Gevo, Inc. (GEVO) Earnings Call Transcript & Summary

Hello. Thank you, everyone, for joining us today. My name is Shawn Severson, Co-Founder and President of Water Tower Research and Head of Sustainable Investing Research. Welcome to the next-generation here in our ongoing sustainable investing fireside chat series. We have Gevo back with us today. We have the CEO, Pat Gruber; and the CFO, Lynn Smull. He's going to be talking about some of the financing opportunities and options and strategies the company is pursuing. As a reminder, this event is archived and you can listen on demand as well. And if you do have questions, we do try to take some questions at the end of the presentation of the formal fireside chat. So you can submit your questions in the box in the lower left-hand corner. Obviously, it's called simply questions. So if you have anything there, please put them in there. And then we will also be able to access those for you, for you that are viewing this in an archived on-demand version. As a reminder, all of our -- all of our fireside chats, research content is accessible and available to all investors. With that, I'll turn it over to you, Pat, to make introductions.

Thanks, Shawn. Hey, it's good. I like these fireside chats. We had a lot of good feedback from everyone meeting Tim Cesarek on the last one we did, so we thought we'd continue on this thread. And this time have Lynn Smull. Lynn Smull is our CFO. He's going to join us. He's going to do the bulk of the answering of the questions, I hope, although I can never help myself and I jump in anyway, I can't help it. But Lynn, why don't you give people your background, let them know you came from, what you've seeing before, et cetera.

Sure. Hello, everyone. Lynn Smull, CFO at Gevo. My background is about 30 years, and a common theme through my career has been very complex, some large capital-intensive project financing. So I've closed about $13 billion worth of deals in different forms. All of them had structural complexity. Spent first 1/3 of my career on investment banking platforms at Salomon Brothers and Bank of America. Ran through the Calpine growth phase where the markets were throwing billions of capital at Calpine as one of the IPP agents to deploy assets in the U.S. repowering in the late '90s and early 2000s. And then have been on a variety of platforms since then, including private equity and corporate as more of the CFO function.

Cool. And of course, then, you've been here a year, Lynn, what do you -- just what's your impression after a year? Just -- that's worthwhile. What do you think of Gevo?

Well, when I came, I was excited to join Gevo. I thought there was a secret sauce here. Of course, you never know until you get inside of a company. And when I got in, it just only looked better. Last year, our backs were against the wall a little bit in terms of our balance sheet and cash, but we worked through that and have come out well and are well positioned to make Gevo a real entity, a real player in the renewable fuels market. So we're -- and other related renewable materials. So I'm just delighted to be here.

Shawn, back to you.

Yes. Thanks for that, Lynn, and for the introduction. Let me start by going to kind of summarizing things to date. I know you just reported your fourth quarter yesterday. But if you kind of go through some of the things and the milestones that have been impactful for Gevo from the fourth quarter, maybe through year-to-date, just to help set up some time line and milestones of where you've been over the last 6 months.

Well, a big one is that we got the debt off our back. We've got enough cash to be able to go do the actual full development of a plant site without having to get it from third parties. We had -- we got the engineering firms going and doing the design and engineering work we need to put a big site together. We raised a lot of money. We have $530 million of cash and no debt. All those pieces are good. We are completing our RNG project. We're actually moving forward with that. We'll talk more about that today I know. But that's a worthy project in and of itself. Our Net-Zero 1 project, as I look forth, we got to go and do the engineering and design phase. We got to get the capital estimates down to about plus or minus 10%. That will take us until the end of the year to do. And that actually is wicked fast for anybody wondering because we're -- it's a big capital project. It's expanded. Remember, originally, we were thinking about just doing 13 million gallons of hydrocarbons going to sell-out Luverne while we exceeded the goal, got more. And so it is time to go big. And you know what? As we thought about that, we had all kinds of interesting ideas about we can do better at driving the footprint down by making our own energy complex, renewable energy complex. So that's all part of the design, and it's going at light speed, even though it seems slow to those watching. And we need that data. We needed information so we can get a finance deal done. Remember, we're doing this off-balance sheet in a special purpose entity, project finance approach rather than just deploying all the money from Gevo, Inc. directly, right? We'll take 100% of the equity position in that project. An alternative would be just simply raise all the money at the corporate level and just do it. So we think it's a better answer, may get better returns by doing a leveraged debt deal. And coming forth, I know, Shawn, you asked what's coming at us, is that you heard Tim Cesarek, everyone heard Tim Cesarek last time. Throughout, he sees at least 6 net zero plants like good. Let's do #2 and 3, get those customer offtake agreements in place, I expect that happens this year.

