Good day and thank you for standing by. Welcome to Gevo's Fourth 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. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. John Richardson, Investor Relations.

Good afternoon, everyone. This is John Richardson, Gevo's Director of Investor Relations. Thanks for joining us to discuss Gevo's fourth quarter results for the period ended December 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; 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 the timing, development, engineering, financing, and construction of Gevo's sustainable aviation fuel projects, our 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 and 10-K, 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 everyone that this conference call is open to the media, and we're providing simultaneous webcast to the public. A replay will be available via the company's Investor Relations page at www.gevo.com. I’d now like to turn the call over to the CEO of Gevo, Dr. Patrick Gruber. Pat?

Thanks, John. 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. You've probably read that Carol Battershell has joined Gevo as its newest member of our Board of Directors. Carol has had a long and successful career in the energy industry and provides our Board with additional depth in the field of federal energy regulatory policy. Carol was Principal Deputy Director in the Office of Policy at the Department of Energy. She spent 10 years at the DOE. She also spent over 24 years at BP. Her last role at BP was Vice President of Policy and Strategy in their Alternative Energy division. We are very glad that Carol could join our Board, and I expect she'll be able to contribute greatly. We successfully commissioned our Northwest Iowa RNG project. It's been up and running since the third quarter of 2022. We’ve worked through the start-up issues, and we're able to achieve greater than design raw gas production from the digesters in late fourth quarter 2022. We made the decision to expand the capacity of our system to 400,000 million BTU used per year. That's up from 355,000 million BTUs. The digesters have already been optimized to achieve that capacity, and we are expanding the gas upgrading system at the pipeline injection site to be able to inject that 400,000 million BTUs. This expansion should be completed by, or in the third quarter of 2023 and operational in the fourth quarter. We have already RIN approval from the EPA. And, of course, we've already applied for the temporary pathway from CARB for the LCFS credits. This approval would apply to all the gas we produced to date and until we get the final pathway from LCFS approved. That could happen later this year, it could possibly even drag into next year, depending upon their workload at LCFS CARB. If a temporary pathway is assumed to be in place all year, which that's a good assumption for the moment, without being superseded by the final pathway, we'd expect the revenue from our RNG project to be about $13 million in 2023 based on the production of about 360,000 million BTUs and using current low prices, just projecting it forward throughout the year. We expect that we should see the RNG project being operating cash flow positive even using these low values of the temporary pathway and the conservative assumptions for pricing. When the final pathway gets approved, we would expect an uplift of about $400,000 per month. Now if anyone's trying to model the RNG business, note that the 2023 revenue expectation takes into account RINs lagging by a month and LCFS lagging by about one-quarter. For example, we carried $4.2 million worth of RINs and LCFS value in inventory into 2023 that was actually attributable to 2022. In the fourth quarter of 2023, we may choose to delay monetizing RNG inventory until the first quarter of 2024 if we believe that our final LCFS pathway approval will be delayed until then. Although this would reduce the RNG revenue in 2023, it would be more than made up for in 2024 by a higher value in pricing. Our Net-Zero 1 project continues to be on track with its first volumes targeted for 2025. We plan to use our balance sheet to execute the remaining detailed engineering purchases of certain long-lead equipment and enter into construction contracts for mobilization this year. Fortunately, because our balance sheet is healthy, we can keep the project on schedule while we negotiate detailed agreements, including the EPC contracts required for the financial close later this year. In other words, the EPC contracts are not on our critical path for COD, which they often are for project developers. We're lucky in this case. We will begin purchasing certain long-lead equipment for NZ1 in the coming months, and we have already advanced funds to support the wind project development and the hydrogen plant development, including some wind turbine and hydrogen electrolyzer purchases and money to support development and long leads for our electricity service at NZ1. We expect to start construction in earnest by this summer with a limited notice to proceed in advance of full financial closing. We intend to keep the project on schedule with Gevo continuing to fund the first phase of the project as needed prior to financial close, which will fund the complete construction work of NZ1. During this time, we will continue to work with potential equity and debt partners, including the Department of Energy in order to secure third-party capital that will help to conserve Gevo's balance sheet. We expect that, Gevo will have the option to leave some, or all of the development money in the project as project equity, or to take reimbursement of capital from potential partners for some amount of the development capital in order to recycle it into other NZ projects. We are working with Guggenheim and Citigroup on the equity financing, and Nomura Greentech and Citigroup