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

Hello and good morning, ladies and gentlemen. Welcome to today's Virtual Non-Deal Roadshow. My name is Noella Alexander-Young, Virtual Event Moderator here at Renmark Financial Communications. On behalf of our team, we'd like to thank everyone in Denver and surrounding areas for joining us today for the presentation of Gevo, Inc., trading on the NASDAQ under the ticker symbol GEVO. Presenting today is Patrick Gruber, Chief Executive Officer; and Eric Frey, Vice President of Finance and Strategy. That being said, I will now hand the floor over to Eric.

Good morning, everyone. Thanks for joining. We're holding this fireside chat to talk to folks and answer live questions, following up on a call that we had Monday to announce the closing of our acquisition of assets of Red Trail Energy. Before we get started, let me just remind everyone that our remarks today will, including the answers to your questions, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated. Those statements include projections about the timing, development, engineering, financing and construction of our sustainable aviation fuel projects, our recently executed agreements, our renewable natural gas projects 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 press release from Monday, which can be found on our website at www.gevo.com. in the Investor Relations section. So for those of you who are new to Gevo, let me just say a couple of quick things about us. You can find a lot of information on our website, www.gevo.com in our Investor Relations section. We've got several presentations and recent news releases. The one that we announced Monday is probably the most useful place to start. Our stock ticker is GEVO and we trade -- we're publicly listed on the NASDAQ. If you look at our balance sheet, we've got a strong balance sheet. If you look at what we do, we commercialize and develop low-carbon hydrocarbon fuels that are cost competitive with fossil fuels but have a net 0 footprint. We have a flagship greenfield project in South Dakota that we call Net-Zero 1, that's a sustainable aviation fuel project. And we also now have captive low-carbon ethanol feedstock to do a similar project at what we call Net-Zero North, which is in North Dakota. That's the acquisition of assets that we announced on Monday. Let me make a couple of comments about that. The reason this is important is because we believe that using these technologies, we can make scalable, low-carbon hydrocarbon fuels that are production cost competitive with fossil fuels over the long term. And that surprises a lot of people but Pat can talk more about some of the details of that, particularly in rural communities. And we believe that our business model creates value not only for us and our shareholders but also creates domestic jobs, increases domestic energy production and reduces emissions. So it really, we think, across the spectrum of the U.S. and globally, appeals to a lot of folks that just want to make a product that works in existing infrastructure, that reduces emissions, that creates jobs in energy and it has a monetizable value, a carbon intensity value that can be valorized incremental to that product. That's kind of a quick summary of Gevo. Pat, do you want to add anything to that before I talk a little bit about what we announced Monday?

One of the things that separates Gevo from a lot of the companies in our space is that when we do this alcohol-to-jet route, we can make a jet fuel that's cost competitive on a cost production basis with oil. That's a pretty fundamentally important point. It's the only technology of which we are aware that can do that. That's what makes our stuff particularly exciting. So capital charges and all that would make -- we have to recover more of that value cost in the marketplace. But on a fundamental economic basis, what we're doing here is right there with petroleum-based products in terms of a cost of production standpoint, the actual cash cost. That's a first fundamental point that everyone needs to understand. It's one of the -- all of the above solutions that we saw in the unleash American Energy. That's the idea. Cost-effective solutions, energy diversity and all the rest because, of course, in this country we really are short on certain kinds of energy. And for us, we can address a new market as well because not only can make it cost effective, we can abate carbon. Well, this asset at Net-Zero North, it took us a long time to find that plant and work it. We're able to -- we're falling in love with North Dakota over there. These people understand gas, oil and agriculture. They're all kind of the same people. They work together and they get it really crystal clear as to how this all works. It's a great business environment. That asset is a really well-run ethanol production facility and it also has a CCS site. The CCS site, the value of it shouldn't be underestimated. There's only 3 of these in the whole country that exist, that are operating. One's at ADM in Decatur. One's in -- there's another one at North Dakota, a plant called Blue Flint Ethanol and then there's ours. ADM, they're coal-fired electricity and all the rest. Blue Flint already sold -- presold their carbon value, their carbon sequestration value with Bank of America, awesome. That leaves us as the next place you can get the most high -- the highest quality carbon credits, the actual -- we're measuring tons of CO2 that go into the ground and our sequestered forever. We're the only game in town at the moment. That's a pretty good place to be. It also solves the problem we had for Net-Zero 1, in that, well, what happens if the pipeline doesn't occur? Well, I got news. We can solve that ourselves now. That's in our control. And that was an important point even for the DOE process. So we're pretty excited by it. And of course, we expect it to -- there's another fundamental point that we've been working on that we've said over and over again, I'm going to say it again, is that our lives, our economic viability as a company does not depend upon closing Net-Zero 1. It's not a binary outcome. It is not a drug company like that. That's wrong. That's not how it works. We're about building value across a variety of assets between what we've just done up here at Net-Zero North, generating cash flow with our RNG facility generating cash flow. It's a combination, making cost-effective products and also abate carbon, that's a paradigm-busting thing that we can do for the marketplace and we're out to do it. And then, of course, we see that the growth opportunity is for SAF. The demand continues, it's worldwide. It's the market -- there is a market that will pay for carbon abatement. However, you've got to deliver a cost-effective product. That's what we're all about and that's growth. And so Gevo's balance sheet is strong. We are in a good position. We have a huge number of patents. My guys tell me that we have 30-plus patents that read exactly on making alcohol-to-jet of all type. Awesome. Great. I'll find out the final number and we'll give more color on that in the future. But we have technology or development. The development project of Net-Zero 1 is almost complete. There's a little bit more to go. And we're in great shape. So it's fun. And I look forward. We're on a quest to get to EBITDA positive this year and we'll talk more about how those economics might work.

