Gevo, Inc. Q3 FY2021 Earnings Call

Welcome to Gevo's Third Quarter 2021 earnings conference call. My name is Gigi and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later we will be conducting a question-and-answer session. Please note that this conference is being recorded. I'll now turn the call over to Geoffrey Williams, Gevo's Vice President, General Counsel, and Secretary. Please go ahead, Mr. Williams.

Good afternoon, everyone, and thank you for joining Gevo's third quarter 2021 earnings conference call. I would like to start by introducing today's participants from the Company. With us today is Patrick Gruber, Gevo's Chief Executive Officer, Lynn Smull, Gevo's Chief Financial Officer, and Paul Bloom, Gevo's Chief Carbon and Innovation 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. I would like to remind our listeners that this conference call is open to the media and that we are providing a simultaneous webcast of this call to the public. A replay of today's call will be available on Gevo's website. On the call today and on this webcast, you will hear discussions of certain 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're also making certain forward-looking statements about events and circumstances that have not yet occurred, including but not limited to projections about Gevo's Net-Zero 1 project and Gevo's operating activities for the remainder of 2021 and beyond. These forward-looking statements are based on management's current beliefs, expectations, and assumptions and are subject to significant risks and uncertainties, including those disclosed in Gevo's Form 10-K for the year ended December 31, 2020. That was filed with the U.S. Securities and Exchange Commission and in subsequent reports and other filings made with the SEC by Gevo, including Gevo's quarterly reports on Form 10-K. 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. On today's call, Pat will begin with a discussion of Gevo's business developments, Lynn will then review Gevo's financial position and Paul will lead the discussion of verity tracking. Following these prepared remarks, we will open up the call for questions. I will now turn the call over to Pat.