Let me go back to the RNG and renewable natural gas project. We get a lot of questions from that from institutional investors we're talking to. And I know it comes up on year-end quite a bit as well. So clearly, that has some short-term opportunities for Gevo, so a shorter development cycle and project cycle. So maybe if you'd give us some more color on that and help us understand the impact that, that has on Gevo.

Sure. The big problem, if you think about greenhouse gas in this world is that they primarily originate from the generation of electricity and of course, then using natural gas reheating stuff. So we look at that and we know it's going to be important in the long run. We had started originally developing this project up in Northwest Iowa, so we could supply RNG to our Luverne project. It'd be good because we can get rid of the natural gas, the fossil-based natural gas, reduce the carbon footprint. We started developing. We made progress. We like the RNG business itself. This one has potential. This one is 25,000 cows or so, it's dairy cows, taking the manure, digesting it, make gas. It should make about 355,000 million btus. It's a $70 million plus project. And it's already developed. We're going forth. We'll talk more about it here, and Lynn can jump in and give some color to it. But it's been a good experience to do. The way we think about it strategically for Gevo is we like renewable natural gas, because I can take it to one of my net zero plants, and I can turn it in, the carbon values, into the energy dense liquids, attach them to the energy dense liquids. So I'm not beholden to the California market, like so many others. We can go other directions with it.

And just as a reminder for investors who maybe aren't as familiar with that, RNG, renewable natural gas has become a very popular topic with companies in nat gas engines like Westport Fuel Systems or Clean Energy Fuels, Cummins, and so for transportation as well as power generation, RNG has been a fairly aggressive development and in demand. But let's assume there's no problem of offtake agreements outside the fence as well as the consumption inside the fence for the plants, right now?

Yes, that's right. So -- and we look at it as collectively, we should -- in a real broad philosophical sense, what we should do is capture every bid of manure in this country and digest it to make renewable natural gas, then people can stop complaining about methane with meat production and all the rest, and we can get on with this and solve some of the problems. And you know what? You can make a lot of money at it, too. I like that.

Let's jump back to the financing side. I think both for net zero projects as well as RNG for that matter as well because there are going to be financing needs for that. Where is -- where are you on things? What's the strategy? And really, if you're looking at these topics for investors, is the financing in place today? Or what are the next steps that have to go? So we get these questions all the time. Where are you? What do you need to do? What's the incremental data that we can see that we can find as investors and analysts to understand where you are on the financing?

Let's have Lynn answer this?

Yes, sure. So from a project nonrecourse finance perspective, i.e., the project special purpose entities, raising the capital, a portion of which is Gevo equity investment and a portion is debt, we think the best market to tap into for Net-Zero 1 is the private activity bonds markets. Those are tax exempt. They have attractive pricing. They like renewable projects. Now that could evolve, and we could see an expansion and opening up of other markets like traditional syndicated bank loan markets or taxable bonds. But right now, the PABs market is the best way for us to go we think. To get to a nonrecourse financing, we have to do the engineering, get the plus or minus 10% nailed down, get some commercial agreements in place to mitigate completion risk, i.e., cost schedule and performance. That's the traditional project finance key element is completion risk. Once that's locked down, then all the other components come together, the commercial aspects on the attractiveness of the revenues vis-à-vis cost to support a debt offering. We are doing all of that in parallel with the engineering. So we're not looking to sequentially finish engineering and then go and put together a lump-sum turnkey and then go get the debt financing. We're going to stage everything to accelerate this as quickly as we can, negotiating debt terms ahead of time; fully documenting things ahead of time, so we're staged and ready to go on the debt side once the lump-sum turnkey contract comes into place after the engineering is done. So the objective is to close, we say first half of next year, sooner, the better, and we're going to be driving towards that.

