Thank you for standing by and welcome to the Gevo Inc First Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's program maybe recorded. And now I'd like to introduce your host for today's program Mr. John Richardson, Director of Investor Relations. Please go ahead sir.

Good afternoon everyone. This is John Richardson, Gevo's Director of Investor Relations. Thanks for joining us to discuss Gevo's first quarter results for the period ended March 31, 2022. I would like to start by introducing today's participants from the company. With us today are Dr. Patrick Gruber, Gevo's Chief Executive Officer; Dr. Chris Ryan, Gevo's Chief Operating Officer; and Lynn Smull, Gevo's Chief Financial Officer. Earlier today, we issued a press release that outlines the topics we plan to discuss. A copy of this 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 Gevo's sustainable aviation fuel projects, its renewable natural gas project and other operating 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 in this call. The relevant definitions and GAAP reconciliations may be found in our earnings release and 10-Q, which can be found on our website at www.gevo.com in the Investor Relations section. Following the prepared remarks, time permitting, we'll open the call to your questions. I would like to remind our listeners that this conference call is open to the media and that we are providing a simultaneous webcast to the public. A replay will be available via the company's Investor Relations page at www.gevo.com. I would now like to turn the call over to the CEO of Gevo, Dr. Patrick Gruber. Pat?

Thanks, John. Good afternoon everyone and thanks for joining us on our call today. We filed our Form 10-Q earlier today. We asked that you refer to it for detailed information. The first quarter was exciting on several fronts. We progressed further down the path toward Gevo becoming one of the first commercial producers of verifiable net-zero carbon aviation fuels starting with residual carbohydrates and through raw material and toward our goal of producing a billion gallons of this valuable high demand fuel by 2030. We are in a unique position with our vertically integrated plant design that we believe will make it possible for Gevo to offer the transportation industry a fuel with a very low and potentially negative full lifecycle CI score. This can only be achieved by managing the entire system from feedstock selection through product delivery, the optimization of farming practices and the elimination of fossil-based energy throughout the whole lifecycle is key to achieving low CI scores. Low CI scores are critically important to the airlines as they have limited options to decarbonize their operations. As a reminder, a CI score of zero means that as much CO2 is consumed in producing the fuel as it's created when it's burned in an engine. Now during the first quarter, we announced new supply agreements with Delta and British Airways for combined total volume of 105 million gallons off sustainable aviation fuel or SAS. We now have contracts for more than 200 million gallons per year. These agreements further validate the airline industry's commitment to low carbon SAS as the solution for their businesses to meet the environmental goals that they have identified and that their customers and investors demand. We also completed construction of our RNG plants in Northwest Iowa on time and within budget, that…

Thanks, Pat. Our Net-Zero 1 project is coming along really well. We're on track with site development, engineering and all the commercial contracts for our Lake Preston site to be operational in 2025. We're excited to receive the conditional use permits a few months ago for both the Net-Zero 1 plant, as well as the wind turbines that will power the Net-Zero 1 plant. Those conditional use permits are a critical green light that we needed to move forward at the site. Together with the land agreements that our wind partner has in place with the local landowners, the wind part of the project is moving towards the execution phase. At this site, we're on track to break around this year. We have the land option agreement that we executed in 2020 and we expect to finalize the land purchase soon. All the necessary permits are on track and our engineering is finalizing site layout and foundation requirements needed to start moving dirt this year. Speaking of engineering, I want to take a minute to highlight the very experienced and capable engineering team we have for our Net-Zero projects. I can't think of a core group of more experienced engineers at designing, scaling up and commercially operating such a diverse set of bio-based processes. Each of our leaders has 20 to 40 years experience in engineering and operating bio-based chemical and fuel processes that are running successfully today. The team has a track record of commercially successful renewable resource based processes. Add to that, the experience of our development and engineering partners, most of whom we've not yet disclosed. This gives me comfort knowing that we have the capability of designing and building what we believe to be the most efficient, most carbon processes with low operating risk. All of…

