Q4 2021 Gevo Inc Earnings Call

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Okay.

Welcome to <unk> fourth quarter 2021 earnings Conference call. My name is Kevin and I'll be your operator for today's call. At this time all participants are in a listen only mode. Later, we will be conducting a question and answer session. Please note that today's conference is being recorded I will now turn the call over to Heather Emmanuel Jabil as Vice President of Investor Relations and Communications. Please go ahead Mr. Andrew.

Good afternoon, everyone and thank you for joining <unk> fourth quarter 2021 earnings conference call I would like to start by introducing today's participants from the company with us.

Our Patrick Gruber, <unk>, Chief Executive Officer, Lynn Smull, <unk>, Chief Financial Officer, and John Richardson, Chief Investor Relations manager.

Earlier today, we issued a press release that outlines the topics we plan to discuss today.

This press release is available on our website at Www Dot Gibeau Dot com.

I'd like to remind our listeners that this conference call is open to the media and that we are providing a simultaneous webcast of this call to the public.

Replay of today's call will be available on <unk> website.

On the call today and on this webcast you will hear discussions of certain non-GAAP financial measures.

non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP.

Conciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure 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.

But not limited to projections about G. Both net zero, one project and our operating activities and 2022 and beyond.

These forward looking statements are based on management's current beliefs expectations and assumptions that are subject to significant risks and uncertainties.

Including those disclosed in <unk> Form 10-K from the year ended December 31, 2021 that will be filed with the U S Securities and Exchange Commission and its subsequent reports and other filings made with the SEC by G, though including <unk> quarterly report 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 Jabil disclaims any obligation to update information contained in these forward looking statements.

As a result of new information future events or otherwise.

On today's call Pat will begin with a discussion of <unk> business development. Linda will then review <unk> financial results for the fourth quarter of 2021. Following the presentation. We will open up the call for questions I'll now turn it over to Pat.

Thanks, Heather and thank you all for joining US we have had a great and very busy quarter.

I'd like to everything, but our stock price.

Today I'll be using a slide deck, please refer to it and I'll, let you know when it turned the pages as I go through it and we will start on slide number three.

Recently, you've had some very important announcements today I'll be talking about how these announcements get together towards our goal of profitably producing 1 billion gallon stable fuels by 2030.

A lot of what we will discuss today will focus on achieving that goal while de risking the strategy as much as possible.

Actions ethanol for sustainable aviation fuel technology.

So you have that alliance.

Is all about accidents exclusively licensing their ethanol the SaaS technology to join United States.

The ADM Mou, it's about converting large scale capacity for ethanol into SaaS.

Coal supply agreement.

Out firm demand for SaaS and other hydrocarbons <unk> R&D project in northwest, Iowa is about execution of an energy transition project that is expected to bring in meaningful revenue. Starting later this year.

Now before we get into the details of those announcements I wanted to commit to refresh everyone on <unk> overall business and how investors should view it.

Please turn to slide four.

<unk> always focused on profitably converting renewable carbohydrates, it's SaaS and other renewable hydrocarbons Jabil has been one of the leaders in these technologies over the years in the U S. It's a vertically integrated system that includes primary processing of corn.

Afirma taishan to alcohol process, and a chemical process to make renewable hydrocarbons like SaaS.

Vertical integration should allowed net zero plant to achieve a very low or even potentially negative carbon intensity or ci score for SaaS using the scientific argon greet model for measuring carbon emissions being.

Being vertically integrated for primary processing of corn to fermentation to hydrocarbon production provides an advantage for driving carbon scores down due to integration of systems. For example, integrating wastewater generating biogas on site is expected to enable the displacement of fossil based natural gas.

That we would use the power of the facility.

Setting a plant we're getting after fossilized electricity is critical because of the large footprint that grid electricity would mean to a ci score.

By working with farmers, we believe we can enhance soil carbon capture which should translate to improved ci scores, so by reducing and eliminating fossil based energy and <unk> business system in particular and by choosing feedstocks wisely Jabil believes it can achieve at net zero SaaS, meaning net zero for cash.

Two of the bar to the exhaustion with jet engine.

To provide the transportation industry with real Decarbonising options. It is critical that we offset.

The exhaust emissions fully with the carbon absorbed in the fuel production process.

We have established and are developing a business called Verity tracking.

Blockchain technology to track carbon and other sustainability attributes from renewable carbon sources through the end use we expect that we will separate verity tracking out as a standalone company at some point, perhaps as early as 2022.

We think that the way to deal with all controversy around sustainability is to document facts, you science it'd be transparent and that's what we're really tracking is all about.

Moving on how to we are developing a profitable business remember that we have set a goal of 1 billion gallons of capacity and sales for <unk> business system by 2030.

Let's go to slide five.

We struck what we believe.

Good financial off take agreement with Kalmar. This agreement brings us to nearly 100 million gallons per year of off take agreements, we expect to get more offtake contracts done relatively soon our contract pipeline wherever where we are negotiating terms is greater than one 5 billion gallons per year.

SaaS contract momentum picks up we need more production capacity and likely sooner.

The airline industry and the airlines themselves have made bold statements about needing SaaS I believe them.

The chart on the upper left shows that SaaS dwarfs, the California renewable diesel market by 2030, assuming a 10% SaaS blend level the market would be roughly 13 billion gallons per year.

We believe that yet we believe that the economics work for investment and the pricing <unk> can offer works for customers now it's all about building out production capacity to scale to match. The offtake agreements, we have in place and the off take agreements that we expect to ink in the future.

Please turn to slide six.

In the fourth quarter of last year, we did a deal with actions that grants <unk> exclusive license in the U S to develop and commercialize their technology to convert ethanol to SaaS and other hydrocarbons now we had been working with actions on Chico's Isobutanol hydrocarbon production process as we got to know each other it became clear that there was a lot of synergy we know how did the carbon.

The ice feedstocks and production plants and alcohols, using our net zero concepts and action had proven technology to convert ethanol and other alcohols into hydrocarbons, including SaaS.

<unk> is well known in the chemical and refining industries is an outstanding technology and engineering company. The hydrocarbon process technology to make jet fuel from olefins has been commercialized in the petrochemical petrochemical industry. Many times, it's really strategic relationship we complement each other.

In addition to Greenfield plants, we're developing we see the opportunity to convert certain existing ethanol plants to net zero or SaaS.

We will work together with actions to try to make that happen, we all want to grow faster.

We have made the decision to use ethanol as the building block for SaaS, rather than IPA at our net zero. One plan. We believe we can make more money and produce more staff and have a complete engineering package that would work for with existing ethanol plants.

Currently the capital cost for in Israel is projected to be about $900 million fully installed and a non recourse project financed.

The net zero one project EBITDA estimates.

Approximately $150 million to $200 million per year based on the current assumptions of commodities and all the rest.

Ethanol plants are well known in terms of cost and operating reliability.

Carbon process accidents is doing engineering it will provide.

Certain process guarantees for converting the ethanol into hydrocarbons. This is derisk production system as much as we can make it.

In the current more cautious environment for financing.

Way to move forward.

The engineering designs modules integrations are planned to be cookie cutter for deployment at other sites and ethanol plants.

A great deal of the engineering work and designs that we already have completed our ANZ one will be utilized.

<unk> using ethanol accidents technology.

The fermentation section of the plant will be smaller and we will have to add additional equipment as part of the chemical processes.

We expect ANZ one to be mechanically complete in 2024 and operating in 2025, we expect to order long lead equipment in 2022 and begin site preparation work later this year, please turn to slide seven.

Many of you may recognize this chart, it's basically the same as before although the amounts of product mix have changed theres more SaaS being produced.

The total capital expenditures remained about the same the IRR is projected to be better using ethanol and isobutanol deploying renewable energy and infrastructure to drive down Ci is still critical to success.

Please turn to slide eight.

The actions relationship and our plans to grow help to put the ADM Mou announced with you to perspective.

Has some of the biggest and most efficient ethanol plants in the world.

We think there is an opportunity to convert those plants into SaaS plants and other hydrocarbons.

ADM indicator has one of the few operating sphere to sequestration sites in the U S.

We are in the midst of figuring out how to with them, we expect that we'd be able to leverage the engineering work. We are doing with Accenture ANZ one into any transaction that we would do with ADM.

We are also exploring other opportunities with existing ethanol plants and we're currently in discussions with several plant owners. The idea here is that we can bring our de carbonization partners like Jewel energy.

F plant designs and our off take contracts to the table.

The value proposition for the ethanol plant owners simple they would make more money more reliably by feeding ethanol to SaaS plant. They also would need to BD carbonized along the lines of a net zero plant. We have a very open business model and look forward to working with many ethanol operations over time.

But we would stress that net zero one is our priority.

Ultimately to reach our 1 billion gallon goal, we expect to build multiple greenfield sites. We have several sites in development already there at least as good if not better than the late <unk> site. The advantage of Greenfield sites. So that we can optimize the key parameters for long run success. In addition to raw material cost we also take into consideration.

Access to the fossilized energy and potential for carbon capture and sequestration in a strategic sense. It is how it is good to have options. For example, the plant layout that we have developed for like Preston could be used at another piece of land of similar size.

We believe that the site, we select with required minimal changes to the engineering work.

Let's turn to slide nine.

We announced that we have begun to startup of <unk> R&D project in northwest Iowa.