on the debt financing. We have engaged with investors and are finding strong interest. Many interested parties are in the due diligence phase doing deep dives and we are in the midst of securing term sheets. Some potential investors have expressed interest in both equity and debt. However, all of this will take several months to get arranged and get it in place. Additionally, we have submitted part two of the application for the DOE loan guarantee process. DOE appears to be very supportive, and it is possible that a DOE loan guarantee will provide the lowest-cost debt to the project. So we need to work through that process along with the process that would secure commercial debt. We're running these things in parallel. The DOE timeline is expected to take incrementally longer than a commercial debt process, but it potentially increases the equity distributions of the product and the overall profitability. One of the special things about this NZ1 design that we're doing is that it can have a very low carbon footprint with lots of optionality. As we've previously discussed, Zero6 Energy, that's formally Juhl Energy, is our partner for wind and hydrogen. Zero6 is developing both a 99-megawatt wind site and a 20-megawatt hydrogen plant for NZ1, as we recently announced, Cummins has been selected as a supplier for the green hydrogen electrolysis now. Turning to the NZ1 plant site build-out itself, we have been working through the EPC contracts to get favorable terms for debt financing, while also working on limited notice receipt contracts, which will cover the initial phase of construction prior to finalizing the debt and equity financing. Because we're using our own cash for the NZ1 project until financial close, we can keep the project moving forward in parallel to get the EPC agreements in place. As we negotiate the EPC contracts, we expect to arrive at final terms that de-risk the project and lower the financing costs. The ETJ plant is expected to be heavily modularized, and we have our favorite fabrication shops identified in what has been a competitive process. However, we still need to finalize the pricing guarantees, and the ETJ plant details are coming together. One thing we're doing to reduce project risk is that we are planning to have the ethanol plant start up well ahead of the ETJ plant so we ensure it's running at a stable rate prior to feeding it into the ETJ plant. This sequencing of construction in this way is expected to reduce overall execution risk and give people comfort. We are also in the midst of engineering our NZ2 plan. We have committed $25 million for the development and engineering of NZ2. NZ2 is expected to be three times the size of NZ1 and is being designed to utilize fossil-free electricity, process energy, and hydrogen at a commercially advantaged location convenient to supply Chicago, Harry Reid International Airport, with sustainable aviation fuel. We expect to be able to say more about NZ2 in the near future. Now we've had several questions from investors related to the recent comments from certain entities about their exposure to projects with Gevo. They referenced three projects. And obviously, we are working with them on NZ1 and NZ2. However, the details of the third project are still confidential, I confirm there is one, but it's confidential. We are planning several sites that would be developed in cooperation with existing ethanol plants. We have a partner network of ethanol producers that understand how to decarbonize their ethanol plants; our marine carbon intensity score is far below where most ethanol plants are currently targeting. We expect to carbon copy the design and modules of the ATJ portion of the plant from our NZ1 site. Some of the potential partners for equity in NZ1 have also expressed interest in developing and investing in multiple plants along with us. It's obvious to everybody that Gevo doesn't have the balance sheet to build all these plants by itself. We plan on raising money, we've already disclosed, we plan on raising it at a project level. And I expect that Gevo will play the role of project originator, developer, and investor in these projects. As such, we'd expect to recycle capital from project to project. The implication is that Gevo expects to see cash flow much sooner than the NZ1 operation date. We expect to provide guidance on our potential revenue and cash flows once we define the details of our partner deals. The idea that Gevo will have to wait for cash until 2026 or so, that's the wrong paradigm. We should see it sooner as we get into this developing business. In addition to revenue from developing and investing in projects, we also expect to generate cash from licensing and/or assisting others to build out ATJ projects. These markets are huge and growing. The Axens technology combined with Gevo's low-carbon integration technology is attractive and the most commercially ready and scalable technology compared to others in the field, at least in our opinion, and that of our potential partners. We would expect to see some revenue streams licensing and/or assisting others in the relative near term. The details are being negotiated, and we'll report them as the deals are signed. We're in the midst of creating a new business line called Verity Carbon Solutions, which includes a proprietary Verity Tracking digital MRV or measurement, reporting, and verification platform. Over the past year, we've realized that the solutions we're developing to immutably track, count, report, and monetize carbon intensity reductions from the field to final fuel for sustainable aviation fuel (SAF) is the same solution needed for the biofuels and bioproducts industry. Therefore, we are planning to develop and launch the Verity Carbon Solutions business to service the needs of the broader industry. Now I'll pass it off to Lynn to talk through the numbers.