Thank you, Eric and Patrick, for this brief presentation. We'll now begin the Q&A. So your first question is, what are your plans with the Red Trail Energy plant? Will you convert it to producing SAF?

The thing is, is that remember what we're about, like -- it's about cost-effective products that abate carbon. There's a -- it's a new attribute actually. And there's people who will pay for it. I like the idea of selling it to them and moving the needle that we can abate carbon. You know that burning a hydrocarbon fuel generates about 20 -- jet fuel, in particular, it generates about 21.5 pounds of CO2 per gallon. It's not insignificant. So isn't it cool that we can make something that is the same kind of cost structure fundamentally as oil yet abates that carbon. There's a demand for that and people who are -- want to pay for that if they feel obligated to do it or they are obligated to do it like in Europe, it actually is a mandate. So for -- let's do that and let's go figure out the true value of that and make it happen. And you know that if we're successful at this in the long run, you don't even need any government support of tax credits or anything like that at all. That's the long-run game. It helps -- definitely those tax credits and stuff help during -- and we got to deploy all this new capital. But then we know what's interesting is that when we talk about that, we're also creating a huge number of jobs and economic benefit in rural economies. So it isn't like it's a freebie, you're getting paid for performance here. We're delivering something. We're getting paid from the marketplace. It's a new attribute that goes all the way back to farmers and gets farmers paid more money for how they manage their farms and how they grow things. So it's a very different game to play. And that's what's kind of fun about this. We're creating, basically delivering a new attribute to the marketplace that people are willing to pay for. Why wouldn't we want to capture value from that? We should.

Do you still anticipate producing 1 billion aggregate gallons of SAF by 2030?

No freaking way, no. That will be an unrealistic expectation. Look at the way the world has been, 45Z just -- rules just got published. We haven't -- it takes 3 years to build a plant. In the old days, I would have said 2 years. Now it takes 3 years to build a plant. And it's like no, no. No way, nohow. And so we were -- this 45Z thing taking so long. It took how many years from when it was talked about. 4 years later, here we are, it's still not finalized really. And I think it's going to get finalized first -- that -- it has to, it's law. It's going to get finalized. It's a question -- will get tweaked a little bit and it should. And then I think that we'll see it -- I think there's good bipartisan support to see it extended. But it's really hard to pin down economics of these things in the short run without knowing what that number was and how to calculate it. People want to know. So yes, it was -- no, that is not realistic.

Now that we have a company that is producing and making money, how long is it going to take Gevo to be EBITDA positive?

We expect to be EBITDA positive. Well, we would hope, we're going to see how all the dust settles. Maybe Eric, you can give more color on this, as the range is? And why don't I hand it off to you. But I would want to make progress against that in 2025 and if the world works really good, we're EBITDA positive in 2025. But we'll be -- definitely make an inroad to it. Eric, do you want to give it more color?

Yes. So we're targeting adjusted EBITDA positive in 2025. Let me walk folks through a couple of components of that. So the main components of getting to -- how do we get from here to there. Well, there are couple of things that are going to be different in 2025 versus 2024. We're going to continue to spend some money on Net-Zero 1 but that's tapering as we hit the investment threshold that we set out about 1 year ago for equity Net-Zero 1. That's the South Dakota project, preconstruction. We just closed on the acquisition of the Red Trail assets. Those assets include an ethanol plant -- a low carbon ethanol plant that produces about 67 million gallons of ethanol last fiscal year. How do we get to adjusted EBITDA positive, albeit sustained because we can come back to this. But basically, there's 3 components. One component that are important this year in '25 versus '24, one component is the acquisition of the low-carbon ethanol plant at Red Trail; second component -- which brings EBITDA with us, second component is the ethanol 45Z tax credit, which for the first time, really allows that plant and the various small number of plants that have carbon capture like that to monetize their ultra-low carbon intensity. It took effort to drill that well and took investment to drill that well. And so it earns what it gets from that tax credit by sequestering over 160,000 tons of carbon dioxide about 1 mile in the ground in that site per year. And then the third place is our renewable natural gas assets in Iowa. That's dairy manure renewable natural gas, where we capture the biogas from dairy manure, clean it up and inject it into the pipeline as methane. And that business has been operating for a couple of years. But this year, 2 things are happening. There's a biogas tax credit that takes effect and there's also our [ permanent ] carbon intensity score in California. And so all those things, we expect to boosting -- we're targeting adjusted EBITDA positive run rate by the end of the year.

Are your loan commitments from third-party investors for Net-Zero 1 dependent on South Dakota, first authorizing the Summit pipeline?

