Q3 2024 Gevo Inc Earnings Call
Okay.
Speaker Change: Good day, and thank you for standing by and welcome to the G. Though incorporated quarter three 2024 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
Speaker Change: Ask a question during the session you will need to press star one on your telephone.
Speaker Change: We'll then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.
Speaker Change: Please be advised that today's conference is being recorded I would now like to turn the conference call over to your speaker for today, Dr. Eric freight Vice President of finance and strategy.
Speaker Change: Eric you may begin good afternoon, everyone and thank you for joining us on today's call to discuss <unk> third quarter 2024 results I'm, Eric Fry, Vice President of Finance and strategy, though with me today are <unk> CEO, Dr. Patrick Gruber and CFO Lynn Smull.
Speaker Change: Earlier today, we issued a press release that outlines the topics we plan to discuss a copy of this press release is available on our website at www Dot <unk> Dot com.
Speaker Change: Please be advised that our remarks today, including answers to your questions contain forward looking statements within the meaning of the private Securities Litigation Reform Act. These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently anticipated.
Speaker Change: Those statements include projections about the timing development engineering financing and construction of our sustainable aviation fuel products, our recently executed agreements our <unk>.
Speaker Change: Natural gas project and other activities described in our filings with the Securities and Exchange Commission, which are incorporated by reference we disclaim any obligation to update. These forward looking statements. In addition, we may provide certain non-GAAP financial information on this call the relevant definitions and GAAP reconciliations may be found in our earnings release, which can be found on our website at www dot com and the.
Speaker Change: Investor Relations section.
Speaker Change: Following the prepared remarks, we'll open the call for questions I'd like to remind everyone that this conference call is open to the media and we are providing a simultaneous webcast to the public.
Speaker Change: A replay of this call and other past events will be available via the company's Investor Relations page.
Speaker Change: Now like to turn the call over to the CEO of <unk>, Dr. Patrick Gruber Pat.
Thanks, Eric and good afternoon, everyone and thanks for joining us on our call. We have filed our Form 10-Q today, we ask that you refer to it for more detailed information after this call.
Speaker Change: During the third quarter and shortly after the close of the third quarter, we achieved several important milestones not only to these milestones enhance our financial outlook, but they also reinforced <unk> commitment to advancing drop in cost effective scalable carpet of payment solutions.
Speaker Change: Though it's difficult to electrify market sectors and industries.
Speaker Change: In fact.
Speaker Change: Two of the milestones we achieved our transformative to our company, even when you consider them individually.
Speaker Change: Let's start with our acquisition of retro energy low carbon ethanol and carbon capture and sequestration assets in North Dakota.
Speaker Change: This acquisition, which we expect to close by or by the first quarter of next year brings a well operated low carbon ethanol plant along with an active ccs site into our portfolio.
Speaker Change: Retro assets will be a valuable addition to achieve.
Speaker Change: In fact.
Speaker Change: They generate approximately 200 million in revenue in the fiscal year of 2023.
Speaker Change: They're going to be a great addition to our company is transformative.
Speaker Change: This positions us for long term success, providing a platform for further growth by developing our carbon abatement capabilities. For example, we are exploring converting low carbon ethanol at the site to SaaS using our <unk> business to track the farms and count carbon and make sure that we can account for all the <unk>.
Speaker Change: A payment that occurred throughout the business system.
Speaker Change: We also by acquiring this site.
Speaker Change: Provides our net zero one project in South Dakota with access to a wholly owned Ccs site.
Speaker Change: Could be important for the future.
Speaker Change: In short this acquisition once closed as expected to accelerate our plans to scale <unk> production.
Speaker Change: We call it net net you're up north.
Speaker Change: And strengthen our footprint in a region with abundant renewable resources strong rural communities that resilient domestic circular economies.
Now, let's talk about the other transformative milestone we achieved that is the conditional commitment for the U S Department of energy. This is a major milestone for our net zero one SaaS project in South Dakota. This 163 billion loan facility marks the first large scale alcohol to jet project to receive such a commitment.
Speaker Change: We believe this agreement validates the strength of our project reduces our execution rate risk.
Speaker Change: And supports our financing plan.
Speaker Change: Okay.
Speaker Change: One is the largest economic development project in South Dakota history based on our research and we expect to attract other capital investments to unlock SAP commercialization given the robust due diligence conducted by the way we.
Speaker Change: We are grateful for the support from the low.
Speaker Change: Loan programs office.
Speaker Change: We also recently acquired cultivate agricultural intelligence L. L C. Our cultivate AI.
Speaker Change: It's a proven business with expected 'twenty 'twenty four revenue of $1 7 million and a correspondingly positive cash flow cultivar.