Thanks, Chris. We ended the first quarter of 2022 with a strong liquidity position of $413.4 million in cash, restricted cash and other liquid investments. Our long-term debt outstanding is related to the Northwest Iowa RNG project and was $67 million. Our corporate spend, that is SG&A, was approximately $8 million net of non-cash, stock-based compensation. During the first quarter of 2022, we invested approximately $31.2 million comprised of $9.6 million into our Net-Zero 1 project, $18.3 million into the Northwest Iowa RNG project and approximately $3.2 million into other capital projects. I believe that the future looks bright for Gevo. We're at the forefront of creating a new industry that blends substantial aspects of existing agriculture, energy, renewable energy, transportation, and materials industries into the new carbon reduction industry. We sit at the nexus of all this and have a unique perspective on the horizon that customers, financeers, contractors and equipment suppliers recognize. This perspective is holistic and drives a comprehensive approach to the business system development. Central to this is the vast undersupply in the market of renewable fuels and materials and most importantly, right now, sustainable aviation fuel. Taking the pronouncements of major airlines like Delta, we expect global demand for SAF to be in the 13 billion gallon per year order of magnitude by 2030. Our billion gallon initiative would obviously supply only a portion of this demand. Rapid capital deployment is key and limited by the ability to site, permit, engineer and construct production capacity. We're solving these issues and showing the solutions to major financiers who want to participate in the capital formation and industry creation. We believe our enterprise model is a realistic view on the billion gallon initiative. And based on what we feel are our reasonable projections of future CapEx, revenues and OpEx, it indicates highly accretive value creation for the next several years. We have discussed the model with financiers and early stage reactions are positive. Given our strong value proposition, we do not expect that capital availability will be a constraint. Our mission from a finance perspective is securing the capital for growth on terms that are both accretive to Gevo's shareholders and it also keep us in the driver's seat. We feel that remaining in control of our business plan execution is important, given our unique perspectives on this newly emerging industry. It takes substantial time and energy to explain this to people, but we believe these efforts will yield the capital resources needed to execute on our plans. Capital will likely be supplied in various forms, given the large numbers involved and the various levels at which different financers may prefer to participate. For example, we expect financing will come in the form of non-recourse debt at the project SPE levels, third-party, project level equity, potentially the evolution of hold co level equity and aggregated portfolio debt and corporate level equity raises to downstream funds into the projects. Now I'll turn the call back to Pat.

Thanks Lynn. And with that, I think, we should open it up for questions.

Good afternoon, all and congrats on progressing your northwest Iowa RNG project on time and budget in light of the current environment.

Thank you.

So perhaps for Pat, wanted to see if you could speak to the importance of the Farmers Edge MoU and the value you expected to contribute to your net-zero and Verity Tracking concepts.

Yes. So one of the great, big issues that's in front of all these sustainable products, not just ours, but everybody's is what's sustainable and isn't. You have all kinds of people creating, talking about how they are green – they are doing these great green credits or whatever, but stuff [indiscernible]. We want to see things verified absolutely throughout the whole value chain so these things are verified, they're verified by third parties, mutable, can't be messed with hence the blockchain approach. And Farmers Edge has 18 million acres of farming partners where they collect all the data that's used in agriculture and how those people plant their crops and all the rest. And that's a key input for figuring out the sustainability footprint. That's just one part of the puzzle. There'll be more parts to this as you all see it unfold. But the idea is to do absolutely verified, certified data from the field all the way through the energy of the production, all the way straight through the whole supply chain, out to the marketplace. We have a different point of view than almost every other company out in our space, we think it should be tracked that way, that's how we can be sure of it and we can end the debate, we can do it with data.

Great. And as my follow-up, I wanted to focus on the Net-Zero 1 inputs and outputs referenced on Slide 8. Directionally both the inputs and outputs are higher than your Q4 update. So just want to see if you guys could perhaps update us some of the most notable process and/or design changes, which have led to the enhanced productivity?

