Gevo, Inc. Q3 FY2025 earnings call

Key Points

• Acquisition of ethanol plant, carbon capture plant, and class six sequestration well in Gevo North Dakota is performing better than expected. The carbon sequestration well has been operating since June 2022, is uniquely certified as a thousand-year performance well, and is in good geology.
• North Dakota is a favorable business environment. Gevo views selling carbon as a key initiative and has monetized carbon value through various methods. They sold all 2025 production section 45Z clean fuel production credits for $52 million.
• Gevo North Dakota is a core earnings engine, demonstrating reliable energy production, efficient carbon capture, and consistent monetization of clean fuel production credits. They completed a sale of remaining 2025 section 45Z credits and expect to bring in remaining cash soon.
• Paul Bloom discussed capturing and optimizing carbon dioxide coproduct value, with 90% of carbon benefits associated with CO2 sequestration sold into low carbon fuel markets in Q3. They are applying for more pathway approvals and expanding CDR sales. Verity digital carbon tracking and verification platform is installed at Gevo North Dakota and expected to be fully functional by year-end.
• Chris Ryan talked about corn harvest at Gevo North Dakota, good relationship with farmers, plant operations including safe turnaround, and improvements like new truck scale, road improvements, and energy efficiency. Engineering work is ongoing for ATJ 30 project and other improvements at the site.

Gevo North Dakota generated income from operations of $4.3 million and positive non-GAAP adjusted EBITDA of $17.8 million. Gevo RNG generated income from operations of $500,000 and positive non-GAAP adjusted EBITDA of $2.7 million. Combined operating revenue, interest, and investment income was $43.6 million during the quarter. Our loss from operations was $3.7 million, and our non-GAAP adjusted EBITDA was a positive $6.6 million. Last year's third quarter revenue was approximately $2 million, while this year's was approximately $43 million, an increase of ~$41 million. Last year's third quarter adjusted EBITDA was approximately negative $16.7 million, and this year's was approximately $6.6 million, an increase of ~$23 million.

Forward-Looking Statements

• Expect operating cash flows to normalize and trend towards breakeven or better in coming quarters.
• ATJ 30 project design and engineering progressing well, estimated installed capital cost around $500 million (excluding financing costs).
• Anticipate ATJ 30 project would add an additional ~$150 million annual adjusted EBITDA uplift.
• Expect tangible increase in 45Z generation next year due to the big beautiful bill and ongoing decarbonization measures, aiming for closer to a dollar per gallon in credit generation.

Risks

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from current anticipations, including projections about timing, development, engineering, financing, and construction of alcohol to jet projects, carbon credit sales, and other activities described in SEC filings.

Q: Derrick Whitfield asked about incremental capital and timeline to achieve $110 million of EBITDA at Gevo North Dakota.

A: Incremental capital is around $15 million or so, and it's about debottlenecking the ethanol plant, optimizing energy use, capturing more CO2, and maximizing carbon value. The timeline depends on how things progress, but they're well on the way to moving towards the $40 million mark and expect CI scores to improve leading to more tax credit money.

Q: Amit Dayal inquired about drivers of EBITDA in 2026, whether from sequestration capacity expansion or debottlenecking.

A: On Slide 12, it's a projected picture for 2026, with expected improvements in carbon score due to the big beautiful bill and growth in carbon side with Paul Bloom to provide more color. Ethanol and RNG have their own considerations with ethanol being less volatile but not overly optimistic on RNG market.

Q: Craig Irwin asked about conversations with potential customers using the well in Richardson for carbon sequestration.

A: Gevo North Dakota has unused capacity in the well. They are looking at expanding their own CO2 sequestration with plant expansion, and having ongoing discussions with other companies to store CO2 for them, considering options like virtual pipelines. The CI score will improve next year due to the big beautiful bill and ongoing decarbonization measures aiming for closer to a dollar per gallon in credit generation.

Q: Peter Gastreich asked about the Frontier partnership and overseas markets.

A: Frontier helps ethanol plants without direct geological storage or pipelines. For overseas markets, with Refuel EU limitations on corn ethanol, they're looking at waste and residue feedstocks for ethanol, focusing on economics and right partners in geographies to execute ATJ 30 as a global business.