck logistics, an experienced operating workforce, available land and pore space capacity for future growth, and it's in a business-friendly state that supports agriculture, energy, and carbon management. Given the strengths of the Gevo North Dakota complex and other business factors we considered, we have finalized our decision to exit our ATJ-60 project activities in South Dakota and formally discontinued other non-core project activities. As a result, we recognized $176 million one-time non-cash impairment charge.

[Paul Bloom, CEO at Gevo]

Leke will talk more about this non-cash charge. Continuing with our growth plans, Stage 2 at Gevo North Dakota targets doubling our capacity to about 150 million gallons per year of low carbon ethanol, with associated carbon capture and sequestration, and tax incentive opportunities. Financing efforts for this expansion are on track and are targeted to be completed in the second half of 2026, consistent with our previously announced arrangement and timeline with Ara Energy. Engineering, permitting, and initial equipment procurement for the expansion project are underway. We anticipate completion of the expansion in 2028 once financing is complete and construction commences. This expansion is expected to result in meaningful revenue and gross profit growth.

[Paul Bloom, CEO at Gevo]

Stage 3 of our growth plan contemplates the conversion of approximately 1/3 of Gevo North Dakota's expanded low carbon ethanol capacity into higher value synthetic aviation fuel through Project Northstar, also known as ATJ-30, which is our 30-million-gallon-per-year alcohol-to-jet development project. We are making good progress on this medium-term multi-year effort and provided details on our milestones in our recent business update. The team delivered our FEL3 engineering estimates on schedule in the second quarter.

[Paul Bloom, CEO at Gevo]

As we moved from FEL2 to FEL3, the capital estimate was refined based on substantially more detailed engineering, vendor engagement, and execution planning. The updated estimate of $600 million remains within the expected range and accuracy associated with an FEL2 estimate. We believe it provides much higher level of confidence as we approach FID. FEL3 showed very favorable results for the underlying alcohol-to-jet process modules, which were within 2% of the previous estimates.

[Paul Bloom, CEO at Gevo]

That's a good sign for enabling the development in a repeatable fashion at other locations in the future. The site-specific engineering and equipment logistics cost increased in FEL3, but we believe that the project's ROI remains attractive. Securing additional financiable offtake agreements is needed to reach FID and remains a gating item. These are complex multi-year economic commitments. We are making progress advancing these agreements from the current term sheet stage. We remain committed to advancing our ATJ-30 initiative in a disciplined way, sequencing capital based on customer demand, project financability, and policy support. As a reminder, we are currently pursuing non-dilutive project-level financing for the project. We do not have to choose between becoming a cash-generating low carbon fuels and carbon management business and building future ATJ projects. The Gevo North Dakota site and its near-term cash generation are expected to support ATJ in the future.

[Paul Bloom, CEO at Gevo]

We continue to target final investment decision for this initiative by the end of the year. I will now turn the call over to Leke to discuss our financial results and outlook in more detail.

[Leke Agiri, CFO at Gevo]

Thank you, Paul. This last quarter was an important one for Gevo. We delivered solid operating performance and completed planned maintenance and debottlenecking activities to expand capacity at our flagship North Dakota site. During the second quarter, we reported revenue of $47 million, compared to $43 million in the same quarter last year. This 7% year-over-year growth reflects consistent operations of our low carbon businesses, even with modest impact of planned downtime at our Gevo North Dakota site for maintenance and debottlenecking activities. In comparison to the first half of 2025, revenue during the first half of 2026 grew by 23% to $89 million, reflecting a full six months of the benefit of our Red Trail Energy acquisition, compared to just five months last year, coupled with continued solid performance in our carbon business.

[Leke Agiri, CFO at Gevo]

Gross profit was $20 million in the second quarter, representing a gross margin of 43%, compared to gross profit of $19 million and gross margin of 44% in the same quarter last year. Relative to revenues alone, we believe that gross profit is a meaningful barometer of a business performance. It captures not only our revenue performance, but also the impact of optimizing carbon, commodities, and incentives that are monetized as part of our business model. During the first half of 2026, gross profit was $36 million, an increase from $21 million in the first half of 2025, reflecting a full six months of the benefit of our Red Trail Energy acquisition, coupled with dynamic efforts to optimize 45Z tax credit generation from our assets. Note that we recognize the benefit of 45Z tax credit as a reduction to cost of goods sold.

