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”) 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.

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 acquisition strategy and, if completed, the potential success and financial contributions of proposed acquisitions, 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 marke…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Our primary market focus, given current demand and growing customer interest, is hydrocarbon fuels, and SAF in particular. We believe that SAF from carbohydrates to alcohol is the most economically viable approach for carbon abatement. We also have commercial opportunities for other renewable hydrocarbon products, such as RNG; hydrocarbons for gasoline blendstocks and diesel fuel; ingredients for the chemical industry, such as ethylene and butenes; plastics and materials; and other chemicals. Global fuel consumption by commercial airlines continues to remain strong. Global fuel consumption by commercial airlines continues to remain strong, with global fuel consumption of approximately 86 billion gallons per year in 2023, and growing.

Current wording

Our primary market focus, given the large demand and growing customer interest, is net-zero hydrocarbon fuels, including SAF. We believe that SAF produced from a carbohydrate-to-alcohol process is the most economically viable approach to generate value from carbon abatement. We also have commercial opportunities for other renewable hydrocarbon products, such as RNG; hydrocarbons for gasoline and racing fuel blendstocks and diesel fuel; ingredients for the chemical industry, such as ethylene and butenes for plastics and materials; and other chemicals. Global fuel consumption by commercial airlines continues to grow, with jet fuel consumption expected to rise from approximately 92 to 99 billion gallons from 2023 to 2024, respectively.

Previous 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.

Current wording

To serve these markets, we are developing commercial projects for converting renewable energy into energy-dense, liquid hydrocarbons that can be used as renewable fuels, such as 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 cultivation) and 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. This is because such feedstocks come from crops, which take carbon dioxide out of the atmosphere and convert it into biomass through photosynthesis. This yields vital amino acid nutrients, or protein, that must be consumed in order to sustain humans and animals, as well as vegetable oil and carbohydrates, or sugar. The plant sugar may be fermented with microorganisms to produce a clean alcohol suitable for industrial scale chemical processing into hydrocarbons. Given the overabundance of plant-derived sugar, the growing unmet demand for drop-in, renewable hydrocarbons such as SAF, and the availability of demonstrated industrial-scale technologies that can convert plant sugars to alcohols and then to hydrocarbons, we view our project as first movers in an attractive, scalable new industry connecting this overabundance of plant sugar to unmet demand for products such as SAF.

Previous wording

Net-Zero Projects. Our concept of “Net-Zero Projects” is a series of planned facilities to produce energy dense liquid hydrocarbons using renewable energy and our proprietary technology. Our initial Net-Zero Project, Net-Zero 1 (“NZ1”), is expected to be located in Lake Preston, South Dakota, and is being currently designed to produce approximately 65 million gallons per year (“MGPY”) of total hydrocarbon volumes, including 60 MGPY of SAF, which would fulfill part of our approximately 350 MGPY of SAF and hydrocarbon supply agreements. The liquid hydrocarbons, when burned, are expected to have a “net-zero” GHG footprint. Along with the hydrocarbons, NZ1 is expected to produce approximately 695,000 tons per year of high-value protein products for use in the food chain and more than 34 million pounds per year of corn oil. Our products will be produced in three steps: the first step is milling the corn to produce the carbohydrates needed for the production of SAF while simultaneously enabling the production of protein and oil; the second step produces alcohols using carbohydrate-based fermentation; and the third step is the conversion of the alcohols into hydrocarbons.

