GEVO - Earnings call transcript Q4 2019

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Operator

Welcome to the Gevo Incorporated Q4 2019 Earnings Conference Call. My name is Adrian and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. the to turn T. Counsel, now will call General over Geoffrey I Jr. Williams may Geoffrey Williams begin. Jr., you

Geoffrey Williams Jr.

Good afternoon, like Carolyn Officer; thank With Executive earnings and introducing everyone Officer; and President participants Romero, us conference quarter Gevo’s today’s Gevo’s Gruber, Controller. call. Gevo’s XXXX today fourth Lynn is Vice I Gevo’s the Smull, and would from to Patrick by you start company. for Chief joining Financial Chief

plan that today, that a on today. replay to call issued I will we press listeners remind media providing the Earlier press simultaneous the webcast website. our to be available available of to our www.gevo.com. of today’s on discuss release copy is to outlines this we is at of conference would A A like this Gevo’s topics this open a public. release are and that we call website call the

GAAP. which call non-GAAP with our from hear a this today in isolation accordance in for GAAP press financial webcast, or contained On Non-GAAP these on today not considered measures of most will on should directly in information presented financial measures. measures financial substitute you and be the certain as of discussions comparable measures to financial distributed release the is is non-GAAP posted and the Reconciliation website. financial

these December Gevo’s to, forward-looking about and have These not that disclosed based for projections and to on Gevo’s circumstances including on such assumptions to activities in are and the whether yet forward-looking statements. undue reports was Such and reliance future Form any expectations make risks of reports a events beliefs, statements by the forward-looking with result subject SEC in to as and but the forward-looking XX, and or also and events filings any contained Gevo, about will place including, of or not statements Investors Form information, update Gevo filed are which cautioned Commission today’s statements date We other those as limited and not Securities with made speak quarterly forward-looking SEC certain for statements including occurred, current on only Gevo’s management’s disclaims in beyond. Exchange subsequent XXXX, operating XXXX U.S otherwise. XX-K XX-Q. significant year obligations information ended new are uncertainties, and

lastly, will begin Gevo’s Pat call, for financial business discuss a then results Gevo’s review of today’s of fourth will the On and developments, XXXX. discussion Carolyn with Gevo’s financing Lynn will efforts; quarter

questions. we the presentation, for will up open call Following the

to turn I call over will now Pat? Pat. the

Patrick Gruber

Thanks, Geoff.

XXXX jet contracts. combination was million gallons gallons pricing under revenue represent is big Our goal able find We year gasoline a per per successfully should in the contracts to life $XXX fuel and and to deal, for isooctane approximately work renewable million we milestone. of that Instead, major achieved million contracts. secure the These over take-or-pay customer XX for that XX a a year. us across of of of were the

find to big the had investors able so we attract was attractive that outstanding last out can marketplace. question build the to that capacity pricing that We us, in be need. the gives we For returns, to

to It’s contracts. that We up many of we going the to take-or-pay there obtaining the under stand to relief project see many locked need. this chance gallons It’s also these and potentially more a a financing have get relief are that to coming. needed gallons take-or-pay are a

the show Whole fuel. our And emissions. even fuels that gallon negative is gallons, gallon products, there with jet, able form about time potential net had market. to gas means do or gasoline The technology is story, our neutral what whether matter vision, potential technology us whole attention in is to Our whole have resonating that no and causes people’s differently fuel, the catches are diesel of greenhouse to that over to the our think zero it a or a basis been that for net we possible.

zero is reduce accomplish or that sustainable the energy to the the it order that missions, gas for fossil the will source of By renewable carbon that, net and requires eliminate required or resources production. electricity boilers. I in mean Now, the the for

opening site, cutting Just for had last goodbye our for to Luverne to we the wind week, fossil-based the of supply ribbon the dedicated towers electricity grand Luverne.

renewers biogas will used and feedstock developing the use Luverne also that plant. at We to our then be biogas are natural the gas of output projects displace would fossil-based

funded projects these year, in We next more operational biogas on expect that to this year and bit. get a

incentives. types California has and adopted in even make pushing emissions and and carbon gives of bigger the York policies Oregon. demand why other California, low several RED create Midwestern or policies. is for Already, In become to that more customers. that policy the and and the entrenched. minute, the with are to requirements investors’ confidence. and and to only Air solid such greenhouse run. suppliers gas SAS are away as Not fuels, policy to comply. France In We continue Companies increasing going to emissions. that, sustainable reduce are fuel mandate New this to long the of carbon they with carbon to fuel ahead likewise carbon over other have uses as fuels states fossil renewable And provides back going is II TOTAL fuel airlines that pressure It pressured RED a policies think for products. EU the incentives Union, countries happen build have Now, isn’t is low European being to and Washington and picture jet going have which begun low similar how fuel address Sweden are discussing been

seeing fossil do addition to ESG their Consumers recognize brands about major In policies, also demanded. they investors that to are something we footprint. need demanded.

