Good day, and thank you for standing by. Welcome to the Gevo, Incorporated Q4, 2024 [sic] Earnings Conference Call. At this time, all participants are in 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 call is being recorded. I would now like to turn the conference over to your speaker for today, Dr. Eric Frey, Vice-President of Finance and Strategy. You may go ahead.

Good afternoon, everyone. This is Eric Frey, Vice President of Finance and Strategy. I'm responsible for Investor Relations here at Gevo as well. Thanks for joining us to discuss Gevo's fourth quarter and year-end results for the period ended December 31, 2023. 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, 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 at 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 sustainable aviation fuel projects, our recently executed agreements, our renewable natural gas project, 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 would like to remind everyone that this conference call is open to the media, and 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'd like to turn the call over now to the CEO of Gevo, Dr. Patrick Gruber. Pat?

Thanks, Eric. Good afternoon, everyone, and thanks for joining us on our call. We are filing our Form 10-K today, and we ask that you refer to it for more detailed information after this call. We entered the fourth quarter with about $376 million in cash, cash equivalents, and restricted cash on our balance sheet. The total that Gevo expects to have to spend to achieve FID for our Net-Zero 1project is $236 million to $286 million, excluding certain internal cost allocations, of which only $125 million to $175 million of cash is left to spend to get that project complete to FID. So it's a downhill slope to get there. I'd like to thank the Department of U.S. Energy Loan Program's office for the thorough and diligent work that their team is doing to help us secure a loan guarantee as part of this construction financing. Now, we are quite excited about Net-Zero 1, in fact, even more excited. In the third and fourth quarter of last year, we had McKinsey in here working with us to challenge our assumptions, competitive position, competitive economics, and such. The results of their work with us reaffirmed that the NC1 plant design would be expected to deliver the lowest cost of carbon abatement compared to other SAF technologies, including HEPA, other ATJ routes, and especially direct air capture routes. The reason the NC1 design is expected to win economically is because of the mass reduction in the use of natural gas, the efficiency of the use of resources, creative integration technology, optimization of unit operations and overall efficiency, and selectivity in getting to high yields of SAF or other valuable products that we want to make. More effective carbon abatement means that less carbon value has to be recovered in the marketplace…

Thanks, Seth. Gevo's Q4 combined revenue and interest income was $9.4 million with the interest income benefiting from higher interest rates. Our corporate spend, that is G&A, was $25.5 million for the year in 2023 excluding non-cash stock-based compensation of $17.1 million which is $2.5 million increase from a 2022 number. Debt related to our RNG project was $68 million consisting of $68.2 million of base value less unamortized premium and insurance cost of $0.2 million. As Pat mentioned, we ended the fourth quarter of 2023 with a strong liquidity position of $375.6 million in cash, restricted cash, and other liquid investments. The restricted cash portion is associated with our RNG bonds and certain collateral related to the development of Net-Zero 1and totals $77.2 million. During the fourth quarter of 2023, we invested and capitalized $13.5 million in cash, in capital projects comprised of $1.8 million into Net-Zero 1, $0.3 million into the expansion of our RNG project, $7.4 million into other Net-Zero projects, and $4 million for our fractionation and hydrocarbon skids. We also advanced $1.1 million of reimbursable expenditures to our partner developer for the purchase of wind and hydrogen equipment to support Net-Zero 1. On Net-Zero 1, the DOE and its suite of independent experts are working with us in due diligence and loan guarantee structuring. Once that component is pinned down with a formal term sheet, we'll formally ramp up the third-party equity capital raise and work towards a close of funding necessary to finance the project construction budget and all the project finance elements such as interest during construction, various reserves, and transaction costs. Equity investors are standing by for a clear line of sight to the debt terms, which is underway and will be announced when the DOE term sheet is agreed. During Q4 2023, our dairy RNG assets in Northwest Iowa sold 90,666 MMBtu of RNG. Revenue of $4.4 million for the quarter included RNG sales of $0.2 million and $4.2 million net proceeds from the sales of environmental benefits. Between RNG and Verity growth, we continue to close in on positive cash flow for the company. As Pat mentioned, we see a lot of embedded growth in RNG just by continuing to operate that asset. We also look forward to announcing the first revenues at Verity this year, which is a capital-like, fee-based business. Now I'll turn the call back to Pat.

Thanks, Lynn. Let me wrap up our prepared remarks by saying we believe Gevo was undervalued given our balance sheet and growth potential. We plan to address that first through execution and second by getting our message out. I hope everyone will take a look at the corporate investor presentation on our website, which lays out the enormous upside potential that we see and why now is such an exciting and pivotal time. Let's open it up for questions.

