Gevo, Inc. (NASDAQ:GEVO) Q1 2025 Earnings Call Transcript

Gevo, Inc. (NASDAQ:GEVO) Q1 2025 Earnings Call Transcript May 13, 2025

Gevo, Inc. beats earnings expectations. Reported EPS is $-0.09, expectations were $-0.1.

Operator: Good day, and thank you for standing by. Welcome to the Gevo Incorporated First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] 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.

Eric Frey: Good afternoon, everyone, and thank you for joining us on today’s call to discuss Gevo’s first quarter 2025 results. I’m Eric Frey, Vice President of Finance and Strategy at Gevo. With me today, we have Patrick Gruber, our Chief Executive Officer; Lynn Smull, 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 2025 results and the topics we plan to discuss. A copy of the press release is 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. 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. 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. Pat?

Patrick Gruber: Thanks, Eric. What a change since the last quarter of 2024. In this first quarter of 2025, we generated $29 million of revenue. Now this is only with two months of operations under our belt at Gevo North Dakota. The ethanol and carbon sequestration are working well, contributing value as we expected. 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 to 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. 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&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 Gevo North Dakota. We don’t need clarification around agricultural benefits. Our carbon intensity score is already low at about 20. The more we learn about the Gevo North Dakota site, the more we like it. It has an ethanol, ethanol plant with 67 million 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’ve got railroads, the roads, the sequestration operation has had a few years of operation without issue. 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 1,000 year well. We own it. Being vertical is an advantage. We’ve run into a pleasant surprise too. 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 already — and already well run, well-built ethanol plant that’s working great.

In fact, we think we can get that an ATJ plant built faster up there in North Dakota than in South Dakota, leveraging design and engineering we’ve already done for our ATJ60 plant. We believe we can keep the capital cost down too, making the ATJ project Gevo 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 million gallons per year of ATJ, maximizing the modularization, which reduces risk at the project and lower labor costs. It’s exciting enough that several companies from around the world who 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. Now this is separate than the LCFS credits in California or 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 Gevo North Dakota alcohol-to-jet plant sold out. The traditional commitment from the Department of Energy is still in place for our ATJ60 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 there’s work to do on their side, but we have work to do on a variety of fronts too, changing certain offtake 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 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. While we expect that we will get the DOE loan done eventually, we aren’t waiting around to get ATJ capacity deployed. Hence, you can see why we wanted that Gevo North Dakota site with all of its advantages. As you’ve 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. Jet fuel in fact is going to 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 or used cooking oil or animal fat is the second best way economically. 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 production, 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.

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 million 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. 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.

Lynn Smull: Thanks, Pat. Let’s go over the numbers. We ended the quarter with $135 million in cash, cash equivalents and restricted cash. Combined operating revenue and other net income was $30.9 million for the first quarter. Our RNG subsidiary generated $5.7 million in revenue during the quarter. This reflects an increase of $1.7 million 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 Gevo North Dakota or GevoND for the two months of February and March, income from operations was $0.5 million and adjusted EBITDA was $1.8 million.

This does not include expected growth this year from our monetizing the ethanol 45Z. At GevoRNG, income from operations was $1.1 million and adjusted EBITDA was $2.7 million 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. Turning to our Gevo and GevoFuel segments, which include R&D, project development and other operating costs, including the development of our ATJ projects, combined net loss from operations was $21.7 million and adjusted EBITDA loss was a combined $19.9 million last quarter. Company-wide, consolidated loss from operations was $20.1 million last quarter with non-GAAP adjusted EBITDA loss of $15.4 million.

We expect continued adjusted EBITDA improvement throughout the year driven by the monetization of 45Z, increased RNG value from our new negative 339 CI score and ongoing performance at Gevo North Dakota. With that, I’ll turn it over to Chris.

Chris Ryan: Thanks. I’ll expand a bit more on operations this past quarter. Since completing the acquisition of Gevo North Dakota at the end of 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. And this is all part of our copy paste approach to building out ATJ capacity for ourselves and for others. Regarding operations at Gevo North Dakota, Gevo’s first quarter 2025 results reflect the impact of just two months of February and March from Gevo North Dakota.

During those two months, Gevo North Dakota operated exceptionally well producing over 11 million gallons of low carbon ethanol, while selling over 40,000 tons of high protein animal feed and 3 million pounds of corn oil, all from less than 4 million 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. 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 GREET model, we’ve avoided [Technical Difficulty] 7,000 metric tons of carbon emissions as a result of the use of our low carbon fuels.