that have. supplying we already we for are limited quietly fact, the In some companies capacity

This gasoline, consumer high to itself of the octane than miles per demand What better for high because pump at isooctane renewable we demand is for for is due gasoline octane because with demand increased octane new new product deliver make. seeing are engines. to high We cars like gallon increasing. the

the demand could jet big think for over long than fuel at I isooctane the be if least bigger not run. as our

the As to liquid of liquid electric transportation I fuels for was surprised in projections roughly at fuels for I side as That IEA is today. the taking from when out looking is demand the gas a even was XXXX. account view. transportation greenhouse note, and growth scary that vehicles, point similar the EIA into

soon volume makes come that gallons have that In we addition to us the year per under we will yet have Luverne. soon under expect it and timeframe gallons additional believe contract believe XX currently we much the to we And contract, with would plant more another need million built bigger in take-or-pay needed have than it likely to the same as maybe even online Luverne. volume we

new we looking at several for are end, that to already So sites production.

build financing Our online in for our in place. be is plan out we get large to the XXXX assuming

take-or-pay have we will a have by place, a the that for good business. problem and tiger got in we’ve to our the With have contracts tail. It’s

a going able next considering to gallons, gallons shift commercialization bit. million plans large are we that of XX get, are to chunk the we with our So

Gevo year made. XX that we the million equity have per Inc. Previously, use hydrocarbons plant smaller and capacity of Luverne, need for money Inc. assume than and would to about Instead we build. gallons we at Gevo up needed a we plant already raise there developer, putting participation the but step contributions Gevo licensor owner minority forward an plants, of equity the and perhaps, per into operator, Inc. the se, role is to for plan plant of not except

not will As and we part balance capacity, Gevo’s we build believe out liabilities sheet. the be that of assets

the as change, expect concern a their result. and gas With on to impact financers greenhouse we both emissions attract equity debt increasing over and climate

good all for at and equity carbon in defossilized for move saying products, away from good, banks marketplace sustainable favor. how in they have good, want seen funds us. The momentum We is our fuels shifting towards fossil low the fuels to are investments that’s

advisor large in actions we scale our The us are a help look our process sort of attractive. planning. project to build-outs a aid security to of financing are a build-outs future the We near strategic as in the to plant out the strategic and economics hiring

really been reductions business ours system We folks well-known missed. are or can’t auditors. carbon real ISCC of and getting certifications, of the are sustainability done. footprint we in us achieved to XXXX noticed both even like have of We fuels lower have marketplace from whom have and certifications are contribute another that these and RSB, a them. in contracts obtaining that milestones These important By set certifications obtained proving might carbon the eliminate that

money biogas Inc.’s of mentioned already to have than the currently to to equity. biogas of We in on do before, that raised Now, of That that developer. here plans spent biogas too. taking our a a the plant. as as economics footprint approach we debt. we developer investing the carbon we have that portion have planning become we not Gevo projects we we for expect And will already biogas need do projects, believe biogas invest the lower what attract the our off-takers We to instead Luverne at the our project the Gevo means back are other projects, into

We the at boilers become our expect in us for that Luverne will biogas XXXX. to available

to bluntly product plant. know understand want next that before, Ethanol for Gevo. probably said all Luverne a this haven’t non-strategic at our quite have I I capacity ethanol this You everyone is we this. part but

we once was plans begin a isobutanol contribution hydropower margin. we at ethanol see develop the plants is expanded In The XXXX. we hard for As believe we ethanol. and year production XXXX, for terrible. capacity Luverne may facility, around when larger marketplace It had hydrocarbon ethanol we positive operation ran

to we ethanol. margins for carbon do lowering improvements the would reduce same further renewable our plan low further. the increasing margins other California in to biogas and crazy. expect help using Then on of expect score margins our we can we we basic plant and be improve the commodity first markets expect to our from that improve are margins Between the thing. to carbon to XXXX, plant fuel expected do the XXXX, are will Those score ethanol qualifying electricity our this plant. our by implementing in ethanol Luverne that translate Luverne now standard for XXXX, carbon the we in online profitability profit Now, doing And if and by for even on

something that our electricity mind in keep renewable isooctane build-outs. for in shall we jet are fuel and biogas and want renewable we course, Of place

have answer I to jet of impact their about simple hands don’t we the for have I that we today, the certainly that don’t contracts. to than And planned. The large under our have suppose fuel full coronavirus have but have Turning on asked recent do events, is Airlines that we been reality is any. contracts. already those jet needed XXXX/XXXX good we more we that deliver contract. timeframe have Actually, gallons the until it’s