Speaker Change: Cultivate EI provides agricultural data, including data from drones with near infrared sensors to clients through a software as a service platform SaaS platform.
Speaker Change: We are combining cultivate AI digital agricultural data and analytics platform with <unk> carbon accounting and tracking solutions to provide the highest quality data driven solutions for carbon abatement accrued bead fuels industrial markets, while simultaneously, helping farmers improve their operations and sustainability and profitability.
Speaker Change: Finally in the third quarter, we were granted not one but two patents for our breakthrough ethanol to olefin process.
Speaker Change: We also monetize investment tax credits related to our R&D business generated cash proceeds and further bolstering our liquidity.
Speaker Change: So in summary, we've been pretty busy and there's a lot more to come.
Speaker Change: We are looking forward to next year with this acquisition of Red Trail energy assets and in combination with our <unk> business. We believe this will help us achieve a positive adjusted EBITDA in 2025, that's very exciting.
Speaker Change: This quarter's achievements reinforce our commitment to reduce the carbon footprint of the things people need that is food fueled materials, while transforming gibeau into a large scale platform for growth.
Speaker Change: With each milestone we are advancing our vision to scale drop in low carbon molecules, such as sustainable aviation fuel and of course to create value for our stakeholders.
Speaker Change: Now I'll turn it over to Lynn our CFO to discuss the financial results for the quarter led.
Lynn Smull: Thanks, Pat and good afternoon, everyone.
Lynn Smull: Starting with our financial position, we ended the third quarter of 2024 with $292 9 million in cash cash equivalents and restricted cash.
Lynn Smull: Our continued strong liquidity position reflects our disciplined approach to net zero, one development and other capital expenditures our attention to corporate G&A expense.
Lynn Smull: And our strategic approach to financing and our receipt of proceeds from the recent sale of R&D investment tax credits.
Lynn Smull: Combined revenue and interest income for the third quarter was $5 8 million.
Lynn Smull: Third quarter's results include $2 million in revenue generated by our R&D business, including $1 8 million in net proceeds from the environmental attributes and point $2 million in R&D and sales.
Lynn Smull: This also represents a reduction in sales by choice due to our preference to buildup environmental attributes inventory in anticipation of our final carbon intensity pathway approval under California's low carbon fuel standard.
Lynn Smull: We expect this approval targeted for early 2025 to substantially increase the revenue potential from our R&D business.
Lynn Smull: Operationally the business has been running well generated more than 100000 <unk> of RMG sales last quarter.
Lynn Smull: And as previously announced we sold R&D investment tax credits nothing about $14 million of cash to the balance sheet.
Lynn Smull: Our corporate spend that is G&A was $8 6 million for the quarter, excluding noncash stock based compensation of $3 1 million or <unk>.
Lynn Smull: Primary driver for these costs is personnel cost in critical areas to support execution on growth the majority of which we expect to allocate to our project segments and legal entities.
During the nine months ended September 32024, we invested $36 5 million into our capital projects comprised of $23 million for net zero. One development 11 4 million for the MPV program modular organization design and engineering work.
Lynn Smull: One 6 million in R&D project expansion, and <unk> 5 million and other projects.
Lynn Smull: Our strategic growth investments also include cash of $6 million, we spent on cultivate AI and $10 million of earnest money deposited in connection with the announced Red Trail after the acquisition.
Lynn Smull: Our loss from operations in the third quarter was $24 million and our non-GAAP adjusted EBITDA loss was $16 7 million. This includes personnel and consulting expenses associated with our net zero and verity growth initiatives.
Lynn Smull: Notably our development spend for net zero, one is tracking to come in under the previously estimated range and we expect to reimbursement of our development capital at financial close, allowing us to reinvest in net zero, one project equity and possibly recycling capital into other projects, depending on the total recovery in fee amounts which will be.
Lynn Smull: We negotiated with third party equity investors.
Lynn Smull: This project level financing strategy also means we do not expect to have to commit further cash to the project once it's in the construction phase.
Lynn Smull: <unk> Trail energy asset acquisition is going well, we're advancing due diligence in term sheet discussions with multiple project finance lenders and plan to combine third party project debt with Gibeau equity capital to consummate the acquisition early 2025.
Speaker Change: In summary, we remain focused on prudent management of our capital with a view to supporting the continued development of nets are one the Red Trail Asquith acquisition and other value generating projects. We're excited about the path forward and look forward to the opportunities in 2025, and I'll hand, it back to Pat.
Speaker Change: Thanks Lynn.
Speaker Change: Before we open the line for questions. Let me reiterate how proud we are of the progress we have made this quarter.
Speaker Change: This is hard work, we're doing between arguably loan commitment and our pending acquisition of <unk> assets and the advancements in our <unk> and technology businesses.
