Gevo Inc

Previous wording

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used anywhere in this Report, the words “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. These forward-looking statements include, among other things, statements about: our financial condition, our results of operation and liquidity, our ability to finance, develop, and construct our Net-Zero Projects (as defined below), as well as other growth projects, our ability to produce our products, our expectations regarding the demand for our products and our ability to meet such demand, our ability to meet production, financial and operational guidance, our ability to generate revenue from our executed contracts, our strategy to pursue low-carbon or “net-zero” carbon renewable fuels for sale into California and elsewhere, our ability to replace our fossil-based energy sources with renewable energy sources at our Net-Zero Projects and elsewhere, our expectations regarding the location and start-up date for our initial Net-Zero Project, our expectations regarding our ability to produce renewable liquid hydrocarbons, our expectations regarding our ability to produce protein and other products for use in the food chain, our ability and plans to construct greenfield commercial hydrocarbon facilities to produce sustainable aviation fuel (“SAF”) and other products, our ability to raise additional funds to finance our business and the sources of those funds, our ability to perform under our existing offtake agreements and other sales agreements we may enter into in the future, our ability to successfully operate our renewable natural gas (“RNG”), also known as biogas, facilities in Iowa, our ability to produce renewable hydrocarbon products at a commercial level and at a profit, the availability of, and market prices for, government economic incentives to the renewable energy market, achievement of advances in our technology platform, the availability of suitable and cost-comp…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). When used anywhere in this Report, the words “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. These statements relate to future events or our future financial or operational performance and involve known and unknown risks, uncertainties and other factors that could cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. These forward-looking statements include, among other things, statements about: our financial condition, our results of operation and liquidity, our ability to finance, develop, and construct our Net-Zero Projects (as defined below), as well as other growth projects, our ability to produce our products, our expectations regarding the demand for our products and our ability to meet such demand, our ability to meet production, financial and operational guidance, our ability to generate revenue from our executed contracts, our strategy to pursue low-carbon or “net-zero” carbon renewable fuels for sale into California and elsewhere, our ability to replace our fossil-based energy sources with renewable energy sources at our Net-Zero Projects and elsewhere, our expectations regarding the location and start-up date for our initial Net-Zero Project, our expectations regarding our ability to produce renewable liquid hydrocarbons, our expectations regarding our ability to produce protein and other products for use in the food chain, our ability and plans to construct greenfield commercial hydrocarbon facilities to produce sustainable aviation fuel (“SAF”) and other products, our ability to raise additional funds to finance our business and the sources of those funds, our ability to perform under our existing offtake agreements and other sales agreements we may enter into in the future, our ability to successfully operate our renewable natural gas (“RNG”) facilities in Iowa, our ability to produce renewable hydrocarbon products at a commercial level and at a profit, the availability of, and market prices for, government economic incentives to the renewable energy market, achievement of advances in our technology platform, the availability of suitable and cost-competitive feedstocks, our…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The following discussion should be read in conjunction with our unaudited consolidated financial statements and the related notes and other financial information appearing elsewhere in this Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including, without limitation, the disclosures in our 2023 Annual Report.

Current wording

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information appearing elsewhere in this Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including, without limitation, the disclosures in our 2023 Annual Report.

Previous wording

We are a growth-oriented, carbon abatement company with the mission of solving greenhouse gas emissions for those sectors of the transportation industry that are not amenable to electrification or hydrogen. We believe that the market size for hydrocarbon fuels will continue to remain significant in the long-term even with the rapid adoption of electric vehicles and hydrogen technologies.

Current wording

We are a growth-oriented, renewable fuels, chemicals, and carbon abatement company with the mission of solving greenhouse gas emissions for those sectors that are not amenable to electrification or hydrogen. Our primary focus is on net-zero hydrocarbon fuels. We believe that the market size for hydrocarbon fuels will continue to remain significant in the long-term even with the rapid adoption of electric vehicles and hydrogen technologies.