Our R&D project comes fully online is projected to be the fifth largest dairy LNG project ever done in the U S. This project has over 20000 cows and is expected to produce 355000 million btu annually or thereabouts.

There are three areas involved at this point you can see the pictures of the Digesters.

At each of the dairies the.

Upper right picture is the gas upgrading and injection site the picture in the middle shows the relative locations.

The digestion systems that we've built and our <unk> pipeline that connects them to the upgrading system.

We expect that the <unk> project EBITDA would be approximately $16 million to $22 million per year.

Across the year of 2023, I gave a range because the LNG project EBITDA will depend upon a variety of assumptions, including how carb scores scores. The ci for each of the dairies now to get a Ci score we have to achieve a steady state send it in application wafer the approval to get the full value from carbon California.

We would expect to get those scores in late 2022 early 2023 Carter's backed up these days with lots of applications RMG provides an exciting opportunity for <unk>, we see it as a strategic review, but because we have to decarbonize, our saf plants and we do like the idea.

Being able to take R&D up too.

Our net zero, one plant and drive RCI scores lower if we so choose.

We like having R&D and biogas in our portfolio as an option in the meantime, we can make good money meeting demand in California for our partner BP.

Please turn to slide 10.

This is a rendering.

Engineering rendering of our hydrocarbon plant currently built by prize in India. We expect that this plant will be delivered to our production facility in Woburn, Minnesota latter part of 2022.

We are currently making Isobutanol law burn this hydrocarbon plant.

Convert isobutanol.

Through a variety of hydrocarbon products. We also expect it to be able to produce or to take ethanol and make.

Various hydrocarbon products, we expect to use the burn as a development site for new products and to improve and refine the IBM production processes, we may deploy isobutanol in our side by side configuration in the future for example, as an add on to our net zero plant.

Now I'll turn it over to Lynn.

Thank you Pat.

We finished 2021 with a strong cash and cash equivalent position of $40 8 million as well as $95 2 million of short and long term restricted cash.

Our highly liquid and readily convertible short and long term marketable securities totaled $339 7 million and our.

Available for capital and operational needs.

Our long term debt outstanding related to northwest, Iowa, R&D was $67 million.

Our corporate spend was approximately $18 million for 2021 net of noncash stock based compensation.

During 2021, we invested significant capital into our preliminary in advanced stage projects, including approximately $23 million into our flagship net zero one project.

$52 million into northwest, Iowa, R&D, and other capital projects as well as approximately $12 million into strategic patents and licenses.

As Heather noted our full financial statements are available in our earnings release.

Our Form 10-K , both available on our website.

I would like to stress that we substantially advanced the company with our expenditures last year. We have continued to staff experienced talent to bolster our corporate management platform and to prepare for successful execution across a range of critical functions, including <unk>.

Stronger design engineering capabilities.

<unk> R&D around our technologies.

Deeper commercial contract solicitation and execution capabilities with.

The development of Verity and the GMO growers program.

Substantially improved capabilities around Investor relations significant advancement in the integration of our ERP system into current and future operations to enable intelligent automation and reliable internal and external reporting.

Successful implementation of Sox 404, B compliance requirements without any deficiencies.

And improved financing and financial management capabilities.

We strengthened our balance sheet to provide financial resources to support the development of our 1 billion gallon initiative.

The equity investment and net zero, one R&D execution, and our operational and R&D activities that laverne.

We advanced the development engineering unexpected nonrecourse debt terms and obtain ability for net zero, one and we substantially constructed the northwest, Iowa LNG project.

As a result of this progress in our work with institutional investors. There was an impressive shift in vivo institutional stock ownership from 10% at the end of 2020% to 46% at the end of 2021.

We may still be considered a pre revenue company as our revenues have been intermittent and mostly were related to testing and R&D activities.

That will begin to change in 2022.

Given that we have begun the northwest style RMG project startup, we expect to start generating revenue and cash flow later this year once the biogas production ramps up and stabilizes it.

Initial revenue recognition and cash flow realization for any LNG project in the marketplace lags actual orangey production due to California carbon scores and EPA Rins certification processes, but we will push hard to realize value in 2022.

Upon full R&D operations and certifications, we would expect to see RMG project EBITDA flows in the range of $16 million to $22 million a year, depending on the project certified carbon index outcome and market prices for commodities and environmental benefits.

As we flush out our 1 billion gallon initiative and how much south we expect to produce and when we expect to communicate these plants to our shareholders.

Everything we are planning to do is supported by a comprehensive financial enterprise model, we're happy to be in the growth phase of our business and we are delighted that our capital deployment opportunities should result in excellent returns.

We would expect any future capital raises to support this growth to be accretive.

Now I will turn this call back over to Pat to wrap things up.

Thanks, Glenn let's open up the call for questions operator.

Ladies and gentlemen, if you have a question or a comment at this time. Please press Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.

Our first question comes from Sean <unk> with <unk>.

<unk> research.

Thanks, Good afternoon, everyone.

Hey, Pat could you maybe start with a 50000 foot view picture here on what's going on with demand for SaaS and kind of an update on where the airlines are taking this in any other industry items, we can point to in terms of.

Leasing demand there.

Hello.

Yes.

Here, we go sorry.

Right.

What we're seeing.

Is because of the government.

Discussions about wanting to see SaaS because some of the policies that are being talked about to put in place because the airlines themselves are making pretty bold goals as to how much has to be replaced by 2030, we're seeing a definite uptick in SaaS. In fact, we're seeing the shift definitely a shift before when people are asked if I can it was hard to tell now it's clear.

It's a shift all of our existing corporate customers are on board with what we're doing they get it and moving forward with us and it's pretty darn interesting to see so SaaS is but one thing everyone can agree upon that no. One is going to we got to have hydrocarbons. The fly jets over long hauls, nobody disputes that one and so that makes it much.

Much easier and now the momentum has definitely shifted that way. So our goal is to make more of it and do it faster and grow bigger hence.

We like the idea of lot of being able to leverage existing assets.

And along those lines, how does that derisk the business.

Talking about in terms of EPC guaranteed cost of capital.

Obviously, a very mature and well developed ethanol market. So how is that going to affect the economics for you.

Well using an ethanol route obviously theres no risk involved in the fermentation systems around that unlike youre using isobutanol, we would be we would be the people who have to guarantee it.

And.

You look at that and you look at how many gallons you get how much profitability. The costs are similar using Isobutanol route.

Cost per gallon and Isobutanol isn't fully optimize it was.

<unk> cash cost wise, it's good enough to put out there, but gosh you add it all up and you get more gallons.

For the same kind of capital numbers.

And give you that means you can make more profit and so you look at all of that and it serves the market need where the market is heading and with our other customers that are coming down the pike that we can see and so then you look at and say well how fast can we grow well it turns out this net zero concept that we've been working on it translates directly over into using ethanol if that's been a big deal.

From a technical standpoint to substitute and the engineering overlaps hugely and so that makes it.

A lot easier to go about this and the thing is we didn't until we start working closely with actions. We didn't have all the massive energy balances to be able to figure out what kind of Ci scores, we could get.

And do they make sense and all that kind of stuff because you really do have to integrate these things well we had already done that work on Isobutanol Thats, where access trial, we had done and Thats why it came together like shoot we can do this not just at a greenfield plant, but we can also do this at existing ethanol plants.

And that means.

After path for growth given all the demand.

Just my last question is on projects really wasn't could you explain a little bit more about what was going on there.

Equipment transfer.

Yes, so practice building that plant for us.

That things in partial construction and they'll deliberate later this year, it's a alcohol to hydrocarbon plant and it will be a relatively small one 3000 tonnes and.

It's a.

Our plant so we can make a variety of products, we could make hydrocarbons the gasoline products, we can make.

Jet fuel products, we can make diesel products, we could make.

Olefins, we can make feedstocks youre doing alkylation units, we can do a whole variety of things and so we have commission. This last year, we sometimes people have heard us talk about this as the skid. Okay. When you put it in the artist's rendition like this or in engineering rendition it looks a little bit bigger than our scale. It will be several skids stacked on top of one another but that in fact has been under construction and we will see a deliberate.

Liberty.

Thanks, Paul I'll take the rest of my questions offline.

Cool.

Our next question comes from Derrick Whitfield with Stifel.

Hi, there good.

Good afternoon, all and thanks for taking my questions.

Perhaps for powder, Paul referencing slide eight youre, indicating that youre still evaluating site selection for net tier. One is there are several greenfield sites that are at least as attractive as late Preston could.

Could you perhaps elaborate on the degree of economic improvement that is possible at another location.

Well I'd say Theres, a couple of things that come into play one obviously you have to have a land and it's got a good transportation good corn price raw materials, you've got to have access to renewable energy at least with wind or and we also like the idea of access to sequestration, We think Lake press and we'll have that too, but we see all of our sites if we're picking them carefully.

Nick it'd definitely happen and that will be interesting in the future and useful in the future.

Along with that it depending upon as we develop <unk> been developing sites for.

Actually quite a long time, because you always have to have alternatives in case somebody gets cute.

Try to go and deploy something like up at like Preston.

You're always kind of alternatives and so we've been keeping that in mind the whole way, we just don't talk about it very much.

So we have a couple of sites that are attractive in summer.

Sometimes they come with economic incentive and so what we won't you won't see US do is trade off a new site if it impacts the timeframes to commercialize.