Thank you, Pat. We ended the fourth quarter of 2022 with a strong liquidity position of $482.8 million in cash, restricted cash, and other liquid investments. The restricted cash component of that number was $78.3 million and is associated with the Northwest Iowa RNG bonds and certain collateral we've had to post related to the development of Net-Zero 1. Long-term debt outstanding was $67 million and is related to the Northwest Iowa RNG project. Our corporate spend that is SG&A was approximately $7.3 million for the quarter, net of non-cash stock-based compensation of $3.4 million. During the fourth quarter of 2022, we invested a capitalized $15.6 million cash in the capital projects comprised of $8.6 million into Net-Zero 1, $5.3 million into Net-Zero 2, and $1.7 million into the Northwest Iowa RNG project. We are progressing our Net-Zero program and are in the process of seeking debt and equity partners for NZ1 and projects beyond flagship projects. Third-party debt and equity financings for the program are currently being structured at the Net-Zero 1 subsidiary level rather than at the Gevo, Inc. level. The equity outreach is going well with substantial market interest, and we expect to secure one or more investors as a result of those efforts. The NZ1 debt process is underway with fuel tracking of commercial debt sourcing and DOE guaranteed loan sourcing, both tracks are progressing well, and we expect to secure debt for the plant construction late this year. As Pat mentioned, we continue to spend development and engineering capital to progress the project and maintain its timeline in advance of securing the full construction financing.

Thanks, Lynn. And with that, we can open up for questions.

Thank you. Our first question comes from Dushyant Ailani from Jefferies. Your line is open.

Hi, team. How are you? Thank you for taking my question. I want to quickly ask if you're seeing any inflation on the long-lead items that you guys are planning to purchase. Maybe just kind of remind us of the overall CapEx budget for NZ1?

Overall, we expect to spend around $100 million in the next year to kick off the project and invest in long lead equipment. We'll monitor progress throughout the year. Fortunately, we aren't experiencing significant delays with long lead equipment, and nothing too elaborate is involved. So far, everything appears to be on track. Much of this expenditure will focus on capital for site development and the initial construction of our balance sheet. We anticipate seeing results within a year. Currently, there are no critical issues requiring immediate funding, apart from the hydrogen modules we have already addressed.

Got it. Thank you. And then I guess, so you talked about roughly $100 million for 2023. And I just wanted to understand your total CapEx for 2023 and then how do we think about next year as well?

Well, as we disclosed in the 10-K, we expect that the next 12 months for NZ1 will involve somewhere between $100 million and $200 million. The reason why the range is wide is because we're managing through the EPC contracting process and limited notice to proceed in the timeframe of the project spend. But that's the range that we feel comfortable with.

Understood. Thank you.

Thank you. One moment. We have a question from Derrick Whitfield from Stifel. Your line is open.

Thanks, and good afternoon, all.

Hey, Derrick.

Regarding your capital raising efforts for NZ1, how should we think about your equity ownership of the project and its production streams as you advance the private capital market solutions? And more specifically, is there a minimum or maximum ownership you'd want to maintain?

It's difficult to pinpoint exactly because the discussions have varied. Some people have expressed a desire to pursue an all-equity approach, while others are interested in forming a partnership. We need to bring everyone together to determine what can be accomplished. One interesting aspect is that if we were to adopt a pure developer model, we would retain some interest in the project. This could allow us to avoid direct investment while still gaining equity in the deal, which is advantageous. It would be an efficient use of capital, enabling us to allocate more funds for developing additional products and potentially increasing our retained interest. Of course, it's also possible that we may choose to invest straight away, depending on how much capital we feel comfortable committing based on our balance sheet. We have several projects to work on, so this isn't just about NZ1. The right approach will depend on feedback from our partners and their goals, as some are interested in investing in multiple plants. We need to clarify everyone's intentions and move forward.

Terrific. And regarding Net-Zero 2, are you seeing the potential for capital synergies if the project is designed to be 3x the size of Net-Zero 1?

There is?

Any that you can elaborate on just to give us a feel for how that scales?