Previous wording

We are focused on transforming renewable energy into energy-dense liquid hydrocarbons that can be used as renewable fuels, such as sustainable aviation fuel (“SAF”), with the potential to achieve a “net-zero” greenhouse gas (“GHG”) footprint. We believe that this addresses the global need of reducing GHG emissions with “drop in” sustainable alternatives to petroleum fuels. We use the Argonne National Laboratory’s Greenhouse gases, Regulated Emissions, and Energy use in Transportation model (the “GREET Model”) to measure, predict and verify GHG emissions across the life cycle of our products. The “net-zero” concept means Gevo expects that by using sustainably grown feedstock (e.g., low till, no-till and dry corn cultivation), renewable and substantially decarbonized energy sources, drop-in hydrocarbon fuels can be produced that have a net-zero, full life cycle footprint measured from the capture of renewable carbon through the burning of the fuel.

Current wording

We are developing the commercial projects and markets for converting renewable energy into energy-dense liquid hydrocarbons that can be used as renewable fuels, such as sustainable aviation fuel (“SAF”), with the potential to achieve a “net-zero” greenhouse gas (“GHG”) footprint. We believe that this addresses the global need of reducing GHG emissions with “drop in” sustainable alternatives to petroleum fuels. We use the Argonne National Laboratory’s Greenhouse gases, Regulated Emissions, and Energy use in Transportation model (the “GREET Model”) to measure, predict and verify GHG emissions across the life cycle of our products. The “net-zero” concept means Gevo expects that by using sustainably grown feedstock (e.g., low till, no-till and dry corn cultivation), renewable and substantially decarbonized energy sources, drop-in hydrocarbon fuels can be produced that have a net-zero, full life cycle footprint measured from the capture of renewable carbon through the burning of the fuel.

Previous wording

We currently expect to finance the construction of NZ1 at the subsidiary level using a combination of Company equity and third-party capital, to include non-recourse debt. In January 2024, the Company announced that it expected to spend approximately $125.0 – $175.0 million from January 2024 until the financial close of NZ1. The Company has further refined and updated its estimates and now projects a range of $90.0 – $125.0 million to be spent on NZ1 between January 2024 and the financial close of NZ1. Of that expected spend, the Company has spent approximately $17.0 million in the first quarter of 2024. Cash distributions from future NZ1 earnings would be proportionate to Gevo’s ownership in NZ1 under this expected financing structure. The use of project debt and third-party equity allows us to conserve capital for use on other growth projects. We expect to apply similar development and financing strategies to future Net-Zero Projects to grow our SAF production to meet the demand for SAF.

Current wording

We currently expect to finance the construction of NZ1 at the subsidiary level using a combination of Company equity and third-party capital, to include non-recourse debt. The Company previously projected a range of $90.0 – $125.0 million to be spent on NZ1 between January 2024 and the financial close of NZ1. In the first half of 2024 the Company spent $22.8 million and expects the remaining spend until the financial close of NZ1 to fall below the previously estimated range. Cash distributions from future NZ1 earnings would be proportionate to Gevo’s ownership in NZ1 under this expected financing structure. The use of project debt and third-party equity allows us to conserve capital for use on other growth projects. We expect to apply similar development and financing strategies to future Net-Zero Projects to grow our SAF production to meet the demand for SAF.

Previous wording

In order to achieve full construction financing for NZ1, we need to secure third-party equity and debt. Upon receiving an invitation from the U.S. Department of Energy (“DOE”), we submitted a Part II Application for a DOE loan guarantee for a direct lending from the Federal Financing Bank. In August 2023, Gevo was invited to enter the due diligence and underwriting phases with the DOE. Given the current interest rate environment and general macroeconomic conditions, a DOE-guaranteed loan is expected to be our most attractive debt option and offer the lowest cost of debt for the project. We expect that obtaining a DOE-guaranteed loan will have the benefit of reducing the overall amount of equity required to finance NZ1 and should result in higher project equity returns for investors which should increase the likelihood of Gevo successfully financing NZ1. The DOE loan application process is targeted to be complete in 2024. We expect that our NZ1 plant start-up date will occur twenty-four to thirty months after the NZ1 financing closes, the timing of which is uncertain. In parallel with the DOE-guaranteed loan process, we continue to explore debt financing for NZ1 without the benefit of the DOE-guaranteed loan. We are also working to secure access to carbon capture and sequestration at the site.

