Gevo (NASDAQ:GEVO) Q4 2020 Earnings Call

0:01 Welcome to GIBO's fourth quarter 2020 earnings conference call. My name is Carmen, and I'll be your operator for today's call. At this time, all participants are in a listening mode. Later, we will conduct a question and answer session. Please note that today's conference is being recorded. I'll now turn the call over to Jeff Williams, GIBO's vice president, general counsel, and secretary. Please go ahead, Mr. Williams.

0:28 Good afternoon, everyone, and thank you for joining GEVO's fourth quarter 2020 earnings conference call. I would like to start by introducing today's participants from the company. With us today is Patrick Gruber, GEVO's chief executive officer, and Carolyn Romero, GEVO's chief accounting officer. Earlier today, we issued a press release that outlines the topics we plan to discuss today. Thank you for joining us. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP.

1:31 Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release distributed today, which is posted on our website. We will also make certain forward-looking statements about events and circumstances that have not yet occurred including but not limited to projections about JIVO's business development plans and operating activities for 2021 and beyond. These forward-looking statements are based on management's current beliefs, expectations, and assumptions and are subject to significant risks and uncertainty, including those disclosed in JIVO's Form 10-K for the year ended December 31, 2020 that was filed with the U.S. Securities and Exchange Commission.

2:18 and in subsequent reports and other filings made with the SEC by GVO, including GVO's quarterly reports on Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements. Such forward-looking statements speak only as of today's date, and GVO disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, Pat will begin with the discussion of GEVO's business developments, and then Carolyn will review GEVO's financial results for the fourth quarter of 2020. Following the presentation, we will open up the call for questions. I'll now turn the call over to Pat.

3:06 Thanks, Jeff.

3:07 Hello, everyone. I'm going to keep this relatively short today because tomorrow we're doing another fireside chat. Those who join us will hear Lynn and I discuss more information around the financing projects, how to think about them, et cetera. But back to reporting on this year. We've had quite a change from a year ago. So I'm going to run through a partial list. Now, we sold out the capacity to a large commercial plant using take or pay contracts that are suitable for use in backing of project debt financing. Now, these contracts add up to more than 45 million gallons per year of hydrocarbons. That offtake caused us to think bigger sooner.

3:53 We also paid off all the white box debt. We advanced the development of our renewable natural gas project. We figured out how to make net zero hydrocarbon products by using a mix of renewable energy with our process. And of course, that's targeted for our net zero plant. in Target for Lake Preston, South Dakota. We have $530 million of cash on the balance sheet and no material debt. That money should enable us to develop multiple plans and make the full equity investment in our Net Zero One plan rather than being dependent upon a third party. We also have the cash in the balance sheet that should allow us to sponsor significant equity investments in future Net Zero plans such as Net Zero 2 or Net Zero 3 projects.

4:47 We've worked with Citigroup to figure out and they have figured out and vetted a potential bond offering that we may use to finance our debt for the Net Zero 1 project. That's taken a lot of work to actually work through that and they have a really attractive solution in line. We have work to do to get ready for it still.

5:11 Now, we shut down our ethanol plant.

5:13 It lost money given that the market wasn't very good and it wasn't a strategic focus for us. We've been told by some new investors that they now understand that we aren't an ethanol company. Well, that's good. That eliminates confusion. We aren't an ethanol company. We're all about the renewable energy into energy-dense liquids, hydrocarbons, net zero footprint. We developed our customer pipeline. It's grown quite a lot from last year, and it's grown even more since. Importantly, we proved that we can establish pricing and take-or-pay contracts that works for our customers and ourselves and result in meaningful take-or-pay contracts. These take-or-pay contracts are backed by the balance sheets or letters of credit from our customers.