Thanks, Geoff. Paying attention to us knows, and seeing our presentations or press releases, the videos, they know we're on a crusade in pursuit of net-zero drop-in fuel. We have learned that we can convert renewable carbon in gasoline, jet fuel, and diesel fuel, as well as the building block chemicals to make most plastics and other larger volume chemicals; the technologies work. The key to driving out the fossil footprint of all these products is renewable electricity and alternatives to fossil-based natural gas. If we reduce and eliminate fossil energy from our production systems, we should be able to achieve net-zero fossil footprints of our products as measured across the whole business system. That means, all the way from carbon capture to the tailpipe or the exhaust of a jet engine. We're in the business of transforming renewable energy into energy-dense liquids like SAF and motor fuels. When we look at our business, we have some similar issues as are confronted by EVs and hydrogen. What is the source of electricity? Is it fossil or not? What's the source of energy for hydrogen? Fossil or not? As it turns out, we're all aligned regarding infrastructure. If our business system has access to renewable energy, then it shouldn't surprise anyone that the fossil footprint could be reduced and potentially eliminated. So, EV folk, Biofuel folk, and companies like us all need improved access to renewable energy. I'm glad to see the emphasis on this in public policy, particularly regarding infrastructure. I'm glad to see that bill got passed. Because of the size of our renewable energy need and the ability to achieve economies of scale, we expect that our business system could further catalyze the development of renewable energy. We're finding that there are many parties interested in building out renewable energy infrastructure. They need a big customer, someone like us. I'm also glad that our products are dropping into existing pipelines and enhancing existing markets. I'm glad our products are reaching the consumer level. There's a benefit if no one needs to use airplanes, cars, or trucks to reduce or even eliminate the fossil fuel greenhouse gas emissions footprint from combustion engines. I expect that we will have the opportunity to help EV and hydrogen sectors too. As we expect to generate excess renewable energy, including hydrogen, and supply to the marketplace where it wouldn't otherwise be available or couldn't be done. Our Net-Zero 1 plant design is unusual for the following reason: We are designing it with the carbon footprint in mind from the start. We are working with Juhl Energy on a wind farm that would be wired directly to the plant. We are planning to install a wastewater treatment plant that has the ability to generate water for use in the production process. But equally as important, it is expected to produce enough bio-based methane to run the plant. We also plan to install electrolysis units to produce green hydrogen from wind, further managing energy across the entire lifecycle. We're excited that we can prove using the world-leading Argonne National Laboratory's GREET model that by substituting the energy sources, moving away from fossil-based sources, and by using carbohydrates from sustainably grown corn, that the system we are building should be able to achieve a net-zero fossil carbon footprint across the whole lifecycle, from carbon capture to the tailpipe or exhaust of a jet engine. Think about it for a second. Jet fuel has roughly a fossil footprint of about 90 on a carbon score index, which means a score of 90 is fossil-based. Our SAF, when burned according to the Argonne GREET model, is expected to be 0, meaning that our SAF, sitting in a tank or a railcar before it's burned, is at least a minus 90 CI score. If we never burn it as a fuel, it would just be sequestered carbon in the tank. That's an interesting paradigm. When the fuel such as SAF is burned, it does release CO2, so then the carbon scores back up from minus 90 to near zero. Renewable energy in a tank with all the infrastructural advantages for market access and all the vehicles or planes that can utilize our energy are amazing possibilities. Let's consider, for a moment, if our building blocks produced at a net-zero plant were used to make plastics rather than jet fuel or motor fuels. These building blocks would result in the same plastics made from petroleum, except we have swapped fossil carbon for renewable carbon captured from the atmosphere. The technology works! So, imagine car bumpers or tires made from our materials. It would be sequestered carbon captured from the air, transformed into durable goods, and the carbon score of those products could be expected to be significantly negative, as we're not burning the products to make them into durable goods. Of course, it would depend upon the composition of those plastics or rubber derived from our net-zero ingredients. Looking forward, we expect to add geological sequestration to the carbonization mix. Others can do this, and we can too. That should make our footprint even more negative—potentially negative in a significant way. According to GREET, we'd expect the possibility of a negative 30 to 40 CI score from where we are today, and this is quite possible even after the fuel is burned. If we apply some new techniques in agriculture, it can become even more negative across our entire lifecycle. How can it be so negative? Because our business system could drive carbon sequestration—for instance, in the soil or geological formations. Additionally, by using the latest processing techniques for corn, higher-value protein products and corn oil can be produced and brought into the food chain. This is really essential. We believe that it's possible to use land to produce food while simultaneously generating raw materials for energy, and many improvements can still be made. We're not done yet! We can also utilize carbohydrate feedstocks derived from wood, biomass, molasses, and various other carbohydrate sources. Any of these are in our plans as we grow our operations. The sustainability of each feedstock must be proven, and it must be cost-effective before we proceed. Now, we've been making excellent progress on the business front. First, Chevron: the MOU with them outlines the basic deal where they would take up to 150 million gallons of hydrocarbon fuels and correspondingly invest in the production assets needed to produce those fuels. Good! That means that if we build six Net-Zero 1-style plants, each with a capacity of about 50 million gallons, and if they took 50% of the capacity, the MOU contemplates them investing in 50% of the capital for each plant. We still have to convert the MOU into definitive agreements, and there could be some twists and turns along the way, but we appreciate Chevron's commitment and the energy that they bring to getting this done. Ethanol to jet is a new endeavor for us. We've been quietly working on it for years, and then we announced that we signed a deal with Axens of North America, which gives Gevo the exclusive license to develop ethanol-to-jet in North America. Axens is the licensing arm of the French National Research and Engineering Laboratory called IFP, which has focused on applied research and engineering for years. They have extensive expertise in refining and chemical plant technology. Their capabilities are truly impressive. We visited them last month, and we’re quite pleased with what they bring to the table. As we got to know them, we learned that they hold more than 60 patents with 25 plants commercially operating using their technology to convert ethylene into fuels and chemicals. Now we know how to decarbonize alcohols, and we know how to convert alcohols into olefins—ethylene is an olefin. Therefore, it came to us that we have a clear path to take ethanol as feedstock, using commercially proven technology, and convert it to SAF while improving processes. It's pretty impressive! They have successfully deployed these technologies with petrochemical-based feedstocks. The fresh perspective here is substituting ethanol, converting it to ethylene, and then forwarding that ethylene into these well-established processes. We’ve struck a strategic alliance with them, and we believe ethanol-to-jet will be essential for us. We also see it as synergistic with the isobutanol-to-hydrocarbon routes. Indeed, there are many opportunities to add value to each. This should enable us to produce more products across a wider slate, as Tim Cesarek likes to say—we can produce diesel fuel, jet fuel, gasoline products, and many other building blocks for the chemical industry, ultimately achieving a higher renewable content in our fuels. In other words, we are enhancing our capabilities. It's also worth noting that Axens will provide process performance guarantees for the alcohol-to-SAF and motor fuels technologies, which is invaluable in financing production facilities at the project level. We signed an MOU with ADM to convert 900 million gallons per year of ethanol into about 500 million gallons of SAF and hydrocarbons, along with building IBA hydrocarbons, particularly indicator hydrocarbons. ADM operates some of the most economical ethanol plants globally. Starting with low-cost ethanol is a prudent approach when converting it into SAF. Working with ADM is expected to result in a joint venture with them and other investors. Interestingly, ADM has also been a pioneer in geological sequestration. It's an exciting opportunity, and I believe they will be a good partner. Regarding our customer pipeline, it's expanding! We're still on track to obtaining financeable off-take agreements, but the pipeline of potential contracts is now exceeding a billion gallons per year. We're actively negotiating these contracts. The interest in SAF has significantly increased, especially in light of the White House meeting a couple of months ago. We expect to announce the next agreement that sells out Net-Zero 2 and beyond soon. We've also acquired the Butamax patent portfolio, now having around 600 patents covering the biotechnology fermentation production processes for hydrocarbons. It's advantageous to consolidate these patents under one roof. I'm pleased to have that polished off. Our Net-Zero 1 project is on track! Kiewit, one of the world's largest and most capable engineering and construction firms, is a fantastic addition to our team. Kiewit brings tremendous expertise and the capability to build multiple plants simultaneously. This capacity is vital as we may need to build more than one plant concurrently. They have a reputation for delivering both on-time and on-budget. We plan to complete the next round of engineering around year-end, moving into a more detailed phase. We expect to complete the EPC wrap around the end of the first quarter or early second quarter and work on our project debt deal. If this all goes according to plan, we expect to kick off plant operations in 2024. Our Northwest Iowa renewable natural gas project is also on track to start up early next year, and everything is going well so far. I appreciate the experience we're gaining because renewable methane, biogas, and R&D will be crucial in finalizing our hydrocarbon production systems, like alcohol and alcohol hydrocarbons. As previously mentioned, one of the major issues contributing to the carbon footprint of these plants is fossil-based natural gas and fossil-based electricity. Eliminating these components makes everything greener. Lastly, we are elevating our ambitions. We believe that it's possible to bring online a business capable of delivering one billion gallons of capacity or more per year using a combination of IBA and ethanol as feedstocks for hydrocarbons to serve SAF and motor fuel markets by 2030. We call this the billion-gallon initiative. Simple—one billion gallons or more by 2030. This is what we are striving for, and I feel the pieces are falling into place. Net-Zero 1 is the first step, and we need to get it right. However, we see vast potential for rapid growth beyond Net-Zero 1, with Chevron, ADM, Axens, and others playing instrumental roles in making this happen.