Speaker Change: We're making meaningful strides towards that vision up net zero business systems, where we can really truly drive out in a big target throughout the whole of the business system and that cuts across the fuels food and feed.
Speaker Change: This is important stop and it matters. So remember what we're doing this is about making something thats cost effective. It works. It works economically compete with petrochemicals on a cash cost basis. That's what we're trying to achieve and division, yes, we got to spend the capital and build it we've got to get out and go get that done it's a different game to play this.
Speaker Change: Isn't just about taking it it's not a giveaway, we're delivering products that are really really valuable.
Speaker Change: And they truly abate carbon.
And cost competitive that's what the future holds here.
Speaker Change: What makes it so darn exciting that's why we're able to get those daily loan commitments.
Speaker Change: We're looking forward to continuing this momentum into our coming quarters assuring further updates on the transformed company and a new platform.
Speaker Change: In 2025.
Speaker Change: Right, let's open it up for questions go ahead operator.
Speaker Change: Thank you very much at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Sameer Joshi of H C. Wainwright Shamir Your line is open.
Speaker Change: Hey, guys. Thanks, Thanks, Patrick.
Speaker Change: We have discussed this before.
Speaker Change: Before the $1 6 billion ambition your commitment is.
Speaker Change: Not dependent on any change in administration.
Speaker Change: Yeah.
Speaker Change: Can you explain what are the remaining steps before the money gets relieved and.
Speaker Change: Caters to the needs of the moment.
Speaker Change: So yes, you are correct. This conditional commitments a real commitment it survives administration changes they've designed it that way.
Speaker Change: And so yeah, we just got to go through and do the work right now I think that everyone in the.
Speaker Change: Everyone is trying to sort out what's what we're so.
Speaker Change: Well, we can't talk about specific details of that according to their rules. That's just the way it is.
Speaker Change: So we have to go and once the dust settles a little bit we'll have more insight into that and then the Madison and what we can say when but it does survive as the important thing and now it's about how can we still got to push forward and get it done.
Speaker Change: Our project is a good one so that's the thing that people forget this.
Speaker Change: This is our project is a good one it creates.
Speaker Change: A huge number of jobs.
Speaker Change: Our project capital is high when we deploy in part because these are really good paying jobs that we're doing to go.
Speaker Change: Higher these thousands of people to build things and so it plays to lots agendas.
Speaker Change: And remember at Charles River study shows that it creates $170 million regionally in South Dakota and it creates.
Speaker Change: Tax revenue so it's a good solid project and it makes money right.
Speaker Change: So it's a good overall project.
Speaker Change: That's what makes it yeah.
Speaker Change: Its effects.
Speaker Change: Great.
A job creator and it is.
Speaker Change: Traditionally Republican sweep, so yeah and theirs.
Speaker Change: Yes, and Theres one other important thing that everybody seems to forget is that these net zero type system that we put together the cash cost of our product would be.
Speaker Change: Competitive with Petro jet it's in that realm.
Speaker Change: So that people forget that this isn't like it.
Speaker Change: It's a free handout for.
Speaker Change: Carbon no it's not yes, the carbon credits.
Speaker Change: Remember, it's one dollar carbon credit value creates $6 back to the general economy. According to Charles River last pretty important and then of course, there's the RIN value and all the rest but.
Speaker Change: Those all those kind of values the rins the CFS what comes down the Pike from other federal programs.
Speaker Change: Those things.
Speaker Change: Are they help pay for the capital and you'll notice this thing as a conditional commitment without the finalization of 45 Z. So much would ask themselves why I can't talk about a detail, but you've got a notice that.
How did that happen.
Speaker Change: Yes, yes very interesting.
Speaker Change: On the media from you guys.
Speaker Change: Acquisition.
Speaker Change: Mark here.
Speaker Change: I know it will be.
Speaker Change: 2020 fly but.
Speaker Change: From now until then.
Speaker Change: Are there any financing discussions are there any other steps that need to be accomplished milestones to be accomplished before the mou authentic.
Speaker Change: Yes, we're going to do that and so we've been doing of that process and it's going really it's going quite well, we're very pleased with it.
Speaker Change: Okay.
Speaker Change: And then the cultivate the acquisition of course.
Speaker Change: Back to <unk>.
Speaker Change: Any plan.
Speaker Change: Integrating the rating programming to this.
Speaker Change: And then can be independently.
Speaker Change: Maybe.
Speaker Change: They're going to be there together theyre already been integrated and it.
Speaker Change: It makes for a more complete offering and of course for everyone Who's listening the big game here is.
Speaker Change: It's not good enough just to say Oh I hope my corn is good you got to prove its good with real data that's the thing that gains goodbye to partisan support.