6:00 That's a big deal and a big accomplishment. We announced our Net Zero One project. This project, slated for Lake Preston, South Dakota, would produce roughly 400 million pounds per year of value-added protein-rich animal feed, roughly 30 million pounds of corn oil, 45 million gallons per year of energy-dense liquid hydrocarbons. These hydrocarbons are drop-in gasoline and jet fuel products that, when burned, have a net zero greenhouse gas emission across the whole of their life cycle, measuring All the way from capturing the CO2 from the atmosphere, accounting for the farming and agriculture, accounting for all the energy sources, the transportation of the products. The hydrocarbon products produced at our plant are expected to be more than minus 70 in their carbon footprint score. But when burned as a fuel for transportation, the whole cycle would be net zero, according to the leading science-based lifecycle model called GREET that's been developed by Argonne National Lab.

7:05 So how does it get to net zero? It's all about two things. Paying attention to how things are grown, that is the growing practices such as low-till and no-till, along with precision agricultural techniques where farmers only apply the chemicals that are needed, not excess. And two, eliminating dirty electricity and fossil-based natural gas from our production processes. Net zero is being designed to be off the grid from dependence on fossil-based energy. We are putting in a water treatment plant that is expected to generate enough biogas to meet the thermal demands of the plant and provide enough excess gas so we can generate about 30% of our electricity with a combined heat and power unit. We plan on meeting the need for the other 70% of our electricity from a related wind project that we are developing with Juul Energy.

7:56 We don't want dirty electricity that's typical of the grid in this country. We don't want it. We also expect to use our green electricity to generate green hydrogen for our production processes. We haven't decided yet if we'll make excess hydrogen to take to the marketplace. Our negotiating power has strengthened as well. This means that strategics approach us differently now. We expect that if and when we work with strategics, we'll be able to make a more balanced deal. That's a major change from our previous position when we had our hat in our hands. Yeah, several parties are in discussion with us. No, we can't give more detail at this point. So what's going to happen this coming year in 2021? We expect to sign more take-or-pay customer contracts in support of Net-02 and Net-03.

8:44 We already have attractive production sites chosen and options are under LOI. We expect to announce the specifics for these sites after we announce the next set of off-take contracts. We expect that Net-02 and Net-03 would look a lot like Net-01. We expect to start construction of our renewable natural gas project with a size of 355,000 million BTUs. This project would take manure from more than 20,000 dairy cows and convert it to renewable natural gas. This project will cost about $75 million, and we project return of more than 30% IRR using conservative estimates. The project is expected to come online and start generating profit in the fourth quarter of next year. In the near term, the gas will be sold to the California market.

9:35 Once net zero one starts up, we may take a portion of that gas up there to drive the carbon scores even lower, or maybe we just keep on supplying the California market. That's a future economic optimization question. In order to close the project finance deal for net zero one, we need to have the capital cost estimates to the plus or minus 10% or so level. This engineering work and design work is underway. Our engineering partners have upwards of 50 people working on our design and capital costs. We are grateful to have the money to do it properly. The capital cost of Net Zero One is currently expected to be about $650 million inclusive of the production plants, water treatment plants and energy complex.

10:22 On a fully installed project finance basis, the project total would be roughly $800 million because of the interest during construction and the reserves and such that are required to do a debt financing. The IRR for this $800 million project is expected to be better than about 20%. We need to get the engineering design work done and pin down the capital costs to the appropriate precision to enable the debt financing of Net Zero One. That's a prerequisite. We have to know what it is, plus or minus 10%, before we can do a debt deal. This will take to the end of 2021 to complete and get it right. We'd expect to close a bond deal in the first half of 2022.

11:07 It's possible that the capital cost of Net Zero One project could go up or down, depending upon adjustments, the scope of equipment costs, or what we work through in the design of that plant. Well, that's what all this design work is about right now, pinning down the capital cost and the very best optimal processes that deliver the returns we want. Net-01 is expected to take about two years to build. This is normal. It's a big capital deployment. One good thing is that the engineering and design cycle for Net-02 and 3 would be much, much shorter. We expect that those plans will be based upon Net-01. It shouldn't be lost on anyone that our business is significantly de-risked.

11:52 We have money to execute our plans in a real sense. Yeah, it's quite a change from last year. Last year we had to raise money to keep the lights on. Our team did well developing the business, advancing the technology. Now if we raise more money, the purpose will be to take more of the large cash flow streams we expect from our net zero projects or from an R&D project. Tomorrow, Lynn Small and I will be doing a fireside chat with Wartar Research, where we will be discussing project economics and financing for both Net Zero One Project and the R&G Project. We will be answering a whole bunch of investor questions. Information on registration can be found in the investor section of our website, investors.givo.com. Now, I will turn the call over to Carolyn, who will take us through the financials.