Thank you, Pat. Gevo's primary execution focus is getting Net-Zero 1 built and operating. Net-Zero 1's design and engineering work are progressing well, and we're advanced in the plant engineering, procurement, and construction contract with Kiewit. We feel very confident about our partnership approach with Kiewit and their strong expertise and capabilities, especially regarding their ability to deliver multiple plants simultaneously, as Pat mentioned. We expect to start ordering long lead equipment to engage in site mobilization and preparation work, continuing detailed engineering in the first half of 2022. This is critical for maintaining our project timelines. The wind power and wastewater anaerobic digestion design-build, own, operate partnerships referred to as 'DBO' partnerships are progressing well. Juhl Energy, our wind power partner, is advancing the Net-Zero 1 60 megawatts behind-the-meter wind project development and collaborating with potential utility partners to ensure a structure that works for all participants. We are well into the engineering and commercial processes with multiple wastewater anaerobic digestion partners and expect to finalize arrangements with a winning party early in 2022. We've been very active with advanced work surrounding the Net-Zero 1 non-recourse debt financing. We have multiple tracks underway, including tax-exempt private activity bonds (PABs), a potential Department of Energy loan guarantee route, and interest from long-term private placement debt providers. We are pursuing multiple PABs out of an abundance of caution, seeing which will present the best debt structure in terms. The base case thus far has been a PAB offering by Citigroup, as the majority of our Net-Zero project costs are eligible for PAB funding, and those markets are quite favorable for this type of credit. We expect to have the project finance elements in place, aiming for a mid-2022 debt offering, regardless of which route is taken. The strength of Net-Zero 1's project participants—from off-takers to Kiewit, Citigroup, and other essential supporting elements—will all be favorable as we head towards breaking ground and financing construction next year. We are also working to ensure follow-on Net-Zero 1 plants are sold out with off-take agreements developed, financed, and built. To construct a fleet of plants, we will be raising money at the project level, as contemplated in the Chevron MOU, and we will additionally assess circumstances at the Gevo Inc. level. For instance, adding a strategic partner or two would enhance our ability to execute on these projects. In any case, we will ultimately want to raise money at the Gevo Inc. level so that we have capital available to contribute as equity and can benefit from the corresponding project cash flows. Our perspective on capital investments is that the opportunities are immense and should be accretive. We are also interested in partnering with companies that own ethanol assets and acquiring ethanol assets with the intent to decarbonize existing production, supplying low-carbon feedstocks for new SAF production capacity, and achieving correspondingly low carbon index scores on the final product. We would welcome hearing from ethanol plant owners who may be interested in Gevo's approach. We have identified and are pursuing several sites for follow-on greenfield Net-Zero projects that are as appealing as the Net-Zero 1 Lake Preston site. We will require these site options as we expand production capacity. Decarbonization of production is always a focus when analyzing sites. For example, ADM's Decatur, Illinois site presents a great opportunity due to its carbon sequestration capacity. We are also actively operating our Luverne plant to produce isobutanol while optimizing systems and processes. These learnings should aid us as we operate the Net-Zero plants. We're utilizing the Luverne isobutanol to produce small quantities of hydrocarbons at the Silsbee, Texas plant. Next year, we expect to leverage Luverne's isobutanol production as feedstock for a modular hard-to-carbon plant currently being fabricated by a partner, slated for installation at Luverne in 2022. We remain a pre-revenue company. Recall that while we are producing isobutanol at Luverne to accumulate feedstocks for hydrocarbon production, we suspended the plant's ethanol production in Q1 2020 to focus on our Net-Zero program. Late next year, we expect some revenue from our RNG project and some revenue from small quantities of hydrocarbon products. In late 2024, we expect to see substantial revenue upon Net-Zero 1's projected start-up. As our one-billion-gallon initiative begins to take shape, we expect to issue some guidance, but that is premature today. Given our pre-revenue status, the key third quarter financial metrics are as follows: End of Q3 cash and cash equivalents were $522.4 million, long-term debt outstanding was $66.8 million, the corporate burn rate was $6.1 million, capital investments associated with Net-Zero 1 and other capital projects totaled $16.8 million, and we had other investing activities worth $9 million associated with the Butamax patent acquisition. As Geoff noted, full financials are available in our earnings release and our Form 10-Q on our website. I will now turn it over to Paul Bloom to discuss Verity Tracking.