And to clarify, when you say close on that, it's not -- you say it's running in parallel today. So it's just difficult because from the outside, you don't see progress reports, what's happening on the financing and on the debt side. But to understand this correctly, the engineering work is being done simultaneously with working in the markets, Citi, working in the markets to find the debt financing. And then it all comes together, I guess, at one time, we will see it. Not like oh we think you have this much debt that we can today, and we're going to get this much more tomorrow. This is a singular event, I guess, is what I mean.

That's correct. And -- but meantime, we have the capital to fully develop the project, which isn't inconsequential. I mean these are large capital-intensive deals. Counting -- well, excluding long lead equipment deposits that are necessary to maintain construction schedule and planned commercial operations date in early 2024, excluding those long lead deposits, it's a $25 million development undertaking. That's $15 million of engineering, $5 million of licensing. We have to license certain technologies. We're licensing Axens. We'll license Fluid Quip. And then there's all of the debt work that goes in, which is a $5 million ticket right there just to get a debt deal to the finish line, with independent experts, counsel, administrative costs for a bond offering that you have to pay prior to the actual issuance.

And then I'll add that in order to even come up with a solution for these private activity bonds, tax-exempt private activity bonds, that took a heck of a lot of work even to start through and get the engineering assessments, legal assessments done, to figure it all out, make sure it all complies, how to structure them and what to do. Citi did a great job of putting forth the effort to get that done.

Yes. It's a residual waste processing facility. So it's pretty clear now, although nobody has really looked at it from that perspective before, but that we've gone through all of the work to prove that out in relation to the IRS rules and the interpretations. So we're pretty confident we're going to qualify for that tax-exempt treatment.

If I can jump back for a minute and go to the starting point, which is offtake agreements, right? We had a great conversation with Tim a couple of weeks ago, and he laid out the pathways how you get to that Net-Zero 2, 3, 4. Maybe, Pat or Lynn, if you could summarize some of those again because without those in place, which we covered in detail last time, that's the starting point for all the plants going forward. So we need better -- we need to understand that clearly what's happening there.

So I'll start and then Lynn can jump in. But the -- these are about getting take-or-pay agreements. These are nontrivial agreements. It means that the companies we're partnering with are promising their balance sheet or put up a letter of credit from 2024 onward in case of Net-Zero 1, or if it's a Net-Zero 2, they're making some kind of substantial commitment. This isn't like a simply I'm going to build a plant and wish that people come. No, we're actually making deals with people that says, "I make it, you buy it." Now that is needed for project finance, and that's what allows us to take a project finance approach. Lynn, do you want to add anything to this?

No, it's critical to have that offtake agreement underpinning the operational period risk mitigation. I would say that maybe in Gevo's long-term future, there's more -- there's an evolution towards financing that doesn't look like nonrecourse. But right now, we're at the nonrecourse space for projects.

So let's get to a topic near and dear to my heart as an analyst and certainly to investors. Let's talk about cash and economics and profit from the plants. And you've talked about it costs around the $5-ish type per gallon of hydrocarbons. So maybe, Lynn, if you could walk us through one, how you get to that first, so the investors and everybody understands the selling price of this and why? And then let's maybe get into the economics of that model. So we understand the levers accurately.

Sure. So from a -- traditionally, project finance relies on very detailed projections because it's nonrecourse. It's looking to the future and future cash flows as the source of repayment for debt. And equity, of course, looks at that for the source of value. So everything is modeled in extensive detail, and our model's no different, very, very detailed, reflecting every contract, all the terms and conditions and all the market inputs that go into various things like the indices on which revenues depend, so all those are modeled out with 100-plus lines just on the contract side. At the end of the day, we're expecting, not including co-product revenues, that would be the 400 million pounds per year of corn -- sorry, of protein FEED and 30 million gallons per -- pounds per year of corn oil. Not including those streams, we're well north of $5 on our revenues per gallon of product sales on the 45 million gallons. And that's a critical element. It's pegged to -- the indices are pegged to an oil price that's in the $55 to $60 range. So we're not being aggressive on that. I think most analysts feel like that's a very comfortable level to be at on the indices, which are highly correlated to oil prices. So we feel good about the revenue stream and what this project will generate.