Current wording

Net-Zero Projects. Our concept of “Net-Zero Projects” is a series of planned facilities to produce energy dense liquid hydrocarbons using renewable energy and our proprietary technology. Our initial Net-Zero Project, Net-Zero 1 (“NZ1”), is expected to be located in Lake Preston, South Dakota, and is being currently designed to produce approximately 65 million gallons per year (“MGPY”) of total hydrocarbon volumes, including 60 MGPY of SAF, which would fulfill part of our approximately 350 MGPY of SAF and hydrocarbon supply agreements. The liquid hydrocarbons, when burned, are expected to have a “net-zero” GHG footprint. Along with the hydrocarbons, NZ1 is expected to produce approximately 1.3 billion pounds per year of high-value protein products for use in the food chain and approximately 30 million pounds per year of corn oil. Our products will be produced in three steps: the first step is milling the corn to produce the carbohydrates needed for the production of SAF while simultaneously enabling the production of protein and oil; the second step produces alcohols using carbohydrate-based fermentation; and the third step is the conversion of the alcohols into hydrocarbons.

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. 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.

Current wording

We currently expect to finance the construction of NZ1 at the subsidiary level using a combination of Company equity, third-party capital, and 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. Year to date 2024, the Company spent $32.3 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. 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.

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. On October 16th, 2024, NZ1 reached a critical milestone of receiving conditional commitment from the DOE for a loan guarantee facility with a capacity of $1.6 billion (including capitalized interest during construction). This milestone is significant as it helps to validate NZ1’s integrity, which is underpinned by the DOE’s diligence process. The focus is now on negotiating and closing this DOE loan and our project level equity financing as quickly as possible. We expect that our NZ1 plant start-up date will occur approximately thirty-six months after the NZ1 financing closes, the timing of which is uncertain. 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 expected output 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 RNG Project to increase its annual expected output from 355,000 MMBtu to 400,000 MMBtu. Further increased production is intended through debottlenecking to achieve 500,000 MMBtu

Previous 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.

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 in 2024.

Previous wording

In March 2023, we entered into a joint development framework agreement with Southwest Iowa Renewable Energy; in August 2023, we entered into a joint development framework agreement with a second ethanol producer in the midwestern U.S. that has over 100 million gallons of capacity; and in October 2023, we entered into an agreement with a third ethanol producer in the southwestern U.S. These agreements include commercial terms and profit-sharing frameworks. As we grow Verity as an externally facing business, we are working to sign up additional ethanol and biofuel customers. Each of these agreements will focus on implementing Verity technology and developing the market for carbon credits to help farmers and biofuel producers quantify the CI reductions for their products.

Current wording

Customers. In March 2023, we entered into a joint development framework agreement with Southwest Iowa Renewable Energy; in August 2023, we entered into a joint development framework agreement with a second ethanol producer in the midwestern U.S. that has over 100 million gallons of capacity; and in October 2023, we entered into an agreement with a third ethanol producer in the southwestern U.S. These agreements include commercial terms and profit-sharing frameworks. As we grow Verity as an externally facing business, we are working to sign up additional ethanol and biofuel customers. Each of these agreements will focus on implementing Verity technology and developing the market for carbon credits to help farmers and biofuel producers quantify the CI reductions for their products.

Previous 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.

Current wording

During the three and nine months ended September 30, 2024, the Company incurred $1.1 million and $4.6 million of costs under the USDA Grant, which are included in Project development costs in the Consolidated Statement of Operations. During the three and nine months ended September 30, 2024, the Company recognized $1.5 million and $3.5 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

On February 29, 2024, we received notice from Nasdaq that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), as the minimum bid price of our common stock had been below $1.00 per share for the previous 30 consecutive business days. We have 180 calendar days, or until August 27, 2024, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the minimum bid price of our common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during the compliance period. In the event we do not regain compliance with the Minimum Bid Price Requirement by August 27, 2024, we may be eligible for an additional 180-calendar day compliance period. Our failure to regain compliance during the compliance period, and additional compliance period, if any, could result in delisting.

Current wording

On February 29, 2024, we received notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), as the minimum bid price of our common stock had been below $1.00 per share for the previous 30 consecutive business days. On September 27, 2024, we received a letter from Nasdaq notifying the Company that it had regained compliance with Nasdaq Listing Rule 5550(a)(2), because for the 10 consecutive business days from September 13 to September 26, 2024, the closing bid price of our common stock had been at $1.00 per share or greater. Accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2) and Nasdaq considers this matter closed.