12:40 Carolyn?

12:42 Thank you, Pat. GEVO reported revenue in the fourth quarter of 2020 of $0.5 million as compared to $6.9 million in the same period in 2019. During the fourth quarter of 2020, hydrocarbon revenue was $0.4 million compared with $1.0 million in the same period in 2019. Hydrocarbon sales decreased because of the lower shipments of finished products from our demonstration plant at the Southampton Resources, Inc. facility in Sylvie, Texas. During the fourth quarter of 2020, revenue derived at the La Verne facility from ethanol sales and related products was $5,000 compared to $5.9 million during the same period in 2019.

13:31 as a result of COVID-19. And in response to unfavorable commodity environment, we terminated our production of ethanol and distillers grain back in March of 2020, which resulted in lower sales for the fourth quarter. Cost of goods sold was $2.0 million in the fourth quarter of 2020 versus $9.4 million in the same period in 2019. Cost of goods sold included approximately $0.9 million associated with production of IBA and related products and maintenance of the La Verne facility at approximately $1.1 million in depreciation expense. Gross loss was $1.4 million for the fourth quarter of 2020 versus $2.5 million for the fourth quarter of 2019.

14:20 Research and development expense increased by $1.7 million during the fourth quarter of 2020 compared with the same period in 2019 due primarily to an increase in consulting and personnel expenses. Selling, general, and administrative expense increased by 0.2 million during the fourth quarter of 2020 compared with the same period in 2019 due primarily to an increase in consulting and personnel costs offset by a decrease in investor relations and marketing costs. For the fourth quarter of 2020, we reported a loss from operations of $7 million. compared to 6.2 million for the same period in 2019. In the fourth quarter of 2020, cash EBITDA loss, a non-GAAP measure that is calculated by adding back depreciation and non-cash stock-based compensation to GAAP loss from operations was $5.1 million compared to 4.0 million in the same quarter of 2019.

15:25 Interest expense for the fourth quarter of 2020 with $0.5 million, a slight decrease compared to the same period in 2019 as a result of lower amortization of original issue discounts and debt issuance costs and the conversion of $2.0 million of 2020-21 notes to common stock during July of 2020. During December 2020, we converted the remaining $12.7 million of 2020-21 notes into common stock. For the fourth quarter of 2020, we reported a net loss of $18.1 million, or a loss of $0.15 per share based on a weighted average shares outstanding of $120,017,120.

16:11 This compares to a loss of $6.8 million in the fourth quarter of 2019, or a loss of $0.50 per share based on weighted average shares outstanding of 13,659,944. During the fourth quarter of 2020, we incurred a $1.4 million non-cash loss related to the conversion of $12.7 million of 2020-21 notes into common stock. During the 30 months ended December 31, 2020, we recognized a non-cash loss totaling 8.6 Thank you. Thank you.

17:25 or a non-GAAP adjusted net loss per share of $0.07 based on a weighted average shares outstanding of $120,017,120. This compares to a non-GAAP adjusted net loss of $6.8 million in the fourth quarter of 2019 or a non-GAAP adjusted net loss per share of $0.50 per share based on a weighted average shares outstanding of 13,659,944. Now, I will turn it back over to Pat to wrap things up.

18:01 Thanks, Carolyn. Let's open up the call for questions. Operator? Thank you. And ladies and gentlemen, that is star one to get in the queue and ask a question. To remove yourself from the queue, press the pound or hash key. Again, star one to get in the queue. Please stand by while we compile the Q&A roster. Our first question is from Amit Dayal with HC Wainwright. Your question, please.

18:35 Thank you. Hi, Pat Graf and everyone. Appreciate you taking my question. Good. Thank you, Pat. So I'll save some of my questions around, you know, the project for the call tomorrow. but just in terms of the timeline you've provided, the first half of 2022 for the financial close of Net Zero One, is this sort of a typical timeline for something like this and could this potentially be accelerated if things fall in place for you as you expect?