And if I understand it correctly, we're looking at feedstocks being corn, right? So -- but you also have co-products in the high-value proteins from that corn. So corn prices go up, let's say, you have a natural hedge in that model as well because the value of the co-product, either protein oils go up. Is that correct?

That's exactly right. We're probably 50% hedged on our cost of feedstock through the co-products. So we feel like that does a substantial job on mitigating sort of potential squeeze risk between corn and revenues.

On a tonnage basis, it's almost 2x the amount of hydrocarbons. So in other words, the protein and the oil are almost on a weight basis, 2x the weight being sold. It's a huge amount of protein and oil. And that's pretty interesting. But that's one of the benefits using corn is you get this built-in hedge, and that mitigates feedstock risk. Sorry for interrupting.

No. So if we look at the feed, that'd be the primary feedstock, right? Then we've got the other 2 components would be other variable costs and fixed costs of the plant, right, that go into that and then there'd be the value of the carbon itself, right, which you make a basic assumption in your model that carbon is worth x dollars per gallon. And then, of course, the end is what the hydrocarbon value is to. So just so investors understand the levers, and we understand the levers. If carbon value goes up, that's more profit to Gevo, right? And if the oil price goes up, the hydrocarbon value is thus more profit to Gevo as well, correct?

Correct. Certainly, if environmental benefits -- we call them environmental benefits because there are a range of them, primarily LCFS, credit revenues and RINs, but also blenders' tax credit and things like that. But if those markets improve, our returns improve. If oil price goes up, our economics improve. We have, I think, better upside than downside because of the protection that we just commented on, on the natural hedge and in the corn feedstock and the protein markets. Yes.

And when I kind of put all that together and run it through our models, at somewhere around $100 million in annual cash flow generation, is that correct for a net zero plant?

It's north of $100 million of EBITDA pretty substantially. I'd put it more towards the $120 million plus, but we don't [indiscernible].

Okay. And this is where the CEO steps in again. So what we do is we talked about that publicly as a $100 million EBITDA, even though we all believe it's probably higher. We got work to do. And so it gives us comfort and that we're probably going to get it right because there's excess profit from what we actually need here to make an attractive project. So it could be quite a lot less than $100 million and still be an attractive project. So $100 million's a comfortable spot to talk about. That's how we're going to be talking about it. So I look at it as each net zero project's worth about $100 million per year of EBITDA.

And then I assume that, that -- the opportunity to improve that with each subsequent plant, right? You're going to have a learning process to some degree in the first plant, and you're going to have cookie-cutter processes from that. So I just assume that there's going to be some more engineering costs and other things in the first plant than the second, certainly the third. Is that correct?

Yes. It's not just the cost themselves, but the speed of deployment. We can stagger these to meet the -- to match the demand on the contract position that will emerge over the coming months and years.

And I'd say that and the speed thing is a big deal because we got to go through the design and get it right. We're integrating renewable energy right into our plant, also water treatment, biogas generation right into our plant, right? It's part of the plan. That's not necessarily a normal thing to do. So we're getting it in pinned down. It's going well. You know what? Once we know how to do it, we know how to do it. That shortens the cycle on the design side next time. And then we also -- there's -- we are working with companies on the engineering -- on the engineering construction side, the people we're working with who are interested in doing this, they have capability to do multiple projects at once. So I think that we get those Net-Zero 2, Net-Zero 3 signed up, then I think we should get on with the financings of Net-Zero 2, Net-Zero 3. They'll be staggered a little bit. But you know what? We should get on them right quick and get them built because there's a gain afoot called the world needs this stuff, and we can make a lot of money doing it.

And just to clarify on that, inside the fence renewables production goes towards that carbon value, right? So when you're looking at what the carbon value is worth, maybe just explain that.