At GevoRNG, where we convert dairy manure into renewable natural gas, we produced about 80,000 million 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.

Paul Bloom: 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 Gevo North Dakota and RNG as we are negotiating our first 45Z tax credit sales. Back in December, we received our Form 637 approval notifications from the U.S. 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. 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 1 and Scope 3 emissions credits tied to 10 million gallons per year of fuel from our future ATJ production. That value is in addition to and separate from the physical fuel, written value and other state and federal tax credits we expect to obtain and it shows the market value of our carbon attributes.

By separating the carbon attributes from the physical fuel, we anticipate this unique booking 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. In many cases, we’ll be developers, licensors and strategic investors. We’ll have more to share in the future as these opportunities develop.

And with that, back to you, Pat.

Patrick Gruber: 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, strengthen the rural economy. 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. Well, 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 lifecycle, making it all auditable by anyone ideally, visible and most importantly, all based on science and data, but this is going to be extremely important in the future. 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. 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 real crops that adds protein and nutrition to the food chain, 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. We’re now ready to go to the open line for questions. Operator, please go ahead.

Operator: [Operator Instructions] Our first question comes from Dushyant Ailani with Jefferies. Your line is open.

Q&A Session

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

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

Whitney Mutalemwa: Got it. I understand. And then just as a follow-up, relating to ATJ30, 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 ATJ60? Yeah. That will be all. Thank you.

Patrick Gruber: Same or sooner than ATJ60 is my guess. Yeah. We have been working on the ATJ30 for a quite a time here, and it is a copy, edit, paste type of an approach and that we already have these designs worked out for the ATJ60. This is about making it smaller and but the concepts are the same, which is that’s actually the harder part, getting — a lot of companies are going to fail because they simply don’t know how to design a commercial plant well, we do. That’s our background. So those kind of things have already been thought through. So we expect it to be more straightforward. We also expect that, it’s going to generate a lot of interest because it’s going to be a lot cheaper to build than an ATJ60 that has project financing.

So that’s going to be very interesting. We’ll talk more about it once I have more numbers baked and then who else was going to participate with us up there. But it’d be a project level game again for us in that, except for it’s going to be adding on to 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, it’s like, all right. This is going our direction finally.

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

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

Patrick Gruber: Paul, why don’t you go ahead and take this question? This is your work.

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

Amit Dayal: Understood. Thank you. And then with respect to 45Z, it looks like 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 going to start monetizing this right away in 2Q, Pat? And potentially, just wanted to 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.

Patrick Gruber: Yeah. So — yes, we can — expect to monetize it sooner rather than later. These are credits that exist, 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. 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, that should be overall for the year. We should be EBITDA positive is, what we’d expect, that’s what we’re shooting for. 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 going to raise more money, Pat?

You’re going to run out of cash. 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. 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, when we — or we do ATJ, but we expand ethanol. Well, that’s what OIC said they’re interested in. Great. We’ll find out. So we are pretty — we feel pretty confident in where we are. Now in terms of 45Z, I was in D.C. all last week talking to senators, representatives, and their staff.

And I got to tell you, it’s pretty strong support for 45Z. So I think they’re going to get it done. If they get the big the big beautiful build done, I think we’re going to be in good shape. The principles in play, I think are paid for performance. You got to 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 and the criteria remains stringent. We are in good shape. I think that, extending it through 2031 (ph) was at least a year better than I was expecting, so I was kind of excited to see that. And the rest of it, 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.

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 got to waste feedstock. It has a zero. Well, no. They don’t have a zero. Not really, 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 iLUX score as well. Cool. That’ll make it and improve in the future the CI score even at our Gevo 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 and in the Yuko (ph) area. You use cooking oil and half a, where people are using counterfeit or the claims that people are using counterfeit, oils and stuff.

So it’ll — it just goes along. It’s a brilliant idea. They did a good job. It makes sense. It levels the playing field. I think they still should go pound on CORSIA and Europe, on because of their biases against U.S. agriculture. But, overall, I got to say, I was, like, pleasantly shocked, surprised. It’s great. It’s really good. 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 money from 45Z already.

Amit Dayal: Understood. Good to hear that. Congratulations, guys. That’s all I have. Thank you.

Patrick Gruber: Yeah.

Operator: Thank you. [Operator Instructions] Our next question comes from Derrick Whitfield with Texas Capital. Your line is open.

Derrick Whitfield: Hey. Good afternoon, Pat and team.