We want unless the payments upfront were so great that we would have to say, yes, but I don't have one of those in hand, yet, but those are the kinds of things that can come into play and how we would think about it we know that we're going to need multiple sites available decarbonising a net zero.

Our Greenfield plant is we think probably easier than doing a existing ethanol plant.

So learning how to do that well and translating it teaches us.

How to just deploy the stuff cookie cutter style, but it also gives us the insight as to the tricks, we can use with existing ethanol.

Great and perhaps for powder Lynn I know you guys have been working hard on the enterprise financing plan.

You referenced in your prepared remarks.

Support the 1 billion gallon initiatives could you just speak to the progress on that and then kind of your latest thoughts on that initiative.

Lynne do you want to comment.

Sure I'll jump in.

That model is substantially complete and useful now.

So very large model and it incorporates a lot of flexibility.

To make different assumptions around growth and capital deployment pace the cadence.

And of course, all of the old the cost involved in assumptions around.

Revenue streams and it does it in a way that then rolls up into a traditional III statement format. So it's quite advanced.

The underlying assumptions that have gone into it I think are pretty robust and everything that goes in terms of project level assumptions.

It was based on everything we're doing at <unk> one.

And looking at other potential <unk> opportunities and all of those returns are very attractive so when we roll up and look at.

The impact on the on the on the stock price.

It's pretty appealing so we'll be sharing some thoughts around that in the future.

Great.

Yes.

Sorry, what's fascinating about this is when you get to one of the things Thats attractive about this is.

When we bring the decarbonization people everybody want to deploy renewable electricity or gas or biogas reenter with suggestion that they want to do the.

Or sequestration or whatever all those things are fair game right. So we have a bunch of partners, who want to work with us to do that put up capital that's great love that.

And that we have working with on the <unk> side.

With actions and we are designing modules. So that this is like literally.

It will be 100 million gallons of ethanol in to make the product.

Hydrocarbons coming out so we're designing it so that it literally can go anywhere and Thats a pretty interesting model. We think we can grow faster with that and that solves one of the problems and I got to say it does de risk the heck out of it because otherwise.

Youre left people does it all work together.

There is no question of ethanol that can be made and there's no question that the ethanol into hydrocarbons work and so that.

Clearly changes then how people view the risk associated with the deployment of this.

That's great and then really last for me.

With the understanding that you don't have a formal announcement today on Archer Daniels Midland or Chevron could you just share comments on how your dialogue with those companies.

Progressing in a reasonable timeline for the disclosure of commercialization plans.

The conversations are going well with both and so it's a matter of getting all the pieces together, obviously what has to happen if we're talking about de carbonization of ADM.

ADM has got 900 million gallons of ethanol upticks of serious chunk of capital. So there's lots of discussions going on in the background, we got put them altogether.

And we can't do it all at once obviously and so that is why we commented we stay focused on that tier one we're going to learn all the stuff we have to have the concrete focus for that but we know that everything we are learning applies to these other things and so we just we're working at all of those pieces out and how to do it but obviously it is way bigger than us.

By yourselves.

No.

And the.

Chevron's have been interest at the project level, we have other people are interested in vivo corporate we have.

The ADM is.

<unk> been very cooperative in trying to sort this out because it is a change of look figuring out.

All the details of economics, because mass and energy balances and all that kind of stuff and how does it all work and fit together. So we're in the midst of all that and remember we've only had access to the detail from.

We've only had access to the accident detail.

Only in the last few months as we sorted it out so we're making a pretty darn good progress and I like where it's headed.

That's great very helpful. Thanks for your time guys.

Our next question comes from Prashant Rao with Citigroup.

Hi, good afternoon, thanks for taking the question.

I wanted to start just on the R&D side.

And something you said about the inflection there youll become revenue the revenue inflection coming I kind of wanted to hone in on that a little bit.

The guidance that you gave the 16% to $22 million of EBIT could you help us walk through put some color on those on the posts on that range what sort of.

Score you'd need to get or what sort of credit assumptions and then also a little bit on the offtake.

You are working with BP. So just wanted to understand how that arrangement works if theres any credit sharing in that 16 to 20 timberland just kind of help us walk through how we should be thinking about that so we could sort of put that in our models with some surety.

Sure I believe.

Yes, I believe the BP.

<unk> agreements posted on an 8-K.

To summarize it.

There is a sharing arrangement.

BP places that gas directly into dispensaries in California through their distribution networks.

Ramping up now.

As we commenced the physical production, we're ramping up the.

Coordination on accumulating the right level of data for the applications with carb.

So that we can get that process rolling as quickly as possible and try to get their approvals for L. CFS credits on the Ci score.

Soon as we can we do have alternatives.

For the near term to use temporary pathways.

Go ahead and bring revenues in sooner, but we want to assess the risk around doing that and maybe foregoing higher higher ci or I should say lower Ci outcomes.

Because of that temporary is assumed to be a 150 to negative $1 50. So.

<unk> will be producing on a steady state about 355000, <unk> and you can kind of do the math on on the on the prices of RMG. These days with the <unk> and Rins.

To get to a revenue number or our EBITDA is at this point.

We don't think about leverage.

Because where we financed the project with the MLC back.

Private activity bonds issuance.

But we will refinance that probably this year to go ahead and do it on a nonrecourse basis.

So that we can release that cash collateral back to jabil for our own use.

I'm not sure anything else that I can help you with.

I think thats good.

I appreciate that.

My follow up is.

Sort of related to that Pat you've talked about the numbers of yields sort of being updated on net zero one to be more SaaS and.

And you've got that $150 million to $200 million target there just wondering.

A lot of moving parts, but what does or what does that not need from.

The credit markets for further incentives or other subsidies in order to achieve that $150 million to $200 million.

What's what are you sort of risking there.

We've had a lot of talk over the last few months and Theres a lot of positive momentum, but everything from.

Upsizing the BTC credit.

Two.

Looking at <unk> multiple things like that so can you just help us sort of think about what you think is sort of.

The odds on risk profile for that for that number on that tier one that'd be helpful. At least on the revenue side.

Yes, sure. So I'll start and then Lynn you can pile on a.

What.

Yes, so we don't we do we budget a buck a gallon BTC because we think that that's an appropriate number. It's good I was just like stability in it and so we can predict it over a longer period of time, it doesn't need to be more none of us need it to be more it's nice to have it as we can all make more money. If it is but it's not going to cause any want to ship anything or do different behaviors or anything like that so that just says that stability.

City is good on the RFS side.

This is the year, where the EPA gets to do it set process. So there'll be some finagling around how RFS works and I think what we're going to wind up with something that's a lot like what we got except for they'll probably be enhancements that take into account.

Perhaps for.

Lower carbon scores and things like that but it is going to be I think the same basic system. So that kind of what we assumed going forward that we can actually predict going forward is the same as what it is today and then.

In <unk>, we just model out the long term predicted.

Carbon scores, we have consultants advisors, we actually have a bunch of people who do this and advise us what that would look like and then we incorporate that into our model, but one thing I really like a lot about the way the system works.

Is that we got three different bites at apples.

And the chance of all three of them going down is pretty low and so you get okay. So right now you're about in California's 100, 150 Bucks a ton carbon.

Okay. That's a fractional thing to us because that's one part of the Green just one third of the green value RFS and the blenders tax credit make up the other two thirds.

So I like that approach we.

We do see that the <unk> type market Youre going to increase we think because you've got a.

Different states, putting their policies in place and also in Canada, we kept a lot of interest because they have an LC FFS, but Oregon, Washington grid.

Going now.

New York in the Rulemaking state.

Stage of their health PFS and then you've got the mid Western States are working on it too so we'll see which one of those goes first.

So all of that creates bigger markets, where there's extra profit and of course tenders out there is still business. We can do in Europe . So and then you wanted to add anything here.

Yes.

That to us.

Those numbers are based on long run projections by independent experts under the debt case so.

We're not as focused on today's corn or today's.

Carbon price or rens price some are.

Higher than what we have some are lower.

But over the long run we feel like these numbers will will be.

We we feel that these numbers are definitely achievable from the $1 $50 million to $200 million level.

Benoit.

Okay. So the way to think of it when he when he talks about that that case, where everyone else is listening I know you get a shot but the debt cases cynical case.

And when we're talking about what will really happen that's more of an equity case and it's the higher side.

That's what we believe.

Got you and then just one.

Last one if I could sneak it in.

The preliminary results of the ALLL testing I was just curious I know theres a lot of steps here and for those of us sort of sort of.

Trying to thread the needle on going from there to what that means in terms of getting certified pathways or even provisional pathway is not just in California, but you mentioned Patrick a bunch of the other jurisdictions that have their own Lcs, that's where you'll see a slight programs ramping can you just give us a sense of what that gets you right now having that preliminary.

Analysis and this peer reviewed process does that move you materially closer or how does it maybe inventory to close with any of the jurisdictions. You are eventually thinking of as end markets and I'll leave it there. Thanks.

Yes, so what happens is that a lot of these people who are developing their lcs type policies. They start with the argon greet model, which is the gold standard of models and then and then they start modifying it usually for political reasons or convenience and California, California does take the greet model any modified a bit may just say all corners of the same and.

The discussion and so it's not all the same it depends argon greet model takes that into account now in our economics, we just model for.