[Operator Instructions] Our first question will come from the line of Amit Dayal with H.C. Wainwright.

Hi, everyone. Good afternoon. Thank you for taking my questions. Pat, just to clarify on the $125 [ph] to $175 [ph] to be spent on NZ1, is that for 2024 that's been coming into play or is that going to be over the next few years as you build everything up?

No, that's to get to FID from where we stand today.

Okay.

So it's a budget that'll be measured out over time. If FID is in 2024, that's the money it takes to get to FID. It's not a time-based thing. It's what we have to spend to get to FID.

And just to follow up on that, some of this you will get back, I guess, right? As you are spending upfront?

Yes.

Do you know what the amount is potentially that you...

Yes. So it is, I think it adds up to be like $235. Eric, you can help me here. $235 million, $236 million or something like that. And all of that would be reimbursable upon FID, at which time we'll probably reinvest it into the project to take a big chunk of the equity of the project. Or, it may be that we have a better opportunities, which I can't see right now, but that could happen out in the future. So it's a reimbursable in its full amount.

Understood. And then in parallel to that, I think in the January update, you said you may be spending some funds on future MV projects. Is that still on the table as well?

We are. It's a low level of spending, but one of the things that we're seeing is a lot of the customers want to know how to get to way beyond 65 million gallons. And so you, it's about developing some other sites and making sure that we have good ones locked down. We aren't announcing where they are. And he just, that's not to our benefit because there's so much work of, of development work that needs to be done, but we have spent some. So we're doing it in moderation, but yes. It's for locking down additional sites.

Okay. Thank you. Just last one from me, with respect to Verity, it looks like it's starting to get into the hands of customers, etcetera. And you are leveraging blockchain for this. Any scope of, bringing AI related offerings or, capabilities for this, is there a need for that type of a feature in this or use for this in the Verity offering?

There is. So what's fascinating about Verity is that we're a little bit different than all the other companies out there and we're doing it end to end. So think of it as, carbon capture at a farm all the way through to the seat of an airplane or a seat of a car and how you map everything straight through that, measuring the sustainability and carbon scores, hitting all the regulatory marks that are required for reporting and all of that. It's all of it integrated. And what's interesting about it as the database builds, I think there'll be opportunities for AI, particularly with farmers, so that they can see how to improve their fields. We've already seen improvements from farmers and they're excited by it. And there's, I think we even posted a video on our website talking about it, but it's pretty darn interesting where they can see differences of field to field using the tool that we developed. And that's pretty interesting because that allows them to plan differently for the next year and reduce their CI score. We fully believe that we will, that agricultural benefits will be part of the Argonne GREET model as it gets enshrined into the 45Z and public policy. There's a question of how it'll be done, but it's all related to climate-smart ag. And Secretary Vilsack and the rest of the team in the administration seems to be pretty committed to make sure that those improvements are measured and reported and get credit where it's due. So that's an exciting thing. Of course, that is something that's a pure upside. Our NZ-1 needs good corn, but it's also, remember, we're getting our low CI scores from wind power, from how we've done reduction of natural gas, and of course, the CCS pipeline. We anticipate.

Understood, Pat. Thank you. That's all I have. I'll step back in queue.

Our next question will come from the line of Shawn Severson with Water Tower Research.

Thank you. Good afternoon. Hey, Pat, I was wondering, could you address any real or perceived political risk, I guess, to the economics of NZ-1? I mean, is there anything that we need to be watching for as far as plant economics and any changes in the political environment?

Well, that's what the carbon value is political. Right. So just to get real grounded, our cash cost reduction is right now at pencils ought to be something around $3.80 a gallon. That's very competitive cash cost basis. But we need another $3.80 to pay for all the capital or something. It's something like that, okay. What we need then is carbon value from the marketplace that covers that cost. Well, it looks like there's more than enough carbon value to cover that cost. That's what creates the opportunity. And that comes from a combination of the RINs, the state level programs like in Illinois or in Oregon or now New Mexico or in California or we expect one in Minnesota, etc. That adds value. And then there's the 45Z potential as well at the federal level. And there's something else called scope 3. We know that scope 3 are being sold in dollars per metric ton and substantial in some cases. But you've got to be able to prove, in fact, that you really got a carbon reduction for your money. So when you add all of that up, it looks like there's a lot of headroom here for something to give way over time and carbon value. In terms of the sentiments that we're seeing around 45Z, it's we're hearing the sentiment of extended. It makes sense. However, I think having the ability to prove that taxpayers got something for their money is crucial. That's why we're so keen on Verity. That seems to play on both sides of the aisle so far. So I think we're in a good spot overall. So it looks like there's more than enough carbon value in the marketplace to accommodate variations of things that might change to some degree. And then it looks like it's headed in the right direction. That's my take.

