Welcome to the Q4 2014 Gevo Incorporated Earnings Conference Call. My name is Adriane, and I will be your operator for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Brett Lund. Brett Lund, you may begin.

Good afternoon and thank you for joining Gevo's fourth quarter 2014 conference call. I'm Brett Lund, Gevo's Chief Legal Officer and General Counsel. With me today are Pat Gruber, our CEO and Mike Willis, our CFO. Earlier this afternoon we issued a press release which outlines the topics that we plan to discuss today. A copy of this release is available on our website at www.gevo.com. I would like to remind our listeners that this conference call is open to the media and we are providing a simultaneous webcast of this call to the public. A replay of our discussion will be available on our website later today. On the call today and in this webcast, you will hear discussions of non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release distributed today, which is posted on our website. We will also provide certain forward-looking statements about events and circumstances that have not yet occurred, including projections of Gevo’s operating activities for 2015 and beyond. These statements are based on management's current beliefs, expectations and assumptions, and are subject to significant risks and uncertainty, including those disclosed in Gevo's most recent annual report on Form 10-K, which was filed with the SEC on April 14, 2014, and in subsequent reports and other filings made with the SEC by Gevo. Investors are cautioned not to place undue reliance on any such forward-looking statements. Such forward-looking statements speak only as of today's date and Gevo disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to Gevo's SEC filings for detailed discussions of the relevant risks and uncertainties. On today's call, Pat will begin with a review of our recent business developments. I will provide a brief review on the status of our intellectual property and litigation. Mike will then review our financial results for the fourth quarter of 2014. Following the presentation we will open up the call for questions. I will now turn the call over to Pat.

Thank you, Brett. The fourth quarter 2014 was very good quarter for Gevo. We achieved a lot on the isobutanol front, met meaningful production milestones to plant, and have now established a great position from which to really accelerate our licensing program. So first I’ll talk about Luverne. We demonstrated that our side-by-side operational process to produce isobutanol worked. We were able to produce isobutanol and ethanol in the same plant at the same time. That's a big deal, a lot of people thought that we couldn't do that and manage the impressions but we can. We were able to answer these all the confirming isobutanol startup issues that had previously been biting us. We have a goal of greater than 50,000 gallons produced in a month and we achieved that. We are able to deploy second-generation yeast to produce isobutanol improving the yields and rates further. We were able to show that we could manage the process, manage the infections, operate the isobutanol process on a normal basis and continue to improve the process. Ultimately, what we are trying to demonstrate and prove out is that we can produce isobutanol our production cost that support profitable isobutanol operations at commercial scale. Currently, operating under side by side, were by only one parameter dedicated to isobutanol this is not the case. To simply put, we can now produce sufficient gallons of isobutanol to absorb the fixed cost base associated with running isobutanol at Luverne. Now with that said, we are in a position to extrapolate the data that we have generated both at Luverne plant under side by side as well as at our labs in Denver to support ultimate optimized isobutanol production cost that would indicate EBITDA margins for isobutanol of about $0.50 to $1 per gallon. We believe…

Thanks Pat. In January we had a very significant result. The U.S. Supreme Court ruled in Gevo's favor and overturned an earlier Federal Circuit Court of Appeals ruling on the interpretation of key patent claims. The result is that Gevo's victory in the Delaware District Court is effectively reinstated, and that the case has been remanded back to the Federal Circuit Court for consideration in light of the new standard of appellate review that was decided in the Teva case. In Teva, the Supreme Court ruled that the Appeals Court must apply a more stringent clear errors standard of review, rather than a de novo standard of review. In Gevo’s case, the Appeals Court must now apply the clear error standard of review and cannot set aside the Delaware District Court's findings of fact in Gevo’s favor unless they were clearly erroneous. Based on the Supreme Court decision, we believe that this means we will prevail at the Federal Circuit Court and this will end the phase of the litigation. In addition to the U.S. Supreme Court win, we have recently had a lot of success in patent reexaminations at the USPTO regarding these filed catalysts. We successfully defended claims in three of our patents and we defeated all of the challenged claims in one of Butamax’s patents. Our IP strategy is to file patents very broadly and then narrow them down in prosecution and reexamination. These recent decisions from the USPTO are very important because the vast majority of the time - over 80% of the time the USPTO invalidates or significantly modifies claims and reexamination. We had two of our very important patents go through reexamination were all of the claims in our patents were confirmed by the USPTO without any modification. This is pretty rare and further…