No. Here's more color though, is that we -- one of the things we need -- CCS is going to be part of the game in the long-run plan for energy in this country, CCS is part of it. Carbon-dioxide is important for enhanced oil recovery. So we're going to have pipelines and infrastructure in this country for CO2. That's just a reality. People need to get their heads around it. And yes, crossed in the tricky issues like in any domain and people don't like that. But I got news. This country needs more energy infrastructure. If you read the executive order called Unleashing Energy in America, read it. There's a few interesting things about that. It talks about debottlenecking infrastructure. All right, let's go because I got to tell you, trying to get anything done regarding infrastructure, transmission of anything in this country, has been impossible almost. It's just very, very, very difficult. It needs to get fixed. So I'm kind of excited by what I read in that executive order, awesome. There's a couple of other things that are interesting in that executive order. One of them is that it lists biofuels in the same line as what should be unleashed as oil. It lists ethanol, it lists aviation, cool. All of that is excellent. It talks about using fact-based data rather than this super politicized stuff. In fact, I heard comments from Secretary Wright just this morning, where he was talking about we're going depoliticize things. So we actually use data, awesome. We shine in that environment. Let's go. I'm looking forward to it. And I also noticed it had E15 listed in that. Awesome, cool. So I'm excited by what I'm reading. Of all the doom and gloom that everybody had for bio-based stuff, no, what we're seeing here are pragmatic people who are going, let's unleash America, biofuels have a place. Let's make them work. We should be focused on cost competitive stuff. We are -- we make combustion fuels. So one of the problems that we've always had in the past is that, there are some groups of environmentalists that don't like us because even though our stuff is a net 0 footprint, it's still a combustion fuel. We're enabling -- they would actually say things to us like you're helping the petrochemical industry and fossil-based industry because you extend their life. Well, yes, it makes it better. We can lower the footprint of everything, isn't that the goal? And the answer is, no. We're trying to get rid of all combustion engines. We aren't like that. We need, our fuels go to combustion engines. So I think it's -- we got a breadth of fresh air here. It's quite interesting to see how this is going to play out.

I believe in Gevo's business model and science, yet people want to see results. With Net-Zero North and Net-Zero 1 conditional loan are in place, what is Gevo's plan? Build both Net-Zero North and Net-Zero 1 concurrently? Or which one will be first? How long is Gevo going to stand by to obtain the loan?

So it's interesting. So one of the things that we have in South Dakota and this is related to the pipeline, is that Wall Street has to weigh in and make their investment. And they -- the project is -- we're already talking to equity players. There's lots of -- there are several of them who are already interested. And the DOE loan does give a favorable interest rate. Private debt is also interested. So it's going to be the timeline for Net-Zero 1 close, if everything -- we got work to do still. We had to close the Red Trail deal as one of the prerequisites. So that's kind of midyear, third quarter kind of time frame. That probably be the faster thing. But I got to tell you, we're designing the plants up for Net-Zero North already. And we could take a carbon copy of what we just did for Net-Zero 1, drop it up there. That would be a big expansion because it would be a new ethanol plant too. But we're also doing a design that would fit with the existing assets and that saves capital. There's interested parties for that, too. Probably, it's Net-Zero 1 is faster but if there's delays for some reason around financing of Net-Zero 1, then Net-Zero North is going to pick up the speed and take over. But that's not all. We have other projects around the world we just haven't talked about yet, too. So it's not a binary thing up there. It's a -- and we have time. So for us, our financing as a company -- our financial situation as a company, its growth is what we're talking about for these big giant biofuel SAF projects. It's not life dependent. That's such a blessing for a company like ours who's a developer, technology deployer, operator, we're in pretty good shape here. So I think we're -- I think it's -- I think that's our one to win though.

Will Red Trail revenues already be included in Q1 2025 actuals?

The answer is yes. It will be in 2025, to be clear. For 2024, it's a subsequent event. So when our 10-K comes out, it will be shown as a subsequent event. When our 1Q comes out in 2025, Red Trail will be on Gevo's balance -- sorry, the assets will be on our balance sheet and our income statement, our cash flow statement. So that's what you'll see. Keep in mind, this is a -- I think it's important for people to realize this is a transformative acquisition for Gevo. We're going to go to being a company that has an asset that over the last 3 years has generated about $200 million a year in revenue. That goes up and down depending on things like ethanol prices but it's about that scale. So this is really a game changer for Gevo.

Can we expect further announcements on modules being built and brought to site on Net-Zero 1 and when? Can you please tell us more about your involvement in the safe hub in Illinois? Can you tell us about the plant, on the retrofit of Luverne as grant money has been allocated for the site?

The way that we see the world working in the future is, modularization is going to be really important. One of the challenges is doing the old-fashioned stick built type of plants where -- those were hard and they're more complicated. The world has changed. We have a great partner in Praj, where they've got a huge modularization capacity. They've increased. So I wouldn't be surprised if Gevo actually is a plant deliverer in the future. So as we move forward in our business model, we got to get these first things done to get the production process right for modules and then deploy those modules. But Net-Zero North will be a good example of, we're going to want to do copy-paste type plants. And so instead of us, the classic way of a developer would be, here's a process design. Here you go, whoever wants the plant, here you go, they go design their plant and pay for the design and all that kind of stuff. And then they got to go get it built. I don't think that's going to be the practical way that may occur. That's -- I don't think that's reality. I think what reality is going to be is, sorry, we have so many trade secrets and know-how and patents that the deal is going to be, you want to plant, 30 million gallons, here it is. You want a plant, order a plant, we'll get your plant built at the factory and then we'll deliver it. You don't have to worry about it. We'll have already solved your major economic difficulty of doing the engineering and design work. There's already something that works or we'll do a copy of a 60 million-gallon plant or a, we have one for -- we have one that's 180 million as well. So we'll just be like, no, we'll just go get it built for you. You're paying us to get it built, we'll deliver it for you and then we'll work with local constructors. One of the problems that is a real problem in this world is that there's only a few companies who can do EPC contracting, the classic lump sum turnkey things. There's like, what, 3 engineering firms in the world that will do it. That's not a competitive world in the way that we need to deliver things. So that's part of our game plan and strategy is to deliver whole plants. That's how we think it can grow fast -- faster. Modularization is a critically important thing. We continue to work with our partners on it.