The carbon scores that we get in California with whatever their assumptions are and this is one of the complications of a business like ours is that every jurisdiction has some very into the greet model that you've got to take into account and plan into your economics. That's just the way it is.

We think that the at the national level, we should have gotten great model be the standard because everyone takes it uses it and then they start tweaking it but it is the one that is the science based one so what you see us doing is trying to educate people about what the facts actually are theres huge opportunity to capture soil.

Carbon.

Actual future rig systems, when Youre doing most of them are not until they build up carbon each year.

We're going to we're going to measure field by field and prove it to people and so we know that the people who do <unk> tell us that hey, if you can prove it in your business system, we would consider that now the only way to find out if that's true or not is to actually go do it. That's what we work on that's part of what our Verity tracking is all about and then of course.

Secret.

Carbon sequestration offers another opportunity that's like 30% to 35 points.

Lower.

And.

We're friends with the pipeline companies and so it's just a question of who we work with and when we announced the kind of things. So those are all possibilities too. So it's a pretty interesting game and the argon greet model is the one that everyone turns to for the fact based science based systems.

Thank you very much I appreciate the time I'll turn it over.

Thank you.

The next question.

Question comes from Amit <unk> with HC Wainwright.

Thank you Robert Thank you for taking my questions.

With respect to sort of the financing environment given recent market developments interest rate discussions that are taking place.

How does any of that changed for you.

Any color on that and again, you had highlighted mid 'twenty going into us.

Sort of.

The targeted debt to complete the project financing.

<unk> side of the story.

Any update on those would.

It would be helpful. Thank you.

Sure. So I'll comment first and then jump in but I hadn't Lynn go out with Citi and do the market testing to see what kind of money is available and what kind of quantities and what kind of price. So we can make sure we update our numbers because the world is a little weird right now.

And so we went and did that with came back with nice results. We like it theres lots of money who were interested in investing in these projects having a be.

Be able to say look everything exists.

Is an advantage there is no newness here, it's about putting it together in a way that hasn't been done, but the actual theres not a risk around fermentation on risk around the hydrocarbon technology, that's pretty cool.

So I feel pretty good about that we'll probably close how would you comment on that win.

I'll, let you comment on that and add any more color to this question go ahead.

Sure.

Probably given given the desire to maintain our schedule it will be deploying capital this year more equity, but the debt closing will probably occur in Q1 of next year.

That format will because we changed.

Changed from the ethanol configuration, sorry, the isobutanol configuration to ethanol.

Our back at the table examining eligibility for private activity bonds, but the the work that we did in December with Citi that Pat mentioned was not private activity bonds. It was oriented towards long term institutional debt under more of a mini perm structure and the terms, where we're absolutely attractive.

Definitely interest rates are slightly up a little bit, but nothing that would make a good debt financing not achievable.

Okay. So none of this.

The shift out almost like June .

Three quarters.

It does not impact the work you are doing to move everything forward is that how we should read it.

That's what you should read yet whats driving us is everybody wants to see us when are you going to commercialize it when is it going to be operating in 2025 mechanically complete in late 2024, it's a tight timeline. So in these in these projects. We are we feel flat anyway, we're eating up some of our slack Dane and I wish I had.

At close relationship with actions sooner, we could've sorted this out sooner, but we didn't.

We didn't have the emphasis on SaaS wasn't what it is.

A year ago. There wasn't it was interesting it was nice and high potential, but it's not like it is now the majority of the new demand, we're seeing is shifting to SaaS.

So.

We're adjusting to it like we see that Isobutanol has tremendous long run potential our folks are modifying the bug and.

So it drops into an ethanol plant that would be kind of cool.

And but we have time to do that now because we have such a strong intellectual property position.

Before we were pushing it out into the marketplace.

We've derisked this now by doing the ethanol route and the jet route and.

The part that is hard for everyone to grasp I think is.

Is because we're doing this net zero concept, where we're decarbonising east plant, it's not easy to do you have all the detail and the engineering detail well, that's what we know that's why we're able to do it and how to incorporate renewable energy and with all the levers.

You have to go fight for that and figure that out and that's what we've done.

It works and it applies to other plants.

So the front end engineering design work that was being done in the last quarter Q4 'twenty one.

Yes, that's still applicable or do you have to restart some of that work.

Most of it is applicable like Alba.

Stuff around.

The grind and site work. Thank you.

It will be updated but thats miner, the backend of the hydrocarbon process itself overlaps like 50% or more.

More than that probably.

At the same and so thats, what actually got us going in the conversation if theres a couple of unit operations that has to be done.

And then it is about.

Substituting out.

The isobutanol fermentation for an ethanol fermentation that's.

That's the work being done right now and and of course. This time, we really are designing to make it module. That's the work being done right now.

So we have more work to figure that out we wanted to see modularized, because I worry about supply chain stuff.

And I worry.

This weird and so I think that we're better off manufacturing one of these works if we can do it and that's what we're working on with actions right now.

Okay understood.

With respect to the equipment or the.

The plant has.

Is building for you guys when the word yes.

How should we think about revenues et cetera from.

Sure.

That plant.

I think I hate it when people think about it is really a really nice.

Small really nice small plant and we're going to be doing it to develop new products. So I hate it when people start talking revenue because then the expectations get lapped out because we'll run it as we want to run it or not and depending upon what we're trying to do and what catalyst for casting or what unit operations and stuff like that.

Dan.

So I hate to set any kind of an expectation of revenue around that because it's misleading I think.

Now that could change there's a bunch of specialty products that people want us.

For us to make and we will see what is true and what isn't once they sign a contract and if that's the case then we would turnaround and reported like Youre asking for revenue and tell people what it is and what to expect but I hate doing it in advance of that even though I know will be sell the products that we make from it I just hate set an expectation around that.

Understood.

<unk>.

How much.

What's the sort of capex or the investment that is going into this.

<unk>.

Related to planned.

About $15 million or so okay.

Okay, I understood and.

And we spent we spent it.

We started this project.

Right a while ago.

Okay understood.

Yes, so it's already incorporated its already incorporate into our financials. The money has been spent on it so it's not like a new.

No.

I remember what what percent it is already spent and committed but it's well along.

Very little very little left to go so our cash balances won't be dragged by that to complete.

Okay got it and just one last one with the shift to.

Youre going to ethanol versus.

Mercury is a SaaS product.

Is this.

Is this sort of a permanent shift to ethanol.

Zero two.

Would you still consider isobutanol or would you potentially stick to ethanol.

As you.

Get to.

The second and third Phillips plans.

I think what my.

My assumption right now is the first few plants are going to be ethanol oriented because we can deploy them quicker.

And we don't have to prove anything to anybody it's clear.

And I also think that doing working with existing ethanol plants. That's in the cards for us. So we got to go do that and strike those deals and get them done that's part of what we got to go do this year that is one of the things we got to go do because thats part of the business model about how we can grow right taken ethanol down and people are going to get into SaaS through an existing plants, we don't have.

To invest the capital in the fermentation side of things I can tell you, though that there are some very nice.

Greenfield sites, where we.

We might want to build greenfield new fermentation because boy they are really good sites and so that's different the way we think about isobutanol as you could add it on and side by side, we could do that anytime and right now.

We just we will see Isobutanol I believe it will be back and we have the possibilities of building isobutanol plants too, but I would rather at this point I made earlier about.

We had a tech technology on a cash cost basis that can perform and get us about the same kind of cash cost as an ethanol jet now ethanol is 100% optimized.

It's done.

Isobutanol process is not fully optimized theres lots of cost improvements that can be done and I'd rather go do those.

And design, it sort of drops and easily to an existing ethanol plant, particularly one of my Greenfield net zero plant.

And we could switch it because remember what I said about the hydrocarbon process theyre substantially the same.

Alright from alcohol into a hydrocarbon product makes a difference.

Olefin mix is different.

So when youre thinking about us and we've talked about this in the past Amit.

Have to think about assets in olefin company, where Decarbonising olefin notes are the primary building blocks to make plastics chemicals and all the rest.

So people what those things well that's in part what we're going to do with the with this price prior should get at Liberty.

Got it so I'll take my other questions offline, but thank you so much.

You bet.

I'm not showing any further questions at this time I'd like to turn the call back to Patrick Gruber for any closing remarks.

Well, it's been it's been very exciting I think is here is can be quite the year as we just drive and are focused on getting this thing deployed this SaaS sorting through the the fermentation system and how to make it more reliable in this light in this uncertain world that we have I'd like at de risking is great.

And I also like the ability that we.

We are have from working with accident frequency use proven technologies that I wish I had done it sooner.

Remember we've been using.

We've been developing ethanol technology.

Making hydrocarbons for the last decade at least we call. It Ito and so there's lots of synergies here as we start to combine things and think about what can be meantime, we drive to net zero. One that's the focus get that done I want that capital equipment long lead stuff purchased this year I want to move to get the ground prepared so that we can.

<unk> build in earnest next year and.

If you wanted to get that.

Renewable natural gas project I mean, it's astounding five.

Fifth largest plant ever done in the states, that's something and it looks like a great project. So that'll be interesting to we've got to get that thing operating and making money. So we got lots to do this year, but primarily focused on.

It's going to be all about <unk> excuse me about.

Bringing on board into this business system other ethanol plants.

To work with us so we can grow faster and drew.

Drive the R&D get it done.

So with that I appreciate it.