Thanks Brett. Gevo reported revenue in the fourth quarter of 2014 of $9.5 million as compared to $1.7 million in the same period 2013. The increase in revenue during 2014 is primarily result of the production, in sale of ethanol and distiller grains of $8.8 million following the transition of Luverne plant to side-by-side. During the fourth quarter of 2014, hydrocarbon revenues were $0.5 million primarily related to the shipment of bio-jet fuels in the U.S. Military during the quarter. Gevo also continued to generate revenue during the fourth quarter of 2014 associated with ongoing research agreements. Cost of goods sold increased to $10.9 million in the fourth quarter of 2014 versus $5 million in the same period in 2013 due to the increased production activity at the Luverne plant under side-by-side. Gross loss was $1.4 million for the three months ended December 31, 2014 versus gross loss of $3.4 million in the same period in 2013. After deducting depreciation expense of $1.4 million, Gevo generated a small positive cash gross margin of $0.1 million for the fourth quarter of 2014. R&D expense was $2.7 million in the fourth quarter of 2014 compared to $3.9 million reported in the fourth quarter of 2013. Our R&D activities in the fourth quarter of 2014 continue to be focused on the optimization of our technology to further enhance isobutanol production rates at Luverne under side-by-side as well as production-related activities at our hydrocarbons demo plant in Texas, where we produced our bio-jet, paraxylene and isooctane products. R&D expense decreased in the fourth quarter of 2014 compared with the same period in 2013 due primarily to a $0.5 million reduction in salary and consultant-related expenses and a $0.5 million decrease in expenses at the hydrocarbons demo facility. SG&A expense for the fourth quarter of…

Thanks Mike. All right so bring it all together. We had a very good quarter making progress proving our technology, markets and the value propositions for isobutanol. We believe that the potential of isobutanol has been significantly derisk. We're focused on licensing isobutanol technology both in the U.S. and ex-U.S. and plan on signing up at least one definitive agreement this year. As we attract money we plan on building out isobutanol capacity at Luverne. However, we have learned that it isn’t requirement or prerequisite for licensing. We’ll continue to run our Luverne plant to maximize cash flow. Until we deploy a capital to debottleneck the plant, we will intermittently run the isobutanol side of the plant to seize markets, support customers and prove out step change improvements to the process. We will continue to defend our freedom to operate and our IP. We want to establish the uphold hydrocarbons business with strategic investors that is we contribute the technology, they contribute money and the uptick. We believe that we crossed the value of debt from a technology and scale perspective. We have very large attractive markets in front of us. We have multiple partners, who want to develop the business with us. We need to close the deals with them, we need to generate income from licensing and plant operations to become profitable as a company. So we like where we are from a standpoint of the technology to potential of the markets we see that really is possible to make these chemical products that are cost competitive, cleaner and greener that's attracted to people. There’s a big long run game and we’re in a great position. And with that, we can turn it to questions.

[Operator Instructions] And we have Mike Ritzenthaler from Piper Jaffray on line with the question. Please go ahead.

One question on EBITDA breakeven at the plant level, that was something that that have been discussed in the past and I was looking through some of the non-GAAP financial information at the end of the press release. Where does Luverne set in terms cash breakeven metrics just understand like a plant standalone basis?

We basically hit EBITDA breakeven not potentially positive in November. As you can imagine closing procedures in any given month is obviously a lot different than at any quarter ending or year end. So, its hard to put the flag in the ground and stake in the ground say, we're definitively EBITDA positive, but by all metrics and normal closing procedures we’re EBITDA positive in November. And generally across Q4 was much stronger from a cash loss perspective than any previous quarter where we’re running isobutanol. So it’s very strong quarter for them.

Okay. And then excluding the debottlenecking needs, which how you had talked about couple of times in your prepared remarks, is there a level of CapEx in 2015 that's just necessary to sustain what you've already built?

It will be the normal plant maintenance stuff. So it's nothing special what we’re doing.

Right. Have you sketched out what that might be in terms of dollars?

It would be somewhere in the - $1 million to $2 million range just for general maintenance.

Okay. And this first time that we're talking I guess about - at least the first I have seen the ethanol to hydrocarbon technology piece. And I'm curious about what - where I guess - just from the high level whether this is the right time to be introducing a new technology like that, and maybe just discuss some of the synergies with - between that and some of the work that you’ve already been doing on isobutanol?