And the one thing I want to add to is, don't forget, so -- the way we see it, we're connecting the dots between the huge supply of carbohydrates, particularly corn, in the U.S. but globally, too. And the huge unmet demand, which is to make things like jet fuel that's fungible with the rest of jet fuel that's drop into existing infrastructure that doesn't require new fleet or an electric airplane. Gevo has connected the dots between enormous supply and enormous unmet demand. That's basically what the alcohol-to-jet process does. So when you look at the early 2000s, there was a large build-out of ethanol plants in the United States. It amounted to several times the size of our Net-Zero 1 facility in terms of ethanol being built per year at one point. And so we do see long-term that there will be a refueling of the U.S. ag and ethanol industry over time to upgrade that ethanol to a low carbon jet fuel and service sustainable aviation fuel market, which can't be electrified.

With the new administration, can you confirm that the DOE loan guarantee is still going ahead? What is the expected timeline from here on?

We haven't seen any change. It's just plugging along and as I can tell, that's all we can see. And I'd tell you what, there's a lot of noise about this. People are throwing up their arms as if there's some kind of something abnormal occurring here with the new Trump administration. I got news people. Every administration looks at what money is going out the door and wants to put their stamp on it. That's normalness. We had planned for that, that, that would occur given the timing of things. So this is not a surprise, even though the press is trying to make it out to be that there's some big thing. They got to -- executives who are responsible are going to have their name on it. They're going to look at things and go, is it consistent with my agenda. Biden did that too. So that's not news. Our time frame has been, continues to be, midyear, third quarter, same, same, near as we can tell and it looks like it's plugging along just fine.

Employee stock options aside, how come the insider ownership of Gevo is not increasing? Should we be concerned about this?

This question always irritates me. I'm the single largest individual shareholder in the company. I think I'm in the top 6. So I don't get the question.

I'll just emphasize, I don't think that's quite accurate because if you look at our top shareholders, the top individual is Pat, followed by some other officers of the company. And that picture hasn't fundamentally changed over the past 2.5 years.

In the past, a Memorandum of Understanding was signed with HCS Group. In addition, we heard about a collaboration with Praj and there was also talk of a project in Brazil. What projects and collaborations does the company currently have outside the U.S. and we'll see revenue from soon?

We have lots of collaborations. Some -- we're working with Axens, we're working with Praj and there are several other projects. We'll talk about stuff publicly where we can talk about it. So lots of discussions around Brazil. Brazil economics don't work as well as the economics in other parts of the country. So there's lots of talk about, oh, we're going to produce stuff down there and flip it. Yes, it's like we need the economic dust to settle. The details of what carbon is worth and all that kind of stuff to settle before we can figure out project economics. There's some opportunities in Europe. We'll announce those when we're ready. We have opportunities in -- we've talked about looking at projects in India in collaboration with Praj. That's still on the list. And we're selling products around -- in various parts of the world as well. But stuff -- the stuff is all listed in our public. But here's the thing that got me on the question, is anything soon that's going to be material and big? No. The biggest things we -- it takes 3 years to build a plant. And if we're talking about SAF-related stuff, it takes at least 3 years, when we say go. That's just the reality of things. What does matter is having Red Trail acquisition, our Net-Zero North plant and generating cash, figuring out how to sell the carbon that comes with it. This carbon sequestration, it creates these permanent carbon credits, they're biogenic direct air capture carbon credits. These are the highest quality that there are, great. We're going to go find now with that market bears. Now we can get on with the game because we're going to need that in support of our net 0 SAF plants. So that's going to be pretty exciting to sort that one out. That's the biggest thing. Now out there at Net-Zero North, there's also a whole lot of unused pore space. We're going to be only up 1 million tons per year of capacity. We'll be using 160,000 tons currently. It's been operating but it's a 160,000 tons we're currently using. But I think that's going to be interesting to see what should we expand there and that might present some more near-term opportunities.

Congratulations on closing the Red Trail acquisition. The historic financials at Red Trail do not appear to disclose the 45Q credit value. How do you frame the potential value of 45Q? What are your opportunities for utilizing Red Trail's spare CCS capacity? And how imminent might these opportunities be?