Yes. So what happens is that if -- inside our fence line, we're generating biogas, we can use biogas to heat the plant, where you're getting that from the -- we're getting biogas from the wastewater from the water treatment plant. So then we don't need to buy natural gas, right? But there's also -- has that renewable natural gas has a zero carbon footprint. That's a big deal. Likewise, if we make electricity from that biogas we generate on site, that electricity has a zero carbon footprint. It's green electricity. If we use electricity to make hydrogen, which we will, then hydrogen is green hydrogen. And of course, then we have wind electricity coming in as well. And so we're playing a mixing and matching game of renewable energy sources, which is why we describe our business as renewable energy transformed into energy dense liquids. And they can have a net zero footprint across their life cycle according to green. So that's what makes it interesting. Yes, it costs us a little more capital because we're putting so much energy infrastructure inside our fence line as part of the project. That's not a normal thing to do. Normally, you just buy gas off the grid or buy electricity off the grid. But you know what? Our business is all about driving the fossil carbons out of the system and then monetizing it. So it's a little bit different.

And Lynn, I wanted to jump to what the actual value proposition, that cash flow to the common shareholders of say of Gevo, we get this from investors all the time. And if you own -- if you buy 100% of the equity or buy into the equity of the plant, Gevo receives that -- 100% of that EBITDA, and it's directly proportional, right? If you sold half the plant to somebody else, Gevo's shareholders would get 50%. So maybe just walk through why it's attractive, why you'd want to own 100% of these. I mean, IRRs on them are very attractive. I do know that. And that's a great return that you could generate using your cash. So maybe just explain the relationship, the dynamics, the equity component and what ends up being at corporate or the add to the common shareholder at Gevo.

Sure. The 100% equity by Gevo, we take all the cash flow upstream and consolidate that. To the extent we share it, we're giving up value. We think the returns are very attractive. We may opt to bring in a minority investor, so long as they don't complicate the story, or if they add strategic value, which that could happen. But right now, we're busy making this -- executing this project. We know what to do. We know how to get to the finish line, and we have the resources to do it, and we really don't, at this point, want, unless it's strategically valuable, to bring other cooks into the kitchen. But yes, it's a straight sharing relationship off the top. If we had minority investors, depending on how we would treat our license fees and our O&M fees and the things that we would be paying ourselves if we're a 100% investor, we may leave some of those in to bring out value off the top before we split that with a third-party investor because those are services we're providing. They're valuable. It's technology that we're bringing to the party and operations and maintenance expertise. So we'd want to get paid for that explicitly. But if we're a 100% investor, it's just paying ourselves. So it's a net.

Now let's talk about capital. Obviously, you've got a pretty nice war chest on the balance sheet right now. But if I -- if you look at the relationship between capital, is direct investment and the equity component of these plants, right? So that's where capital will be deployed also in the R&D side as well. But does that mean you'd need to raise money? Or how would this work in terms of Gevo investing the equity component on its own?

No, we don't need to raise any money to do Net-Zero 1 and we have substantial resources to develop and invest pretty significant positions in Net-Zero 2 and 3. So we feel really confident with our balance sheet in getting Net-Zero 1 done and making 2 and 3 happen as well. Beyond that, we'll have to think about it.

Shawn, we should describe the natural gas -- the renewable natural gas product a little bit, too, right?

Yes. Yes.

Because that's kind of -- because we have people right now. So the context is this. I was getting lots of questions even from yesterday. There were people were like, well, what about your revenues? It's like, okay, everybody listening, understand this. We're a milestone company. Revenues right now don't matter today that we can't -- unless you want us to turn back on ethanol and lose more money. So we aren't doing -- we got a little bit of stuff we can sell from our plant down in Silsbee, Texas, but we're going to be milestone oriented. The milestones are going to be along the lines of adding customers, net zero projects, getting this RNG project built, get it under construction, keep it on track, get it operational early next year and such, and then getting the net zero stuff done like we've just talked about. And so, however, in 2022, it starts to change. You want to talk about that, Lynn? First talk about the project and then talk about what we would expect to happen in 2022.