Patrick Gruber: Hey. How are you doing?

Derrick Whitfield: Maybe staying on 45Z for the first question. Clearly, some positive news yesterday on the extension of the credits to 2031 removal of indirect land use, but also the creation of a dairy RNG pathway.

Patrick Gruber: Yes.

Derrick Whitfield: Could you speak to the amount you expect to receive for ethanol and dairy, RNG molecules?

Patrick Gruber: Well, it’s a — it’s proportional to the CI scores. So, when you have — we’re already at about a 20. Chris mentioned in his comments a 21, and he rounded upward. I’m rounding downward because I think there’s a couple other things we can do still. But so, we’ll be down in the 20s before taking out indirect land use. So that puts us down, what, another 8, 10 points. That will be the lowest CI score ethanol plant. And so when you figure they’re worth, what a couple cents — you got to get below 50 per — you got to get a 50% reduction before you get the money, okay. And then we should be it’s $0.02 per CI point. So it’s going to be pretty healthy. Now what they’re trying to do is sponsor economic development, growth, investment, jobs, that’s actually what they’re trying to do.

We are firm believers that, tax credits have to have a sunset. They should not last forever because that creates wrong behavior. Everything’s taken when you do that, it really people get starry eyed in what they think they can do. No. They actually should help pay for a plant and its capital and the jobs that are created, and that’s the right idea. And that is the approach that we’re seeing this congress take in their attitude. It’s great. So it’s significant. And then on the RNG side, that was fascinating and caught me by surprise. I was shocked that they included that because I wasn’t expecting them to. The issue had been that they — one of the things when you’re using a biogas or making a biogas, you can do it rather than letting, whatever the raw material is just digest and spew methane into the atmosphere.

You can — by using the, RNG techniques or the processing, you can collect that, and you will also avoid then methane. It’s a methane avoidance factor that goes into the LCA calculations. They punted it in the original 45Z calculations, and they just average everyone together whether it was landfill or dairy or whatever. And what that means is, for instance, if he was worth I don’t remember exactly, Derrick, it was, like, 20 points or something. It was a — it was only, like, a negative 20 or something. Very small, but they averaged all types — all RNG methodologies altogether. What they’re calling out here now is that you’ve got to do it discreetly. So it’ll look probably more like a California where we’re at a minus 330, 339 score. So they have work to do to go figure that part out.

In the meantime, that doesn’t stop us from already monetizing that RNG credit. But I’ll be very keen on seeing how all that does settles. The argument that the IRS had last time was that there’s too much work in the working group. In the prior administration, there’s just too much work to keep track of it all, so they just averaged everything. Well, this one calls out that they got to go calculate it. That’s very good for us because we have one of the best RNG facilities in the country. So like I say, I was — this was a good week in terms of what I’m seeing in these bills. And what’s fascinating and good is that the Republican leadership, they understand what we’re doing. They know us pretty well. And they know that we’re abating carbon, but they also know we’re doing cost effective products and creating jobs.

And it helping agriculture and rural development. It’s all of those things together that matter.

Derrick Whitfield: Completely agree, Pat. And we’re hearing from ministry that you’re potentially going to see a repeal against the transferability, that was stated in that house bill. From a senate perspective, what would you guys I 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?

Patrick Gruber: No. I thought it was about — honestly, the only — the thing that you’re right on my 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 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, that actually makes a lot of sense from, if that’s the intent is build capital, deploy plants. So I kind of like that. And of course, the alternative was that you can just sell the tax credit to anybody. Well, that is convenient. But I like from a policy standpoint, I kind of favor — I like these things that favor industrial investment and growth.

I also like the other language of some — I forget what bill it was. I was just looking at it today where I was talking about depreciation and all that kind of stuff. 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. So it’s pretty good. Now remind me of the second part of your question there, Derrick? I lost track of my mind.

Derrick Whitfield: I think you covered it well. Just in it relates to if any changes you would expect coming out of the senate side versus the house.

Patrick Gruber: 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 senate fight. It’s a fight of people and there’s a group that wants blenders credit. Well, the blenders credit benefits a narrow group of people where a production tax credit benefits a whole huge number of people. And I saw a strong support for a – producing, a producer’s tax credit versus a blender’s tax credit. And 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. 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, it’s all got to go through markup. There’ll be twists and turns. And in the end, I think it’s going to look a lot like what we just saw from the house, maybe with a couple tweaks, but nothing substantial. Just getting rid of leveling the playing field by indirect land use is a huge deal. This is the main way. Indirect land use is the way that Enviro’s penalize U.S. agriculture and raise money for themselves. And, it’s not okay. Europe uses it as a bit, a hammer against feedstocks that could win their business. I mean, from an economic standpoint, if they ban it, 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 — on the tail of the dog in the grand scheme.