So what's interesting about Red Trail is that the 45Q is a tax credit because they're a co-op, a very large co-op, they distributed that tax credit, not monetized but back to their membership. So it's basically invisible in terms of the value because it went directly to credit, got turned over. It's now LLC, it got turned over to their members and they all got to take a tax credit because these are good farmers. They're making money. So that's what happened to it. Now that's partly what created the opportunity. We knew that and saw that and that's what caused us to focus on and it's an operating CCS operation. It's kind of under the radar and people weren't aware of it. And then they're only using the 160,000 tons room for expansion. The expansion side of the question is, we're going to go through systematically and sort out what options we have. And of course, there's always -- we might need it for net 0, it's Lake Preston project, Net-Zero North. So it's one of those things where we'll have to go figure it out. Eric, you want to add to this?

Yes, exactly, as Pat said, up until now, Red Trail generated the 45Q -- what's called the 45Q tax credit. It's a tax credit for sequestering carbon. The site has a well that's been permitted, that sequesters about a little over 160,000 tons of carbon dioxide per year. It takes that off the fermenter and it pumps that about 1 mile underground. And so they get a tax credit for that. As Pat said, you won't see the value of that in their income statement over the last 3 years. So their income statement over the last 3 fiscal years to us is a good proxy of just kind of how an ethanol plant of that size, with that corn bases, in that part of the country, how profitable it can be. Now it is burdened by the cost of operating that CCS well but you won't see the benefit actually. So the benefit from our perspective is going to be the 45Z tax credit. That tax credit came into effect this year and we could claim the Q but instead we're going to claim the Z. The Z is, as I said, if you just do the math, 67 million gallons of ethanol at a well under 50 carbon intensity score, it could be $0.40 or $0.50 a gallon, which is a lot, right, for that size plant. It could be $25 million to $30 million of value, kind of in that ZIP code depending on how the CI score shapes out. The well does have a little extra capacity that's not used. So we could free up more carbon dioxide and pump it down the well and even further reduce that carbon intensity score. In addition, as Pat mentioned, the core space, it's a big site, it's not completely developed and we have rights to core space that we estimate is about 1 million tons per year of CO2 sequestration capacity. So it's a great site for both monetizing what's there and then building on it and growing it.

Why has H.C. Had a $40 (sic) [ $14 ] target on this company and we are not able to achieve 1/7 of that?

So what I would say is that I think research analysts are bullish on Gevo. Why are they bullish on Gevo? Well, because they're looking at the future. What's in the future? The future is demand for carbon reduction that we don't think is going away globally, at the state level in Canada and even at the U.S. federal level, we've been through multiple political cycles and there's always in our experience good support for agriculture and biofuels. In fact, the executive order that came out from the administration specifically identified biofuels as part of the state of energy emergency that we need more biofuels. But that's right up our alley, #1. #2, our biofuels are blended with fossil fuels. So at every level, there is support for more biofuels. That didn't really start to exist in the way it does today until about 4 years ago. It's taken a few years to mature the Net-Zero 1 plant in South Dakota. And also, it wasn't until 2022 that Red Trail drilled their carbon capture well in North Dakota. We now own that well. It was a great transaction for us. So the future for Gevo today, as we sit in 2025, in our view, these are transformative events, getting a commitment for a $1.6 billion DOE loan facility on a world-scale, first of its kind, alcohol-to-jet product in South Dakota,#1. #2, acquiring a profitable low-carbon ethanol plant with operating CCS, that's the feedstock, okay? That's the feedstock you need to do alcohol-to-jet in the future. We now have multiple bites of the apple for growth but also existing assets that will generate profitability for us. And so I think that's what the research analysts are looking at as they're saying, okay, how does the future look? How is this likely to play out? And that's what they're looking at. If history was that there was already a mature marketplace for low carbon fuels, we wouldn't be a growth company.

I'd just add, H.C. Wainwright knows us really well. They know about our intellectual property portfolio. It's huge. They know that we're -- we have been working on alcohol-to-jet -- ethanol-to-jet since 2007. We didn't talk about it for a lot of years but that's why we have made progress on how to improve the whole process. We have a huge intellectual property portfolio. We also have -- we're commercial people and operators. So our plant designs work and we're working with partner Axens, which has proven technology. We're the only company that has -- we are the only system, the only one that has proven technology that works. Nobody else does. There are other people taking stuff out of a lab and they've struggled and they're going to continue to struggle. We're the only ones. And other people are newbies. And so you hear all these people, we're going to do alcohol-to-jet. Yes, good freaking luck. We're the only ones who spent the money to figure out how to do it and make it work robustly commercially with our partner Axens. And so they know that. And so it isn't like -- it isn't -- they look at this and if you look at fundamental economics, it's cost competitive that we can produce products, cost competitive with oil and the marketplace is developing. So we have to establish markets and people -- I think that Wainwright has a point of view and others do, too, that the concern over greenhouse gases is not going away on a worldwide basis. It's just not. It's going to continue to be there. But the -- and I think it's a legitimate question to ask what subsidies should be required because you can't break a bank -- you can't break the bank. It is crazy that China gets a free pass on producing more and more coal-fired plants. It's not -- things need to be redone. 100% agree with that. Ours is the -- remember, cost competitive, hello, cost competitive, cost competitive. That's what we're about in our technologies. We're the only ones who have that, of which we are aware and it's proprietary to Gevo. That is not lost on H.C. Wainwright.

Did Gevo bid on the Greenfield Global Inc. plant in Winnebago, Minnesota?

No.

Now that the acquisition of Red Trail is effective from what point will Gevo and in particular, Net-Zero North, be productive?