Not at this time. It would be premature, but there's advantages in these processes and economies of scale. And the site that we've selected is a good site. It's a really good site and we'll be saying more on it pretty soon. But after seeing that at Chicago, it's a very practical place for us in where we're putting this thing. And we have a good solution for the de-fossilization as well. We'll talk more about it when we're at liberty to fully disclose everything.

Pat, if I may, could you share your perspective on how willing airlines are likely to be in sharing the SAF Tax Credit with the industry, considering the recent developments with the Illinois SAF Tax Credit bill?

Everyone is working together. What we're discussing here is the $1.5 tax credit for SAF in the State of Illinois, which makes it an attractive location. There is a clear understanding among everyone about the need for SAF, and there is a desire for it on a large scale. We have many customers based here, and they are both friends and partners. This shared perspective makes everyone very receptive.

Perfect. Thanks for your time.

Thank you. Our next question comes from Manav Gupta with UBS. Your line is open.

Hi guys. I actually just want to deviate a little and talk a little bit more about your RNG business. Is this something you can grow? Is this something you want to keep? Is this something you can monetize to fund some of the other developments? We've seen some attractive investments in RNG. So, what's the path forward for your RNG business here?

To provide some background on why we initiated our RNG efforts, we believe that biogas and RNG will play a crucial role in the long-term goal of replacing fossil-based natural gas, especially when it comes to reducing carbon intensity. This also applies to supplying our plants, such as NZ1 and others we plan to develop in the future. This is the motivation behind our entry into this field. It's practical to channel RNG through a pipeline and distribute it via BP to the transportation sector in California, as it can generate revenue in the short term. Additionally, supplying our plants with RNG is also financially beneficial. Addressing the natural heat issue in our facilities is one of our significant challenges. We anticipate involvement in more RNG projects, recognizing the growing interest in this area. We are already in the process of expanding our efforts after just a year of operations. There will be further opportunities for us, and our decisions on future investments will depend on our financial standing and existing commitments. I can share that we've connected three dairies through pipelines to an upgrading unit for RNG. The process of stabilizing and optimizing these systems required considerable effort, and now that we have that expertise, we are poised for further expansion. This experience is valuable, and we are aware that it gives us a competitive advantage. So in front of us is the decision of how much more do we invest in RNG, when. We're going to continue to go down the path of learning and working to develop sites that benefit our other plant locations for NZ plants, the jet fuel plants. That's how we think about it. So we aren't doing it just to do transportation fuels in California. That's not the game at foot. The game at foot is to be fossil-free ethanol plants, who can supply ATJ plants and decarbonize ATJ plants themselves. Does that make sense?

Absolutely. A quick follow-up here. I know you're in the middle of raising financing for NZ1 and maybe NZ2 one day, from like looking out there, one of the companies I cover, they got a deal of a lifetime from Eni, walked in $7 a gallon CapEx, fully refunded the project. I'm wondering if a European major or US major walks up to you and says, okay, I want 50% of NZ1 or 50% of NZ2, and here is all the money off of the CapEx, would you be open to that?

We are indeed having discussions along those lines. Currently, we observe many individuals learning from us and validating our efforts with strong positive signals. We need to complete our work thoroughly with them to secure the investment. People recognize that Gevo approaches the entire business system in a unique way. It’s evident that our approach to the value chain, from agriculture to de-fossilization of plants and ethanol, is noteworthy. Recently, Axens highlighted our collaboration during a roadshow, which underscores what makes our partnership special. We also work with Axens on advancements in hydrocarbon projects, which contributes to a compelling narrative. I anticipate that there will be a demand for larger plants, while some may prefer smaller installations focused on reducing the carbon intensity score even more rapidly. Overall, I would be surprised if we don't engage with multiple investors.

Perfect. We are rooting for you and we hope you get the best deal just like others did.

Thank you.

Thank you. And we also have a question from Amit Dayal with HCW. Your line is open.

Hey. Good afternoon, Pat, Lynn. How are you doing?

How are you doing?

Thank you for taking my questions. With respect to the DOE loan guarantee, Pat, could you provide some additional color on maybe what the process is in terms of where the differences are relative to going to typical project financing lenders? And then, in addition to that, is there a cap on the amount for the loan from DOE?

Well, I'll comment on the CAF part and the amount of money that's available from DOE, and then Lynn can talk about the process because that's his life these days. Overall, one of the good things about IRA is it funded the DOE well. So this program is super well funded. So there's not a limit like that. In fact, there'll be money available, I think, for multiple plants, which isn't lost on us either. And so we're in pretty good shape on that front. And that would have been an issue prior to the IRA bill potentially, but we're in good shape. Lynn, you can talk about the process comparison.