[Leke Agiri, CFO at Gevo]

Operating expenses in the second quarter included a one-time non-cash impairment charge of $176 million. This was related to capitalized development and engineering expenses previously incurred, which was primarily associated with prior ATJ-60 project in Lake Preston, South Dakota, and other prior initiatives that are no longer in alignment with our strategic priorities. This non-cash impairment charge does not impact our cash position, liquidity, or operating cash flow outlook. It does not trigger additional cash payment obligation or affect the underlying economics of Gevo North Dakota, or ability to execute our development plan there as our core growth platform. Excluding the non-cash impairment charge, operating expenses in the second quarter were up 18% over the second quarter of 2025, which reflects an increase in G&A expenses primarily due to non-recurring employee severance and accelerated equity award charges.

[Leke Agiri, CFO at Gevo]

On a GAAP basis, net loss attributable to Gevo was $177 million, or $0.75 per share in the second quarter. On a non-GAAP basis, adjusted net loss attributable to Gevo was $1 million, or $0.01 per share. A reconciliation of this amount to the GAAP measure is included in today's earnings release. Non-GAAP adjusted EBITDA for the second quarter was $11 million. Note that the second quarter results did not include revenue related to our recently approved CFR pathway, which is expected to show up in the third quarter. We believe that this quarter's adjusted net loss, coupled with the growing adjusted EBITDA, reflect an ongoing improvement in our underlying earnings power of our business. This quarter establishes a strong foundation from which we expect meaningful adjusted EBITDA and operating cash flows during the second half of the year.

[Leke Agiri, CFO at Gevo]

As we look to the full year, we now expect 2026 adjusted EBITDA of more than $60 million, which is more than double our prior outlook of $30 million. This is a meaningful acceleration from our first half 2026 operating performance and is supported by four main drivers. First, the recently approved Canada CFR pathway and associated sales. We expect to begin realizing those sales in the third quarter. Second, our asset are on track to generate more than $70 million of 45Z tax credits that we expect to monetize in 2026, compared to $52 million last year. This is driven by updated policy guidance and our operational efficiencies this year that improve the carbon intensity of our operating assets. Third, continued operational execution of low carbon fuel sales, including revenue growth from our specialty fuels. Fourth, further fiscal discipline.

[Leke Agiri, CFO at Gevo]

Of the more than $70 million in 45Z monetization we expect to achieve this year, we have already closed on the sale of $20 million in 45Z credit after the end of the second quarter. With our current engagement with seasoned tax credit buyers, we expect to monetize the remaining approximately $50 million of credits and receive the associate proceeds by year-end. A reminder that our 45Z tax credit incentives are generated ratably each quarter based on the volume and carbon intensity of our low carbon ethanol and RNG production. These credits show up as a reduction in our cost of goods sold on our income statement and are a benefit to our adjusted EBITDA. Note that the cash proceeds from 45Z can lag behind the quarter in which the credit is generated. This results in some quarter-to-quarter variability in our cash flow from operations.

[Leke Agiri, CFO at Gevo]

While we continue to expect operating cash flow to be neutral to positive for full year 2026, we also expect meaningful positive operating cash flow in the second half of the year. This further demonstrates the underlying cash generating power of our businesses continue to strengthen. Turning to liquidity, we ended the quarter with cash equivalent, and restricted cash of $58 million. Importantly, this does not include approximately $16 million of cash proceeds from the monetization of 45Z credits that we have collected since the end of the second quarter. We're also excited about our performance in 2027 and beyond. Our debottlenecking project remains on track and on budget. We expect 2027 adjusted EBITDA to be broadly in line with our current 2026 full year target, after we factor in some non-recurring revenue this year and the debottlenecking production uplifts starting at the end of this year.

[Leke Agiri, CFO at Gevo]

Our expansion of Gevo North Dakota to double its production capacity is advancing, with financing on track for completion in the second half of 2026. This is consistent with our previously announced arrangement with our financing partner, Ara Energy. As Paul mentioned earlier, we also continue to push forward on securing bankable offtake contracts to enable securing accretive financing of our ATJ-30 project. We are engaged with various project-level capital providers and remain focused on moving forward to FID by year-end. In closing, we are seeing continued improvement in adjusted EBITDA and cash flow generation, supported by the strong underlying fundamentals of our business. We are confident in our ability to sustain our positive momentum as our near-term group projects at Gevo North Dakota continue to mature on schedule.