Speaker Change: And it's true also in the marketplace, you got to be able to show its not.
Speaker Change: Even if it's if it's corner soybeans or something.
Speaker Change: Not just.
Speaker Change: Growing it that counts is how did you process it whenever the energy to use and you got to track things all the way through the whole supply chain. At this point is lost on the world at large it seems to us and that creates the opportunity for Verity now cultivate AI has some outstanding tools available for that are in operation and working with.
Speaker Change: Farmers and helps them measure their crops and how the crafts performing are what's needed in the fields and it's valuable and so thats one more component and you'll look for us as we grow verity to add in.
Speaker Change: Other technologies into the overall portfolio of parity.
Speaker Change: Interesting.
Speaker Change: That does.
Speaker Change: We agree to the big opportunity.
Speaker Change: Why market Mexican address.
Speaker Change: On the R&D front.
Speaker Change: I don't know you intentionally not.
Speaker Change: So.
Speaker Change: Environmental attributes.
Speaker Change: Do we.
Speaker Change: Among the <unk> the balance sheet.
Speaker Change: Yes.
Speaker Change: What is the basis of valuation for that move.
Speaker Change: On the higher carbon intensity, while you are right.
Speaker Change: We gauge.
Speaker Change: Should we see that the inventory will be translated into revenues going forward, yes input sequent month or it will be at the higher.
Speaker Change: They won't be able to get.
Speaker Change: Yes, it would be at.
Speaker Change: Yes, so what we expect to happen, we're holding them right now because we expect to get the pathway approval in California, we can see that they are working on it we've done the site visits and stuff. So we know that it is progressing.
Speaker Change: Question when it gets done.
Speaker Change: And if we hold the gas.
Speaker Change: And so if we have a pathway then we can get the higher value for it rather than selling it at the 150 pathway and.
Speaker Change: And so if the question is what is it currently booked at and the inventory is that that's what you were asking yes.
Speaker Change: Great.
Speaker Change: I don't know why we're going to plan on monetizing it at the.
Speaker Change: At the full value.
Speaker Change: Well have to get back with you in check.
Speaker Change: Linda Lennox telling me, it's my it's booked at minus 150.
Speaker Change: Okay. Okay.
Speaker Change: Good.
Speaker Change: And then last question.
Speaker Change: <unk> the cost operating cost slightly lower.
Speaker Change: Should we expect these new lower levels.
Speaker Change: Other operating costs on <unk>.
Speaker Change: No.
Speaker Change: Yes, those line items.
Speaker Change: Yeah, Stacy because who runs that plan. She is on a mission to keep driving out cost. So I hope that's what I expect.
Speaker Change: Sounds good.
Speaker Change: Yes.
Speaker Change: Thanks for taking my questions and congratulations on all the progress.
Speaker Change: You very much.
Speaker Change: Thank you very much one moment for our next question.
Speaker Change: Our next question comes from the line of Samir <unk> J John of UBS. Your line is open.
Speaker Change: Hey, how are you guys feeling about raising your I guess equity question of a project financing how are you guys looking towards that.
Speaker Change: Yes, so there's a lot of interest in it.
Speaker Change: The thing about <unk>.
Speaker Change: Conditional compared from the day we.
Speaker Change: Modal office is that.
Speaker Change: The amount of deals you said John absolutely.
Speaker Change: Mindboggling detail of.
Speaker Change: That helps.
Speaker Change: All the questions that can be asked at pretty much been apps.
Speaker Change: And people know that there's built in extra cost to protect the project financially and that benefits equity holders to so yes. There is a lot of interest in it. So we've got to go work through it with the.
Speaker Change: With the equity firms.
Speaker Change: Got it Okay and then how was your annualized RMG production Lucky this year compared to last.
Speaker Change: I think last year, the actual the right annualized rate it was at three in a quarter or something like that we're up about.
Speaker Change: 325000 million Btu last year. This year, we're going to be 400000 million btu or so.
Speaker Change: Okay.
Speaker Change: Instantaneous rates were above that.
Speaker Change: Okay perfect. Thank you.
Speaker Change: Thank you very much one moment for our next question.
Speaker Change: Our next question comes from the line of Greg humor at LTI, Greg Your line is open.
Greg Humor: Hi, everybody.
Greg Humor: Can you talk more about that conditional loan.
Greg Humor: Okay.
Greg Humor: When did you say you'd be giving us more information on that.
Speaker Change: When they tell us we can okay. Yes, it's one of these things where they're super duty.
Speaker Change: They're super what.
Speaker Change: Last year, Dr. Gruber, one moment for technical issues bear with US. Please thank you very much.
Speaker Change: Hello.
Speaker Change: Thank you very much for standing by.
Speaker Change: Hey.