19:08 I would say that the critical timeline runs through getting engineering estimates done. We've got to know what the capital cost is and what we're asking for in terms of debt support. You've got to have that pinned down or you can't do a debt financing. We also have to have a bunch of the permitting stuff done and all kinds of things. That time frame to get that stuff done, we're working on getting it done by the end of this year, and in which case then we should be able to do the bond offering in the early part of next year. But because, you know, that's talking about a year from now, or it actually could be less than a year from now, right? But because it's so far out, there's uncertainty around it. So the lawyers advised me to give it a wide range, first half of the year. Boom, that's the answer. You know, do I want it sooner?

19:54 Hell, yeah, I want it sooner. I want it done. And I'm the most impatient person on earth when it comes to it.

20:02 Understood, Pat. Thank you for that. And then... Our model currently for Net Zero One has some level of utilization coming online by 2024. Is that a reasonable assumption?

20:16 Say that again. I missed the first part of the question.

20:18 Yeah, I was just saying our financial model right now that is published publicly, we have you doing some level of utilization from Net Zero One coming online by 2024. Is that still a reasonable assumption?

20:36 It is. That's the right assumption.

20:39 Okay, perfect.

20:40 Yeah. So, in other words, even if we finance in the first half of the year, we still plan on getting a plant online in 2024. We've obviously built ourselves some slack in there. And this is one of these things where you've got to do the design right and get it right. That allows you to plan right, secure equipment properly. It could be that we could build things in modules, which shortens up the construction timelines. That's the sort of stuff we're figuring out. but yeah, we are aiming at that first part of 2024 like you have in your model.

21:09 Okay, understood. And then with respect to NET02 and NET03, I mean, you're obviously considering those options right now but is this, clarity on this probably comes in 2022 or could we see more clarity on progress around these efforts earlier than 2022?

21:32 I would expect that we have progress in 2021 on those things. So we'll get the contract signed. We'll have the sites. And I would expect to have the net zero two site and customers announced in 2021. You know, and do I think we'd get a net zero three in that timeframe? I think it's pretty much probable. Now, we all heard Tim Cesarek talk a few weeks ago in the fireside chat. He threw out the number of, he can see us doing six plants in short order. Well, that's true, but we've got to go through the work and duties. So I can see us having multiple plants in play at the same time. That's not a, the firms we're working with on the engineering side and constructing side, they're capable of execution on that kind of scale.

22:17 The trick is you've got to get that design right. Thank you for joining us. for the company over the long run because we want those cash flow streams. They're worth a lot of money.

22:54 And just looking at the burn rate for 2021, in terms of all these efforts that you're putting in place to get the permitting and engineering, et cetera, done, what should be the burn rate for 2021 that we should think about?

23:12 I think for the burn rate for Gevo, Inc., is in the $25 million-ish range, something like that. And then we'll have project stuff that's capitalized, and that'll show up differently as a cash number. We'll have to give guidance on that, I suppose, at some point, but it's kind of your normal project stuff. It's in that kind of a bucket. But of cash burn to do the development, you know, the resources to adding staff, for example, and more people to go do things. That would show up. We wind up with probably $25 million, $26 million of burn at the corporate level. So that's the GSA, R&D, including the engineering stuff, the actual corporate engineering.

23:58 Project stuff, permitting, project-focused work, that's all going to be in a capitalization bucket for the project. That's a development expense. Understood. Yeah.

24:10 Just one last one for me, Pat. On the renewable natural gas opportunity, the initial effort seems to be just for your upcoming facility and your own consumption, et cetera, to lower your carbon intensity. But could this develop into a larger sort of ambition for the company in terms of actual revenue scaling beyond what your initial efforts are?