[Leke Agiri, CFO at Gevo]

Today's results anchors Gevo's growth trajectory, further strengthening our capacity to execute our long-term objectives while delivering sustainable value to our shareholders. With that, I will turn the call back to Paul.

[Paul Bloom, CEO at Gevo]

Thanks, Leke. We strengthened our financial position, doubled our expected 2026 adjusted EBITDA outlook, and are starting to show that Gevo North Dakota can serve as a scalable blueprint for profitable growth. We've talked before about the potential for a capital-light licensing or franchise-type model, and that opportunity is becoming more tangible as we demonstrate how our technology, operating model, and carbon capabilities can be deployed to meet customer demand and capture value across markets. We'll have more to share as these initiatives advance. For now, I want to thank our employees, partners, customers, and shareholders for their continued support. We are building Gevo with discipline, focus, and a clear path to creating long-term value. With that, we'll open the call for questions.

[Operator]

All right. Thank you very much. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Once again, star one. We will pause just a moment to compile the Q&A roster. All right. Looks like our first question today comes from the line of Jeff Grampp with Northland. Jeff, please go ahead.

[Jeff Grampp, Analyst at Northland]

Good afternoon, guys. Thanks for the time.

[Paul Bloom, CEO at Gevo]

Hey, Jeff. How are you?

[Jeff Grampp, Analyst at Northland]

Hey, Paul. Good, thanks. I wanted to dive into the $60 million EBITDA target that you guys have refreshed here lately and just wanted to understand some of the moving parts with respect to the approval to reach the Canadian markets. It sounded like some of that $60 million is a little bit of a one-time bump related to some volumes prior to getting that approval, like a retroactive credit, if you will. Can you help us understand how much of a windfall that might be, just to level set, I guess, what the true earnings power of the business is in 2026?

[Paul Bloom, CEO at Gevo]

Yeah, sure thing. That's a perfect question, right? We're really excited that the carbon business itself has grown now to what we think is a run rate of about $30 million a year going forward, right? That's going to be the part that goes forward into 2026. When we think about the CFR credits, this is a big part of what we wanted to get done because we had made a bet that we were going to be able to capture the value from these CFR credits once we got the approval. We had sold a lot of fuel in 2025 and the first half of 2026 here. We haven't been able to monetize those credits yet. But about 40%, a little more than 40%, are actually credits that were realized this year.

[Paul Bloom, CEO at Gevo]

When we think about that, there's a big component of those bank credits that really are in a run rate for 2026. That is a big component going forward. I would say that when you think about the $60 million that we're talking about going forward, remember, we're going to be completing the bottlenecking by the end of the year. We believe that this is really the upside of that, minus maybe these one-time events. We're really kind of flattish going into 2027. We think most of the $60 million is going to be a repeatable run rate on the forward basis. I don't know, Leke, if you got any other comments on that.

[Leke Agiri, CFO at Gevo]

Thanks, Paul. Generally agree with the description there. The way to think about it is what Paul just mentioned. As we complete the bottlenecking, there's going to be uplift in terms of production volume. That increases just our revenue profile. Then when we subtract out the non-recurring basis from 2026, effectively, we end up at that flattish projection as to where we are for 2026.

[Paul Bloom, CEO at Gevo]

Yeah. Remember, this is like, we're really thinking about how are we going to grow this EBITDA nicely. It's also about the increase in the 45Z tax credits that we've got, right? We're kind of putting all of these different levers together to make sure that we can have this durable business going forward that exceeds that $60 million, really.

[Jeff Grampp, Analyst at Northland]

Got it. Thanks for the details. For my follow-up, just sticking in the Canadian market, do you guys have an estimate? I know this changes as market prices and dynamics change, but round numbers, how much of your ethanol do you expect to send to Canada in the second half of this year? Seeing some of the pricing points, it seems like that's the most economic market for you, but perhaps there's some other factors at play that might, I don't know, make sense to send to other markets, or if there's any constraints to how much you can send to Canada. Thanks.