Thanks for joining us thanks for your interest and your support in <unk>.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Okay.

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Welcome to <unk> fourth quarter 2021 earnings conference call. My name is Kevin and I'll be your operator for today's call. At this time all participants are in a listen only mode. Later, we'll be conducting a question and answer session. Please note that today's conference is being recorded I will now turn the call over to Heather Emmanuel <unk>, Vice President of Investor Relations and Communications. Please go ahead Mr. <unk>.

Good afternoon, everyone and thank you for joining <unk> fourth quarter 2021 earnings conference call I would like to start by introducing today's participants from the company with US today are <unk>.

Patrick Gruber, <unk>, Chief Executive Officer, Lynn Smull, <unk>, Chief Financial Officer, and John Richardson, Chief Investor Relations manager.

Earlier today, we issued a press release that outlines the topics we plan to discuss today and a copy of this press release is available on our website at www Dot Gmail Dot com.

I would like to remind our listeners that this conference call is open to the media.

We are providing a simultaneous webcast of this call to the public.

A replay of today's call there'll be available on <unk> website.

On the call today and on this webcast you live there.

Discussions of certain non-GAAP financial measures non.

non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure 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.

But not limited to projections about G. Both net zero, one project and our operating activities in 2022 and beyond please.

These forward looking statements are based on management's current beliefs expectations and assumptions that are subject to significant risks and uncertainties.

Including those disclosed in <unk> Form 10-K for the year ended December 31, 2021 that will be filed with the U S Securities and Exchange Commission and its subsequent reports and other filings made with the SEC <unk>, including <unk> quarterly report 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 <unk> 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 a discussion of <unk> business development. Linda will then review <unk> financial results for the fourth quarter of 2021. Following the presentation. We will open up the call for questions I'll now turn it over to Pat.

Thanks, Heather and thank you all for joining US we have had a great and very busy quarter.

I'd like to everything, but our stock price.

Today I'll be using a slide deck, please refer to it and I'll, let you know when it turned the pages as I go through it and we will start on slide number three.

Recently, you've had some very important announcements today I'll be talking about how these announcements get together towards our goal of profitably producing 1 billion gallons of sustainable fuels by 2030.

A lot of what we will discuss today will focus on achieving that goal while de risking strategy as much as possible.

Actions ethanol for sustainable aviation fuel technology.

So you have that alliance.

Is all about accidents exclusively licensing their ethanol the SaaS technology to GTO in United States.

The ADM Mou is about converting large scale capacity for ethanol into SaaS. The comb our supply agreement is.

<unk> firm demand for SaaS and other hydrocarbons <unk> R&D project in northwest, Iowa is about execution of an energy transition project that is expected to bring in meaningful revenue. Starting later this year.

Now before we get into the details of those announcements I wanted to refresh everyone on <unk> overall business and how investors should view it.

Please turn to slide four.

<unk> always focused on profitably converting renewable carbohydrates, it's SaaS and other renewable hydrocarbons Jabil has been one of the leaders in these technologies over the years in the U S. It's a vertically integrated system that includes primary processing of corn.

Afirma taishan to alcohol process, and a chemical process to make renewable hydrocarbons like SaaS.

Vertical integration should allowed net zero plant to achieve a very low or even potentially negative carbon intensity or ci score for SaaS using the scientific argon greet model for measuring carbon emissions.

Being vertically integrated from primary processing, a card to fermentation to hydrocarbon production provides an advantage for driving carbon scores down due to integration of systems. For example, integrating wastewater and generating biogas on site is expected to enable the displacement of fossil based natural gas.

That we would use to power the facility.

Setting a plant where we can have the fossilized electricity is critical because of the large footprint that grid electricity would mean to a ci score.

By working with farmers, we believe we can enhance soil carbon capture which should translate to improved ci scores, so by reducing and eliminating fossil based energy and <unk> business system in particular and by choosing <unk>.

Feedstocks wisely Djibo believes it can achieve a net zero fab meeting net zero for capturing Cotwo the bar to the exhaustion with jet engine.

To provide the transportation industry with real Decarbonising options. It is critical that we offset.

The exhaust emissions fully with the carbon absorbed in the fuel production process.

We have established and are developing a business called verity tracking that your supply chain technology to track carbon and other sustainability attributes from renewable carbon sources through the end use we expect that we will separate verity tracking out as a standalone company at some point, perhaps as early as 2022.

We think that the way to deal with all controversy around sustainability is to document facts, you science it'd be transparent and Thats what were already tracking is all about.

Moving on how we are developing a profitable business remember that we have set a goal of 1 billion gallons of capacity and sales for <unk> business system by 2030.

Let's go to slide five.

We struck what we believe are good financial off take agreement with Kalmar. This agreement brings us to nearly 100 million gallons per year of off take agreements, we expect to get more offtake contracts done relatively soon our contract pipeline wherever where we are negotiating terms is greater than one five.

5 billion gallons per year.

Contract momentum picks up we need more production capacity and likely sooner.

The airline industry and airlines themselves have made bold statements about eating SaaS I believe them that.

The upper left shows that SaaS dwarfs, the California renewable diesel market by 2030, assuming a 10% SaaS blend level the market would be roughly 13 billion gallons per year.

Believe it yet we believe that the economics work for investment and the pricing Tivo can offer works for customers now, it's all about building out production capacity to scale it.

Match the off take agreements, we have in place and the off take agreements that we expect to ink in the future.

Please turn to slide six.

In the fourth quarter of last year, we did a deal with actions that grants <unk> exclusive license in the U S to develop and commercialize their technology to convert ethanol to SaaS and other hydrocarbons now we had been working with actions on Chico's Isobutanol hydrocarbon production process as we got to know each other it became clear that there is a lot of synergy.

How to Decarbonize feedstocks and production plants and alcohols, using our net zero concepts and Ashton had proven technology to convert ethanol and other alcohols into hydrocarbons.

<unk> SaaS <unk>.

<unk> is well known in the chemical and refining industries is an outstanding technology and engineering company. The hydrocarbon process technology to make jet fuel from olefins has been commercialized in the Petro Chem petrochemical industry. Many times, it's really strategic relationship we complement each other in addition to.

Greenfield plants, we're developing we see the opportunity to convert certain existing ethanol plants to net zero or SaaS.

We will work together with actions to try to make that happen, we all want to grow and faster.

We have made the decision to use ethanol as the building block for SaaS, rather than IPA at a net zero. One plan. We believe we can make more money and produce more SaaS and have a complete engineering package that would work for with existing ethanol plants.

Currently the capital costs for a net zero plant is projected to be about $900 million fully installed and a non recourse project financed.

The net zero one project EBITDA estimates.

Approximately $150 million to $200 million per year based on the current assumptions of commodities and all the rest.

Ethanol plants are well known in terms of cost and operating reliability.

Hydrocarbon process actions is doing the engineering and we'll provide.

Certain process guarantees for converting the ethanol into hydrocarbons. This is a derisk production system as much as we can make it and in the current more cautious environment for financing the right way to move forward.

The engineering designs modulus integrations are planned to be cookie cutter for deployment at other sites and ethanol plants.

Eight deal off the engineering work and design that we already have completed our ANZ one will be utilized for ANZ, one using ethanol accidents technology.

The fermentation section of the plant will be smaller and we will have to add additional equipment as part of the chemical processes.

We expect ANZ one to be mechanically complete in 2024 and operating in 2025, we expect to order long lead equipment in 2022 and begin site preparation work later this year, please turn to slide seven.

Many of you may recognize this chart, it's basically the same as before although the amounts and product mix have changed theres more SaaS being produced.

The total capital expenditures remained about the same the IRR is projected to be better using ethanol resident isobutanol deploying renewable energy and infrastructure to drive down Ci is still critical to success.

Please turn to slide eight.

The actions relationship and our plans to grow helped to put the ADM Mou announcement into perspective, ADM has some of the biggest and most efficient ethanol plants in the world.

We think theres, an opportunity to convert those plants into SaaS plants and other hydrocarbons.

ADM indicator has one of the few operating sphere to sequestration sites in the U S.

We are in the midst of figuring out how to with them, we expect that we'd be able to leverage the engineering work. We are doing with Accenture ANZ one into any transaction that we would do with ADM.

We are also exploring other opportunities with existing ethanol plants and we're currently in discussions with several plant owners. The idea here is that we can bring our de carbonization partners like dual energy.

F plant designs and our off take contracts to the table.

The value proposition for the ethanol plant owners simple they would make more money more reliably by feeding ethanol to SaaS plant. They also would need to be de carbonized along the lines of a net zero plant. We have a very open business model and look forward to working with many ethanol operations over time.

We would stress that net zero one is our priority.

Ultimately to reach our 1 billion gallon goal, we expect to build multiple greenfield sites. We have several sites in development already there at least as good if not better than the Lake Preston site.

Vantage of Greenfield sites, so that we can optimize the key parameters for long run success. In addition to raw material cost. We also take into consideration access to the fossilized energy and potential for carbon capture sequestration.

In a strategic sense. It is how he is good to have options. For example, the plant layout that we have developed for like Preston can be used at another piece of land of similar size.

We believe that the site, we select with required minimal changes to the engineering work.

Please turn to slide nine.

We announced that we have begun to startup of <unk> R&D project in northwest, Iowa, When our R&D project comes fully online is projected to be the fifth largest dairy LNG project ever done in the U S. This project has over 20000 cows and is expected to produce 355000 million btu's annually.