Sure. Well what it is, we have been working for years on dehydration at our hauls to make the butylenes, jet fuel, octane, paraxylene or else, along the way we don't have to do these ethanol conversions. And what’s interesting is, as we’re talking with people about how to commercialize the butylene from isobutanol, they ask Gevo about propylene and can you do that? And so it's the same kind of people who are interested. So they’re highly related from a market standpoint. And we happen to know how to do with [indiscernible] patents and it’s interesting that we can gain investment from in I believe. And so that matters to what's Gevo right, because we do like such strategic investors and we do have the ability to supply ethanol and butanol. So from that standpoint it’s quite well. So the question, behind your question is what about the focus. We will do it, we have always intended to be a Company who does the alcohol production for sure. But always with EBITDA moving down stream and create applications from these alcohols and that's as long as I have been here at Gevo.

I’ll just add Mike, that from a resource standpoint and tell you right now that it’s only a couple of bodies that we’re talking about, it's the same bodies that has been behind the work we're doing with Coke or Toray still the anything related to isobutanol the hydrocarbon basically the same team that we just let using ethanol as a feedstock. And when we talk about potential strategic investment it's exactly with that in mind is our current cash is devoted to ensuring that isobutanol is going to be successful and our licensing model is going to successful. So what we'd like to do is have different infusions of capital to be able to potentially put additional resources behind this ethanol to hydrocarbon, but it’s only with that kind of capital coming into play that we would boost the resources dedicated to that business.

In other words that's been isobutanol dollars on hydrocarbons, they're doing for ethanol I mean. We’re going to be using or working with other people to do it, and that’s part of the task. It is one of these -our guys did a great job we had little part of plant and lab here the data is unbelievable and that makes polymer grade propylene high pure isobutylene we can also make in it renewable hydrogen and it pencils out that all of these products can be made at a price that's cost competitive with oil based products. Even though it’s made from market price ethanol that's a big deal and the reason it happens the guys came up with some catalyst, they don’t have to do it, they don't need to process and they - it is based at apparently it seems no one has done quite this thing before.

So it's like $1.50 a gallon of ethanol or something like that?

Actually we've been using higher estimates [indiscernible] but for it even better.

It's interesting not surprisingly Mike is I think ethanol plant owners given where given first in ethanol, maybe great to have different outlets for ethanol higher value higher margin outlets. So we think this is potentially pretty game changing for the ethanol industry especially given questions about or have some different sector so pretty exciting.

And the way we think about it, we have treated as a venture in a way that we’re contributing the technology but the other people bring money. I need the right mix of strategic partners to play. And so far it was quite hard so we’ll soon get it done.

That makes sense. Thanks for the color guys.

And the next question comes from Jeff Osborne from Cowen & Company. Please go ahead.

Great. Good afternoon. Just following up on the renewable hydrogen conversation you mentioned that data looks impressive. Can you just give us a sense of what the cost to program would be as a hydrogen produce. Is that something that you’re going to share at this point?

250.

That's really would be impressive, excellent. Given there is five days left in the quarter. can you give us a sense of expectations here for the March quarter and more importantly just give an EBITDA per gallon in the ethanol industry as a whole in calendar Q1 as a compressed quite sharply. I'm trying to rectify what - reconcile, what you’re doing with the four fomenters over the past couple of months and more importantly the outlook for the second quarter as well. Are you actually producing isobutanol in January and February or did you make a modest profit on the ethanol side and scale back on the isobutanol to elevate some of the cash burn?

We did run some isobutanol in Q1. However, we did as we described operate the plants for them to maximize margins at the plants and given Pat's comments earlier is unfortunately at the low levels of isobutanol that we’re producing, we definitely - margins are much better on the ethanol side of the plants. So we did run a little bit longer with some four fomenters on ethanol. Unfortunately obviously ethanol margins were challenged in Q1, they are coming back at least for us, they are up probably good 20% to 25% just in the last few weeks or so. So that should help in terms of the cash flow of the corporation in Q2 versus Q1.

I mean this is to Mike in the prepared remarks so what was the cash burn in the fourth quarter and do you have any expectations from operations perspective in Q1 just with some of initiatives you have?

We didn't give the exact tax burn metric but I can tell you that, from a day corporate wide cash to EBITDA run rate, it was somewhat between $6.5 million to $7 million for the quarter in Q4. It probably would be slightly higher in Q1 given where the ethanol margins were and considering as you recall we had the reduction for us in January. So unfortunately, obviously there is a long term positive related to that but there is the typical some severance payments that you have to make and the like that impacts that type of initiative.