24:38 That's a very interesting question, a very insightful question, actually, because what's happened is that we started working on the R&G project in northwest Iowa because we were thinking about putting that R&G over to Laverne. But the demand for our products outgrew the scale of Laverne, and we would have had to redo a whole bunch of permits in Minnesota and all kinds of stuff that would have dragged out our timelines. So we started thinking about that Greenfield plant in Net-01, and as we started thinking it through, we realized we could make Net-01 energy-sufficient, generate our own biogas on-site. Well, that diminished the need for that Northwest Iowa RNG. On the other hand, we had already done a whole bunch of the development work. The way we think of it is this. We learned how to, so in this last 18 months, we learned how to be developers for renewable natural gas.

25:25 We are going in the renewable natural gas business. That's just a fact. We're going to be doing that. The 355,000 million BTUs is initially going to go to California. That's where we're going to sell it. There'll be a time in the future once the net zero plan starts up, or maybe when we start Laverne back up, or maybe when we get to our net zero two or three site, we can use that natural gas there, too, if we need to. So it gives us optionality that I kind of like. But it shouldn't be lost on anybody that we do, in fact, have the capability to develop projects when not everyone can. And we see how to get it done and how to monetize it. If we sell to California, in which we plan on doing in the early days, Good. The plants pay back right quick. That's really attractive.

26:10 And then that's a good thing. So it's one of these very interesting games. When I think of GEVO, I think of, you know, renewable energy transformed to energy-dense liquids. That's no joke. We're wiping out the fossil-based footprint by displacing fossil-based natural gas. More of it's better. You know, we could actually drive... If we took that gas up to NED01, we could make a large negative greenhouse gas emission liquid transportation fuel. That's kind of astounding.

26:43 Right. Understood. That's all I have, Pat. Thank you so much. I'll see you on the call tomorrow. Sure. Thank you. Our next question comes from Paul Fratt with Noble Capital Markets. Your question, please. Yeah. Good afternoon, Pat.

27:00 Hey, if I just get one quick one out of the way, what's your current share count right now?

27:10 I believe it's 198 million shares.

27:12 Okay, so it hasn't changed much since the end of January.

27:18 It hasn't changed at all since the end of January.

27:21 Yeah, no, I'm thinking maybe some of the warrants might have exercised because I think you still had some warrants out there. Right?

27:33 Yeah, you know what? The number that I have is still the same old number on my slides that show up from Carolyn. Yeah, they're the same. They're the same.

27:45 This one. And then on the RNG, Pat, you said $70 to $75 million as far as CapEx. Have you, and you're working on the financing, have you figured out, is it $70, $30 as far as debt equity, and how much equity... are you going to end up putting into that plan?

28:04 Okay, we're going to talk about this tomorrow at the fireside chat, but here's the previews. We don't have to put any more cash into it. We already did the development work. In fact, we're going to get a rebate, so to speak, in that when we close that deal, we'll get money back. So it's already kind of a done deal, and the financing's arranged. And we'll be talking more about that tomorrow when Lynn's on here. He's the guy who did a great job getting it all organized and getting it financed. and so that cash flow should be we should be seeing that you know it should it'll be meaningful cash flow by the fourth quarter we'll start seeing some of it early next year but construction starts like we're going to break ground like it's getting organized right now getting organized so it's you know very very soon we'll be breaking around we'll do a we'll do You know, an announcement and, you know, we'll have to see what kind of ribbon-cutting ceremony and stuff like that, you know, or a groundbreaking ceremony and things like that.

29:00 But it's a – Lynn's done a great job of getting it all organized. Chris Ryan has done a great job at, you know, figuring how to do development of R&G and get it done. It's good. It creates a different business opportunity for us.

29:16 Yeah, just two quick ones. Would any – Do you have an estimate on how much cash you might be able to get out of that once the financing is done? And then also the startup. Is it first quarter of 2022 or fourth quarter of 2022? It'll start up. Hello? Who is that? Oh, that's Lynn. Sorry. Oh, Lynn. Okay.

29:45 We'll start up in first quarter, but the cash is a little bit back and loaded because of the way the LCFS credit system works, but we're expecting cash distributions out of the project in the order of $10 million on very conservative assumptions around carbon score and the cost to complete. We think we can do a lot better on the capital cost.

30:09 What's the range of outcomes, do you think? I know we took a really conservative approach as we did it for ourselves because we're thinking about really long-term and how to use it with net zero plants. But if we just sold to California and it all worked well, what's that $10 million turn into?