Current wording

In order to achieve full construction financing for NZ1, we need to secure third-party equity and debt. Upon receiving an invitation from the U.S. Department of Energy (“DOE”), we submitted a Part II Application for a DOE loan guarantee for a direct lending from the Federal Financing Bank. In August 2023, Gevo was invited to enter the due diligence and underwriting phases with the DOE. Given the current interest rate environment and general macroeconomic conditions, a DOE-guaranteed loan is expected to be our most attractive debt option and offer the lowest cost of debt for the project. We expect that obtaining a DOE-guaranteed loan will have the benefit of reducing the overall amount of equity required to finance NZ1 and should result in higher project equity returns for investors which should increase the likelihood of Gevo successfully financing NZ1. The DOE loan application process is targeted to be complete in 2024. We expect that our NZ1 plant start-up date will occur twenty-four to thirty months after the NZ1 financing closes, the timing of which is uncertain. Based on recent material progress with the DOE guarantee loan, we are now prioritizing this debt source over other debt financiers. We are also working to secure access to carbon capture and sequestration at the site.

Previous wording

Renewable Natural Gas Project. The RNG project in Northwest Iowa (the “RNG Project”) started up and began producing and injecting initial volumes of biogas in 2022, during the project’s testing and ramp-up period. In 2023, the project achieved stable production levels and surpassed our annual production target of 310,000 million British thermal units (“MMBtu”). In addition, we completed an expansion to the Gevo RNG project to increase its annual design capacity from 355,000 MMBtu to 400,000 MMBtu.

Current wording

Renewable Natural Gas Project. The RNG project in Northwest Iowa (the “RNG Project”) started up and began producing and injecting initial volumes of biogas in 2022, during the project’s testing and ramp-up period. In 2023, the project achieved stable production levels and surpassed our annual production target of 310,000 million British thermal units (“MMBtu”). In addition, we completed an expansion to the Gevo RNG project to increase its annual expected output from 355,000 MMBtu to 400,000 MMBtu.

Previous wording

Gevo’s revenue from the RNG Project stems from sales of RNG and from the environmental attributes associated with its RNG sales, including the attributes available from California’s Low Carbon Fuel Standard (“LCFS”) program and the U.S. Environmental Protection Agency (“EPA”) Renewable Fuels Standard (“RFS”) program (“RFS Program”) to receive renewable identification numbers (“RINs”). Gevo was granted registration approval by the EPA in 2022, allowing us to participate in the RFS Program to receive RINs.

Current wording

Gevo’s revenue primarily stems from the RNG Project’s sales of the environmental attributes associated with RNG. These include attributes available from California’s Low Carbon Fuel Standard (“LCFS”) program and the U.S. Environmental Protection Agency (“EPA”) Renewable Fuels Standard (“RFS”) program (“RFS Program”) to receive renewable identification numbers (“RINs”). Gevo was granted registration approval by the EPA in 2022, allowing us to participate in the RFS Program to receive RINs.

Previous wording

During the first quarter of 2023, we received approval for a temporary pathway under California’s LCFS program. We continue to realize substantial sales for our environmental attributes of both LCFS credits and RINs throughout 2023 and into 2024.

Current wording

We currently operate under a temporary pathway from California’s LCFS program, which we received during the first quarter of 2023. We continue to realize sales for our environmental attributes under the temporary pathway for LCFS credits and RINs into 2024.

Previous wording

U.S. Department of Agriculture. In September 2023, we executed a Notice of Grant and Agreement Award with the U.S. Department of Agriculture (“USDA”) for a Partnerships for Climate-Smart Commodities grant of up to $30.0 million for Gevo’s Climate-Smart Farm-to-Flight Program (the “USDA Grant”), with project activity beginning during the 2023 crop year. The project expects to create critical structural climate-smart market incentives for low CI corn and to accelerate the production of SAF to reduce dependency on fossil-based fuels. In addition, this program will help provide support and incentive payments for farmers to produce, measure, report and verify low CI corn using climate smart agricultural practices, as well as accelerate development of the low-CI corn supply chain for low-carbon ethanol and SAF.