And I should know this but you had the LOIs for quite some time now and just how do you differentiate internally between the 2 LOI and the MOU in reconciling the difference between LOI and MOU in your mind relative to the conversation about having one partner converted over to an actual contract this year.

Yes. So the way we think of the LOIs that we have done for the licensing, these are about start corn mills in Canada, that one is we're pushing hard to get that one done. The Highland EnviroFuels' is about – is different thing, so there is stocks to defer. The Argentinean ones core. So those are all still in play but there are one-off, one each plant, one-off type things. To deal with the project is different it is little strategic alliance, is that U.S., ex-U.S. is interesting there have been losses in ex-U.S. and $250 million gallons over a period of 10 years - Mike, what you think.

Well I mean based on the way that we the discussions we have had today with licensing partners that we believe are economics that they would be willing to bear, we can see our cost of 250 million gallons contemplated across products based plants, outside of the U.S. We can see upfront payments totaling anywhere between call it $25 million to $50 million and then recurring revenues between technology licensing and sales and marketing fees. Ultimately when you get to the full 250 million gallons that can represents a recurring revenue base of something similar like $25 million to $50 million. We do understand based on discussions with the Praj that in certain geographies that they play, there is a bit more of a resonance against the recurring royalty, they are comfortable to sales and marketing team and ongoing royalty is something that is less appealing to certain geographies or folks playing in certain geographies. So that might land itself to higher upfront payments, an upfront prepaid royalty effectively but that kind of gives you a sense for the opportunity base here with Praj versus doing something with one-off licensing.

Yes the multiple plant deal, multiple years of partnership they are going to do the development work to do the sugar mill integration with isobutanol process, whole system and offered price and other yeast to do it because of course that is crucial having to separate isobutanol. So that is what we are going to do it and then we will have – it is a broad relationship that will impact just here in the U.S. to we just have when we are ready we will disclose what that looks like.

Understand that. The last question I have is just as inventories of ethanol that drawn down across the industry and exports have picked up. Do you certainly seen an increase on profitability which you alluded to? And I’m trying to reconcile your statement that Pat you don’t need isobutanol production to convert some of these fields or sign additional licenses. So, what it would be the processor internal decision making to convert the four fomenters that’s isobutanol today over to ethanol to maximize the EBITDA potential here, in the second and third quarters, when seasonally profitability is little bit better.

Yes. To playback your question, if you're asking me how we do the decision to run isobutanol or not given the margins, is that what you’re asking?

Yes or just what’s involved to do four fomenters of ethanol, skip isobutanol for six months and make it bit more money and it also confident above getting some of these deals converted over.

We have to see the markets, so we made commitments to the customers and such. So we’re really doing the balancing act of matching their expectations, we can show that we don’t short them. We really do need these market seeded and it does help to prove out its value proposition and gain confidence. We do plan on ramping up isobutanol again. We'll do plan on landing - they’re people who are interested in investing in Luverne. We would like to laid on those guys and have their investment, and get on with it and ramp up production and it's better if we have a good seeded market do so.

But I think to answer your question, I think I heard a different question which is, we can operate all four fomenters on ethanol right now. There is no conversion process, we can switch back in forth on that four fomenters between isobutanol and ethanol and then we have already done that Jeff.

Got it, okay, that's what I was asking Mike. So appreciate that. Thank you.

And that concludes the Q&A session. I’ll now turn the call over to Pat Gruber for final remarks.

Well, thanks for joining us. We look this isobutanol technologies part of along its good to be, its good that Praj can see what we have done. There are real - they are substantial company, they have been leaders in the field of doing the process technology and bio-base processing for ethanol and other businesses. It's good to have their validation. And it will help us in the business. We look forward to working with them. We like where the product is in place. We like the way the value propositions are playing up where we expected, in other words it’s a valuable product. And then this hydrocarbons business is exciting. It's exciting from two fronts, one is on the isobutanol to hydrocarbon side were I do believe we can make the world's cars jet-fuel of any bio-base product, its real like fuel, its matter of putting those deals together. And then on the ethanol side we’ll see what happens. This is going to depend upon how the strategic bite, as you heard - as we discussed this, we've been able to generate low cost hydrogen as a big deal and along the way I think the only ones that I’m aware of that are able generate a low cost propylene made from renewable resources. That’s going to be interesting because we will see who bites. And that will be different Gevo in any case. So with that we can ramp it up. Thank you very much for joining us.