Thanks, Lynn. First, I'd like to note that we have executed a joint venture agreement for Verity Tracking with Blocksize Capital. Verity Tracking is based upon distributed ledger technology, commonly known as blockchain, and it focuses on tracking sustainability attributes, such as the greenhouse gas footprint across the whole of the supply chain, including carbon capture, feedstocks, sources of energy used in production, and other key inputs to determine the lifecycle footprint of products like ours. We intend to provide verifiable and immutable sustainability data from the source of the raw material to the tailpipe and exhaust of jet engines. As the responsible executive of Gevo overseeing this joint venture, we envision that Verity can benefit any company that needs to prove their sustainability footprint. When we started Verity, it was focused on Gevo's sustainability systems and products. We quickly discovered that this technology and method of tracking sustainability improvements using a blockchain solution fills the gap for other industries as well. We intend to open Verity up to work with any company that desires verifiable proof of carbon intensity reduction and is willing to commit to transparency. As demand grows for high-quality carbon offsets for compliance and voluntary markets, Verity Tracking is anticipated to provide the carbon accounting needed for both segments while avoiding double counting. We also aim to simplify auditing while providing users with the best-in-class data security. We look forward to continuing to develop the joint venture with Blocksize Capital and devising solutions for other potential customers. Thank you. Now, I will turn it back over to Pat to wrap things up.