Previous wording

*Operating revenue.*During the six months ended June 30, 2024, operating revenue increased $1.0 million compared to the six months ended June 30, 2023, primarily due to sales of RNG and environmental attributes from our RNG project. During the six months ended June 30, 2024, we sold 184,154 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.3 million and environmental attribute sales of $8.0 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 six months ended June 30, 2024, compared to $1.3 million during the six months ended June 30, 2023.

Current wording

*Operating revenue.*During the three months ended September 30, 2024, operating revenue decreased $2.6 million compared to the three months ended September 30, 2023, primarily due to lower sales of environmental attributes from our RNG project. This is due to a buildup of environmental attribute inventory in anticipation of receiving the final pathway approval under the LCFS Program, which we expect to result in a lower CI score. Said approval is anticipated during the first quarter of 2025. During the three months ended September 30, 2024, we sold 101,101 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.2 million and environmental attribute sales of $1.8 million. See Key Operating Metrics above.

Previous 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.

Current wording

Cost of production. Cost of production remained flat during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Previous 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.

Current wording

*Depreciation and amortization.*Depreciation and amortization decreased $1.5 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to the timing of sales of environmental attribute inventory, which includes allocated depreciation and amortization.

Previous 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.

Current wording

Research and development expense. Research and development expenses decreased $0.4 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to decreased consulting expenses and professional fees.

Previous wording

General and administrative expense. General and administrative expense increased $0.9 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to increases in personnel costs related to the hiring of highly qualified and skilled professionals, and professional consulting fees, and an increase 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.

Current wording

General and administrative expense. General and administrative expense increased $1.2 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increases in 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 $4.8 million during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to increases in personnel costs, consulting fees, and costs related to our USDA Grant, which have not yet been reimbursed.

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 $1.8 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increases in personnel costs, consulting fees, and costs related to our USDA Grant, which have not yet been reimbursed.

Previous 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.

Current wording

*Facility idling costs.*Facility idling costs are related to the care and maintenance of our Luverne Facility. Facility idling costs decreased $0.4 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Previous 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.

Current wording

Loss from operations. The Company’s loss from operations increased $3.3 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the increase in costs for our Net-Zero and Verity projects.

Previous 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.

Current wording

*Interest and investment income.*Interest and investment income decreased $1.4 million during the three months ended September 30, 2024, compared to the three months ended September 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 September 30, 2024.

Previous wording

Comparison of the Six Months Ended June 30, 2024 and 2023 (in thousands):

Current wording

Comparison of the Nine Months Ended September 30, 2024 and 2023 (in thousands):

Previous 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.

Current wording

*Operating revenue.*During the nine months ended September 30, 2024, operating revenue decreased $1.6 million compared to the nine months ended September 30, 2023, primarily due to lower sales of environmental attributes from our RNG project. This is due to a buildup of environmental attribute inventory in anticipation of receiving the final pathway approval under the LCFS Program, which we expect to result in a lower CI score. Said approval is anticipated during the first quarter of 2025. During the nine months ended September 30, 2024, we sold 285,255 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.5 million and environmental attribute sales of $9.8 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 nine months ended September 30, 2024, compared to $1.3 million during the nine months ended September 30, 2023. See Key Operating Metrics above.

Previous wording

Cost of production. Cost of production decreased $0.3 million during the six months ended June 30, 2024, compared to the six 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.

Current wording

Cost of production. Cost of production decreased $0.3 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to lower costs incurred at our RNG Project in 2024. Additionally, sales of environmental attributes were lower in 2024 compared to 2023, see Key Operating Metrics above.

Previous wording

*Depreciation and amortization.*Depreciation and amortization decreased $0.6 during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, due to the timing of sales of environmental attribute inventory.

Current wording

*Depreciation and amortization.*Depreciation and amortization decreased $2.1 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to the timing of sales of environmental attribute inventory, which includes allocated depreciation and amortization.