Or thereabouts.

There are three areas involved at this point you can see the pictures of the Digesters.

At each of the dairies the upper right picture is the gas upgrading and injection site the picture in the middle shows the relative locations.

The digestion systems that we built and <unk> pipeline that connects them to the upgrading system.

We expect that the R&D project EBITDA would be approximately $16 million to $22 million per year.

Across the year of 2023, I give a range because the LNG project EBITDA will depend upon a variety of assumptions, including how carb scores scores. The ci for each of the dairies now to get a Ci score we have to achieve a steady state Senate and application wait for the approval to get the full value from carbon California.

We would expect to get those scores in late 2022 early 2023 cargos backed up these days lots of applications RMG provides an exciting opportunity for <unk>, we see it a strategic review, but because we have to decarbonize, our saf plants, and we do like the idea being able to take R&D up too.

Our net zero, one plant and drive RCI scores lower if we so choose.

We like having RMG in biogas in our portfolio as an option in the meantime, we can make good money meeting demand in California for our partner BP.

Please turn to slide 10.

This is a rendering.

Engineering rendering of our hydrocarbon plant currently built by prize in India. We expect that this plant will be delivered to a production facility in Woburn, Minnesota latter part of 2022.

We are currently making isobutanol Auburn this hydrocarbon plant.

Convert isobutanol.

Through a variety of hydrocarbon products. We also expect it to be able to produce or to take ethanol and make.

Various hydrocarbon products, we expect to use the burn as a development site for new products and to improve and refine the IBM production processes, we may deploy isobutanol in our side by side configuration in the future for example, as an add on to our net zero plant.

Now I'll turn it over to Lynn.

Thank you Pat.

We finished 2021 with a strong cash and cash equivalent position of $48 million as well as $95 2 million of short and long term restricted cash.

Our highly liquid and readily convertible short and long term marketable securities totaled $339 7 million and are available for capital and operational needs.

Our long term debt outstanding related to northwest, Iowa, RMG was $60 7 million.

Our corporate spend was approximately $18 million for 2021 net of noncash stock based compensation.

During 2021, we invested significant capital into our preliminary in advanced stage projects, including approximately $23 million into our flagship net zero one project.

$2 million into northwest style, RMG and other capital projects as well as approximately $12 million into strategic patents and licenses.

As Heather noted our full financial statements are available in our earnings release.

Our Form 10-K , both available on our website.

I'd like to stress that we substantially advanced the company with our expenditures last year. We have continued to staff experienced talent to bolster our corporate management platform and to prepare for successful execution across a range of critical functions, including <unk>.

Stronger design engineering capabilities.

<unk> R&D around our technologies.

Deeper commercial contract solicitation and execution capabilities.

The development of Verity and the GMO growers program.

Substantially improved capabilities around Investor relations significant advancement in the integration of our ERP system into current and future operations to enable intelligent automation and reliable internal and external reporting.

Successful implementation of Sox 404, B compliance requirements without any deficiencies.

And improved financing and financial management capabilities.

We strengthened our balance sheet to provide financial resources to support the development of our 1 billion gallon initiative.

The equity investment and net zero, one R&D execution, and our operational and R&D activities that la Verne.

We advanced the development engineering unexpected nonrecourse debt terms and obtain ability for net zero, one and we substantially constructed the northwest, Iowa LNG project.

As a result of this progress and our work with institutional investors. There was an impressive shift in vivo institutional stock ownership from 10% at the end of 2020% to 46% at the end of 2021.

We may still be considered a pre revenue company as our revenues have been intermittent and mostly were related to testing and R&D activities, but that will begin to change in 2022.

Given that we have begun the northwest style RMG project startup, we expect to start generating revenue and cash flow later this year once the biogas production ramps up and stabilizes it.

Initial revenue recognition and cash flow realization for any LNG project in the marketplace lags actual orangey production due to California carbon scores and EPA Rins certification processes, but we will push hard to realize value in 2022.

Upon full R&D operations and certifications, we would expect to see RMG project EBITDA flows in the range of $16 million to $22 million a year, depending on the project certified carbon index outcome and market prices for commodities and environmental benefits.

As we flesh out our 1 billion gallon initiative and how much south we expect to produce and when we expect to communicate these plants to our shareholders.

Everything we are planning to do is supported by a comprehensive financial enterprise model. We are happy to be in the growth phase of our business and we are delighted that our capital deployment opportunities should result in excellent returns, we would expect any future capital raises to support this growth to be accretive.

Now I will turn this call back over to Pat to wrap things up.

Thanks, Glenn let's open up the call for questions operator.

Ladies and gentlemen, if you have a question or a comment at this time. Please press Star then the one key on your Touchtone telephone. If your question has been answered or you wish to move yourself from the queue. Please press the pound key.

Our first question comes from Shawn Severson with.

<unk> research.

Thanks, Good afternoon, everyone.

Hey, Pat could you maybe start with a 50000 foot view picture here on what's going on with demand for SaaS and kind of an update on where the airlines are taking this in any other industry items, we can point to in terms of.

Increasing demand there.

Hello.

Here, we go sorry.

<unk>.

The what we're seeing is because of the government.

Discussions about wanting to see SaaS, because some of the policies that are being talked about and put in place because the airlines themselves are making pretty bold goals as to how much has to be replaced by 2030, we're seeing a definite uptick in SaaS that we're seeing the shift definitely a shift before when people Bath and so again it was hard to tell now it's clear.

Cut it to ship all of our existing corporate customers are on board with what we're doing they get it and moving forward with us and it's pretty darn interesting to see so SaaS is the one thing everyone can agree upon that no. One is going to we got to have hydrocarbons to fly jets over long hauls, nobody disputes that one and so that makes it much.

Much easier and now the momentum has definitely shifted that way. So our goal is to make more of it and do it faster and grow bigger hence we.

We like the idea of lot of being able to leverage existing assets.

And along those lines, how does that derisk the business.

We're talking about in terms of EPC guarantee cost of capital.

Obviously, a very mature and well developed ethanol market. So how is that going to affect the economics for you.

Well using an ethanol route obviously theres no risk involved in the fermentation systems around that unlike agreed using isobutanol, we would be we would be the people who have to guarantee it.

And.

You look at that and you look at how many gallons you get how much profitability. The costs are similar using Isobutanol route.

Cost per gallon and Isobutanol isn't fully optimized.

Cash cost wise, it's good enough to put out there, but gosh you add it all up and you get more gallons.

For the same kind of capital numbers.

And give you that means you can make more profit and so you look at all of that and it serves the market need where the market is heading and with our other customers that are coming down the pike that we can see and so then you look at it and say well how fast can we grow well it turns out this net zero concept that we've been working on it translates directly over into using ethanol, it's not been a big deal.

From a technical standpoint to substitute and the engineering overlaps hugely.

So that makes it.

A lot easier to go about this and the thing is we didn't until we start working closely with actions. We didn't have all the massive energy balances to be able to figure out what kind of Ci score if we could get.

And do they make sense and all that kind of stock because we really do have to integrate these things, but we had already done that work on isobutanol and Thats, where accidents trial, we had done and Thats why it came together like shoot we can do this not just at a greenfield plant, but we can also do this at existing ethanol plants.

And that means.

Faster path for growth given all the demand.

Just my last question is on projects really wasn't could you explain a little bit more about what was going on there.

Equipment transfer.

Yes, so practice building that plant for us.

That thing is in partial construction and they'll deliberate later this year, it's a alcohol to hydrocarbon plant and it'll be a relatively small one 3000 tonnes and.

It's a.

Our plant so we can make a variety of products, we could make hydrocarbons the gasoline products, we can make.

Jet fuel products, we can make diesel products, we could make.

Olefins, we can make feedstocks are doing alkylation units, we can do a whole variety of things and so we have commission. This last year, we sometimes see people for just talk about this as the skid. Okay. When you put it in the artist's rendition like this or in engineering rendition it looks a little bit bigger than our scale. It will be several skids stacked on top of one another but that in fact has been under construction and will see it delivered to.

Liver.

Thanks, Ben I'll take the rest of my questions offline.

Cool.

Our next question comes from Derrick Whitfield with Stifel.

Hey, good.

Good afternoon, all and thanks for taking my questions.

Perhaps for pattern, Paul referencing slide eight youre, indicating that Youre still evaluating site selection for net zero. One is there are several greenfield sites that are at least as attractive as late Preston.

Perhaps elaborate on the degree of economic improvement that is possible at another location.

Well I'd say Theres, a couple of things that come into play one obviously you have got the land and it's got a good transportation good corn price raw materials, you've got to have access to renewable energy at least with wind or and we also like the idea of access to sequestration, we think thats like Preston will have that too.

But we see other sites, if we're picking them carefully.

I could definitely happen and that will be interesting in the future and useful in the future.

Along with that it's been upon as we develop besides been developing sites for <unk>.

Actually quite a long time, because you always have to have alternatives in case somebody gets cute you try to go and deploy something like up at Lake question.

You're always kind of alternatives and so we've been keeping that in mind the whole way, we used to talk about it very much so.

We had a couple of sites that are attractive in summer.

Sometimes they come with economic incentive.

So what we won't you won't see US do is trade off a new site if it impacts the timeframes to commercialize <unk>.

Walt.