Speaker Change: Dr Gruber either.
Speaker Change: Hello.
Speaker Change: Hello.
Speaker Change: So we're back Okay I agree with you there, yes, I am here, okay, sorry about that.
Speaker Change: Yes.
As far as the deals so they'll let you know and then Youll pass it on to us, but the big thing I heard walk up from the previous question was that survives the change.
Speaker Change: Alright, President so that's good.
Speaker Change: Good yeah, Okay, because I was very concerned about that so I'm glad to hear that.
Speaker Change: That's the most important thing and the.
Speaker Change: Other part I was trying to get across is that our project plays to both sides of the aisle where in a red state. It's a creating jobs, it's real real economic development rural infrastructure development lifts the price of corn in the region.
Speaker Change: Big economic impact.
And it also sets a precedent and it's think of it instead oil from out of the ground leases.
Speaker Change: Oil at the at the surface of the ground captured in the paradigm Buster is yes, it can be cost competitive with oil Hello, that's an important point, it's not that these things are just pie in the sky, it's going to cost 10 times that no. That's not the case of a project like ours. That's what makes an important that's why.
Speaker Change: We get lots of bipartisan support.
Speaker Change: And this is something I should probably already know, but as far as.
Speaker Change: Steel.
Speaker Change: Its coming from things like corn, and soybeans and <unk>.
Speaker Change: Cornstarch cornstarch.
Speaker Change: So yeah, just throw the business system works like this they do climate smart corn, so depending upon how you grow corn, you could actually improve the carbon footprint and actually make it negative not that we would get credit for that anytime soon but in the future. We would you take the corn kernel you fractionate, the corn kernel in the process and youre using the carbohydrate portion and making that.
Speaker Change: Ethanol and then ethanol into jet fuel in the meantime, you're generating enormous quantities of protein in fact on a tonnage basis at three times.
Speaker Change: The tons for making protein than it is for jet fuel in a plant like this and then you also get a bunch of oil.
Speaker Change: Oil that you can use for the food market Orissa solid into one of the other industrial markets for oil and so youre capturing value.
Speaker Change: From the protein oil and then the carbohydrates transformed into jet fuel that's how the business system works and then we're applying renewable energy across the whole of it and that's what drives it down to a net zero one of the important analyses that people need to do and pay attention to is that when we're going to very low ci scores or even negative in <unk>.
Speaker Change: Our business system when we when we include carbon capture it's pretty darn interesting in that that makes it makes it more valuable why is it more valuable because when we take that net zero fuel and if I have one gallon of our net zero fuel and blend it with one gallon of petrol.
Speaker Change: Jack I get if I got two gallons when I'm done blending I got two gallons at a 50% reduction think about what that means in the marketplace. That's a big deal in terms of value that is created for the customer.
Speaker Change: A lot of other technologies that are out there in our space they struggled to get to a 50% reduction.
Speaker Change: You can get to gallons for one by blending one of ours, that's what's possible here.
Speaker Change: And in the future World I think.
Speaker Change: We're just talking with a bigger whether group today talking about future looks like and it's can be driving the ci scores down a negative that because it takes less gallons to move the needle in the marketplace. That's the kind of technologies and why they are important and why people care.
Speaker Change: High quality to make your SaaS, how high quality just the corn have to be for instance, if we have a drought condition and its inedible corn can you work with that or does it have to be very high quality corn no no. So the core and that has grown in United States is 91% is actually grown for food none of that none of that.
Speaker Change: Thats used for food.
Speaker Change: What we're using.
Speaker Change: This is steel corn, yeah, yeah, so sweet corn and all that kind of stuff that's not we're talking about here okay.
Speaker Change: Thats in a cornflake box or in a bag, a corner and corn or corn, but none of that this is a different kind of corn its feel corn standard field, corn, and instead of making into hybrid more high fructose corn syrup, or making feeding the cows and making given the six stomach because you know when your feet too much sugar to a colleague against six stomach.
Speaker Change: And then Bert methane well how about we this we don't do that we separate the protein from the carbohydrate now they're happier cows and in fact, that's how the world is working.
Speaker Change: No no no the standard fuel corn.
Speaker Change: Drought conditions will not impact.
Speaker Change: Not not really not the way you are talking about it.
Speaker Change: So that's one of the beauties of the supply chain is that it's well established fundamentally no new creation of this this is about what we've done in this business system is taken giant.
Speaker Change: <unk> business systems that exist and we're adapting them to make them Decarbonize and were even the technologies that we're using and converting the carbohydrates from the corn into jet fuel Rubin Coopting things are already existing in other industries, and bringing them all together and putting it with renewable energy and Thats, how we achieve a net zero so.
Speaker Change: In that sense, we don't have technology risk like you do a new magical things yes.