Of with, that are fossil the on last neither over comes to the the going pollution they run, away, midst need it have long of with airline all in few be fuel course, weeks, in will back travel And their they has jet as this are Even all be Even they footprint dealt haven’t it fuel isn’t forward know distraction focus. with there future, way their still back, gases problems. greenhouse lost and moving turmoil, their it. contracts. the need the They they players. still who still

get So, distant too believe additional some not future. will I in suspect we and contracts

isooctane be at all. clear. our to Now, Isooctane don’t need impacted is customers appear

price pass. of that as build-outs. the future, as have that from our big war brings. the pretty prices when with it’s I As has from oil production oil have of oil tied The a will the feedstock corn already too. the don’t prices know I help we swing can too They will protein oil the and Saudi-Russian will And value know is none history, assumed attractive. noting as from oil while terrible built-in that corn goes, carbon corn project settle the what that our be plant volatility news timing, where think value wildly. we future price the far don’t products eventually. cheap are returns know well, good in also calculating it a our us feed costs that worth hedge to track both holds, of Sustainable And

zero solution. be of ones. belief the fields are consumers That associated is of a existential simply such climate growing days side, fossil give gallons, consumers, Products of is address market greenhouse It’s to lower pass. increasing. part a yours. the change crossed these a to to the to as belief designed when ours we probably whole the of heightened the especially on fuels going return. and It’s even be point net The or potential no an question gas directly that with younger demand issues transportation Now, threat aren’t emissions seems

that We business Look, reducing more even make to works. this have the greenhouse and business. and gases big pollution across world solution and a it need We a crazy future. so matters in eliminating in systems

and then, Okay year both financing arranging debt. this is equity all about

We site with also second to and a expect land get contracts, business. building more pick good on

make is We have real. to business recognized the really potential large this

the can Yes, that that expected will be we sheet We pricing vast seeing balance are We question, raise large no money, off know contracts. the financing. figured the scale. to to pricing. out will drive be bulk have raise but we would We project

just We around now to I hand to with that are the initial that potential of expertise. project have We Lynn, to they over the it We because call the they conversations bring economics me done specifically they financiers his like home projects, brings Small done seeing. from and and what hired Lynn attractive. know got it you. are I who introducing development get already

Lynn Smull

Pat. earnings around in we you, This both technology and the mentioned. equity Thank that increasingly my very de-risked, has project project are has use. be experience, happy in we because that well-positioned secure demand am put here. is career I for debt the third-party business to Gevo, see particularly Because proven, can to and finance take-or-pay substantially joined my could the to immediate call. been I I have financings be are products the Pat contracts first

plant entity financings subcompany the with be levels, special sheet that associated establish will which dilution avoid purpose at balance normally to would constructions. expect on We

that Pat mentioned, debt yield necessary adjusted equity a are with attractive will and cornerstone As are that enabling secure risk down terms contract the to returns on capital. thereby and modeling basis forma indicates settling projects construction detailed financial pro us

as the of capital at strategic as roles entity process advisor and the level. a structuring parent the in project lead debt equity also well chip are on on to blue both perform to placement financial We engaging take and advisory

We are completion that finance can the credible selecting EPC a in as discipline as risk moving customary well of firm along in levels process the capable and to the project commencing mitigate activities development am financial financing. to the initial am be off looking delighted I the here. forward to for Gevo other success. for projects necessary ground I various positioning getting and to

through over to will who Carolyn take the financials. turn I Carolyn? call will us Now, the

Carolyn Romero

fourth million reported to you, Thank Gevo same of compared XXXX. period in in quarter the $X.X Lynn. revenue $X.X the in XXXX as of million

sales During in higher the $X December facility. the ended revenue X hydrocarbon Hampton period months XX, at was XXXX. production same the XXXX, million because of compared Hydrocarbon $XXX,XXX volumes in increased South with

the Hampton the XXXX, facility Gevo and capacity. the to XX, ended production December reduced months production South upgrade double During facility at X to

same of facility X the sales the derived in period $X.X XX, Luverne ended from ethanol products related and During months revenue December a at XXX. was XXXX, decrease million, the $X.X for million approximately

compared distiller December for Gevo XXXX, in a resulted its ethanol of the X As and production environment ended grain, with the sales commodity lower which XXXX reduced XX, of result the unfavorable period. during months an period same

of Gross experienced. as for that unfavorable markets for was versus Cost commodity XXXX to period sold the versus fourth corn XXXX costs of fourth of quarter region quarter ethanol the primarily production due of the XXXX. of the decreased has an quarter. $X.X a the $X.X environment XXXX million was result million loss result the to the largely in million goods $X.X historically same at fourth as compared in national during of in XXXX Production greater $X.X was decreased million quarter

decrease cost and an South to expense during XXXX with expenses. Research fourth due of our partially facility and development to XXXX personnel million offset period the in in Hampton primarily same $X.X associated in a increase the by decreased compared by quarter consulting

non-cash by compared Selling, general operating professional partially $X.X legal, with in approximately in a expenses the quarter increased total million offset an $X.X stock-based we cost in for period the compensation. XXXX XXXX and same by fourth primarily for Relations during due administrative and decrease million consulting expense to fourth Investor the fees. quarter XXXX, of reported Within of increase personnel,

we million in compared For of same reported operations $X.X for the XXXX. loss from quarter period the fourth million $X.X to a of XXXX,