30:25 Well, the range is about $9 million to $16 million, depending on the carbon intensity score. And, you know, the returns can vary. vary from 30 to the high 60s, depending on those things, as well as the CapEx. Did that help you, Paul?

30:47 Yeah, no, and I think you'd had like 20 million in it, or you'd had about 20 million outlays.

30:57 We don't need to put any more cash into it because we've already spent about $8 million on the development, including equipment and engineering and such, and we'll pull that back out. We have zero net cash coming off of the balance sheet to complete the construction of the RNG project.

31:18 Okay, great. And then can you give me a budget for your feed work? either a cost estimate or a budgeting on how much you're going to spend on the feed work?

31:32 For net zero one, that's $15 million. Okay.

31:37 And then, Pat, if it's helpful, you gave sort of the soft cost and the hard cost. The hard cost of net zero one are $650, and then the soft costs are about $150 as it stands right now.

31:49 Right.

31:51 And you need to get that cost estimate to plus or minus 10%. Are you currently at plus or minus 50%? I saw a footnote on your presentation that said it was plus or minus 50%. Can you help me reconcile that goal versus where you are now?

32:11 Yeah, so we're doing different parts of the process or different statuses. So, you know, we changed as we started thinking about how to build out MEDS01 and get ourselves off the dirty fossil footprint of energy, realizing, gosh, we should throw a water treatment plant in. Well, we've got to go do that and figure that out. And then how do you integrate it? What's the best way to maximize the protein and oil? So we've worked on a deal there with a partner, we'll announce later, and had to figure that out. And so what we do is we say things like that as plus 50%. Some parts of the process are already pretty well nailed down. Other parts we're still going, is it this chunk like this and where does it lay out and how does it interact with the rest of it? So it's the putting of the pieces together that creates the uncertainty and to get it right.

33:03 But we also, the real, we have to, this is actually the work entails actually getting bids on equipment and figuring out the real costs. That's a non-trivial thing. This is a giant plant. So that has to be done as well. So it's a mixed bag is what we got here. And the trick of it is that we want to keep – we pin down the scope. That's good. That's extremely helpful. We have inside our battery limits. Inside our battery limits, for everybody listening, means that's inside our – think of it as inside our fence lines under our control, part of the plant, part of the building. Things that are outside the battery limits would be things external to us. There still might be some costs we have to pay attention to.

33:49 For instance, we'll be doing a wind farm in partnership with Juul Energy. But that's separate with different financing. Inside our battery limits, we've got a water treatment plant, we've got a protein plant, we're going to be taking out vegetable oil, large amounts of it. We want all that stuff because that offsets The acquisition cost of corn, right? It's correlated. It's an internal hedge kind of a thing. It's worth a lot of money. And then we've got the hydrocarbon stuff. We're partnered with Axins on much of that because they've built a whole bunch of these kind of plants where you take the petrochemical-based butylene. into hydrocarbons. Well, that's real similar to what we're doing, except for we're starting with isobutanol.

34:34 You've got to make isobutanol and isobutylene, and once you go from there, then it works. Well, great, they've done 125 of these plants before, so that's all good. So it's all about putting all the big pieces together and figuring it out, and it just takes time, and that's where we're at. So it's not a – oh, we're at – this part is – It's a mix of different parts, different places we're going through.

35:06 Okay. And maybe I'll ask the cash burn question a little bit differently. Have you determined how much equity you're going to put into net zero one, what that figure is actually going to be, or is it still a moving target because of the capital market? Cost estimates have been completely finalized.

35:59 I liken it like this. I live in Colorado and I'm a baker. I'm baking a cake at high altitude. It's tricky. I got all my ingredients. I don't need extra cooks in my baking kitchen right now helping me bake. You want to put frosting on it after the thing is baked? Hey, welcome to it. We'll look at it and see what the deal is at that time. And so it could be that we do add additional people into the mix of equity prior to close. It could be that we do. And we're going to want to look at that very, very carefully. But you get them in too early, then you've got too many cooks in the kitchen, and that's how you ruin timelines. So I like where we're at on that front. Now, Lynn, you can give a little more example of what you're thinking about and what you've modeled.