Speaker Change: Yes, we're boring we use things that work for sure at giant scale, that's what we're doing taking co op.
Speaker Change: Do you have any relationships with other countries like I think at one time, maybe still do with India. For example are you still having any partnerships overseas. Yeah. We do we do we work with price all the time.
Speaker Change: And are there any other companies so when they flew jet fuel in India that was ours.
Speaker Change: What kind of when you need it so yeah. We've had many discussions we stay involved with them and then in other parts of the world too. So it isn't just that yes. We are very focused on execution here, we love our net zero one project wanted to get that done I want to get it financed proved the point that these things do work financially and then get on with it and then we are.
Speaker Change: We want to build our net zero north plant get it.
Speaker Change: It going and get it financed up there at in North Dakota, because it's a great site already haven't sequestration right. There on site and we have other sites here in the states, where we are in discussions in other parts of the world as well.
Speaker Change: Okay, Lastly, I'm sorry to take some time is there any plans to dilute this current share base.
Speaker Change: In the near term.
Speaker Change: No.
Speaker Change: Okay.
Speaker Change: You may begin.
Speaker Change: Raising capital through debt.
Speaker Change: Is that one yes so.
Speaker Change: So we don't yes, okay. So let me add more color to this to finance its going to get project level financing for net zero one that means it's a separate company then GMO we have already spent.
Speaker Change: Spent.
Speaker Change: $210 million or so in the development of this project that gets contributed as equity into the project by the time. This is finally done and we get the financial close maybe we'll have spent $250 million that gets credited to us as a equity contribution in the project and we get ownership for that it shouldn't take any more capital unless we are in the mood to spend more.
Speaker Change: Capital down there.
Speaker Change: And then as far as.
Speaker Change: Anything else we've got.
Speaker Change: We're doing retro acquisition.
Speaker Change: Were bought were bought three things actually is the way to think of it we bought an ethanol plant, we bought accs plant, where it actually operates.
Speaker Change: And we also bought <unk>.
Speaker Change: <unk> field of poor space under the ground that can be expanded that's pretty darn important too and so.
Speaker Change: To finance that we're bringing in that so no I don't see us having to support these two projects I don't see any need to raise capital at a <unk> level.
Speaker Change: Okay.
Speaker Change: More than enough cash in the balance sheet alright. Thank you Dr. Gruber appreciate it.
Speaker Change: Thank you very much one moment for our next question.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Peter Gastric of water Tower Research Peter Your line is open.
Speaker Change: Thank you very much so thanks for the presentation of the day and congratulations to Dr. Gruber and team just really a transformational quarter there.
Speaker Change: The question on Ccs.
Speaker Change: Carbon pipeline of tourist Adhibit snag with this referendum in South Dakota.
Speaker Change: <unk> alright.
Speaker Change: <unk> already has the industry lowest Ci score. So TTS is kind of a nice to have so to speak I understand that.
Speaker Change: Still would be interested in your thoughts there and also related to that could you discuss how retro it could be brought in.
Speaker Change: STS option or empty one so considering that we've got some business there between the two between ANZ. One of <unk> is that something you can work with in terms of logistics or is that something that's not on the table. Thank you, yes sure. So what was so bizarre about that referendum in South Dakota is that it was a landowner wrightsville people, commonly talked about as the pipeline.
Speaker Change: Referendum, it wasn't a pipeline referendum it was about making sure that people get paid more money. If a pipeline went through and they had more protections. If a pipeline went through that got defeated that's astounding. What you saw with a bunch of Actavis talk about it as this is a pipeline approval. It has nothing to do with pipeline approval that wasn't what it was.
Speaker Change: At the astounding that it even gets out that way and that's what happens just like you're kidding me now so it doesn't change anything that authority rests in the public Utilities Commission.
Speaker Change: That still hasnt changed one bit and so this is nothing has changed from.
Speaker Change: Fundamental real life standpoint, what has to happen. The ball is in Summit's court. They tell us. They are moving forward that got a plan to move forward, great and we'll help them to get people educated about what really goes on with this pipeline I mean, my goodness people are posing a C O two pipeline and guess what it's the Green Bar Act.
Speaker Change: It's green people, who are trying to do that and is that because they think it's somehow dangerous what.
Speaker Change: They need to get we got so much education to do with people. So it will take some time, we will get there and.
Speaker Change: And our position is is that in South Dakota.
Speaker Change: There is a I think.
Speaker Change: Well when you're putting up a pipeline you also have respect landowner rights and someone has done a great job working on that too and making sure that people are in cooperation.
Speaker Change: Displaying.
Speaker Change: Is playing up our fears on all sides.