XXXX, $X.X million, non-GAAP stock-based In calculated the EBITDA operations Interest compared depreciation a a decrease cash same quarter same to $X.X the adding the to period from measure, and XXXX. non-cash compensation fourth million quarter GAAP XXXX. in the compared in XXXX loss $X.X which loss, to by of was of slight is was expense for million of quarter fourth

a the or outstanding This loss we or the weighted compares $X.XX of reported $X.X quarter shares million a on of share in of loss quarter fourth loss a For of fourth $X.XX million share. per average to net a XXXX of of loss per $X.X XX,XXX,XXX. XXXX, of

Gevo certain the non-GAAP to growing instruments non-cash a fourth resulted of moving per back and such XXXX, totaling $XX,XXX quarter is net per recognized $X.X important of fourth adjusted these a of non-GAAP share net $X.X the net embedded fourth of net our adjusted quarter fair quarter compares forward, financial a loss of or in in non-GAAP million share adjusted balance changes or $X.XX. million our loss $X.XX. business. In due of non-cash gains, Adding non-GAAP to gain of to loss in a strong business XXXX sheet the derivatives. a of value Having This loss net XXXX as warrants in adjusted and developing of our

thank Gevo. of their to would shareholders our for in With support that, and all I like continued interest

up questions. Operator? for call the Let’s open

Operator

you. Thank

Wainwright. H.C. begin And question the Dayal question-and-answer [Operator from comes first our of now Instructions] will from We Amit session. line the

open. is line Your

Amit Dayal

questions. afternoon, Thank you. Pat. taking everyone. for Good Thank my Hi, you

now in is respect this will or XXXX? just fully that Luverne, to transpire green production So with

Patrick Gruber

what that? not by mean mean you green What, I exactly am sorry, sure fully you am I production

Amit Dayal

in Yes, of coming all I renewables? energy from it the consumption mean, terms is all

Patrick Gruber

the Though electricity displaced. is

that So And where hydro powered. that Luverne are from then have we about Dakota, what’s we comes a its up of it South interesting X megawatts now. is large have

And more takes so fossil-based and that grid no the off in electricity. so us essence

that’s And renewable we gets it our year further. down So out. we our – for that. capacity of as well, take then enough We build that it boilers will as us add next rid of would footprint when all for plant and our biogas big

zero for emission. at margins just fossil very net that we or will game agriculture, based got but don’t to we even it’s for With sure our CI – haven’t though zero, to need contracts a zero the way We of write it day don’t we trying not sure to that the hydrocarbon ethanol we get sure the the when think to are down we include I making figured us we gets us down to you on focused are that out. is zero possible focus energy. don’t I and improves renewable see lower to take end the improve margins main all the score because we –

Amit Dayal

environment With plans build lot volatility out? how your this there these for financing is capacity of respect market the is to impacting current

Patrick Gruber

extremely you we enormous in goes is are other what to can invest what yes prove yes the drive invest the know are it funds we our next of the based invest resources the the whole not about Well in? can different we good talking take-or-pay who seem in sustainability electric long players darn interesting gallon are is are that invest solution keep the gallon you and and NDA they able as you for to They moving process it pretty with going can a can know What from portion players and wind, solution like electricity. potential is people have in sure footprint set people under who we of next what fossil they contracts. have gallons that for is you technology that our but are for the cars batteries that can going eliminated so are for the been talking by people and are You away carbon who back to real is real ESG is and interesting works.

project have and that hey I put on of and plays are based has together, the going list them good very a formas put the it it we attention want got in good advisors think to feedback so together of with plays pro and of we people’s a plays in it are and project you Lynn pretty we here. think you from it talking it all you the at to talked So going that strategic in and is that what one what add did funders detailed that Lynn story to great the job done all the catches pick think something end the hence through we bake here returns class far putting are they I

Lynn Smull

the conditions to Well can out the some time as I impact people these would and time so long continuing financing the projects. point lead they are we those was activities is over have on through development doing projects are project more for what imagine so and also we long you today finance much is market the before term going work the ever that looks system current profession dampened to discipline

Amit Dayal

this into bringing I commercialization discussions all but time with topic to is for one partners? etcetera XX-XX for impact of on these looking bailouts your commentary etcetera line this this know the airlines be your is seem potentially Your