Current wording

U.S. Department of Agriculture. In September 2023, we received a grant from the U.S. Department of Agriculture (“USDA”) through its Partnerships for Climate-Smart Commodities grant for Gevo’s Climate-Smart Farm-to-Flight Program (the “USDA Grant”). The USDA Grant was awarded for up to $46.3 million, of which $30.0 million is anticipated being reimbursed to Gevo from the USDA Grant, contingent on Gevo’s spend of up to $43.3 million and other third-party spend of up to $3.0 million. The project expects to create critical structural climate-smart market incentives for corn with a low carbon intensity (“CI”) score as well as to accelerate the production of SAF to reduce dependency on fossil-based fuels. In addition, this program will help provide support and incentive payments for farmers to produce, measure, report and verify low CI corn using climate smart agricultural practices, as well as accelerate development of the low-CI corn supply chain for low-carbon ethanol and SAF.

Previous wording

During the three months ended March 31, 2024, the Company incurred $0.7 million of costs under the USDA Grant, which are included in Project development costs in the Consolidated Statement of Operations. During the three months ended March 31, 2024, the Company recognized $0.8 million of amounts received, included in Project development costs in the Consolidated Statement of Operations, which represent reimbursements for prior periods. The Company expects to be reimbursed for all expended eligible costs not yet reimbursed by the USDA Grant in future periods.

Current wording

During the three and six months ended June 30, 2024, the Company incurred $2.8 million and $3.5 million of costs under the USDA Grant, which are included in Project development costs in the Consolidated Statement of Operations. During the three and six months ended June 30, 2024, the Company recognized $1.2 million and $2.0 million of amounts received, included in Project development costs in the Consolidated Statement of Operations, which represent reimbursements for prior periods. The Company expects to be reimbursed for all expended eligible costs not yet reimbursed by the USDA Grant in future periods.

Previous wording

LG Chem Agreement. In April 2023, we entered into a joint development agreement with LG Chem, Ltd. (“LG Chem”) a leading global chemical company to develop bio-propylene for renewable chemicals using our Ethanol-to-Olefins (“ETO”) technology. Gevo’s proprietary ETO technology can target carbon neutral or carbon negative drop-in replacements for traditional petroleum-based building blocks called olefins, including bio-propylene, which can be used for renewable chemicals or fuels including sustainable aviation fuel. These plant-based, renewable olefins would be derived from atmospheric CO2 captured through photosynthesis and are expected to deliver the same performance in final products on the market today. Under the terms of the agreement, we will provide the core enabling technology we have developed for renewable olefins to be produced from low-carbon ethanol and will collaborate with LG Chem to accelerate the pilot research, technical scale-up, and commercialization of bio-propylene. LG Chem is expected to bear all scale-up costs for chemicals and make certain payments to Gevo. In the second quarter of 2023, we received $1.1 million, net of foreign taxes of $0.2 million, and we expect to receive an additional $1.2 million through 2025 to help defray costs associated with the joint development efforts. In addition, LG Chem agreed to make certain payments to us upon commencement of commercialization as follows:

Current wording

Under the terms of the agreement with LG Chem, we will provide the core enabling technology we have developed for renewable olefins to be produced from low-carbon ethanol and will collaborate with LG Chem to accelerate the pilot research, technical scale-up, and commercialization of bio-propylene. LG Chem is expected to bear all scale-up costs for chemicals and make certain payments to Gevo. In the second quarter of 2023, we received $1.1 million, which is net of foreign taxes withheld of $0.2 million, and in the second quarter of 2024 received $0.7 million, which is net of foreign taxes withheld of $0.1 million. We expect to receive an additional $0.4 million through 2025 to help defray costs associated with the joint development efforts. In addition, LG Chem agreed to make certain payments to us upon commencement of commercialization as follows:

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023 (in thousands):

Current wording

Comparison of Three Months Ended June 30, 2024 and 2023 (in thousands)

Previous wording

*Operating revenue.*During the three months ended March 31, 2024, operating revenue decreased $0.1 million compared to the three months ended March 31, 2023, primarily due to sales of RNG and environmental attributes from our RNG project. During the three months ended March 31, 2024, we sold 88,967 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.2 million and environmental attribute sales of $3.8 million, see Key Operating Metrics above.

Current wording

*Operating revenue.*During the three months ended June 30, 2024, operating revenue increased $1.0 million compared to the three months ended June 30, 2023, primarily due to sales of RNG and environmental attributes from our RNG project. During the three months ended June 30, 2024, we sold 95,187 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.1 million and environmental attribute sales of $4.2 million, see Key Operating Metrics above. Additionally, we recognized $0.8 million of licensing and development revenue from the agreement with LG Chem during the three months ended June 30, 2024, compared to $1.3 million during the three months ended June 30, 2023.