[Paul Bloom, CEO at Gevo]

Yeah. No. Again, great question. This is the whole point of our business on carbon arbitrage, right? We want to make sure that we've got all the levers that we can pull to maximize the returns for Gevo and our shareholders. Having this new lever that we can send, as Canada is a very strong market. Over a 1 billion gallon opportunity for us. Obviously, we're a lot smaller than that, we want to continue to maximize the volumes to where we're going to get the highest returns. Really no limitations there on how much we can send. We're going to continue to make sure that we've got the right certifications and everything in place to do that. We have to look at the other markets. We have to take a look at how's the voluntary market developing.

[Paul Bloom, CEO at Gevo]

That's something that we talked about because we've got more interest in that side. You saw that in our business update, we talked about Nasdaq, as a second year that they bought carbon from us on a substantial size buy. We're always weighing how do we place the carbon in either a compliance market or a voluntary market. What's going to give us the total return that we're looking for? How do we diversify our business, too? Because we don't want all our eggs in one basket. I think that's the thing that we've learned about being in the fuels and carbon markets, that we want a good mix there and be able to play these off of each other.

[Jeff Grampp, Analyst at Northland]

That makes a lot of sense. I appreciate the details. I'll turn it back.

[Operator]

Our next question comes from the line of Amit Dayal with H.C. Wainwright. Amit, please go ahead.

[Amit Dayal, Analyst at H.C. Wainwright]

Thank you. Good afternoon, everyone. Thanks for taking my questions.

[Paul Bloom, CEO at Gevo]

Hi, Amit.

[Amit Dayal, Analyst at H.C. Wainwright]

Congrats on all the progress. Hi, Paul. On the ethanol expansion, Paul, can you remind us what the CapEx requirements are going to be, please, on this project?

[Paul Bloom, CEO at Gevo]

We haven't disclosed the capital requirements on the ethanol expansion. If you flip back to the debottlenecking, we said we were deploying about $24 million of capital, in that range. About half of that was going to operational reliability. The other half was going to the actual debottlenecking to improve the output from 67 million gallons to 75 million gallons. We'll have more details as we get further along here, but it's really about getting this done and getting our deal done with Ara Energy. We're feeling really good about that and expect to get this done within the next few months because we want to then move directly into the execution. As we mentioned, we're moving quickly on this and looking at permitting. We're looking at a lot of the other engineering things. All that's well underway.

[Paul Bloom, CEO at Gevo]

Because it essentially doubles what we're already doing today at Gevo North Dakota. Because the carbon business is working, because we're able to monetize and kind of firing on all cylinders, monetizing tax credits, this is the most accretive project that we have in the hopper. We want to get this to the finish line.

[Amit Dayal, Analyst at H.C. Wainwright]

Understood. We'll have maybe more color on this in the 3Q earnings call?

[Paul Bloom, CEO at Gevo]

Most likely. I think the biggest thing, Greg, you can jump in here, too. Greg Hanselman's on the line with us. Greg, you want to talk about what your expectations are on.

[Greg Hanselman, EVP of Operations and Engineering at Gevo]

Yeah.

[Paul Bloom, CEO at Gevo]

Capital?

[Greg Hanselman, EVP of Operations and Engineering at Gevo]

We don't know the exact timing, but the engineering team is working hard on designing an integrated plant. This isn't like two separate facilities. We really want to optimize the CapEx and the OpEx to drive the best synergies for the long term. We don't have all those answers yet, but we're working hard to solidify that so we have the answer when the time is right, and we bring that together later in H2.

[Paul Bloom, CEO at Gevo]

Very much like what we're doing on ATJ, working through an FEL2, FEL3. We're refining these estimates. Today, we're not there yet on refining that estimate to where we want to be, but we'll keep moving that forward so we have a much finer point on this when we're able to communicate that, Amit.

[Amit Dayal, Analyst at H.C. Wainwright]

Okay. Understood now. Thank you for that. For ATJ-30, would you potentially go with Ara or are you looking at other financing options and partners?

[Paul Bloom, CEO at Gevo]

I'll let Leke chime in here on some of the updates we've got on financing. This has been something that we've been working on for a long time. The key thing again is that we've completed the FEL3 estimates like we talked about. We're working on these financeable offtakes. Really when we think about financing, you need to make sure you've got a bankable project. The discipline that we're putting in this is making sure that we not only have the offtakes, but we've got the right customers, the right customers who are going to be there because it's going to take us a few years to build this plant. Then have long-term, very complex, multi-year financial arrangements that are going to support this project.