Speaker Change: Good for anybody remember get this for this was a piece of data I want everyone to understand for every gallon of jet fuel burn it makes.
Speaker Change: <unk> 1.5 pounds of Sidoti <unk>, that's also true of gasoline.
Speaker Change: 21, five pounds for each time, you burn a gallon of gas at 21 five pounds a few to that goes the year unless of course, yes, the ethanol in which case, it's only 18 those numbers come from the energy information agency.
Speaker Change: So people don't realize that this is a real issue. It's a big issue. It's a tremendous amount of say the pipeline itself is capturing.
Speaker Change: <unk> carbon biogenic carbon.
Speaker Change: <unk> two from the atmosphere you see all this talk all around the world that people want that captured well here's a way to do it and now you have environmental groups opposing it directly in opposition to what they say is true what do they want more fossil stuff burn are you kidding. So it's this whole yeah, a lot of education work to do here, but I think it's a practical matter if.
Speaker Change: Got it.
Speaker Change: Why.
Speaker Change: People of <unk> are people of South Dakota should be punished.
Speaker Change: And have markets work around them makes no sense to me I don't understand it why would you want to have.
Speaker Change: Advantaged corn Y at our stand touch it has to be competitive. So it's just it's going to take work, but as far as decision making goes that balls.
Speaker Change: All about still in the PUC someone's got a plan will work with these guys now in the meantime.
Speaker Change: What you could take some time to get that pipeline built in which case, we could we could rail stop up to our site up there at.
Speaker Change: Sure.
Speaker Change: And Richardson at our net zero, one north site we.
Speaker Change: We could do that.
Speaker Change: We can do that and yes, it costs, a little more but you know what the economics look like they work.
Speaker Change: So.
Speaker Change: And of course, if we ever believed.
Speaker Change: That there really was never going to be a pipeline will then what Dakota has a big time problem way bigger than something we can deal with and in which case.
Speaker Change: It's probably not the place to be.
Speaker Change: Now that's all stuff that we'll have all worked through developer point of view because as far as I can see right now.
Speaker Change: Pipeline I think it's still going to happen.
Speaker Change: It's just a question of when.
Speaker Change: Okay. That's great. Thanks, very much Dr Rubin.
Speaker Change: Thank you very much one moment for our next question.
Speaker Change: Our next question comes from the line of Emily Sorensen Sorenson farms Emily Your line is open.
Emily Sorensen: Yes. Thank you I guess on the coat tails that last gentlemen.
Emily Sorensen: Could you will you still go forward when the loans approved to build start building without the pipeline.
Speaker Change: I think we're going to we're going to make sure we're going to make that case now the way that that case has to look at is it's got to be attracted to wall Street and the equity investors. This is the thing that.
Speaker Change: We will be focused on and we.
Speaker Change: We could do that but it is one of these cases, where.
Speaker Change: Hi.
Speaker Change: Like I say.
Speaker Change: We could rail step up and help solve the problem Theyre definitely that's the beauty of us owning our own sequestration site.
Speaker Change: So the answer is yes.
Speaker Change: It could happen.
Speaker Change: But I got to tell you.
Speaker Change: There is a bigger issue at play here about business in South Dakota.
Speaker Change: And and how people respond the bigger issue that needs to be understood and we're going to be working on it because we have options about other places we do.
Speaker Change: So is this kind of a.
Speaker Change: Can't give definitive answers I'm going to say, we're going to execute this project, we're going to get we're going to work and make N Z project number one happen.
Speaker Change: I wanted I wanted to Lake press in South Dakota, that's what I want and were going to do our very best to make that happen and convince everybody now.
Speaker Change: I say that pipeline is important.
Speaker Change: Why everyone would want to give away value or not.
Speaker Change: Is like.
Not a well understood issue.
Speaker Change: So its work to be done is what I would say.
Speaker Change: Okay, and I guess my second question and last question is.
Speaker Change: Working backwards I guess, but with the new administration I know he is pro ethanol and pro farmers. So I get that if he is not pro green deal working backwards, where you give credits to the the airlines for their carbon neutral if they lose those.
Speaker Change: Credit is with that effect.
Speaker Change: What they purchase.
Speaker Change: What's interesting about that is there isn't that credit that the airlines get its in a section. Our ABL section 45 is the the way that the section 45 Z works has quite broad bipartisan support the reason is to get our credit tax credit.
Speaker Change: <unk>.
Speaker Change: The tax credit.
Speaker Change: To get it even in the EBIT to get it get on the scoreboard on the tax credit you have to do a 50% Ci reduction, meaning the carbon score reduction by 50% you got to get 50% less emissions.
Speaker Change: And then for every point of reduction you get rewarded further you also have to prove how you did it with bullet proof information. Okay. Now that means it's not a broad bucket giveaway, you actually got to work hard to get this we liked that approach because it start.