Yes, the payments upfront were so great that we would have to say, yes, but I don't have one of those in hand yet.

But those are the kinds of things that can come into play and how we would think about it we know that we're going to need multiple sites available decarbonising a net zero.

Our Greenfield plant is we think probably easier than doing a existing ethanol plant.

So learning how to do that well and translating it teaches us.

How to just deploy the stuff cookie cutter style, but it also gives us the insight as to the tricks, we can use with existing ethanol.

Great and perhaps for powder win I know you guys have been working hard on the enterprise financing plan.

You referenced in your prepared remarks.

Support the 1 billion gallon initiatives could you just speak to the progress on that and then kind of your latest thoughts on that initiative.

Lynne do you want to comment.

Sure I'll jump in.

That model is substantially complete and useful now.

Very large model and it incorporates a lot of flexibility.

To make different assumptions around growth and capital deployment pace the cadence.

And of course, all of the old the cost involved in assumptions around.

Revenue streams and it does it in a way that then rolls up into a traditional III statement format. So it's quite a bit.

<unk>.

The underlying assumptions that have gone into it I think are pretty robust and everything that goes in terms of project level assumptions.

It was based on everything we're doing at net zero one.

And looking at other potential <unk> opportunities and all of those returns are very attractive. So when we roll up and look at it the impact on the on the on the stock price.

It's pretty appealing so we'll be sharing some thoughts around that in the future.

Great.

Sorry, what's fascinating about this is when you get to one of the things that's attractive about this is.

When we bring the decarbonization people everybody wants to deploy renewable electricity or gas or biogas random suggestion that they wanted to do the.

Yeah.

Or sequestration or whatever all of those things are fair game right. So we have a bunch of partners, who want to work with us to do that put up capital that's great love that.

And then we have working with on the <unk> side.

With actions and we are designing modules. So that this is like literally.

It will be 100 million gallons of ethanol in to make the product.

Hydrocarbons coming out so we're designing it so that it literally can go anywhere and that's a pretty interesting model. We think we can grow faster with that and that solves one of the problems and I got to say it does derisk the heck out of it because otherwise.

Youre left go and people does it all work together I got news. There is no question ethanol can be made and there is no question that the ethanol into hydrocarbons work and so that completely changes then how people view the risk associated with the deployment of this.

That's great and then really last for me.

With the understanding that you don't have a formal announcement today on Archer Daniels Midland or Chevron could you just share comments on how your dialogue with those companies is progressing in a reasonable timeline for the disclosure of commercialization plans.

The conversations are going well with both and sell it as a matter of getting all the pieces together, obviously what has to happen if we're talking about department as nation.

ADM has got 900 million gallons of ethanol that takes a serious chunk of capital. So theres lots of discussions going on in the background, we got put them altogether and.

You can't do it all at once obviously and so that is why we commented we stay focused on that tier one we're going to learn all the stuff we have to have the concrete.

Because for that but we know that everything we are learning applies to these other things and so we just we're working at all of those pieces out and how to do it but obviously it is way bigger than us.

By yourselves.

So.

<unk>.

Chevron said they've been interested the project level, we have other people are interested in vivo corporate we have.

The ADM is.

They've been very cooperative in trying to sort this out because it is a change of look figuring out.

All the details of economics, because mass and energy balances and all that kind of stuff and how does it all work and fit together. So we are in the midst of all that and remember we've only had access to the detail from.

We've only had access to the accident detail.

Only in the last few months as we sorted it out so we're making pretty darn good progress and I like where it's headed.

That's great very helpful. Thanks for your time guys.

Yeah.

Our next question comes from Prashant Rao with Citigroup.

Hi, good afternoon, thanks for taking the question.

I wanted to start just on the R&D side, when something you said about the inflection there youll become revenue the revenue inflection coming I kind of wanted to hone in on that a little bit.

The guidance that you gave the 16% to 22 million of EBITDA could you help us walk through put some color on those on the posts on that range, what sort of <unk>.

Score you'd need to get or what sort of credit assumptions and then also a little bit on the offtake I know you are working with BP. So just wanted to understand how that arrangement works if theres any credit sharing in that 16 to 20 timberland just kind of help us walk through how we should be thinking about that so we could sort of put that in our models with some surety.

Sure.

Yes, I believe the.

<unk> agreements posted on an 8-K, but just to summarize it.

There is a sharing arrangement.

BP places that gas directly into dispensaries in California through their distribution networks.

Ramping up now.

As we commenced the physical production, we're ramping up.

Coordination on accumulating the right level of data for the applications with carb.

So that we can get that process rolling as quickly as possible and try to get their approvals for <unk> credits on the Ci score.

And as we can we do have alternatives.

For the near term to use temporary pathways.

And to go ahead and bring revenues in sooner, but we want to assess the risk around doing that and maybe foregoing higher hires ci or I should say lower Ci outcomes.

Because that temporary is assumed to be a 150 to negative $1 50. So.

<unk> will be producing on a steady state about 355000, and then b to a year and you can kind of do the math on on the on the prices of RMG. These days with the <unk> and Rins.

To get to a revenue number or our EBITDA is at this point.

And we don't think about leverage.

Because where we finance that project with the.

On LC back.

Private activity bonds issuance.

But we will refinance that probably this year to go ahead and do it on a nonrecourse basis. So.

So that we can release that cash collateral back to jabil for our own use.

I'm not sure anything else that I can help you with.

No I think that's good.

I appreciate that.

My follow up is sort of related to that Pat you've talked about.

The numbers are the yields sort of being updated on net zero one be more SaaS.

You've got that $150 million to $200 million target there just wondering.

A lot of moving parts, but what.

Does or what does that not need from.

The credit markets for further incentives or other subsidies in order to achieve that $150 million to $200 million.

What are you sort of risking there.

We've had a lot of talk over the last few months and Theres a lot of positive momentum, but everything from.

Upsizing the BTC credit.

Two.

Looking at Reem multiple things like that so can you just help us sort of think about what you think is sort of.

The odds on risk profile for that for that number on that tier one that'd be helpful. At least on the revenue side.

Yes, sure. So I'll start and then Lynn you can pile on a what.

What.

Yes, so we don't we do we budget a buck a gallon BTC because we think that that's an appropriate number. It's good I was just like stability in it and so we can predict it over a longer period of time, it doesn't need to be more none of us need it to be more it's a nice fit as we can all make more money. If it is but it's not going to cause any want to ship anything or do different behaviors or anything like that.

So that just says that stability is good on the RFS side.

This is the year, where the EPA gets to do it set process. So there'll be some finagling around how RFS works.

And I think what we're going to wind up with something that's a lot like what we got except where they'll probably be enhancements that take into account.

Perhaps for.

Lower carbon scores and things like that but it's going to be I think the same basic system. So that's kind of what we assumed going forward that we can actually predict going forward is the same as what it is today and then.

In <unk>, we just model out the long term predicted.

Carbon scores, we have consultants, who advised as we actually have a bunch of people who do this and advise us what that would look like and then we incorporate that into our model, but one thing I really like a lot about the way. The system works is that we got three different bites at apples.

The chance of all three of them going down is pretty low and so you get okay. So right now you're best in California's 100, 150 Bucks a ton carbon.

Okay. That's a fractional thing to us because that's one part of the Green just one third of the green value.

First the blenders tax credit makeup the other two thirds, so I like that approach.

Do you see that the Lcs type markets are going to increase we think because you've got a <unk>.

States, putting their policies in place and also in Canada, we kept quite a lot of interest because they have an LC FX.

But Oregon, Washington grid are going now.

New York City in the Rulemaking state.

State stage of there.

CFS and then you've got the Midwestern states are working at it too so we'll see which one of those goes first so all of that creates bigger markets, where there's extra profit and of course, then there is still business. We can do in Europe .

And then you want to add anything here.

Yes, I would just note that these.

These numbers are based on long run projections by independent experts under the debt case, so we're not as focused on today's corn or today's.

Carbon price or rens price some are higher than what we have some are lower.

But over the long run we feel like these numbers will will be.

We we feel that these numbers are definitely achievable from the $150 million to $200 million level.

Okay.

Okay. So the way to think of it when he when he talks about that that case, where everyone else is listening I know you get every shot but the debt cases, the cynical case.

And when we're talking about what will really happen that's more of an equity case and it's the higher side.

That's what we believe.

Got you and then just one.

One last one if I could sneak it in.

The preliminary results of the Anl testing I was just curious I know theres a lot of steps here and for those of us or sort of.

And we're trying to thread the needle on going from there to what that means in terms of getting certified pathways or even provisional pathway is not just in California, but you mentioned Patrick a bunch of the other jurisdictions that have their own else CFS real estate a slight programs ramping can you just give us a sense of what that gets you right now having that preliminary.

Analysis and this peer reviewed process does that move you materially closer or how does it moving materially close with any of the jurisdictions. You are eventually thinking of its end markets and I'll leave it there. Thanks.

Yes, so what happens is that.

Lot of these people who are developing their lcs type policies. They start with the argon greet model, which is the gold standard of models and then and then they start modifying it usually for political reasons or convenience and California, California does take the greet model and a modified a bit may just say all corners of the same and the discussion and so it's not.

All the things it depends argon greet model takes that into account now our economics, we just model for.