Patrick Gruber

have yet what they we the are a the airlines have have themselves and greatly they as down number of of and than coming is the different interesting but this to important market what’s so today then this of trying at is point in Isooctane run we our was several consolidation I originally around But in Well kind a are some a is bunch we have problem as been out problem sustainable additional get $XX trying pump to to gazillions people keep proposal mind chain than and an counting should they and now to selling is at and pre-sold might octane and be view this this remember that per gallons is jet are loan to supply is it line I we is have towards going running helped trying to is time doing that into pretty date interesting there going awaited is to again so right not from it the bailouts issue an everyone one that gallon is diverted then like to is is could a bailed the guess future fuel should they that actually an can market as more going used in get there get feedstock. with times expect good but that a been we course I mentioned the the kind that people to worldwide – So of solve reduced potential say the of in gallons jet are on business that more a they already the airline world who going yes rack actually up it we sold them it but billion per impacted be needs regarding day I increase from people is I to is position jet it's industry said different extremely okay long contracts I and over at there times worth aviation short $XXX definitely now fuel isooctane the or ratios more because fuel. saw proposals who both so it to we has not jet it now it going bailout airlines make isooctane I be in so that gasoline have on generally strategic a legislation they many fuel are loans briefed there for is years there the is money that billion, we are one to but even like and see we believe keen trying money us Isooctane thing anything are isooctane that I we is like knows, have be the road to right haven’t I control but

trying balanced are We approach. portfolio keep to a

Amit Dayal

makes good sense that’s comment, That a Right. Pat. and

– developer owner? you commercialization more and the front, you from the operator owner bit are a it at like a majority looks little have last On update versus plans looking of changed quarter

Patrick Gruber

Right.

Amit Dayal

from discussion this having type with economics you play this to Is did for sort of this of the are minimize risk? scenario in the you of How parties coming sort are a or your you? out trying

Patrick Gruber

interesting we remember of million what’s per is previously had reason goal it the about XX for Well, of a gallons year hydrocarbon.

do than is So at though we for first be happened have gallons very stone. business pretty bigger Luverne. and stepping we good would a originally can and we secured might business be That’s What’s make I a profitable. That the contracts million XX year. per

haven’t million be back, at Luverne. it am might XX to cut In fact, but as going that I up high as could I decided XX. gallons I do it

are looking sort at. that’s what of we So

then, more And are in new is that, do larger expect people is same in plant or In that’s is we Luverne. the technology, this sure, timeframe. a contracts support gallons as licensing we now about we it. I how that we much it. operators, the site than get are for What gallons I near-term because there got to do on that the available to be for portfolio we to the going are teach We got to in means kind However see at of well. case than as separate us which think way, that. production a on way to the bigger in coming got And do thing balanced the delivered us to

know There development I for the paid this Pat, how get God, have so shareholders And that. all will of have at we what, are who – that. one is that this business way. know we Well model. have portion interested to. as much capital the to concerns that is you a going is coming we light people We are capital? used well, the in that other people along paid equity the to had us, refer to you of because for raise money So for get don’t

to cash various on fees. you come want Lynn, And outline flows further the Gevo’s comment from so would the fees? this, just

Lynn Smull

Well, of yes, common period. financial close at development construction the capital finance there during structural licensing project technology is fees a element. is Recovery

of So the will projects the out project out of use back be develop close of financing. proceeds coming money we to the financial as the

asset have functions and and will the both those for We construction And that built management residual investors. project those way streams will all some into gets type role during Gevo. rich tie the also and of us enough negotiate it the ensure will equity projects then third-party right equity a the support interest manager, perform we we to operator long-term are end, be projects will with carry back the on to will of

actual can and at until attractive what have we given versus look you we when So quite the fact expect to back off-take capital out know start fairly dollars it’s model, don’t contracts. development on risk we we that the for development development the low

Patrick Gruber

for ourselves project EVs it of they the out too. going not that be going pricing, to what, what’s even going and away, this Yes. the said know view changed what remember carbon get that able everyone are able that reprieve I because But turmoil, this a still earlier, able that away, in common not interesting share play. that And aren’t, being And – the for gasoline, asking us game so for look They that. well, world a that’s might pretty they could a be the about it’s got the That’s to maybe to large works it for returns. you are what that’s might growth. to and right accountable what gosh, was could it – they take or over market? and and nobody knows like. held and mother you it’s give me, of no works what Yes, enabled share customer predicts And to figure you going take keep people

in havoc going tolerate question. the And you gases the to to future? people spewing Are going out show continue to into these think do so raise That’s future? are that the they greenhouse

away for They already do mandate RED brands they So and fuel. The II got down They out good the are Legislation path Sweden jet happening have is policies. to already world. going polices already around made. aren’t get went are it. something. EU figuring that from France the to it

these has So just to It’s it all world the keep with hard changed. days.