Yes. On the RNG front, we're going to commence construction next month. We intend to finish that project by the end of the year and start operations in January of 2022. The project will, as Pat mentioned, generate 355,000 MMBtu per year of renewable natural gas available for injection in the pipeline to go to California and get those credits or to go over to our net zero facilities. Although we're really designing the net zero facilities to be very much stand-alone and not requiring much, if any, outside renewable natural gas. So right for now, we're assuming that, that -- most of that gas goes to the California market. That gas will start immediately in, say, January. The way it works for the California pathway generation certification and then actual receipt of revenues for LCFS credits is delayed by, we're assuming the worst case, 9 months. So we'll have back-ended cash flows starting in 2022 off of the project. The revenue stream is probably about $22 million a year on a downside case. And what I mean by that is a high CI score, the lower your CI score, the more you get paid for your gas. We're assuming worst-case CI score, and it's $22 million. And after servicing debt, it will be somewhere around $9 million to $10 million of cash flows, distributable cash up to Gevo Corp. If we end up on the positive end of the CI score, which we'll obviously argue that position to the California Air Resources Board who sets the ultimate pathway score, the cash flows are essentially plus $7 million. So it goes from $10 million to $16 million, $17 million of distributable cash streaming up to Gevo in 2022. And that will carry out for indefinitely. The project lives are very long. So they're long-lived assets. We model them on a long-term basis.

And one of the interesting things here is The Street tends to value predictable cash flows. And when you kind of look at the business model, you can off-take agreements ranging from net zero through to the RNG plants, I mean, that's really what this is, right? I mean, highly predictable, long-term cash flows that really require a very low discount rate because they're very secure, I guess. We get blue-chip customers and offtake agreements. Is that the right way to think about this as highly predictable, consistent cash flow business that Gevo will become with the net zero plants and RNG?

Yes. I think that's a fair assessment. The products are in great need. They're in great demand. We only see increasing values for carbon reduction. All of the mechanisms for payment are in place and growing through other states, other countries. We see substantial growth in the demand for the products. So our production cost, we have a good handle on those. That will be a lower risk stream on OpEx. At the end of the day, I think that investors should view these as reliable cash flows.

Let's -- we're up by a little bit past half an hour. If you don't have anything to add there, Pat, I'm going to go ahead and take some questions. We've got quite a few, as you can imagine. So let me start. We've got a number of questions. It's a good one about government, government subsidies, government loans, interest-free loans, low interest loans. What is Gevo doing to explore that area, potentially find some of these monies that are in the government?

Our -- we are looking at them and having discussions. In fact, we just had a discussion today about it with the DoE and it's a question of can we get the time lines to merge. The most important thing for us is get on a track, keep our time lines intact, get this plant built, right? We already believe we have a very attractive economic situation in hand. The Citi's done a great job of pinning down the tax-exempt bonds, great. It all works already. I got a time line. We can push it forward and it works. And so if there's money that's cheaper, makes the project even more profitable, and we can hold our time lines together, then we're open to it. And if not, we aren't, and it's not clear. Because whenever you work with the government, it's one more layer of bureaucracy you have to deal with. But it's been an ongoing discussion. There are some monies available that might be applicable here, but time lines trump it. I'm telling you, we will always go for staying on track on the time lines always because the project already makes good money.

Let's move to another question on the size of contracts. This is a good one. We talked a little bit about it with Tim in the last one. But I mean, are you seeing, in this pipeline, bigger potential contracts? Are you talking about lots of singles here? Or is the dynamic changing a little bit to where you have 1 or 2 entities that could take off an entire plant?

The answer is yes. I mean it's not -- we don't see being piecemealed. No. We see that there's opportunities for big -- really big ones. We see opportunities where it might take a couple of people cooperating, but it's more concentrated. It's not -- I think SAS was the first tranche, you should consider it as the first tranche of a Net-Zero 2. And so, okay, we've got to fill up Net-Zero 2. How many more customers might that take? Maybe 1 more, maybe 2 more. How much for a Net-Zero 3? Might be 2 customers, maybe it's 1 customer, maybe it's 3 customers. Don't know yet. But those are the kind of discussions that are occurring.

I have a question that's an interesting one as well. Why not produce them we'll burn right now? Why not make hydrocarbons, sell them into the market and make some cash?

