Gevo(GEVO)2023-08-11 01:42Financial Data and Key Metrics Changes - The company ended Q2 2023 with a strong liquidity position of 77.8 million related to the Northwest Iowa RNG bonds and Net Zero-1 development [34] - Combined revenue and interest income for Q2 2023 was 9.3 million, with SG&A expenses at 6.7 million, reflecting a 2.9 million, achieving positive standalone RNG EBITDA despite a temporary CI score of minus 150 [50] Business Line Data and Key Metrics Changes - The company invested 9.8 million allocated to Net Zero-1, 4.9 million to other NZ projects [34] - The Northwest Iowa RNG project achieved an onstream injection of 97% and uptime of 91% in its first year, with plans to expand capacity to 400,000 MMBtus per annum expected to be completed in Q4 [35] - The company signed agreements with additional ethanol partners for its Verity carbon tracking platform, aiming to capture and monetize carbon value [30] Market Data and Key Metrics Changes - The U.S. jet fuel demand is approximately 20 billion gallons per year, with nearly 200 ethanol plants having a collective capacity of about 17 billion gallons per year, presenting significant opportunities for the company [16] - The company is exploring the potential of the plastics and chemicals market, which exceeds 400 million tons and hundreds of billions of dollars, leveraging proprietary technology to produce olefins [18] Company Strategy and Development Direction - The company aims to optimize capital use by taking on roles as a developer, licensor, and co-investor in projects, focusing on generating higher returns and cash flow [10][25] - The strategy includes licensing plant designs to other developers and pursuing partnerships to expand its market presence in sustainable aviation fuel (SAF) and low-carbon products [14][17] - The company is also focused on developing proprietary technologies, such as ETO, to reduce capital and operating costs in converting ethanol to olefins and SAF [20][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a pathway to positive cash flow, with multiple avenues to become EBITDA positive in the near future, including RNG, specialty chemicals, and fuels [40] - The company is closely monitoring regulatory developments, particularly regarding the 45Z rule-making, which is expected to provide clarity on carbon credits and economic returns [79][97] - Management emphasized the importance of partnerships with airlines and other stakeholders to navigate potential economic challenges and ensure project success [41] Other Important Information - The company is in the term sheet phase for a DOE loan guarantee of up to 950 million for the Net Zero-1 project, which is a significant milestone for financing [42] - The company has received payments related to its ETO technology and expects additional payments as commercialization progresses [73] Q&A Session Summary Question: Clarification on RNG revenues - The 2.9 million RNG revenue includes the LCFS at a score of minus 150 [53][54] Question: Additional steps needed to reach 400,000 MMBtu capacity - The additional steps are minor and involve optimization work, with some costs potentially covered by the IRA bill [55] Question: EPC process and DOE loan finalization - The EPC pricing must be finalized to complete the DOE loan, with McDermott being the preferred contractor [78] Question: Variance in expected CI pathways for RNG - The variance is due to the company's advanced instrumentation and operational discipline in managing the RNG project [90] Question: Licensing and development business model returns - The returns will likely be linked to carbon value, with a focus on specialty products and government support [94] Question: Timing on 45Z rule-making - The 45Z rule-making is expected to occur in late fall, with potential impacts on the company's operations [97]