36:46 Sure. You know, the debt work that we've done with Citi has been pretty exhaustive to confirm the that we can qualify for private activity bonds issuance. That's a tax exempt bond issuance. Those markets are very attractive for the types of projects that we're sponsoring, the net zero one. We expect to be somewhere around two-thirds leveraged. At the end of the day, we're expecting that we could be putting in somewhere in the neighborhood of $250 million of equity if we invest 100% of the equity in that project. And I'd also note that the returns that Pat cites are oftentimes not giving credit to a range of fees that we would not charge to the project if we're 100% equity. If we're partial equity, we'll charge for licensing fees, operations and maintenance fees, project management, certain overhead recoveries. If we're 100% equity, consolidated, those fees only come to GEVO and add to the IRRs that are being cited.

37:52 Great, that's helpful, Lynn. And that is, you know, that $250 million equity, that is a 2022 event, right? So it's you, do you have an idea sort of where you think you'll end the year, you know, 2021 from a cash perspective? You have $531 million now. Do you have an idea of sort of what you think your cash on hand or on the balance sheet will be at the end of this year?

38:23 Well, Pat, I'll just say that we're budgeting the development of Net Zero One as though we're going to complete it and close financing at the end of 2021. That won't happen, but that's the way we're budgeting it. And it's including long-lead equipment deposits to maintain that completion schedule that Pat cited earlier in 2024. We're going to probably have about $45 million out the door. That will recover when we close the financing of Net Zero One.

38:55 Okay. Okay.

38:58 So if you're doing our cash then, you'd add it up and say, well, you told you it was going to be $15 million to do the feed engineering, right? You told you we'd lay out probably, we budgeted for $45 million outlay, which we may or may not do, but that's what we budgeted for capital equipment, long lead items. And then we told you that it's like $25, $26 million of corporate bird-related expenses and all the other work. So that's the kind of number subtracted off of 530. That's kind of the number you'd wind up with.

39:31 That's really helpful. Pat, is it $15 million on the feed or $50? Sorry. $15 million. 15, 1-5, right? 1-5, okay, great.

39:42 Yeah, and one clarification I want to make, you know, you asked about the phase and stuff and design, is that, of course, you know, this design, when we're talking about it this way, is it's about Our process of design, it's about going through the details, the mass and energy balances. These are engineering exercises to figure it out. We're optimizing the process along the way, right? Because we want to minimize the carbon footprints, we maximize the carbon score that we get. That's how we make the most money. So you go through and look at, in the design phase, you go through and look at every single unit operation, ask, is it the right one? Does it have the right horsepower on that engine or on that motor? is it the right pipe size is the right detail detail and put it all together and then you got to source the equipment and come up with it that's why it takes so much work and so you know when we talk about it we talked about a cat as engineers to each other here a few minutes ago but other people listening might not grasp that of course it's we have a process designed it's about I'm pinning down the exact detail so we can spend money to go buy it.

40:52 This stuff doesn't come off a shelf, you know. So, anyway.

40:57 Okay, great. And then I think, Pat, before you, you know, on the R&G project, you had been sort of saying that the off-take customer might be somebody who, you know, would be recognizable and that would be sort of a significant move. Yep. Are you prepared at this point to talk about that, or will we have to wait until the financing is finalized?

41:24 Yeah, we've got to finalize that contract. Renewable natural gas is worth a lot of money in California right now, so that gives us the confidence to just move ahead on the project anyway, and then we'll announce that customer partner when we're ready here.

41:44 Okay, and then just a couple more if you wouldn't mind. It looks like you've identified sites for Net Zero 2 and 3 and then along the line. One intriguing thing to me was that you added a site on your map in Florida. Can you talk about Florida from the standpoint of...