Sure. Regarding the process, the DOE has a well-structured approach. We are currently in part two, which is significant because it initiates their due diligence, allowing them to hire consultants and actively engage in the financing process. As for the terms and conditions, I want to highlight that the commercial debt funds are primarily operated by private equity, with some institutional involvement, making them more flexible. However, their terms may not match those offered by the DOE. In part two, we requested long-term fixed-rate debt for construction plus term, aiming for a favorable debt arrangement. If successful, it may surpass what is available in the commercial markets, which typically offers short-term options and requires refinancing. We will need to weigh the speed of commercial debt against the timing of the DOE process and assess the economic advantages for equity distributions between the two choices.

Understood. Thank you for that. That, sort of, leads to my follow-up question on this. Now that you have the DOE as well as a potential financing option, from the substantial close aspect, it's understandable that time line for that could be moved around a little bit depending on how DOE comes in or not. But should we assume that the project timeline itself, given that you have the capacity to fund some of the initial development requirements from your own balance sheet, the project timeline for completion should still remain in line with what you have indicated previously, right?

That's correct. You are thinking about it correctly, and it's one of the significant challenges we face. Many people want clear milestones, but that's not how things work in reality. It's about keeping everything on track and balancing various factors. You are right; it may take longer, but it could be the more economically viable choice. The same applies to the deals we've discussed previously. We could finalize a deal now that might not be beneficial, but we have several parties involved, and we need to navigate the process in a disciplined manner to secure the right deal for us. It's not only about NZ1; it also includes our other plans. Lastly, I want to reiterate a point I made earlier. Often, I receive questions where people believe we are just waiting for revenue from NZ1 in a specific year, whether it's 2025, 2026, or 2027, and they wonder what we will do in the meantime. Well, we plan to grow our R&D business, which brings in cash. We are also adopting a developer model, allowing us to recover funds from these projects and change our ownership percentage. As developers, we can anticipate opportunities that enable us to participate in projects without needing to invest directly to obtain a stake. We might invest beyond that, which is a choice we can make. Additionally, there is potential revenue from licensing and facilitation, representing another possible income stream. We need to finalize our deals and present the figures clearly, but I believe people will be pleasantly surprised. I hope so.

Understood. Thank you, Pat. And then just on the Verity Tracking solution, who are we sort of targeting as near-term customers? And is this product ready to launch? And are you building the sales pipeline for this right now?

Yes. We received a grant from the USDA to finalize the development of Verity Tracking. This system involves monitoring and documenting what occurs in the field, how products are manufactured, and how they make their way to the market. We are utilizing distributed ledger technology, which underlies blockchain, to create digital quality certificates, sustainability certificates, or carbon certificates that can be transferred between parties. With this technology, all data remains linked throughout the process using smart contracts. We have made significant progress, having already created tokens and demonstrated that it works. There has been interest in these tokens, and we are currently working on commercialization. We'll begin this process with other companies, as our NZ1 plan is not operational yet, so we are preparing to move forward with external partners. We'll talk more about that. Paul Bloom is in charge of that business. He's got to decide when he wants to talk publicly about it more. But that is something that's pretty exciting. And it's a way of bringing value to farmers, to sharing value across the whole supply chain. And remember, we're going to be making immutable, documented, bullet-proof validations of carbon savings. It applies for other fuel products. It could also apply to food products. So we'll be working with a variety – expect us over time to work with a variety of folks on this outside of what we do ourselves. It's bigger than us in this case. It will be interesting to see. It's getting traction already. And so we've got to go through the commercialization of it.

All right. Thank you, Pat. That's all I have. Appreciate it.

Yeah.

Thank you. At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Dr. Gruber for his closing remarks.

Thanks all for joining us. It's an exciting time for us at Gevo. We're bringing in – we're in working on these partners and stuff. It's going to be very interesting to see how this all comes together. I'm glad that, we're able to share a little more color than we have in the past, talking about how we see commercialization of these multiple plants actually occurring. And I look forward to being able to talk about it a whole lot more as all the pieces come together. Thank you for joining us.

Thank you. This ends our presentation. Thank you for joining us today. You may now disconnect.