Previous wording

Cost of production. Cost of production decreased $1.8 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023 primarily due to the production and sales from our RNG project, which significantly increased in 2023, after the ramp-up phase.

Current wording

Cost of production. Cost of production increased $1.5 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023 primarily due to the production and sales from our RNG project, which significantly increased in 2023, after the ramp-up phase.

Previous wording

*Depreciation and amortization.*Depreciation and amortization remained consistent during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

*Depreciation and amortization.*Depreciation and amortization decreased $0.5 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, due to the timing of sales of environmental attribute inventory.

Previous wording

Research and development expense. Research and development expenses increased $0.4 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to an increase of consulting expenses and personnel related costs due to additional headcount added during the period.

Current wording

Research and development expense. Research and development expenses decreased $0.3 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to decreased consulting expenses and professional fees.

Previous wording

*Facility idling costs.*Facility idling costs are related to the care and maintenance of our Luverne Facility. Facility idling costs remained consistent during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

*Facility idling costs.*Facility idling costs are related to the care and maintenance of our Luverne Facility. Facility idling costs decreased $0.3 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

Loss from operations. The Company’s loss from operations increased by $2.3 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the increase in costs for our Net-Zero and Verity projects.

Current wording

Loss from operations. The Company’s loss from operations increased $5.1 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the increase in costs for our Net-Zero and Verity projects.

Previous wording

Interest expense. Interest expense remained flat during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, and was primarily comprised of interest on the 2021 Bonds.

Current wording

Interest expense. Interest expense increased $0.6 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and was primarily comprised of interest on the Remarketed Bonds.

Previous wording

*Interest and investment income.*Interest and investment income increased $0.8 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to an increase in interest earned on our cash equivalent investments as a result of higher interest rates.

Current wording

*Interest and investment income.*Interest and investment income decreased $0.9 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to the usage of cash for our capital projects and operating costs, resulting in a lower balance of cash equivalent investments during the three months ended June 30, 2024.

Previous wording

General and administrative expense. General and administrative expense increased $1.4 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to support efforts for carbon sequestration initiatives, increasesin personnel costs related to the hiring of highly qualified and skilled professionals, and professional consulting fees, partially offset by a decrease in stock-based compensation. On an annual basis, we assess our corporate cost allocation estimates across all segments to reflect the use of centralized administrative functions as well as the allocation of personnel costs related to our project development efforts. Costs incurred to date have not yet been allocated to the specific growth projects on the face of our financial statements.

Current wording

General and administrative expense. General and administrative expense increased $2.3 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to support efforts for carbon sequestration initiatives, increasesin personnel costs related to the hiring of highly qualified and skilled professionals, and professional consulting fees, partially offset by a decrease in stock-based compensation. On an annual basis, we assess our corporate cost allocation estimates across all segments to reflect the use of centralized administrative functions as well as the allocation of personnel costs related to our project development efforts.

Previous wording

Project development costs. Project development costs are primarily related to our Net-Zero Projects and Verity which consist primarily of employee expenses, preliminary engineering costs, and technical consulting costs. Project development costs increased $2.4 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to patent related costs, increases in personnel costs, and consulting fees.

Current wording

Project development costs. Project development costs are primarily related to our Net-Zero Projects and Verity, which consist primarily of employee expenses, preliminary engineering costs, and technical consulting costs. Project development costs increased $7.2 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to patent related costs, increases in personnel costs, and consulting fees.

Previous wording

Other income (expense), net. Other income (expense), net increased $0.2 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the termination of an agreement at our idled Luverne Facility.

Current wording

Other income (expense), net. Other income (expense), net increased $0.2 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to the termination of an agreement at our idled Luverne Facility.

Previous wording

There have been no significant changes to our critical accounting estimates and policies since December 31, 2023. For a description of our other critical accounting policies and estimates that affect our significant judgments and estimates used in the preparation of our consolidated financial statements, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” contained in our 2023 Annual Report.

Current wording

There have been no significant changes to our critical accounting estimates and policies since December 31, 2023. For a description of our other critical accounting policies and estimates that affect our significant judgments and estimates used in the preparation of our condensed consolidated financial statements, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” contained in our 2023 Annual Report.