It's more of going through the details. Chris, did you want to comment on this, at a high level, because you can't go into detailed details?

Yes. I mean, we're still making some improvements for the process to allow us to increase the amount of product we produce, as well as reduce the inputs required. So, it's all heading in the right direction.

Perfect. Thanks for your time.

Thank you. Our next question comes from the line of Shawn Severson from Water Tower Research. Your question, please.

Hi, thanks guys. Pat I was wondering looking forward, when you're talking about ethanol plants and the right ones, what does the timeframe look like for new energy development in a plant that's existing like that? Some at compressed timeframe relative to what the first one has been obviously, but how long will that take if you have the right plant getting to production?

Well, we're trying to accelerate as much as possible. So the idea of the design of Net-Zero 1 is to make it a modular type of a plant from the alcohol forward. There's some things that you still have to do around optimizing for energy around ethanol, but that part of converting ethanol into jet fuel, that's – the idea is to do a modular approach. And in which case you could put these things anywhere right quick. However, you still got to work on the decarbonization. And that's when we're talking, when we say the right ethanol plants, we got to be able to decarbonize those ethanol plants in order to make them into a SaaS that the marketplace would want.

Okay. So not two different of the timeframe from development and that obviously NZ-1 timeframe, additional plants NZ2, 3 using existing ethanol plants is going to be what degree shorter? I'm just trying to understand how quickly they can be a cookie cutter?

So the design that we're doing for NZ1 could be, that's going to be a master design that could be taken directly to any other plant directly. And then the time – so it could be very, very quick with it to the point, unusually quick, and we don't have risk the way normal processes have. So these processes from Accents are well-known well-studied. We're doing the energy integrations. We're working with full equipped on the ethanol stuff. So we have a pretty good – we don't have risks like so many other processes do. We don't have here. So it's much, much better shape. And so I think we can deploy multiple leisure at once, which I think you're asking me. The answer is yes, we can.

Yes, exactly. And the second question is regarding pipeline new business, obviously the environment created a lot of opportunity for energy diversification, let's say and looking for alternatives to oil. How has that changed or impacted your pipeline given the events year-to-date?

Do you mean because of all the discussion in particular market place like SaaS or is it a...

No, no, no. I'm talking about just oil and energy security diversification, Ukraine-Russia, et cetera?

Got you, macro, yes, big time. So what's happened is that people know we're going to need liquid fuels. Everyone can see that we're going to need liquid fuels. And it's a question of how to de-carbonize them and we have one of the very good routes. Our technologies make of course, SaaS. We could make use of jet fuel as well, of course or any other – any of the basic chemicals and materials too. So the need is going to be here. It's strong. The demand is growing and the interest across the whole front of everybody involved in the space has heightened because of all the pressure, the price of oil, the price, still the concerns about carbon, all of that stuff comes to bear. And there's going to be a need for the fuels, fundamentally and I think that'll become more clear in the next month.

Right. Thanks guys.

Thank you. Our next question comes in line of Amit Dayal from H.C. Wainwright. Your question, please.

Thank you. Good afternoon everyone. Back that with respect to the RNG revenues, how should we expect these to start showing up? I know, you still are getting qualified on that front right now, but by fourth order do we – do you think we should be able to see some cash flows from that efforts going through?

This is a question for Lynn. I'll pass it to him. Lynn?

Sure. Yes, we're in startup now. We expect to be in steady state production by June. We'll be selling commodity right off the bat under normal terms of trade. The revenue recognition around the environmental benefits, i.e., RINs will be slightly delayed a few months and LCFS credits are delayed under the carb-process for pathway approvals by a few more months. So by the end of the year, we hope to see some revenue recognition off of the environmental benefits. And then 2023 should be steady state on a cycle of receipt of the receivables on that, but we've all – we modeled in that as a working capital hit to delayed receipt of revenues and on receipt of cash and revenue recognition. So we were fully anticipating that, that's just part of this business of generating environmental benefits. It's a particular cost to all projects and in fact, we learning firsthand by the administration of – putting those into the market and receiving the cash and the revenue recognition is a great learning exercise for us to get us ready for the bigger game around Net-Zero.