Thanks for that. That was helpful. And my next question is I understand you were at a staff conference last week, I believe, in London. What's the takeaway from the user environment? And I don't know if there's more on the investment side there, on the user side, but just what are you hearing in the SAP markets? I mean, obviously, you guys have already had several great offtake agreements, but what's the latest in the demand picture and what some of the key points are from the potential consumers?

Well, I think that the airlines know that they have to do something. And so it's a question of how do they do it, what do they do it, and what are the real terms? And that is, what are the real terms of contracts that lead to financeable debt deals? That's going to be the critical issue that has to get resolved. And we're working through partners on the customer side and the DOE on that issue. And everybody's cooperative. I think that everybody recognizes that we've run into, they've all seen this McKinsey work, they've seen the competitive analysis, we're very transparent about this stuff. And they see that the ATJ is the most cost competitive route to make SAF and to do carbon abatement. And an important point is this, I keep saying carbon abatement, this isn't about the actual cost to reduce the carbon. And so we're at about $450 per ton or so is what we would pencil out to be today. And the next best alternative half hour would be about $600 to $700 a ton. Power to liquids, which everyone is so enamored with, it seems, for capturing CO2 and making liquids that might be $1,100 to $1,500 a ton. So we're a fraction of the cost of some of those technologies. That data is sinking into people. And so ATJ is a fundamentally long run competitive product and technology. So it's about sorting that out. So at that SAF conference, a lot of discussion was about the various technologies and the cost of carbon abatement, what's real and what isn't. And then there is a question of financiers where they say, they hear so much noise about all these different technologies, it's confusing for them. They have no idea because everyone says, I have the new answer. And it's the greatest thing, it'll be free and things like that. Hi, we can use three pounds of hydrogen to make a gallon of jet fuel like you would with power liquids. Oh, and it'll be free, it's stuff like that. And so it doesn't, it isn't, that isn't real. So I think the reality of things are setting in for people. And of course, we come along and we're like, hey, this is the real deal, let's go. So we've got good partners that are being cooperative.

Thanks. And my last question, I want to follow up a little bit on what Amit had asked. And that was about the expenditures. I think when you start to peel back the layers, the company is in a substantially, very strong financial position and balance sheet. But I wanted to walk through, and I think you did a little bit in the new deck, which was very helpful, but walk through kind of what's operating expenses in the plan for 2024 and what is, let's say, spend that can be done, pushed out or timing dependent. So it's a long way of asking, what do you really have to spend in 2024 and your flexibility in spending cash?

Because the main mission of Gevo is to get the NZ1 operating. The number that I threw out there of that range in the beginning is the chunk of the money, the bulk of the money that we're going to spend. If we strip everything away and say money that's not recoverable someday, so not project money, then I think we're left with maybe $12 million to $15 million or so of basic burn or what most companies would call basic burn. Now, we have a bunch of activities. We have a big -- we're spending a lot of effort and resources, people on government affairs and all the things related to make NZ1 successful and profitable, the engineering, and we're developing some other sites. And so we bundle that all together. It's in that range that we're talking about already. And we'll moderate the spend throughout the year, depending upon how fast the DOE goes or how fast all the pieces and parts come together or if there's some kind of a turmoil in the marketplace or whatever. So it isn't like we're just saying, shoot the whole lot and it's all gone. We do careful moderation along the way. So that's a long way of saying that when you get us down to the really basics, if you just looked at our management plus our R&D plus accounting and stuff like that, it's a pretty small number.

Thanks, that was very helpful. Thanks, Pat.

Our next question will come from the line of Kumar Raju with BBG. Kumar, your line is now open.

Kumar, are you there? Okay, let's move on.

I'm showing no further questions in queue at this time. I'd like to turn the call back to Dr. Gruber for closing remarks.

Thank you all for joining the call today and I appreciate you listening to me and thank you for the questions too. I'm glad to clarify some of these things that have been confusing. And we really, I feel pretty good about where we are and I like what I see on the Argonne GREET. I'm thankful that they're taking a serious approach at getting it right. That's good for all of us in terms of the 45Z. And one comment on that, just to be clear. The rule that was going to come out is a 40B rule, right? That expires at the end of 2024. What we expect to see is going to be talking about, here's the key components that are going to be included in 45Z as guidance. So I expect that people will be a little bit confused about that. 45Z is the thing that actually matters. So whatever they say about 40B serves as some reference and precedent. So I expect them, the two things to be different. Whatever they say about 40B and how they implement that, I expect that it will be different than 45Z, but I expect them to give guidance to what 45Z will be. With that, thank you all. Thanks for following us and being part of Gevo. Bye-bye.

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