So Net-Zero North is already productive just to be clear, from a perspective of low carbon ethanol and carbon dioxide capture. So the plan has a really good operating history going back many years. Last fiscal year, produced about $67 million gallons of ethanol as well as animal feed products from local -- mostly local corn. And in addition, as I mentioned a bit ago, it has an operating carbon capture well. That means it's taking 160,000 tons of carbon dioxide, putting it in a little pipe where it's liquefied and then pump down about 1 mile underground where it's stored. So it's already productive last couple of fiscal years. If you look at their 10-K filings, they do anywhere from $150 million to $200 million of revenue. So that's productive. Our dairy manure RNG facilities in Iowa are productive. They take manure from dairy cows and capture the methane that comes off that manure, thereby reducing greenhouse gas emissions from the fugitive methane that will otherwise come off there. It's actually a form of carbon capture because there's carbon atoms in methane and cleans it up and inject it and sells it as natural gas. And that's about 4,000 MMBtus per year of production and that's been operating pretty well. There's a little bit of seasonality where production tapers in the cold winter months. But the capacity target is about 400,000 MMBtus per year of a -- what we estimate to be about a negative 330, call it, carbon intensity gas. So very, very low carbon intensity. In fact, negative on that scale. So Gevo is producing from that perspective. Now what we're not producing yet is Net-Zero 1. That's the greenfield new construction project in South Dakota. That's the one that has a commitment from the DOE for $1.6 billion. And we need to get some more things in place before it funds and then it gets into construction. That will be financed at that asset level. Gevo has already put substantially most of the cash equity that we expect to put into that project. Now we've got to do the effort of definitive documentation, certain things complying with things like NEPA and third-party infrastructure equity that will come in alongside of Gevo. As Pat mentioned, there's some dependencies on exactly when that will occur. But an optimistic time line might be somewhere in the beginning of the second half of this year, like June, 3 quarter time frame. We're going to see how it plays out because we did have a change of [ stack ] but they are moving at DOE. And we know that we're -- we believe that we're part of the new administration's agenda. So we think that, that bodes well for us. But that's the one that's not in production, to be clear.

What other countries are interested in funding/working with Gevo?

It doesn't work at a country level, not that way. It just doesn't work that way. That's not how the world works. What is required in order for projects to get deployed is that you got to have an inexpensive raw material source that works. And that works means it's got to be low-cost-raw material in the first place and it's got to have the right environmental footprint. Then you got to have it -- have the products have a marketplace that works. That makes it more trickier because everybody says, oh, we're just going to send it up to the U.S. and collect the 45Z. Yes, it doesn't work that way, people, sorry. We're not going to use taxpayer dollars to fund overseas stuff. That isn't going to -- that's isn't how the world works. That's not what's done [indiscernible] So then they said, well, we're going to send it all to Europe. Yes. Okay. Well, Europe has got its own issues. They can't possibly do what they've said with how restricted they are. I personally think that they have kind of anti-agricultural especially U.S. agriculture but it's rest of the world -- against the rest of the world, too, anti-agricultural policies and that's all about protecting themselves in agriculture. That ain't going to work in the future. That's going to be a problem. So there's a lot of dust to settle. So it doesn't work the way you think. So it takes real specific circumstance. The market works like this. Our product like ours, cost competitive jet fuel, who's going to pay for the carbon value. Who, where, how, what market? And the most clear marketplace is, happens to be here in the U.S., believe it or not. The EU stuff, they're trying to sponsor stuff that makes -- it's hard to even understand the economics, you can't. They just don't work, like this big talk about e-fuels. I got news, e-fuels under no circumstance, could be cost competitive with oil fossil-based products ever. Can't. It takes 3 pounds of hydrogen for every gallon of jet fuel. So the amount of energy required. There's not enough energy infrastructure at all possible to do that. So you might see e-fuels that will show up in a real specific circumstance. It's not where there's specific economics. I can see places where that might work like Iceland or something because they don't have carbon as a raw material. They've got geothermal energy. They got wind and they got other stuff. Cool. That might work there for them but it's not the calculus for them. It isn't your basic fundamental market-driven economics. So it's going to be a lot of dust to settle. There's so much hype about all these products. And I think we're going to see a dose of reality kicked into the worldwide marketplace because of the new administration. That is good for Gevo, frankly, because our stuff is a fundamental economic game.

First, you guys are doing an amazing job. How are the Red Trail current employees holding up? And what is Gevo doing to help boost morale through the transition?

Well, interestingly enough, we get along great with our folks in North Dakota. They're excited because we're a growth company. We are not a ethanol-focused company. We aren't just trying to eke out an existence. We're about expanding and doing new things. That's exciting for them and they're a great team up. They're a great workforce. And as I can tell, they like working with us and they're excited about the future because we bring money to the table. We bring OIC as a partner. We didn't talk about the financing of this. But OIC, Orion Infrastructure Partners, is a -- they brought $100 million -- $105 million of debt, $5 million of equity invested into the project up at Net-Zero North. And then they're -- they were discussing another $100 million of debt made available for expansion projects. That's pretty exciting. And then you're in a climate where people want to exist. North Dakota is a wonderful place. I wish we had, had this Red Trail deal done a few years ago. We would have been there fully with our Net-Zero 1 plant rather than Lake Preston. This is an environment where oil people get along with agricultural people and gas people get along with everybody and it's all about let's make more energy and let's go be successful and let's sequester carbon and no screwing around. It's a very different business environment. So it's really fun to go work in a place like this. It's exciting. Nebraska is developing a culture that's likewise interesting. We have a site in Nebraska that we have secured. And -- but we just haven't talked about the specific details of exactly where it is but it's a -- it's pretty darn interesting opportunities that are being created. So the team up there, excited to work with us and we are excited to have them because they -- this plant is a really well-run plant. That's fun to have.