All right. Thanks, Paul. Thanks, Lynn. And let's open up the call for questions. Operator.

Please stand by while we compile the Q&A roster. Our first question comes from Nate Pendleton from Stifel. Your line is now open.

Good afternoon, all. Thanks for taking my questions.

Sure.

The first question is, with the understanding that you and ADM are only a couple of weeks removed from your ethanol to jet announcement, could you share comments on how your dialogue is progressing, and what's a reasonable timeline for disclosure of commercialization plans to achieve first production in 2025–2026 time frame?

The steps that need to happen are first to figure out our full decarbonization game plan. We’re conducting engineering work on the ethanol to jet transition. Once we have those details confirmed, we will ascertain the timeline for production. It's not an immediate matter; we are quite a way from that as of now. Regarding ADM, their CEO has discussed that 900 million gallons of ethanol as raw material is an excellent starting point for generating significant amounts of SAF. There are many tasks ahead, including forming our game plan and bringing in other partners, as this decarbonization process requires extensive collaboration and financing. Many interested parties are here, poised to assist.

Excellent. Thank you. And for a quick follow-up regarding Net-Zero 1, I wanted to follow-up on the CCS commentary that you gave. While not part of the initial plans for Net-Zero 1, could you comment on the opportunity you have to integrate CCS and the price and EBITDA uplift potential?

I'll comment first then Lynn, you can elaborate on the economic implications. Yes, our plant at Net-Zero 1, like any other facility that generates CO2, actually creates value as that CO2 could be captured and sequestered. This could improve our carbon intensity (CI) significantly—around 35 points. We start at a CI score of minus five, so integrating CCS would lead to further reductions even in states with stricter carbon penalty measures. Lynn, what are your thoughts on the potential value?

That’s correct; the 35 point CI improvement could represent substantial EBITDA uplift opportunities. The costs associated with engaging the counterparty for CCS are relatively minimal compared to the expected benefits from the CI reductions. While we don’t see CCS as a crucial part of our initial debt financing for Net-Zero 1, it presents a future equity upside investment proposition.

Exactly. We believe that the debt must be financed before CCS pipelines come into play.

Great. Thanks for taking my questions.

Our next question comes from the line of Shawn Severson from WTR. Your line is now open.

Great. Thanks, and good evening, Pat. A question regarding the mix of isooctane these days and renewable gasoline. We hear a lot about SAF, especially due to the recent ATM deal. But what do you currently observe in the potential contracts and off-take agreements between isooctane and SAF?