Derrick Whitfield: And, Pat, I’d be remiss if I didn’t ask you 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 1 and Scope 3 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 additionality requirements for the production of staff.

Patrick Gruber: Yeah. Well, so I’m going to have Paul answer this question. But, Paul, if you give it to — 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, 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. So you kind of got to give them guidance on the dollars per ton.

Paul Bloom: Yeah. Sure. Thanks. No, 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 –so 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 booking claim case because you’re not going to have SAF at every airport, but you’ve got customers who want to access SAF. 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.

Patrick Gruber: 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 3s in particular get lost in the channel somewhere, and then someone else monetized them. We’re going to try to keep that for ourselves, and it’s an important part of the strategy. And that’s, of course, the whole reason of Verity and all the rest, and that really does help us.

Derrick Whitfield: Extremely, helpful. Thanks for your time guys.

Patrick Gruber: You bet.

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

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

Patrick Gruber: They’re different. And the reason they’re different is because the contract structures are different. And the contracts for the DOE have to be done in a certain kind of format to lend itself to financing. We think it’ll be more equity financed up there in North Dakota. And so, it’s a different kind of a contract. FEG is representative of it. And there’s other deals that we’ve done where we’ve sold, the jet fuel and part of the carbon to somebody else, and we keep the carbon and sell that to some yet again on a third-party. So it’s pretty darn interesting. We’re on the right track. It’s about time we figured this out. And part of it is because the DOE was, the DOE process is onerous. I mean, it’s onerous. There’s no question.

They’re very thorough. They’re very good. They have a huge success rate with their 97% track record of success. Awesome. But my god, it’s tedious. And it’s got belt braces, suspenders, and protections, and blah-blah, blah-blah. And one of those things is how contracts are written. Here, we can do we have a wider range of latitude of what we can do. And so that makes it and that makes more sense. We’ll eventually, I think, get that roped into ATJ60 as well, but we got to get it going first and make it happen. So we don’t tie our contracts to one location. We can go make it anywhere and I mean, move contracts around. We have the ability to do that. It’s just that here, we didn’t have to start with the burden constraints.

Peter Gastreich: Okay. Got it. Thank you. The second question is, how much expansion is theoretically possible at North Dakota side? I know you can get up to 1 million tons for the CCS capacity, but have you done any preliminary work on how much further you could scale up on ATJ if you wanted to go beyond ATJ30?

Patrick Gruber: Yeah. So here’s how we’re thinking about is that we’ve had — people know about the — people in the industry. So colleague companies know that we’re working on the ATJ30 plant, and the economies of scale for an ATJ30 are still pretty good. They’re way, way, way better than a smaller plant. 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 — comparing it to an ATJ60. So we see the opportunity to do an ATJ30, 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 large. And so, that derisk the living heck out of it because everything will be known to work 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, and I got to say, it’s pretty darn exciting. I like it a lot. And so you can imagine that we do this — we would do this in a series of things. We’re going to — I want that ATJ30 because I think that’s the commercially viable plant that we can sell around the U.S. and around the world. We have other opportunities for ATJ60 that are copied from the one in South Dakota.

We have a couple sites that that’ll play really well. We could expand that ethanol plant up there and then add yet another ATJ30 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 intellectual property, people forget that we have a hundred plus patents or so that cover the supply chain. We were the first to do ethanol to jet even though other companies claim to have done so. We have the technologies that work. It’s with — we’re our partners with Axens. We have a lower cost technology in the future, or even Axens believes that we can win.

So people forget that part of it, that intellectual property is a key component. 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.

Peter Gastreich: Okay. Great. That’s all my questions. Thanks, Pat. Appreciate it and again, congratulations.

Patrick Gruber: You bet. Thank you very much.

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

Patrick Gruber: 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. And is that, my gosh, we’re putting — we’re getting revenue up. We’re going to get EBITDA contributing. We’re offsetting the costs. We’re going to continue to make progress through the year. It’s quite transformational year actually. And as I just got through saying, we have well developed projects and technologies. These are ready for deployment. And there’s many people around the world interested. We got to 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. 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, the best opportunity. Thank you all for joining us. Bye-bye.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.