Are you planning to raise capital in 2025 for other projects? Or would you prefer to wait for the warrants at $4.37 to be exercised? Can you confirm that you will not raise capital below the warrant price?

Questions like this are always tricky because the fact is that, yes, I'd rather have the warrants exercised and [indiscernible]. And I don't have any direct plans to raise money. I don't think I'm going to raise money with certainty on anything, I don't. I don't have any plans to raise money. That's probably the best answer. Now could there be a circumstance where we want to raise money for a specific project? Yes, that could happen, too, where -- but it's like it has to be accretive, it's have to be, we'd have to be able to explain it to shareholders as to what and why. But we don't -- the basic bottom line is, I don't foresee anywhere in my vision, ever, the old-fashioned dilutive financing we had to do just to survive. I don't see that ever on my horizon, even if Net-Zero 1 didn't close, ever, I don't see that ever having to do that. Could there be a circumstance? I don't know, I can't even envision it right now. So we're in the strongest position Gevo has ever been. We're on the path to profitability here with our acquisition and our RNG projects. So I feel pretty good about this. We've already spent the bulk of the money that's needed to do the development on Net Zero 1. We're going to monetize the money from technology and the engineering around the SAF. We'll do that. It's a question of time. We'll get it done. It's a question of time. And I feel pretty good about it. So no, I don't have any plans that where I have to raise money. I don't have that. Might we want to because we want to acquire some other assets? Maybe. But that's not clear to me. I don't have that. I don't have anything in mind. I don't have that story. But it's not the game of old, it's a game of new. It's about growth.

It's important to remember, so we have a strong balance sheet and the purpose of the DOE financing, that's taken the time and effort. But the purpose of that is actually conserve our balance sheet, to build a large project and have equity in a large world-scale project but actually conserve our balance sheet. Red Trail doesn't require more capital because we just acquired it. And RNG doesn't require more capital because it's already been operating and we're optimizing it. So targeting adjusted EBITDA positive this year, the goal is to not issue dilutive capital at the corporate level. As Pat said, you can opportunistically do accretive capital for really good growth projects. But our strategy is get to EBITDA positive and not spend additional large amounts of capital, unless we feel like our balance sheet is really strong.

How is the aviation industry seeing your innovations, military and commercial?

There seems to be a worldwide consensus that if you're going to focus on something to reduce carbon in a fuel, jet fuels is the place to be. It's a international standard -- the international -- it's like a United Nations effort and the CORSIA or IATA industry-wide pressure. I happen to agree with a lot of -- reducing carbon at any cost no matter what, is insane. I personally believe that, that's insane. That's not even a rational thing. But that's kind of what the rhetoric has been because the world is going to end tomorrow. We all know that, that's not true. That's just -- we all know that, that's not true. Is it a problem for the long run? Time will tell how big a problem it is. But I do know this, energy is required. More energy is required. We have a cost-effective way of producing energy. Great. We're to use that and create a market by creating new attributes that people will pay for. We're going to test it and see whether -- if people are willing to put their money where their mouth is. That's partly the game afoot. And it's a -- and if you have, if you know, as a consumer that you can buy something that's petrojet, fossil carbon or it has the 22 pounds reduced and they're at the same cost, which we would you choose? Which would you choose? That's going to be the question for people. Will you pay 5% more, 10% more, 15%, 20% more? Will you pay anything more? And I think it's a -- that's not a straightforward question because the consumer has to know that they got something for their money. Taxpayers have to know that they got some for their money. Of course, that's what Gevo has been about since day one. That's why we have our Verity business that tracks and traces and calculates everything to make sure. So it's a little bit different game to play. But gosh, I like being on a level playing field and considered as one of the all the above category for energy. It's going to be fun. It's the right basis. But that gives -- all that kind of stuff makes Gevo shine because it's fundamentally economics is the premise, fundamentally economic. And it's huge. The capital has gone up hugely since prior to COVID. There's no question about it and it's primarily related to labor. All right. Labor costs go up, why? Because we don't enough labor. We don't have enough people. There's -- you got to pay people extra premiums and things. That's what we're planning on. Is that a bad thing? It creates jobs, 1,000-plus construction jobs. It creates 700-plus regional jobs, 100 direct jobs. The amount of money that, that's going to bring to wherever we bring one of our projects is huge for economic development. Isn't that we need in this country, more economic development, job creation, higher-paying jobs, higher skilled jobs? That's what I'm hearing. I like it. And that's no change, of course, for us, it's the same as it was. For us, it's the same. There's no change with the new administration. It's the same. But this is what you get with a project like ours. It isn't just tacking it on to some fat cat refinery like some of these things are. Ours creates economic development. For every dollar of tax credit according to Charles River Associates, a study that we had done earlier this year, where every dollar of tax credit under 45Z, that creates $6 back to the general economy. So even a cynic could go, okay, I don't believe the $6 because they took all this intangible foofy stuff. But you can't get away from the fact is -- it's 700 jobs plus regionally and $110 million of annual regional economic development outside of the benefit of creating the SAF in the first place and marketing it. It's real economic development. And that's what a company like ours represents and that's why we think it occurs like this around the world, too. So it's a -- it's not the same as putting money in some already existing fat cat's pocket. That ain't what we're doing here.