The carbon scores that we get in California with whatever their assumptions are and this is one of the complications of a business like ours is that every jurisdiction has some very into the greet model that you've got to take into account and planning into your economics. That's just the way. It is we think that at the national level, we should have our gun greet model be the standard because it.

Everyone takes it uses it and then they start tweaking it but it is the one that is the science based one so what you see us doing is try to educate people about what the facts actually are theres huge opportunity to capture soil carbon.

Actual cotwo off those root systems, when youre doing most of them not until they build up carbon each year. What we'll do is we're going to.

Measure field by field improve the people and so we know that the people who do <unk> tell us that hey, if you can prove it in your business system, we would consider that now the only way to find out if that's true or not is to actually go do it. That's what we work on that's part of what our Verity tracking is all about and then of course.

Carbon sequestration offers another opportunity that's like 30% to 35 Ci points.

Lower end.

We're friends with the pipeline companies and so it's just a question of who we work with and when we announced the kind of things. So those are all possibilities too. So it's a pretty interesting game and the argon greet model is the one that everyone turns to for the fact based science based systems.

Thank you very much I appreciate the time I will turn it over.

Thank you.

Our next question comes from Amit Dayal with H C Wainwright.

Thank you.

Thank you for taking my questions.

With respect to sort of the financing environment given recent market developments interest rate discussions that are taking place.

How does any of that changed for you.

Any color on that and again you had highlighted mid 2022 is.

Sort of.

The targeted date to complete the project financing.

<unk> side of the story.

Any update on those would.

It would be helpful. Thank you.

Sure. So I'll comment first and then jump in but I hadn't Lynn go out with Citi and do the market testing to see what kind of money is available and what kind of quantities and what kind of price. So we can make sure we update our numbers because the world is a little weird right now.

So we went and did that with came back with nice results. We like it there is lots of money who were interested in investing in these projects having a be.

Be able to say look everything exists.

Is an advantage there is no newness here, it's about putting it together in a way that hasn't been done, but the actual theres not a risk around the permutation on risk around the hydrocarbon technology, that's pretty cool.

So I feel pretty good about that we'll probably close how would you comment on that when it's a.

I'll, let you comment on that and add any more color to this question go ahead.

Sure.

Probably given given the <unk>.

Desire to maintain our schedule it will be deploying capital this year more equity, but the debt closing will probably occur in Q1 of next year.

<unk>.

That format, we will because we.

Changed from the ethanol configuration, sorry, the isobutanol configuration to ethanol.

Our back at the table examining eligibility for private activity bonds, but the the work that we did in December with Citi that Pat mentioned was not private activity bonds. It was oriented towards long term institutional debt under more of a mini perm structure and the terms were were absolutely attractive.

Definitely interest rates are slightly up a little bit, but nothing that would make a good debt financing not achievable.

Okay. So none of this.

The shift out almost like June .

Three quarters.

It does not impact the work you are doing to move everything forward is that how we should read it.

That's what you should read yet whats driving us is everybody wants to see us when are you going to commercialize that one is it going to be operating in 2025 mechanically complete in late 2024, it's a tight timeline. So in these in these projects, we always build flack anyway were eaten up some of our <unk> and <unk>.

I wish I had.

Have a close relationship with actions sooner, we could've sorted this out sooner, but we didn't.

And we didn't have the emphasis on SaaS it wasn't what it is.

A year ago. There wasn't it was interesting it was nice and high potential, but it's not like it is now the majority of the new demand, we're seeing is shifting to SaaS.

So.

<unk>.

And two it I like we see that Isobutanol has tremendous long run potential our folks are modifying the bug and what we saw it drops into an ethanol plant that would be kind of cool.

And but we have time to do that now because we have such a strong intellectual property position.

Before we were pushing it out into the marketplace you know what.

We've derisked this now baidu in the ethanol route and the jet route and the part that is hard for everyone to grasp I think is.

It is because we're doing this net zero concept, where we're decarbonising east plant, it's not easy to do you have to know all the details and the engineering details well that's what we know Thats why we are able to do it and how to incorporate renewable energy and with all the levers.

If not and you have to go fight for that and figure that out and that's what we've done.

Why it works and it applies to other plants.

So the front end engineering design work that was being done in the last quarters Q4 'twenty one.

Yes, that's still applicable or do you have to restart some of that work.

Most of it is applicable like all the stuff around.

The grind and site work. Thank you.

The updated but thats miner, the back end of the hydrocarbon process itself overlaps like 50% or more.

More than that probably if it's the same and so thats, what actually got us going in the conversation. If there's a couple of unit operations that has to be done.

And then it is about.

Substituting out.

The isobutanol fermentation for an ethanol fermentation.

That's the work being done right now and and of course. This time, we really are designing to make it module. That's the work being done right now.

So we have more work to figure that out we wanted to see modularized, because I worry about supply chain stuff.

And the <unk>.

World is weird and so I think that we're better off manufacturing one of these works if we can do it and that's what we're working on with actions right now.

Okay understood.

With respect to the equipment or the.

The planned debt.

<unk> is building for you guys or the word yes.

Right.

How should we think about revenues et cetera from.

Sure Doug.

That plant.

I think I hate it when people think about <unk>, it's really a really nice.

Small really nice small plant and we're going to be doing it to develop new products. So I hate it when people start talking revenue because of the expectations with blacked out because that will run it as we want to run it or not and depending upon what we're trying to do and what catalyst for testing or what unit operations and stuff like that.

And.

So I hate to set I think it's kind of an expectation of revenue around that because it's misleading I think.

Now that could change there's a bunch of specialty products that people want why don't want us to make and we will see what is true and what isn't once they sign a contract and if that's the case then we would turnaround and reported like Youre asking for a revenue and tell people what it is and what to expect but I hate doing it in advance of that even though I know what we sell the products that we make from it I just hate side on the X.

Vacation around that.

Understood.

How much.

What's the sort of capex or the investment that is going into this raj related plant.

About $15 million or so.

And we spent we spent that.

We started this project quite.

Quite a while ago.

Okay understood.

Yes, so it's already incorporated its already incorporate into our financials. The money has been spent on it so it's not like a new.

I don't remember what what percent it is already spent or committed.

Well along.

Very little very little left to go so our cash balances won't be dragged by that to complete.

Okay got it and just one last one with the shift.

Youre going to ethanol versus.

Mercury is a SaaS product.

Is this.

Is this sort of a permanent shift to ethanol.

Zero two.

Would you still consider isobutanol or would you.

Essentially stick to ethanol.

As you.

Get to.

The second and third floor plans.

I think what my.

My assumption right now is the first few plants are going to be ethanol oriented because we can deploy them quicker.

And we don't have to prove anything to anybody it's clear.

And I also think that doing working with existing ethanol plants. That's in the cards for us. So we got to go do that and strike those deals and get them done that's part of it Thats. What we got to go do this year that is one of the things we got to go do because thats part of the business model about how we can grow right taken ethanol down and to really get into SaaS through an existing plant. So you don't have to.

Invest the capital in the fermentation side of things I can tell you, though that there are some very nice.

Greenfield sites, where you know what we might want to build greenfield new permutation because boy. They are really good sites. So that's different the way, we think about isobutanol as you could add it on and side by sides, we can do that anytime and right now.

We just we will see Isobutanol I believe it will be back and we have the possibilities of building isobutanol plants too, but I would rather at this point that I made earlier about.

We had a tech technology on a cash cost basis that can perform and get us about the same kind of cash costs in ethanol ethanol is 100% optimized.

It's done.

Isobutanol process is not fully optimized theres lots of cost improvements that can be done and I'd, rather go do those and design it sort of drops and easily to an existing ethanol plant, particularly one of my Greenfield net zero plan.

And we could switch because remember what I said about the hydrocarbon process. They are substantially the same.

Alright from alcohol into a hydrocarbon product makes a difference.

The olefin mix is different and so when youre thinking about us and we've talked about this in the past Amit you have to think about us as an olefin company, where Decarbonising Oliphant notes are the primary building blocks to make plastics chemicals and all the rest.

And so people what those things well that's in part what we're going to do with the with this price pressure yet at Liberty.

Got it I'll take my other questions offline, but thanks so much.

You bet.

I'm not showing any further questions at this time I'd like turn the call back to Patrick Gruber for any closing remarks.

Well, it's been it's been very exciting I think in a series can be quite the year as we just drive and are focused on getting this thing deployed this SaaS sorting through that.

<unk> fermentation system and how to make it more reliable in this light in this.

Certain world that we have I'd like at Derisking is great.

And I also like the ability that.

We have from working with actions to use proven technologies that I wish I had done it sooner remember we've been using we've been developing ethanol technology.

To break into hydrocarbons for the last decade at least we caught Ito.

And so there's lots of synergies here as we start to combine things and think about what can be meantime, we drive the net zero. One that's the focus get that done I want that capital equipment long lead stuff purchased this year I want to move through and get the ground prepared so that we can build in earnest next year and.

If you wanted to get that.

Renewable natural gas project I mean, it's astounding five.

Fifth largest plant ever done in the states, that's something and it looks like a great project. So that'll be interesting to we got to get that thing operating and making money. So we got lots to do this year, but it's primarily focused on.

It's going to be all about <unk> excuse me about.

Bringing on board into this business system other ethanol plants.

To work with us so we can grow faster and <unk>.

Driving the RMG get it done.

So with that I appreciate it.

Thanks for joining us thanks for your interest and your support and do though.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.