Amit Dayal

And my are respect are managing is last and now? we how how comfortable and with are question burn, hand with to the that current cash environment your the you situated in to this you right in

Patrick Gruber

down hunkering because while I the from reports a ago, started coronavirus. the saw We

already down. we here hunkering started so And in

of people, literally trying we already the much. move money we that surprised have working. that ahead. million saw I had every And that we still would is to the think ball think beginning will we of the working, still are everyone – have many year way. fronts, the along be extremely way of everybody many, managing hunkered have reported had and because $XX dollar down finance carefully, that amount now, the are all going the predicting burn down, hunkered but are were our else, had You world the because people at we the like I they And spend to to wisely we Right us we

So that’s good.

Lynn Smull

next On finance every construction current the till don’t jobs, in all do that to because for won’t project for that. task XXXX, delivery continuing a to be year The has we our front, literally impact are conditions really done. market commence project

in you course will stretch we out go of to situation. have as try That’s to it you this do. and So further what

Amit Dayal

you, one next could little bit a materialize further? few project that out quarters maybe this over And one is to is the or this something respect financing, with last pushed for

Patrick Gruber

firm can quality a and of to global to is best of No, requirements to And capable will disciplines level the takes sort of EPC performance the risk finance on the of meets a project and the the for completion to project example, will allocation developing that finances, of develop project to mitigation risk. credible risk it, the risk, time have that mitigating that price take reality take we time. risk, parties discipline and get profitably that out

So of engineering financing in done. is months. there that think has project X materializing work to possibility the that also And is any I be there a lot of

Amit Dayal

had. I all that’s And Understood.

Patrick Gruber

is know our before. is have So, interesting that what that that discussions we about enough here they is we story occurred Amit, what had something to have though of talking are

do. soon and carbon showing drive sitting negative can fuel emissions, and jet to do around there doing how we that’s zero, As we start we data net possible with the as it gasoline whole even gasoline to here at of what on are can and talking of and we gallons look

and scale is and business much can working known because we interesting, We But as as at customers have standing all are It in up the camp products of marketplace. stuff a that dead the interesting. on done other – possible, running in side. sustainability de-risked play. have falls is and full it’s qualified that whole all that’s system the course. and for this There material because it’s been difference. square make That’s And on pretty the absolutely

And here, have save look Now already going at corporate us, to just unfolds does I invest at If as all get it this down too? matter. project road had that yet got I matters, level this the we invest level, we time it whom. questions of see players they equity to further are at to conversations oughtn’t this am where and how these the

make so we And those fit trying pieces together. to are

from will large at level this going Our project these done be one company, because options to will first And next I think where for always of to all we the strategic business advisor. thing, capital need our very look the get to That And it cases, big amounts right. we is for a hiring are plants, strategic advisor of the we to don’t That’s we looking like on are can bunch marketplace now to so of will I to going forward help turmoil And going it the that gallons. help think have to obviously. that’s in the get discussions, big with are are we do. right us. like I who guns see what we be interesting grow the be at – grow

Amit Dayal

Thank I you, it. all have. Patrick. That’s Appreciate

Patrick Gruber

you bet. Yes,

Operator

Markets. from NOBLE question next your from comes Poe And Capital Fratt

Poe Fratt

sort you be not you or looking and are features Hi, at frame the what just at, Good just of much, sight you you whether but a you good additional are are I looking are forward at? about find too potential up to you know probably that want talk rather you Lynn. little bit what are can looking geographically, the that afternoon, that upper your in Pat, as afternoon, cards the site tip looking you Midwest Pat. as far how don’t

Patrick Gruber

Sure.

things in me. We I that carbon goes is a is forward, have of earlier This people consider was the stuff. As just for that? these are number a carbohydrate of you that like it they It’s that’s a Number quarter. with cost profile the it’s is mean, get put we can’t that – want with I a was of okay, what to it too rank got be one. sustainability footprint some that products today sustainable. two, discussion like not cheap. high are to Yes, kidding the

I access to ship but want it at else would number with have the way going having is and those the how have Midwest gas been be so and have meet that the ethanol balancing somewhere imagine up closer these go all can rail in is before. the this that ability some our markets these would started large in as never and would mitigate to that Pacific help are been is renewable places the margins three are places or it ethanol we a unfolds places be things a the of with in sustainability matters ethanol not but story I basic most That's wants some hope there selling renewable going if historically, so Like, and to may plant. the California that is are use to this I if energy is to have footprint do can to the suggested part is. long does just candidates as starting things carbon in problems our could long carbohydrate who we So to are to acquire act down of their The run it where business of solve folk will out can having something number out with is part down South to we would who that we and going use way partner that multiple because only the natural North lot doing that looking products it in, is interesting we it from assets East places pipelines fit from in somebody we because think down we see criteria, we or see mitigate save else on even that that have the those run have those find so And from the rail made someone I the really are in best those good ethanol we bad. in and lower and that can our where I we could footprint people Does in sites not energy keen going transportation to we come their to would to for bad in and that way What mitigate we think deal what their series like be market The important some with money conversations that Lynn? how footprint stuff by gas Luverne California and do of four rail West make electricity greenhouse the the can that something profile cash and cannot do that that year works next something who to driving can of places the from? come picking does