Speaker Change: That that can get bipartisan support when it's a broad bucket giveaway that.
Speaker Change: Causes rock drawing from every side that there is at different points in a political lifecycle here it's.
Speaker Change: Set up so that it goes down this path.
Speaker Change: You got to prove what you said, you're delivering you give out a validated abbott audited make it transparent and then get credit for it I liked that approach. That's the right approach because that way, we can build credibility and stop all this fighting because of the data the data.
Speaker Change: So we like it a lot.
Speaker Change: And they've got to finalize the rules and all that kind of stuff and we want to see it extended it seems to be the good bipartisan support for that too now as I mentioned the conditional commitment we have.
Speaker Change: It was given to us without a finalization of section 45, he that is telling isn't it in that.
Speaker Change: D O.
Speaker Change: Thanks that marketplace will accommodate it somehow.
Speaker Change: No it's not.
Speaker Change: Is it important yes, so the right thing Yeah, I think it was I think that portion of that highway bill was well done.
Speaker Change: And I think they'll have the new administration will have their hands full on doing the things that don't make sense. This one does make sense and remember every dollar tax credit every dollar tax credit under 45 Z returned $6 back to the general economy, That's what Charles river's did the analysis and published.
Speaker Change: So that's a big deal.
Speaker Change: And it's real economic development, it's jobs, it's about energy infrastructure, because with net zero. One you also get a bunch of wind energy.
Speaker Change: Why would it ever be built there there'll be no demand for it.
So this.
Speaker Change: This is about economic development job creation, it's about.
Speaker Change: If my if the plant was built and paid off depreciate and paid off it competes head to head with Petro jet except for the footprint would be net zero.
Speaker Change: So that's and we're and we're not and we're not.
Speaker Change: Talking about getting rid of jet fuel anyway.
Speaker Change: We're going to work together I mean, it's not one or the other you can work together.
Speaker Change: You can make too.
Speaker Change: That's the thing I think people forget you don't have to do a 100% SaaS you don't have to do 100% jet fuel you can do a combination and everybody can be happy you got it and so that's the thing that.
Speaker Change: Is so important is this carbon abatement the jet fuel itself is just jet fuel made from renewable carbon but its just jet fuel has to meet the specs could fly it if it wasn't just jet fuel and youre going to blend it with Petro jet and so the idea is that the more carbon the lower the carbon score we can get the more carbon negative we can make it less of it we have to make to move the needle.
Speaker Change: And the overall emissions of the blend that is a big deal and remember this is using all existing infrastructure, but the same thing as possible with gasoline and diesel fuel. We can do the same thing those are all possibilities. We can do those and so that means you can.
Speaker Change: A combustion engine of whatever type and we can drive the emissions down that's what this technology that we have holds as a promise.
That's what makes it exciting it's a different game to play about whats possible and when you take it then start thinking about.
Speaker Change: <unk> energy infrastructure and energy security.
Speaker Change: You won't see this is going to be spread out across the country in places it's not all concentrated on the Gulf Coast for example.
Speaker Change: So it's a different game to play in the long run and I think that from having all the discussions with political people over the last couple of years it's been.
Speaker Change: They didn't know as possible. So we just showing the economics openly Sean here's what's possible, it's pretty exciting and it changes how they think about things.
Speaker Change: Okay.
Speaker Change: Well. Thank you. Thank you and wish you all the best.
First yourself I wish him all the best you bet. Thank you for investment right.
Speaker Change: You bet.
Speaker Change: Yes.
Speaker Change: Thank you very much at this moment I am showing no further questions I would now like to turn it back to Dr. Gruber for closing remarks.
Dr. Gruber: In fact, I'd like to thank all the investors for investing with us for quite a ride lately.
Dr. Gruber: And that's going to get I hope better from here.
Dr. Gruber: <unk>.
Dr. Gruber: We definitely whenever there is an election like this it causes people to go what.
Speaker Change: All this crazy talk.
Speaker Change: What practical ideas job creation matter.
Speaker Change: <unk> solutions to carbon matter there is a marketplace, that's growing that demands that there'd be carbon abatement.
Speaker Change: So that's what we're talking about is serving a new segment of market that demands it.
Speaker Change: And so we have a practical solution, yes, we got to get that first plant finance getting.
Speaker Change: The ground and do it at scale and show people, but.
Speaker Change: It's an exciting exciting opportunity and we are extremely well positioned in the furthest along in this space.
Speaker Change: Thank you all for joining us on this call today.
Speaker Change: Thanks for your questions too I appreciate it.
Speaker Change: Thank you very much for your participation in today's conference. This does conclude the program and you may now disconnect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].