Previous wording

Our unaudited consolidated financial statements are prepared in conformity with GAAP and require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates, and such estimates may change if the underlying conditions or assumptions change.

Current wording

Our unaudited condensed consolidated financial statements are prepared in conformity with GAAP and require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates, and such estimates may change if the underlying conditions or assumptions change.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $270.7 million and non-current restricted cash of $69.9 million. As of March 31, 2024, we had net working capital of $260.2 million, with $22.1 million of current liabilities. Our cash equivalents consist of investments in U.S. government money market funds. We expect to use our cash, cash equivalents, and restricted cash for the following purposes: (i) identification, development, engineering, licensing, acquisition and construction of production facilities and the Company’s Net-Zero Projects; (ii) potential investment in RNG projects; (iii) potential development of the Luverne Facility; (iv) operating activities at the Company’s corporate headquarters in Colorado, including research and development work; (v) exploration of strategic alternatives and additional financing, including project financing; and (vi) future debt service obligations. We believe as a result of our cash and cash equivalents balances, and the performance of our current and expected operations, we will be able to meet our obligations and other potential cash requirements during the next 12 months from the date of this report.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $245.7 million and current and non-current restricted cash of $69.6 million. As of June 30, 2024, we had net working capital of $232.9 million, with $25.3 million of current liabilities. Our cash equivalents consist of investments in U.S. government money market funds. We expect to use our cash, cash equivalents, and restricted cash for the following purposes: (i) identification, development, engineering, licensing, acquisition and construction of production facilities and the Company’s Net-Zero Projects; (ii) potential investment in RNG projects; (iii) potential development of the Luverne Facility; (iv) operating activities at the Company’s corporate headquarters in Colorado, including research and development work; (v) exploration of strategic alternatives and additional financing, including project financing; and (vi) future debt service obligations. We believe as a result of our cash and cash equivalents balances, and the performance of our current and expected operations, we will be able to meet our obligations and other potential cash requirements during the next 12 months from the date of this report.

Previous wording

During the three months ended March 31, 2024, net cash used in operating activities was $16.1 million compared to $8.8 million for the three months ended March 31, 2023. Non-cash charges primarily consisted of depreciation and amortization of $4.5 million, stock-based compensation expense of $4.2 million, which reflects higher amortization expense for the stock awards issued in the prior period with higher market value, see Note 14 to the Consolidated Financial Statements for additional information, and non-cash expense of $0.7 million, primarily due to the Company’s 401(k) match. The net cash outflow from changes in operating assets and liabilities increased $6.0 million, primarily due to an increase in cash outflows of $3.8 million related to accounts payable, $1.1 million of prepaid expenses and other current assets, deposits and other assets and $1.7 million of costs associated with the sale of environmental attribute inventory. These were partially offset by $0.6 million related to decreases in accounts receivable.

Current wording

During the six months ended June 30, 2024, net cash used in operating activities was $27.5 million compared to $18.0 million for the six months ended June 30, 2023. Non-cash charges primarily consisted of depreciation and amortization of $8.7 million, stock-based compensation expense of $8.7 million, which reflects higher amortization expense for the stock awards issued in the prior period with higher market value, see Note 13 to the Condensed Consolidated Financial Statements for additional information, and non-cash expense of $1.3 million, primarily due to the Company’s 401(k) match. The net cash outflow from changes in operating assets and liabilities increased $2.2 million, primarily due to an increase in cash outflows of $4.6 million of prepaid expenses and other current assets, deposits and other assets and $0.9 million of costs associated with the sale of environmental attribute inventory. These were partially offset by $2.4 million related to accounts payable, and $0.9 million related to decreases in accounts receivable.

Previous wording

During the three months ended March 31, 2024, we had $17.5 million in cash used in investing activities, comprised of investments in our capital projects, including $0.5 million in the RNG project, $10.4 million for NZ1, and $6.6 million in other projects.

Current wording

During the six months ended June 30, 2024, we had $26.7 million in cash used in investing activities, comprised of investments in our capital projects, including $1.0 million in the RNG project, $15.3 million for NZ1, and $10.4 million in other projects.