Currently, the split is approximately 50-50, maybe leaning 40% isooctane and 60% jet. However, since the White House meeting a few months ago, interest in SAF has definitely surged. Airlines face challenges as they typically operate with thin margins and are slow to commit to long-term purchasing. Therefore, we will see which other off-takers might step into the mix, aside from airlines. That said, isooctane remains a significant market. Even with the most optimistic outlook for EVs, gasoline will still represent a major market segment through 2050. California serves as an excellent model for us, as they have developed effective measures for carbon accounting. Our partnerships suggest that we need to establish around 26 isooctane plants aimed at California's current demand since they are currently reliant on imported isooctane or alkylate, which are fossil-based. There’s a tremendous opportunity here, and it will be a vital component of our offerings.

Could you explain the downstream Verity Tracking model in relation to the green model? I know they both relate to carbon accounting, but could you clarify the differences?

Certainly, Paul, do you want to address this question? Explain what GREET is and the business concept of Verity.

Thank you for the question. The GREET model, run by Argonne National Lab, serves as a life cycle inventory program that calculates the carbon intensity score of different products based on the right inputs. The distinction with Verity Tracking is that it incorporates GREET in our calculations to ensure accurate carbon intensity scoring. However, Verity Tracking also utilizes blockchain technology to track provenance from source through the entire production chain. Essentially, Verity connects the sustainability dots—from what a farmer grows, to processing, and finally how the end product is utilized. Rather than being merely a carbon scoring tool, Verity Tracking accounts for holistic sustainability along the supply chain.

Thanks for explaining that.

Yes. It’s worth noting that GREET acts as a scientific instrument, whereas Verity Tracking involves having field auditors that can interactively track and measure inputs in real-time. Verity will maintain an audited record of the energy package utilized throughout production, documenting the entire journey. In essence, Verity Tracking acts as a sustainability certificate that accompanies the product, ensuring reliability through third-party audits. Furthermore, the potential exists to create derivatives based on these sustainability attributes, which could open avenues for commercialization.

Are you suggesting that you might tokenize the data? Could this be a form of exchange like credits?

Yes, tokenization is certainly a part of it. Tokenization on blockchain allows for immutable documentation of attributes, and once established, can be traded. We’ve already worked on prototypes to demonstrate this concept. However, verity tracking will be distinct, as we will back it with detailed data that traces its origins and production history.

Thank you. Good afternoon, everyone.

Hey there.

Thank you for taking my question. Hi, Pat. So Pat, what incentivizes partners and potential customers like Chevron to move from MOU to definitive agreements? Is there a specific trigger or catalyst?

The key is collaboration—getting the right people in the room to work through details and negotiations. We are making steady progress. Similar dynamics apply to our ethanol-related deals; engaging with ADM is one such example. It's an interesting time as we explore additional partnerships that can quickly boost our growth, while also ensuring they align with our isobutanol operations. We're seriously targeting the goal of generating more gallons of hydrocarbons by '23. The Net-Zero project serves as a demonstration of the feasible pathways to decarbonization when renewable energy and gas sources are correctly leveraged. It clarifies the roadmap for others to follow, and we will capitalise on that interest in our partnerships with Axens, and more.

Congratulations on acquiring the Butamax IP. Do you have any near-term plans for it, or are you just holding onto it to see how things develop?

The value of that portfolio is significant, with many active patents that can be extended or adjusted over time. We aim to ensure that we maximize our advantage with these intellectual properties, as they have long lifespans—approximately 20 years. Hence, it’s crucial to make use of them wisely. Ensuring these patents are under our purview is important, as in the future, if we obtain significant revenue streams, it will bolster our stance.

What’s your outlook on supply chain issues affecting your client build-out and equipment needs? Are you experiencing those challenges already or are they yet to impact you?

Kiewit excels at managing such challenges, and they’ve been proactive in mitigating potential issues. At this time, I don’t foresee any major obstacles affecting our plant startup timeline—mid-year, third quarter, or even earlier. The engineers have already factored in these supply chain considerations when planning.

For the purposes of non-recourse debt, we must have defined timelines with potential liquidated damages in mind. Kiewit will consider procurement constraints while guaranteeing their schedule.

