Gevo, Inc. Water Tower Research Virtual Insights Conference

Joining us today. Welcome to this WTR Insights conference session with Gevo, Inc. I'm Peter McGoldrick, managing director of Energy Transition and Sustainable Investing at Water Tower Research, and I'm hosting today's conversation. Joining me today is Paul Bloom, Chief Executive Officer of Gevo. Paul, welcome, and thanks so much for making the time for us today.

Well, thanks for having me, Peter. It's great to be here.

We'll have a couple of housekeeping items get out of the way here before we start. Gevo's safe harbor statements are available on the investor tab of the company's website. Investor questions are welcome. Please put them in the chat box and we'll take as many as we can or address them in our forthcoming management series report. Also, if you'd like to request a meeting with Gevo's management, you can indicate that through the conference portal. With that, let's get started. Paul, as always with these events, there will be some investors who are joining us who may be new to the story at Gevo. Keeping that in mind, could we start with a high-level overview of what Gevo does across low carbon ethanol, carbon capture and storage, and its emerging businesses?

Absolutely, Peter, and look, we've had a lot change at Gevo in the past couple of years, so it's always good to give everybody an update. But really, Gevo produces low carbon fuels and does carbon management, fundamentally. We do that in our low carbon ethanol business. We've got a 67-million-gallon low carbon ethanol plant that's connected to carbon capture and sequestration in North Dakota. We just call that Gevo North Dakota. That plant we're in the process of expanding, and then we also have a renewable natural gas platform, and that's in northwest Iowa. That renewable natural gas, we take and produce renewable natural gas from dairy manure biogas, and upgrade that, sell most of that into the California markets. Then we've got some new, smaller markets that are developing today, things like racing fuels, which we're pretty excited about.

Small markets, but growing in high performance kind of areas. Those are kind of the three main segments where most of our value comes from. Where we're really focused is on Gevo North Dakota. That's our platform site where we're basically today expanding that facility through what we call debottlenecking as a step 1, going from 67 million gallons to 75 million gallons. That's going to be done by the end of the year. Then we've got a larger expansion to double the size of that facility, an additional 75 million gallons that we're working on right now. We're working on financing and all the engineering and lead time equipment that is going to go into that. Then step 3 is really where we have our alcohol-to-jet platform, where we've been talking about this, we call it ATJ-30.

It's a 30-million gallon alcohol-to-jet facility where we'll make jet fuel, low carbon jet fuel. Over the whole business, we basically monetize our fuels, we monetize carbon, and we maximize the value from the incentives that are available for these fuels.

Your ethanol production is generating revenue in a very different way from a conventional producer because yours is, of course, low carbon. Could you walk us through the layered revenue model, RINs, state low carbon fuel credits, and the federal Clean Fuel Production Credit, and how does that combination push your realized margin considerably higher when compared to standard ethanol producers?

Sure thing, Peter. When we think about that, we call it the stack. So what's the stack of the value that we're creating from these different things? Fundamentally, we do the same thing. We produce a fuel, whether that's RNG or low carbon ethanol that we put into the market. Those are the BTUs that people need. The cost-effective fuel solutions that help provide low cost gallons for consumers. On that piece, that's basically what other ethanol producers do. But then we have our carbon capture that we just talked about not too long ago, where for every ton of fuel we produce about a ton of carbon dioxide. We capture that carbon dioxide and sequester that in a deep Class VI well under our North Dakota facility.

That creates the opportunity for us to do two things, to create the carbon value, which we can sell then into compliance or voluntary markets, and then to go after and maximize incentives, which are things like 45Z or Clean Fuel Production Credit tax credits and RINs. Those are the ways that that stacks up. If you look at just what we have done from the time when we acquired what was then Red Trail Energy, now it is just Gevo North Dakota, we have had about a 7-time increase in the overall adjusted EBITDA out of that facility. But that really, that big stack, the commodity component, the fuel component is essentially the same. The additional value that we are driving there comes from both the carbon and from the incentives. All in all, that adds up to something around $1.50 a gallon.

A lot of value, obviously, from 45Z, which that is a popular topic today for 45Z with One Big Beautiful Bill really enabled 45Z, and now we have had additional rules that just came out on 45Z ag benefits. All that wraps into the incentive piece. Of course, RINs for the Renewable Fuel Standard, that is another component that helps support it. Most of our fuel gets sold with the RIN, so that just helps support the value of the underlying fuel that is there. Then the carbon value. The carbon value where we can sell into the voluntary or compliance markets, that is really a differentiator for us, right? Building this carbon business, we call it carbon arbitrage.

We can sell between a compliance market, like a low carbon fuel market like California, or you have got now Canadian CFR, so the Canadian Clean Fuel Regulations market in Canada that is starting to really take off. But you can only sell that carbon credit once. So we can either sell it into that kind of compliance market, where the carbon goes with the fuel, or we can take that carbon and strip that off from the fuel and sell it into a voluntary market. In most of those cases, we are talking about the carbon dioxide removal space, or CDR markets. That is growing. It is still a nascent market, but it is growing and we see more customers show up in that market every day.

Last quarter you delivered a, excuse me, a positive surprise to the market when you doubled your EBITDA outlook for this year. Could you tell us about that trajectory compared to last year and how your carbon business is really driving that?

Yeah. If you look back to 2025, we ended the year with about $16 million in adjusted EBITDA. Going into this year, we were definitely more optimistic. We started out saying, "Hey, we can get to $30 million." So almost doubling of what we anticipated. As we think about our carbon business, we knew that we wanted to continue to increase the optionality that we have there to where we can sell our product, how we can monetize our carbon. Couple of the big things that we were able to do to get us from that 30 that we talked about to the 60 that we anticipate by the end of this year is, one, we needed to unlock new carbon pathways. So one that we just talked about, the Canadian Clean Fuel Regulations, that pathway.

We already had a pathway into Canada, but it didn't include the carbon capture and sequestration of the carbon value that's coming from carbon capture in that pathway. So getting that pathway this year and being able to monetize was a big unlock there. The other factor was we had some improvements in the amount of carbon credit or 45Z tax credits that we could actually capture, with changes that happened under 45Z. Things like removing iLUC, some of those and just being more efficient, we're able to capture more value from our incentives as well. So that combination of things really was an unlock for us this year to take us from that $30 million that we were anticipating to now have our sights set much higher at the 60 for the end of the year. But very, very happy that that's the case.