[Paul Bloom, CEO at Gevo]

It's a mix of making sure that we've got the offtakes and that we've really got the right set of customers who see us. The financing at that point, it kind of falls into place because then you can start to look at what's your risk profile on the overall project. We are working through that de-risking today. Leke, I don't know if you want to make a comment on the other-

[Leke Agiri, CFO at Gevo]

Yeah.

[Paul Bloom, CEO at Gevo]

Groups you've worked with.

[Leke Agiri, CFO at Gevo]

I think just to probably sum it up, in terms of cap raise or capital raise profile, we're engaged with multiple project-level lenders and equity providers. Just not Ara at this point. Also just to express really the excitement that we have is as we look to the development of ATJ-30, what's also very important is to highlight our existing operations, the cash flows that we're generating now. Those actually enable the ability for us to fund ATJ-30 from a development perspective, but also fund our portion of the construction capital as well. That's the really exciting part. I think the engagement with the project-level capital is on the right track.

[Leke Agiri, CFO at Gevo]

As Paul mentioned, as we secure the bankable offtakes with the right partners, with the right economics, the puzzle comes together in terms of just moving forward with the project at the right time.

[Paul Bloom, CEO at Gevo]

Just to maybe close the loop with Ara Energy, we're really laser focused on the expansion today, right? That's what we need to get done. Like Greg was saying, move that forward so we can get 2028 will be here before you know it, so we've got a full court press on making sure that we can get that project executed.

[Amit Dayal, Analyst at H.C. Wainwright]

Thank you guys for the color. Just last one from me, maybe just on Verity. Any updates on progress with commercialization, et cetera, for that offering?

[Paul Bloom, CEO at Gevo]

Great question. Verity, one of my favorite topics. With Verity, I think the thing we're really learning more than anything else is as we get to this run rate of $30 million on our carbon business, Verity is just a key component of how we put all that together. It goes back to the original reasons of why did we build this platform, we can take one source of data from multiple areas, whether that comes from the farm inputs, whether that's from the energy inputs, carbon capture, tie it all together, and then use that tool to basically be able to substantiate and track our claims and carbon accounting into multiple markets, whether that's Canadian CFR, whether that's 45Z, whether that's a voluntary market.

[Paul Bloom, CEO at Gevo]

It's becoming, I would say, a much bigger part of what we see as a key component of the carbon business for us. The other thing with that is that we're just getting to this point now in the development phase, but not only can we track, but we can optimize. You start to think about now, how do we use Verity as an optimization tool? I think internally, we're very optimistic about how Verity's contributing value to the carbon business results that you're seeing today. Externally, we've got a number of customers. I would say a little bit slower on the uptake of external development, mostly because we still don't have good clarity on things like 45Z ag benefits, right?

[Paul Bloom, CEO at Gevo]

Those are kind of some of the big things that we've looked at. We're still trying to figure out how much are we going to be able to pull in from a compliance type tool, right? As we look at this, not everybody's running a carbon business. I think we're actually the only ones running a carbon business like us. I think as this catches on, there'll be more demand for Verity out there, but we still have the eight customers that we've had in the past and continue to develop that portfolio, but the external development's definitely been a little slower on the uptake.

[Amit Dayal, Analyst at H.C. Wainwright]

Understood. No, I appreciate all the color, guys. Thank you so much. I'll step back in queue.

[Operator]

All right. Thank you, Amit. Our next question comes from the line of Derrick Whitfield with Texas Capital. Derrick, please go ahead.

[Derrick Whitfield, Analyst at Texas Capital]

Thanks. Good afternoon. Congrats on the quarter and the updated outlook.

[Paul Bloom, CEO at Gevo]

Well, thanks, Derrick.

[Derrick Whitfield, Analyst at Texas Capital]

Got two questions for you guys, both on ethanol. With respect to the ethanol expansion to 150, could you speak to the expected capital structure for the expansion? Second, staying on the ethanol facility, it's clear that you guys operate a very low CI plant based on efficiency and CCUS. Given that you operate in a more progressive region for CSA practices, how are you thinking about the benefit of expected CSA policy on your 45Z credits?