They will ensure to secure the date before agreeing on pricing and damages.

Could you provide insight into the Verity Tracking effort, including its investment size and team composition?

It's a relatively small investment, and I wish we would have started this years ago. The ROI could be substantial. We're establishing a value-driven business from it without needing heavy capital assets, so we're looking at a low million-dollar investment during its development.

It looks like you have abundant growth opportunities, including the RNG efforts. Are you considering leveraging these projects into additional revenue streams?

Absolutely! We aim to integrate our partnerships like with Juhl Energy, which are enthusiastic about growth and bring a wealth of financial and technical expertise. Our focus on renewable energy infrastructure is vital; we must eliminate at least 60% of fossil-based electricity while addressing our gas requirements. Initially, we began working on RNG solely to supply our Luverne plant. However, the opportunity to market it in California is promising. As we explore the use of various renewable resources and technologies, we aim to minimize fossil fuel dependence, so our commitment to reducing CO2 emissions is at the forefront.

That's all I have. Thank you so much.

You bet.

Thank you. Our next question comes from the line of Poe Fratt from Noble Capital. Your line is now open.

Thanks, Gigi. Hey Pat, how are you?

Doing great, thanks.

You've been very busy. You did an excellent job laying out the progress you've made. I'd like to focus on Lynn's comments regarding your pre-revenue status. Can you highlight quarterly cash burn, maybe even annual projections? Also, what do you expect for capital related to the Butamax acquisition, as it won’t appear in the upcoming quarterly statement?

Yes. Our corporate burn rate is around $6 million per quarter. We’re estimating $24 million for corporate expenses, excluding cost of goods sold at Luverne. In terms of capital investments next quarter, it will be comparable. The more significant expenses related to site mobilization and acquisition will push into 2022 for Net-Zero 1.

Could you quantify what you might expect for the first half of ‘22?

Not at this time. I wouldn’t want to throw those numbers around casually.

There will be long-lead equipment items and some site work. However, the larger monetary investments will come later once we have guaranteed delivery and financing in place. So, we need to go through the due process, but everything appears promising. The reason I emphasized pre-revenue status is due to consistent inquiries from investors who expect revenue despite us having suspended ethanol production to focus on Net-Zero.

Has there been any changes in capacity or costs for Net-Zero 1 at this point?

Not yet. I am continually asking this question given the prevailing circumstances involving COVID and supply chains. So far, I have received no unsettling news. We are progressing well, which is encouraging. Poe mentions increasing the capacity for Net-Zero 1, projected at 45 million gallons, 340 million pounds of high-protein animal feed, and 30 million pounds of oil. We know this site could feasibly accommodate two plants. Such scenarios would allow us to save significantly on capital costs and optimize production by modifying the engineering on the original design. We could accommodate both hydrocarbon plants within the same site, linking them for operational synergy. However, we haven’t finalized details yet; our immediate goal is to fulfill contracts and explore ways to scale beyond the current setup.

Are you pursuing simultaneous construction for Net-Zero 1 and 2? Or will it be sequential?

They will be sequential, given the site development work already underway. Key engineering work can move rapidly since we will effectively replicate Net-Zero 1 in a new location. Practical timelines indicate we are looking at a six-month delay for the earliest start on Net-Zero 2.

Only six months delay.

We’ve already contracted 54 million gallons and if we secure significant additional contracts soon, we could be deep into planning for Net-Zero 3. Momentum is building with our partners.

Lynn indicated a funding refresh, considering the necessity for shareholder approval to expand share authorization. Do you expect that vote soon, and how might that affect your capacity for fundraising?

Indeed, we have $520 million in cash equivalents and are in a good position. Hence, we won't find ourselves pressed for immediate fundraising. We refreshed the ATM to prepare strategically but have not yet utilized it. The landscape shifted for us, and we need to navigate how we communicate these developments moving forward.

Thank you. This was highly helpful.

Thank you for your participation! It's an exciting period as we kick off our billion-gallon plan. I can only see potential growth ahead.

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