Previous wording

Research and development expense. Research and development expenses remained flat during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Current wording

Research and development expense. Research and development expenses decreased $0.4 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to decreased consulting expenses and professional fees.

Previous 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.

Current wording

General and administrative expense. General and administrative expense increased $3.5 million during the nine months ended September 30, 2024, compared to the nine months ended September 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 $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.

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 $9.0 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to patent related costs, increases in personnel costs, and consulting fees.

Previous wording

*Facility idling costs.*Facility idling costs are related to the care and maintenance of our Luverne Facility. Facility idling costs decreased $0.2 million during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Current wording

*Facility idling costs.*Facility idling costs are related to the care and maintenance of our Luverne Facility. Facility idling costs decreased $0.6 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Previous wording

Loss from operations. The Company’s loss from operations increased by $7.4 million during the six months ended June 30, 2024, compared to the six months ended June 30, 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 by $10.7 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to the increase in costs for our Net-Zero and Verity projects.

Previous wording

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

Current wording

Interest expense. Interest expense increased $1.1 million during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, and was primarily comprised of interest on the Remarketed Bonds.

Previous wording

*Interest and investment income.*Interest and investment income decreased $0.1 million during the six months ended June 30, 2024, compared to the six 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 six months ended June 30, 2024.

Current wording

*Interest and investment income.*Interest and investment income decreased $1.5 million during the nine months ended September 30, 2024, compared to the nine months ended September 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 nine months ended September 30, 2024.

Previous 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.

Current wording

Other income (expense), net. Other income (expense), net remained flat for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Previous 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.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $223.2 million and current and non-current restricted cash of $69.6 million. As of September 30, 2024, we had net working capital of $208.0 million, with $28.7 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) in combination with project level debt, the acquisition of Red Trail Energy; (iii) potential investment in RNG projects; (iv) potential development of the Luverne Facility; (v) operating activities at the Company’s corporate headquarters in Colorado, including research and development work; (vi) exploration of strategic alternatives and additional financing, including project financing; and (vii) debt service obligations associated with any future borrowings. We believe that 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 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.

Current wording

During the nine months ended September 30, 2024, net cash used in operating activities was $38.5 million compared to $21.1 million for the nine months ended September 30, 2023. Non-cash charges primarily consisted of stock-based compensation expense of $12.5 million, which reflects higher 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, depreciation and amortization of $12.2 million, and non-cash expense of $1.8 million. The net cash outflow from changes in operating assets and liabilities increased $3.0 million, primarily due to an increase in cash outflows of $9.9 million of prepaid expenses and other current assets, deposits and other assets and $2.7 million of costs associated with the sale of environmental attribute inventory. These were partially offset by $3.2 million related to decreases in accounts receivable and $6.4 million related to accounts payable.

Previous 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.

Current wording

During the nine months ended September 30, 2024, we had $37.2 million in cash used in investing activities, comprised of investments in our capital projects, including $1.8 million in the RNG project, $23.0 million for NZ1, and $11.7 million in other projects, a $10.0 million payment of earnest money in connection with the Red Trail Purchase Agreement, and $6.0 million paid for the acquisition of CultivateAI. These were partially offset by $15.3 million proceeds from the sale of investment tax credits from the RNG Project.

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. 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.

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. Year to date 2024, the Company spent $32.3 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 $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. Early development work at the Red Trail Energy site is currently underway.

Previous 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.

Current wording

During the nine months ended September 30, 2024, we had $7.0 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, partially offset by proceeds from the exercise of warrants.

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 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.

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 1.1 million and 7.2 million shares of common stock for $0.6 million and $4.7 million under the stock repurchase program during the three and nine months ended September 30, 2024. We did not repurchase shares under the stock repurchase program during the three and nine months ended September 30, 2023. As of September 30, 2024, approximately $20.3 million remained available under the stock repurchase program.