Does Gevo plan to partner with big oil companies in the near future?

It depends upon what you mean by partnering. So we work -- we collaborate with them. We think that it's -- they're natural partners. They are natural partners. We partner with them and it's even to distribute the products because -- and we actually think fossil fuels -- remember, this point I made earlier about combustion fuels, we are not going to all of a sudden snap our fingers and transition away from fossil fuels in this country. That is not a realistic thing. It's not possible because of the scale of the size of things and the value that they bring. Can we make them better? Yes, sure. You take 1 gallon of our stuff plus 1 gallon of a fossil fuel, now I have 2 gallons and with a 50% reduction of CO2. I could blend it all together. Remember, I got 0 footprint plus 1 at 90. I could blend them together. I could do -- if I blend it -- I could blend 1 of my gallons with 7 of their gallons, I have 8 gallons in total, with a 12% reduction. So it's an incremental improvement on what's possible but there's still the drop-in fuels that are combustion fuels. We can make them better over time. What's interesting about a business like ours is that when you think about the long-run future of what has to happen, we need better energy security, having a bunch of all of the refining capacity and maybe not all, so overstatement, just slightly an overstatement but it's all concentrated in the Gulf Coast. That's not smart from a national security standpoint. One good attack down there could disrupt the living heck out of things and create problems for all of us. But think about that over the long run, what do you want? You want dispersed manufacturing. Great. That's up our alley. That's what we're talking about. Let's use renewable resources and get stuff dispersed. It creates more energy infrastructure in and around us. We're a big fan of small modular nuclear reactors. We love those things. And we want to see them deployed. I hope they -- I hope we see those because that makes -- I happen to agree about the ratable electricity, meaning it's not variable. I happen to think that, that's important for manufacturing and make life a lot easier for transition. We've got to have more electricity in this country. So all that stuff, is we need more energy, that's how you make economies better. I think that the policies that we're seeing put forth about exporting energy make a lot of sense because why would you let someone else do that when we could do it and use it diplomatically as well. Hello, let's get going. And so it's a -- I like the all-of-the-above approach. We've always been that way and that's been our policy, how we push policy throughout history. So I think we're in a very interesting time frame where we're going to let some dust rationality settle. The fact is that we're value added for the fossil-based industry. It is -- it addresses a concern that consumers do have. Great. We can address that concern. And we can improve energy security. We can create jobs, it's about long-term evolution of things that make economic sense. That's what we represent. And it's -- we're not anywhere -- and you see that even in the questions we're being asked today, well, can we snap our fingers and have instant plants? No, it takes -- these are big giant capital investments with -- that it takes -- the supply chains alone take a long time just to arrange. It's about evolution man, it's about creating jobs and infrastructure widely and it has to make economic sense, so Wall Street invests. That's our focus. Let's get Wall Street investing. That's what we want to see. For me, that's what I'm counting as the scorecard of what I think when we're going to be successful is when we get Wall Street going, yes, I see it. I'm in, let's go. And we're willing to do more than one project. That's what I think is going to matter for the growth of our business. In the meantime, we'll continue to improve our profitability on the basics. But the game is, let's get the marketplace -- we got a marketplace-driven investments going. That's what I think is important. And yes, the DOE loan will help that because the DOE does so darn much diligence. It took us like 3 years to get this far. But the diligence they did is terrific. Wall Street likes that. Awesome. It helps them. Let's go. Let's get on with this. So let's get this stuff financed and let's get the growing part. In the meantime, we won't lose our basic blocking and tackling and make sure that we're secure as a business on a cash flow basis. That's the idea.

Thank you both for your responses today and thank you to everyone who submitted questions. That concludes our presentation for today. But before we go, I will turn back the floor to Eric for final remarks.

Again, our ticker is GEVO, G-E-V-O, we're listed on NASDAQ. Check out our Investor Relations website where we have a few presentations about the Red Trail acquisition that we closed this Monday and a deep dive on alcohol-to-jet economics and talking about the things that Pat alluded to, which is being a low cash cost of production relative to other ways of making a low-carbon jet fuel. And checkout our news release that came out Monday about -- with some details on how we financed the closing of the Red Trail acquisition. We'll do more of these kinds of events with Renmark. I know shareholders have lots of questions. We try to answer the questions as best we can. But I think, hopefully, it comes across that Pat and myself and the people at Gevo, we're really passionate about what we do. We really believe that there is a nexus of agriculture, energy and serving global markets for carbon reduction that can all come together and benefit U.S. rural communities and domestic energy infrastructure. And we really believe in that and we're pretty passionate about it. I hope that came across. And if you have more questions, email our IR bucket too. It's [email protected] and I answer those.

And once again, this was Gevo, Inc. trading on the NASDAQ under the ticker symbol G-E-V-O. Thank you to everyone in Denver and surrounding areas for joining us today. Please stay tuned for other presentations in your area and see you next time.