Lynn Smull

a is either markets inside M&A up or assets a of looking funds point of contributed finance venture or acquisition combination the of straight Well, sources inclined choice way JVs financed it between with project joint at acquisitions are attractive for this the the

Patrick Gruber

make invest and to I asset I deal money a any recognize is investment want that turned why needs that think to investors okay it people unfolds. does money that something or so bunch money who a and of but it loses yes Yes is to it not there it is better make take

Poe Fratt

of short that a plant at looking are it modifying essentially you an saying way So existing is

Patrick Gruber

it yes always is yes Yes,

Poe Fratt

Any states is are incentives down some or incentives state you road too where at you far talking about the that local or the point are

Patrick Gruber

a but and be is of SAF that would and because might people definitely of our off part day going run and plan long existing the even to jet a worried do people bailed age big are interesting pull want where thinking get hard it it fuel next is this octane though and this is and out is are their what might to step thing That available into we be deal. it goes they the in about believe

has octane because higher enormous is high is is it but that higher engines it problem. sold EV’s mileage So you being projections that think do or of aside that's because planned I the is really cannot they it am much future get like you gasoline but always telling as for don’t shove everyone the going much solve also can we about wants to so that to one to gasoline all how look the at the want

Poe Fratt

contracts in And about XX you then to or potentially year per your hydrocarbon SAF? have and what about to it that so SAF? of up ISO gallons at least production then because were million or be XX-XX gallons Have is already over would scaling XX or of your essentially thought component component sort what versus talking and on per million what XX between million you that XX-XX year of capacity that preferred sort is ratio you ISO of base

Patrick Gruber

I we is, that is and is kind what's if about technology an about, things it bit are this asset to kind an swing where I think asset it to split so have place our XX-XX is of I unfolding a thing hydrocarbons the any have contracts in dedicated can it way but And Well where itself ratios lends on out even of around interesting think unfolding. our can particular I change good that a I that's hydrocarbons it we have kind one of is that fly the build if don’t for lock want so are is and

Poe Fratt

standpoint at look you from take-or-pay? when at a of this be then available And some capacity just would look or your would having perfect merchant at looking sort you you

Patrick Gruber

Having have need some take-or-pay product take-or-pays. usually – capacity get like when know way this the driven because you us. happens some people profitable, can the like under it is for people to we are by you as market, businesses other merchant from merchant spec building We reserve the primarily are you it the from very and only because other get is capacity

Lynn Smull

will think have equity bit a in Right. And opt I third-party of projects the investors to also equity spot. optionality third-party on the

Poe Fratt

as or I was thinking XX% that you yes. that sort far XX:XX of XX% capacity XX:XX, of as Okay, optionality? potentially to gives

Lynn Smull

a It stressed depends a dynamic think vis-à-vis much I cases have starting to how as a less. but need decent little little service bit that’s under to but spot, contracted ratios on point, the coverage the we calculating maybe and debt on debt side

Patrick Gruber

to should – wrong of capacity. those. the even what gets be way can the model can analysis still it look and I at We then is our less the doing and for we we will with first go the because some do probably. is And look things it economics exactly, are way out done – That’s can that think the all reason but I that, the and that money, are all think. that’s And plan – be you you the projects, all make people like for just go some cover first if of will debt survive the what shows, these okay, the come well, able Yes.

Poe Fratt

hopefully… And

Patrick Gruber

but is discussion. Yes, be an I won’t know, ongoing it XX%, this

Lynn Smull

future think ahead. spot. future and what improve I concept one risk allow get done after we that projects go the bit that taking for a projects little call in we bundled on more will Yes,

Poe Fratt

X%? in you has refinery And potentially up been to that engineering improvements, bottleneck Yes. say mean, I the was group capacity should to get with and the I typically historically the curve X% we learning going and

Lynn Smull

Yes.

Poe Fratt

big cost that a recovery costs financial one number or of recovery talked of the the when financial it financial will dependent think development you and development you about the I different close streams it Lynn, do the of that then was close? you at on timing put at be that the close. fee component that something on Can actually is was when

Lynn Smull

example, of on money. quite number project contractor things, absolutely than with that are to ourselves we to rather There engineering an what and required we generally it’s speaking, would of a But could that dependent do a lot earlier align could get that’s EPC expense FEL an close. call for X later save of the that’s bulk the

Patrick Gruber

as then get the paid closes. And back you it project

model. we of own overall, a work twist about pretty the it is intellectual We is – property. one all the standard think it’s the so – And the development though. a the way much amount There of

We are the experts in it.

it makes the little go. different in a that And things how bit so

also is are subtlety another This about We this market-makers. business the model.

contracts. continue We writing there be that people there and and out as to are the developing We out future the off marketplace see well. into the