[Paul Bloom, CEO at Gevo]

Yeah, both great questions. Thanks. I'll start with the first one. On the capital structure, right, as we work through the details with Ara on the expansion, we'll stay in the lead, right? We're going to have a controlling interest in the plant. Obviously, we will operate the plant, as we work through that, everything's going to be consolidated on our balance sheet. That's the plan going forward. I don't know, Leke, you want to jump in there?

[Leke Agiri, CFO at Gevo]

Yeah. The only thing to add to that is there is going to be project-level debt that we also use to optimize the financing strategy. As Paul mentioned, we are targeting a controlling interest. We'll consolidate the expansion project, the rest of the capital stack is going to be provided by us and Ara. Which again, it goes back to the point I was raising earlier. Our existing operations generating the right level of EBITDA on a recurring basis, cash is coming in for us to be able to fund our ownership interest of the expansion project.

[Paul Bloom, CEO at Gevo]

Yeah. Again, just to be clear, right? Again, a non-dilutive financing approach at that project level-

[Leke Agiri, CFO at Gevo]

That's right

[Paul Bloom, CEO at Gevo]

That Leke's talking about. Moving on to your second part of the question, we do have one of the lowest CI scores out there. From a 45Z ag benefits perspective, the question is always how much lower can you go? We do have a little bit, that's going to be, Greg can chime in here, too, but we've got more energy optimization, right? When you think about CI, carbon intensity, it's kind of a proxy for a lot of good things that happen. The best one is called efficiency, right? As you continue to do more with less or have more output with less input, you drive down the carbon intensity. You also drive your economics in a favorable way for your projects. We're laser focused on that.

[Paul Bloom, CEO at Gevo]

Again, we already have a low CI score, probably compared to a lot of others, we've got a smaller amount that we can take advantage of, like a CSA or the ag benefits, regen ag benefits that are coming in, because you can't go lower than zero, right? We're already getting pretty close. It could be a few million dollars that we're going to be trying to pull out of that, but it's really going to come to that we're going to need more bushels. We've got an expansion coming. We think that this is just a bigger deal, again, we're optimistic that this is the right way to go because climate-smart agriculture or regen agriculture, all of those things help to also enrich the carbon in the soil.

[Paul Bloom, CEO at Gevo]

They make the soils more robust to weather events. We think that this is just the right way to move forward. Farmers can do more with less too, right? It's a good practice to have. I don't know, Greg, if you want to talk about anything else that we've got.

[Greg Hanselman, EVP of Operations and Engineering at Gevo]

No, I'd just add on the CI score, we do have a little room to go. Volume is a nice lever to dilute out fixed, obviously. Energy is there's less consumption as you get that next unit at the top end of a big facility. Working and solving for that in our modeling and our design is a key part of what we're working on, not only in the debottlenecking, but also the expansion project.

[Paul Bloom, CEO at Gevo]

I think the other thing that we're really focused on is that reliability, because we can't get time back. Our operational excellence, we're laser focused on making sure that we're a great operator. The only downtime we have is the planned downtime. That's the thing that gives me a lot of optimism about this growth plan that we have is we're already demonstrating this. We've been doing the debottlenecking now this year and thinking about that. Take a look at our website when you get a chance. We've got some time-lapse photography of everything that we've been doing. It's fantastic. Team's really been executing well. We've been building and growing while operating, right? It's not an easy thing to do. We need to do that safely.

[Paul Bloom, CEO at Gevo]

We need to make sure that that's at the top of our list. Continue to be focused on that. We're going to move into the next phase, where we're really going to be doing the expansion. We'll move into the third phase beyond that, where we've got the ATJ project. I think my confidence level's really building with the entire team because they're able to execute on this. You can see it, right? Again, go to the website, check out our photos. It's pretty cool stuff.

[Derrick Whitfield, Analyst at Texas Capital]

Great. Thank you guys, and congratulations on all your progress.

[Paul Bloom, CEO at Gevo]

Thank you.

[Operator]

All right. Thank you, Derrick. It looks like our final question today comes from the line of Peter Gastreich with Water Tower Research. Peter, please go ahead.

[Peter Gastreich, Analyst at Water Tower Research]

Thank you very much, and congratulations on the results and thanks for taking my question. Just a couple questions. First of all, for Frontier Infrastructure and Carbonfuture, they announced a new partnership a few days ago to market CDRs from ethanol CO2. That's a parallel initiative, right? Does that have any implications to you in terms of advancing the strategy and what can you share about that?