Well, you see we don't have capacity to make hydrocarbons at Luverne. So that's kind of a nonstarter isn't it now. So we have 1 isobutanol fermenter. Everybody remember, we did 1 isobutanol fermenter. Luverne was never fully built out to be a full production plant. It has potentially 1.5 million gallons of capacity of isobutanol. The hydrocarbon capacity that's available to us is down in Silsbee, Texas. It is 100,000 gallons a year. That's it. It has to be built out. And so that's just the reality of where it is. Yes, we proved out the technology. It all works. But -- and we may do some projects to build some intermediate capacity at Luverne in parallel for other reasons. But you know what? Our focus is on getting the big plant online. That's the way we make money and getting the RNG project on. That's the way we make money.

The question I have actually is looking at plants on an international basis, right? So as corn isn't growing everywhere, so they're the sources of sugar. But how does this work if it's beet or sugarcane or where else would there be enough corn in -- available in the market to produce these plants?

Yes. In the Midwest U.S., corn is a great feedstock. Everywhere else in the world doesn't matter. Remember, our technology works with sugar, molasses, beets, beet sugar. It works with wheat residuals, waste sugars, wood sugars, we simply do not care. What I do care about is that it is sustainably produced because we're going to have to prove it because we're out there with a net zero operation. So if someone makes it from some really poor process, I'm not that interested in it. I need it sustainable. I need it economical. I need it in abundant. So we aren't seeing -- causing shortages somewhere else. But we are indifferent. And around the world, that's what makes our stuff attractive is because it works for -- it can work anywhere in theory, where there's carbohydrates available.

Move to a question and we've gotten this one many times. I know you've answered it before, but where is a gallon competitive relative to oil produced from a net zero plant? I mean, I know that you take out carbon values and things like that. But where is the real -- where is the economic inflection point and economic incentive for users relative to oil price?

Well, for -- the way that this works is that we share carbon value with the customer. So what we're trying to do is if it goes into gasoline or a jet fuel, we give them -- generally give them enough carbon value back, so they're at a slight premium to the petrochemical-based product on a net-net basis. We keep most of the green value for ourselves. So it's not too far away from -- when does it cross over is probably a more relevant question. When does the combination of oil price and green value help the net acquisition of our product crossover against the petrol one? And it's like, man, I can see that in the not too far horizon potentially, depending upon how the world unfolds.

Well, we'll take that as the last one. We're almost 40 minutes in. I think we've hopefully made some progress in understanding the economics behind the plant and what that really means to the corporate level. I think that was very helpful. And as a reminder, if you have any other questions, I know we didn't get to most of them, but try to get back to your best we can. And I'll turn it back over to you, Pat and Lynn, for any final remarks, and then we'll end it today.

Yes, we get a lot of questions about what's this plant mean? What's it mean economically? Is it worthwhile, et cetera? What does it mean for your stock? I do know this. Wall Street values cash flow streams and especially reliable ones. These are backed up by offtake agreements. It's good. We have to go deploy capital. We are doing it as fast as we can. If I could go faster, I would, but this is just the reality of it. The good news is that these projects are very attractive, good economics. We know that once we hit production, we're going to be valued on those cash flow streams. Those cash flow streams are precious to us. I don't like sharing them. However, I also understand that for somebody who can make our business grow even faster as a partner, you know what, I might like those guys a lot, too, and we might -- and we could figure that out. So this is all game to unfold. Our risk profile has so dramatically changed, it's profound. We have the money we need to deploy Net-Zero 1. As Lynn mentioned, we got money for Net-Zero 2 and Net-Zero 3. Needs to get them well started. I mean, we can do the development. And of course, we can make equity investments. And so that's all good. Our economics look good. The project economics look good. This business has potential to be big. The customer pipeline is growing. And we've been derisking it. And that makes us more attractive to those people who would like to get in this business.

Yes, understood. Understood. And thank you, everyone, for participating today. We hope you found this educational and useful. And with that, we'll end it. Look forward to having you back again in the near-term here, Pat and Lynn.

Thank you.

Thanks a lot.

Thanks, Lynn.

Thank you. Bye.