Lynn Smull

different. It’s

unique sort of model power a sector, TopCo, of in model. of you not ability just there it’s see power DevCo/yieldco Because So to other completely some technology, are is the projects. might selling we the nature snap together the our different of developer that renewable the

is the We different are RFPs much selling to that than say responding developing market projects. itself. a power are we technology for actually And

that’s We instead are market in relatively flat. a one dynamic of and growing

substantially So our developer different. characteristics are

Patrick Gruber

instance, again another it will places much. – worldwide that’s are here. moving India approach, And there might other I well in on talk Praj. and and a Those working just take about forward. for a we as with the in we subtlety thing licensing other don’t in be simply India is. projects It Those active And basis

customer do is there it while and but And that ship thing of finally for them is the and everybody it and sense we the from want, makes that so talk if optimum? And as it same we but of the Luverne, footprint is fuels lowers can’t that these to quite kind the makes it demand likewise a money carbon – works, No. way yet. it are, we we the off-takes how big it’s happening kind just that Europe is about announce stuff we in who can and

the you footprint of a real conversation shortly And the the Europe, doing. you the in wants And the play exactly carbon in start to product be who Luverne, what’s that’s off look stuff wants carbohydrate what’s the sustainability but what’s so cost but source, game get it same having criteria, what right score, location. who to from we would product the in kind what’s logistics are to like, of

Poe Fratt

ask then mind quantified you gallons if exactly your And per have build-out going to just gallon year, much if capital two Great. cost required how at you could a to to capacity? wouldn’t it’s build I on more couple, today, a just of costs, XX it least development do million costs

Patrick Gruber

XX Well and I XX, what cost out XX to XXX is if building to we by built might have that million to talked a XX gallons we year might two. you XXX about multiply previously if that am

Poe Fratt

notes. the factor, give refinance how any will enough that’s soon the And What to done funds those gating press you of make project financing an at generate going statement looks because you to that debt, you going – the happen? in what’s to factor can release you to look is then box idea when expect refinance like the not gating be the it, us refinance it to to white

Patrick Gruber

a couple Yes, I think there different is paths. of

an out have the what cooperative that some But that, it We interested type that’s people that box we who straight white deal and with there the And work and best I in a had do up been recognize partner that and will through issue. and to are to we produce is box with is is have are we things have people too. figure these of there say, refi think engaged it. – white we projects us they has recognize

that the money trying get and organized too this we get financed thing the same make just way. is here So got whole a potentially, there it to on deal they business also and recognize are growth to right

crazy, I down is that things of crazy Lot that, working the the what’s bridge next color what, could meantime, we solutions had have week week financing should really know just we players table be could who pieces in want they a with, that. get this and project be the out piece is the get is of we and that. the around probably could bunch all do, companies and like So, to situation we week going we who more and all a I is in of financings banker week, but who last figure discussions will on capable to to and who financing have will are settling after do too, the stuff there when of changes with, as that things, this do bridge like debt do really are that

So ideally, how who, we refinance are have want where, as off to pieces waiting or a question as to paid of this be the strategics here build. also what, how of overall together. part the some we Is and them see come who

got going work to just come go of out. we lot pieces So a and it, together to it got sequence that but

Poe Fratt

Great. Thanks your for time.

Patrick Gruber

Yes.

Operator

And remarks. final that Gruber back for over turn the Pat will session. call concludes the now question-and-answer I to

Patrick Gruber

us, time I your before. contracts at I None do I stock issues? whole I is, future big players And for EV? how and here And can who new are that fuels have need asking like when that would us. where in they appreciate like out de-risked, big and whole few here. can time for project look business stuff all wouldn’t like the see a with took a all to Yes. have Yes, there I there creates price them. world. everyone for know progress heat many of bought in I doesn’t been about looking us place the we crazy able that was to say ago the players, I lot this projections it. to tell we these marketplace. well, out discussions but you joining given with we said has fainted weeks sustainability level where the also talk options the more whole sense formas attractive day other they are have made that have marketplace, the have as us. set financing it. customers, it new And the said already been you fundamentals, about our the and We EVs, them, what of and good I me, world this able a solve here of of professionally I those future basic on works, the around that work, forward people have actually likes of the creates are of to through, done, Thanks are we really in products Lynn really to it’s been make I I for pro into table get they solid and keeps turn a about technologies of the can course

And going Technology know you to will Although be does ours dealt has we to it be of to people can get problem. of it. And out good we view. that point able gallons share be billions fuels hundreds next same who and that. for still of with That’s like it’s of XX the what fossil XX years. to a find

play off your we of don’t get we are and game your a And this lot support Thanks with all it. on turmoil. like Bye. I So for yes, appreciate to the new investment. and it.

Operator

ladies you, concludes Thank This participating. gentlemen. you for and conference today’s Thank call.

now may disconnect. You

Gevo (GEVO) 17 Mar 202019 Q4 Earnings call transcript