Previous wording

We have substantially completed the engineering design on our NZ1 project and are proceeding with detailed engineering and modularization design. We are refining the project cost estimates with EPC partners to identify opportunities to reduce and negotiate the cost. We currently expect to finance the construction of NZ1 at the subsidiary level using a combination of Company equity and third-party capital, to include non-recourse debt. In January 2024, the Company announced that it expected to spend approximately $125.0 – $175.0 million from January 2024 until the financial close of NZ1. The Company has further refined and updated its estimates and now projects a range of $90.0 – $125.0 million to be spent on NZ1 between January 2024 and the financial close of NZ1. Of that, the Company has spent approximately $17.0 million in the first quarter of 2024.

Current wording

We have substantially completed the engineering design on our NZ1 project and are proceeding with detailed engineering and modularization design. We are refining the project cost estimates with EPC partners to identify opportunities to reduce and negotiate the cost. We currently expect to finance the construction of NZ1 at the subsidiary level using a combination of Company equity and third-party capital, to include non-recourse debt. The Company previously projected a range of $90.0 – $125.0 million to be spent on NZ1 between January 2024 and the financial close of NZ1. In the first half of 2024 the Company spent $22.8 million and expects the remaining spend until the financial close of NZ1 to fall below the previously estimated range. Cash distributions from future NZ1 earnings would be proportionate to Gevo’s ownership in NZ1 under this expected financing structure. The use of project debt and third-party equity allows us to conserve capital for use on other growth projects. We expect to apply similar development and financing strategies to future Net-Zero Projects to grow our SAF production to meet the demand for SAF.

Previous wording

In 2022, we allocated approximately $25.0 million to develop our next Net-Zero Project, of which we have spent approximately $16.8 million. Gevo is in the process of identifying and performing early site development work for additional Net-Zero production locations. These potential sites include greenfield and brownfield (i.e., at an existing ethanol plant) locations that are advantageous in terms of potential economics, opportunities to decarbonize, and time to market.

Current wording

In 2022, we allocated approximately $25.0 million to develop our next Net-Zero Project, of which we have spent $16.8 million. Gevo is in the process of identifying and performing early site development work for additional Net-Zero production locations. These potential sites include greenfield and brownfield (i.e., at an existing ethanol plant) locations that are advantageous in terms of potential economics, opportunities to decarbonize, and time to market.

Previous wording

During the three months ended March 31, 2024, we had $1.5 million of net cash used in financing activities, due to payments for repurchases of the Company’s common stock, equipment loans, and finance lease liabilities.

Current wording

During the six months ended June 30, 2024, we had $6.0 million of net cash used in financing activities, due to payments for repurchases of the Company’s common stock, debt issuance costs, finance lease liabilities, and equipment loans.

Previous wording

On May 30, 2023, we authorized a stock repurchase program, under which we may repurchase up to $25 million of our common stock. The primary goal of the repurchase program is to allow us to opportunistically repurchase shares, while maintaining our ability to fund our development projects. Under the stock repurchase program, we may repurchase shares from time to time in the open market or through privately negotiated transactions. The timing, volume and nature of stock repurchases, if any, will be at our sole discretion and will be dependent on market conditions, applicable securities laws, and other factors. The stock repurchase program may be suspended or discontinued at any time and does not have an expiration date. We repurchased 2.1 million shares of common stock for $1.4 million under the stock repurchase program during the three months ended March 31, 2024.

Current wording

On May 30, 2023, we authorized a stock repurchase program, under which we may repurchase up to $25 million of our common stock. The primary goal of the repurchase program is to allow us to opportunistically repurchase shares, while maintaining our ability to fund our development projects. Under the stock repurchase program, we may repurchase shares from time to time in the open market or through privately negotiated transactions. The timing, volume and nature of stock repurchases, if any, will be at our sole discretion and will be dependent on market conditions, applicable securities laws, and other factors. The stock repurchase program may be suspended or discontinued at any time and does not have an expiration date. We repurchased 4.0 million and 6.1 million shares of common stock for $2.7 million and $4.1 million under the stock repurchase program during the three and six months ended June 30, 2024. We did not repurchase shares under the stock repurchase program during the three and six months ended June 30, 2023.

Previous wording

In April 2024, we repurchased an additional 3.3 million shares of common stock for $2.3 million under the stock repurchase program.

Current wording

In July 2024, we repurchased an additional 1.1 million shares of common stock for $0.6 million under the stock repurchase program.