[Paul Bloom, CEO at Gevo]

Peter, I think CDRs just in general, right? This is what we're selling today, right? The CDRs are the voluntary side of the carbon market. CDR stands for carbon dioxide removal. We've been certified from the very beginning through Puro.earth, and that's the business that we continue to look at growing. We sold 8,500 tons to Nasdaq. Overall, we were actually just finalizing some more transactions around the carbon business on the voluntary side. We think this is great. If you look at the overall macros on that business, about $12 billion has been actually committed in CDR purchases, but only about 3.3% of that has been actually delivered. That comes from a website called cdr.fyi. I think that is a really good place to look. We're actually number five on the leaderboard on cdr.fyi as a supplier.

[Paul Bloom, CEO at Gevo]

The thing that I think is great about what we're doing is we're one of the handful of companies who can actually not only just talk about CDRs and sell CDRs, but we can deliver those CDRs. We're becoming, I would say, as you work through the quality requirements, which are very high-quality carbon, we're going to stay focused on delivering that high-quality product, that we're a trusted supplier in this space.

[Peter Gastreich, Analyst at Water Tower Research]

Okay, great. Thank you. Just a second question on the EBITDA challenge, which you discussed in the Q1 results. Have you thought about where some of the low-hanging fruit could lie? Also with respect to South Dakota, are there any other benefits to your cost that could be reflected, for example, in the Gevo business segment or other that could come up in subsequent quarters?

[Paul Bloom, CEO at Gevo]

Look, we're very happy with how we've been progressing the EBITDA challenge, there's a lot in the hopper. We've gone through, Leke can provide the details. He's the champion of the EBITDA challenge here at Gevo. We've identified quite a number of opportunities and started to execute on those. Leke, I'll let you give some of the good news.

[Leke Agiri, CFO at Gevo]

Absolutely. Great question. In terms of EBITDA challenge, we're at a place where we've identified over three dozens of opportunities in front of us, which are really probably half of it is low-hanging fruit. To date, we've actually implemented about 50% of those identified items, which is not necessarily related to ATJ-60 or the South Dakota project. This is actually recurring operational efficiencies that we can actually just implement this year. During the second half of this year is when we expect to see some of those executions and implementation to start manifesting in our financial performance for the year as well.

[Leke Agiri, CFO at Gevo]

Where we are tracking today is our Q3 and Q4 results is going to be reflecting our focus and the implementation of the EBITDA challenge, we're on the right trajectory to see some very, very groundbreaking milestones on that as well.

[Paul Bloom, CEO at Gevo]

It's really the combination of how do we continue to unlock revenue through new pathways, things like the CFR, right? We're focused on that. That was part of the EBITDA challenge, we've got more pathways to unlock. The other part is just how do we really manage and control our costs going forward really have a disciplined approach to these are the things we need to accomplish making sure that we understand what that's going to return for us and our shareholders as we do that.

[Peter Gastreich, Analyst at Water Tower Research]

Okay, that's great. Thank you very much.

[Operator]

Thank you, Peter. Ladies and gentlemen, that does conclude our question-and-answer session, so I will now turn the call back over to CEO Paul Bloom for closing remarks. Paul?

[Paul Bloom, CEO at Gevo]

Thank you. Hey, this quarter shows that Gevo is really executing. We've got stronger adjusted EBITDA. We're improving our cash generation. We have a working carbon business and a disciplined growth plan centered on Gevo North Dakota, and that's the platform that we intend to scale. Again, I just want to thank all our colleagues and really our partners and our customers and our shareholders for all the support. Thank you very much.

[Operator]

Thanks, Paul. Ladies and gentlemen, that concludes today's call. Thank you so much for joining, and you may now disconnect. Have a great day, everyone.

Participants

Executives

• Eric Frey, VP of Finance and Strategy
• Paul Bloom, CEO
• Leke Agiri, CFO
• Greg Hanselman, EVP of Operations and Engineering

Analysts

• Jeff Grampp, Analyst at Northland
• Amit Dayal, Analyst at H.C. Wainwright
• Derrick Whitfield, Analyst at Texas Capital
• Peter Gastreich, Analyst at Water Tower Research