42:09 Yeah, so what's happening to us is that as our demand increases – now, remember, we're dealing with people under confidentiality agreements, right? So our customers all talk to us under confidentiality agreements, and then other partners talk to us under confidentiality agreements. We're always restricted in what we can say. However, corn in the Midwest is a sustainable – Low-cost way to get these carbohydrate residuals that we can turn into our hydrocarbon products. And we also have good wind resources up there. We have good biogas resources up there. It makes sense. Stuff makes sense up in the Midwest. In Florida, there's several feedstocks that have potential interest. There's molasses-type things, and there's sugar residues from various types down there.

42:59 And so people have approached us with sites, and so we're going through the work to evaluate them. You'll see them in other places that popped up on our map, too, where same kind of thing, where people are saying, hey, we could supply you with carbohydrates. Would you want to build a site? And we say, yeah, you show me the sustainability. You show me the cost. You show me the risk associated with that acquisition of that carbohydrate source, and we'll look at it. But the one in Florida has risen to the rank of we've got to evaluate it so it shows up on our map.

43:30 Okay, great. And then could you help me understand the significance of the MOU that you signed with HCS and how that fits into the overall plan?

43:41 Yeah, yeah. So, okay, so, yeah, with HCS, that's Holtzman-Carlos. Holtzman-Carlos is a specialty fuel manufacturer. We announced a deal with them where we would be licensing our technology to them for production of hydrocarbons in Spire, Germany. And usually it would be leveraging their site Now, we will work with them to arrange the isobutanyl production in Germany or somewhere along the Rhine River, presumably, or somewhere in Europe. We still have to go do that work. You'll notice in that press release that it talked about jet fuel in Germany, okay? And it talked about the size of the project. We'll co-market it to them because we're real particular about how you place the stuff in the market and hold it sustainable and all the rest.

44:26 So think net zero concept. in Europe. The difference in Europe is that you don't have to have the isobutanol plant next to the hydrocarbon plant. For instance, you can float the stuff down the Rhine River. In the U.S., you can't do that, of course, because you don't get the credits for it. The EPA requires the plants to be integrated in order to get the RFS credits, the RINs. So there we can do stuff like that and separate it. Maybe someday here we can separate things. But There, it seems to be economical and will work, and it's jet fuel aimed at Germany.

45:05 Great. You just mentioned one thing that actually I wanted to bring up. Wind prices are going through the roof, it seems like. Can you help me understand whether that impacts any of your development plans?

45:23 Impacts our development? Oh, yeah, our development plans, I mean broadly.

45:26 Yeah, plans just broadly or does it have any impact on your strategic outlook?

45:34 What we do is we tend to do like averages and futures types calculations when we're looking at our own economic projections. But when price goes up, that's good for us. So the way to think of our business is we win if anything green goes up in value. RINs, LCFS, tax credits, we win. That's just more margin to us, right? And oil price goes up, we win. If corn price goes up, you know what's interesting about that is protein price goes up and so does the oil price. And so that's one. It's not a loss, and it might even be a win, depending upon exactly how it happened and under what circumstance. So it's one of these very interesting dynamics that we have. We've tried to de-risk the project on all those fronts. But on the RINs, we get 1.6 times the RINs.

46:24 This is, again, one of the nuances of making an energy-dense liquid. We have 1.6. Ethanol gets one. Why? We're energy-dense, so we get one point times. So that matters. So when you see these RIN prices going up through the roof, now multiply by 1.6, that's what we would get credited to us. So it matters.

46:47 Great. Thank you so much. And let's look forward to tomorrow's presentation.

46:52 Sure. Thank you. And I don't have any further questions in the queue. I would like to turn it back to Pat for his final remarks.

47:04 Thank you all for listening to us. And join us for the Fireside Chat tomorrow. We'll be asking Lynn a bunch of questions, and Sean Severson will be moderating. But I can't help myself, and I'll jump in. I know. Thank you for your support in the company. We appreciate it. We are off to a good start of this year. The things are working and making progress. It's actually a change and a blessing from last year. And now we are driving to get this done and get this plant online, NED01, and I want NED02, and I want NED03 as well. And I want that RNG done, and we're going to be evaluating whether to make it even bigger. So that's what we're focused on. Thanks for listening today.

47:51 Thank you, ladies and gentlemen, for your participation in today's program, and you may now disconnect. Have a great day.