Understood. That's often. Thank you. And Pat or maybe Lynn, you highlighted you're going to be breaking ground and then ordering long retail equipment in the next – over the next few quarters. Is that going to be funded through our balance sheet? And what kind of risk does it create potentially from a perspective of getting the project financing in place, et cetera. Any thought on [indiscernible] would be?

I think – yes, we will be funding the development period expenditures off the balance sheet. Then when we get to financial close that will provide the full construction budget or financing both debt and equity to complete the project, it reduces the risk though. Because locks in pricing, we will have done enough engineering to know exactly which equipment we need. And Chris can comment on this more specifically. But it actually will reduce the risk of getting to financial close and execution of the project overall, because financiers love to see a sponsor going along, going at risk with a major capital project and that's what we're doing.

Understood. Any changes to that environment, Lynn in terms of, how the market is behaving right now, interest rates, inflation, all these factors, has that changed anything from a financing perspective?

No, not, not at all. We still have strong interest on the debt side. We feel confident that we'll be able to pull the debt in on the sort of projected levels. Interest rates are up, but the bigger component of the interest expense is going to be the spread and the actual underlying rates are not driving any material changes to the overall economics.

Okay. Understood. Thank you for that. And you guys were also expecting to receive or in process of receiving delivery from Praj on some SAF equipment isobutanol conversion equipment? Has that taken place or is that also sort of the second half 2022 catalyst?

That's the second half of the year kind of a thing. And we're working with them and we have some idea. We have some more creative ideas on what to do with that equipment and so once those are baked, then we'll tell everybody about it.

Okay. Well that's all I have guys. Thank you so much for your time today. Thank you.

Thank you. Our next question is a follow up from the line of Derrick Whitfield from Stifel. Your question, please.

Thanks. And thanks for alarm. And you take a couple more questions or offer or ask a couple more questions. As a follow-up for Lynn, Lynn I know you've spent a considerable amount of time in developing the enterprise financial or financing plan, and that effort's likely generated several learning's in the process. Could you speak to how you're generally thinking about the Chevron and ADM partnerships and any key learning's in the process today?

Well, the enterprise model is a 1 billion gallon initiative, so it's much broader than just ADM and under that memorandum of understanding or the Chevron MOU. It's actually looking to control our own destiny with quite a lot of development of Greenfield as well as other potential ethanol JVs or acquisitions that we talked about a little earlier and the model itself is extensive. It's a very comprehensive large model that's been scrubbed backwards and forwards and it yields a very attractive sort of view on the future with respect to accretion and value creation. So I think it's been very useful to form the basis of discussions with financiers and it’s well thought out and we didn't have that three months or six months ago, and it's really been useful to have that plan in place.

That's great. And as one last follow for Pat. I wanted to touch on your decision to proceed with line Preston as a site for Net-Zero-1. As I recall from last quarter's call, you were still evaluating site location as there were several Greenfield sites that were at least as attractive as Lake Preston. Could you perhaps elaborate on the developments that firmed up Lake Preston as the final site selection?

Yes, it comes down to good. We were lucky to have a good pool of sites. We had to take a last one up and Lake Preston is the one we felt we could develop the quickest? And so quickest to market is what we want and therefore let's go.

That’s great. Thanks again for your time.

Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Dr. Gruber for any further remarks.

Thank you all very much for joining us, appreciate your support. I appreciate the questions from the analysts and it's a good experience, we are on to an exciting time here at Gevo. We're in a sweet spot. I don't like the overall markets of course, but what? Hope you got a good plan and are going to drive to get things deployed and get on with success. Thanks.

Thank you ladies and gentlemen for your participation in today's conference. This does include the program. You may now disconnect. Good day.