Q1 2025 Gevo Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the GEVO Incorporated First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: Expand the corn supply and add additional plants like alcohol to jet we've got railroads. Good roads. The sequestration operation has had a few years of operation without issue. The carbon sequestration well is probably one of the best if not the best in the whole country, giving us geological structure and size it.
Speaker Change: Certifies the housing year, well, we own it being.
Speaker Change: <unk> vertical is an advantage we bring to a pleasant surprise to North Dakota, its governor legislators and leaders in agriculture gas and oil and energy more broadly have all been very welcoming they're interested in growth in North Dakota, well so are we.
Speaker Change: We believe the North Dakota site is ideal for an alcohol to jet plan, we have a great corn supply land sequestration already.
Speaker Change: Already well run well built ethanol plant that's working great. In fact, we think we can get that and atg plant built faster.
Speaker Change: Up there in North Dakota, South Dakota, leveraging design and engineering, we've already done for our Atg 60 plan.
We believe we can keep the capital cost down to making the Atg project gets even north Dakota, even more attractive.
Speaker Change: Part of this can be done by starting with a smaller plant in the first place in this case 3 million gallons per year of Atg, maximizing modularized nation, which reduces risk at the project and lower labor labor costs.
Speaker Change: It's exciting enough that several companies.
Speaker Change: Around the world, who approached us for plants in their countries.
Speaker Change: We're on the right track for growth.
Speaker Change: <unk> made progress in selling voluntary carbon abatement now this is separate than the L. CFS credits in California, or the 40 <unk> tax credits or other carbon credits. These are actual downstream customers, who buy carbon abatement in dollars per metric ton Paul Bloom, our chief business Officer, Chief Carbon officer will talk about in a few minutes.
Speaker Change: Here's something to think about the recent volumes of carbon sold.
Speaker Change: And with other fuel contracts, we think we have about half.
Speaker Change: Have the potential to go North Dakota alcohol to jet plant sold out.
Speaker Change: The traditional commitment from the department of energy is still in place for our Atg 60 project in South Dakota, and we expect it to stay that way, you've actually making progress and eventually closing at the DIY is still putting people in place. We know there's work to do on their side, but we work to do on a variety of fronts to changing certain offtake terms to make contracts more amenable to the Doe.
Speaker Change: And we still need to learn what the plan is for the summit pipeline.
Speaker Change: LOE for example to spend capital develop a virtual rail pipeline to our North Dakota site only to find out that summit as they continue to expect.
Speaker Change: Have solve their pipeline issues.
Speaker Change: While we expect that we will get the Doe loan Don eventually we aren't waiting around to get atg capacity deployed head. So you can see why we wanted to execute on North Dakota site with all of its advantages.
Speaker Change: As we have said over and over to you is not a one trick pony, we don't even need to depend upon alcohol to jet to be cash flowing however that atg that alcohol the growth opportunity is a great.
Speaker Change: <unk> opportunity for the future.
Speaker Change: And its growth.
Speaker Change: <unk> is going to be needed in this country going forward from a basic supply and demand point of view.
Speaker Change: Shall we import the jet fuel or make it right here in the USA well, we believe that <unk> should.
Speaker Change: We made here in the USA, we believe that alcohol to jet is the most economically advantaged way of adding capacity in this country have that jet fuel made from vegetable oil used cooking oil or animal fat is the second best way economically, making more jet fuel for fossil oil in this country would require a new.
Speaker Change: <unk> refinery to be built now could that happen I suppose it's remotely possible.
Speaker Change: However.
If you actually look at full cost reduction I think that on a T J plant using ethanol as a raw material.
Speaker Change: It would be a similar cost to the jet fuel made from oil on a cash cost basis.
Speaker Change: We actually think it will be cheaper to deploy alcohol to jet overall.
Speaker Change: Now as you all of this debt.
Speaker Change: That we can reduce and even eliminate the carbon footprint and that there are markets and customers that are willing to pay us to do so we think it provides a tremendous opportunity.
Speaker Change: We calculated over the next decade, the USA could use more than 30 alcohol to jet plans. If they were 60 million gallons each and of course that means more if they are a little bit smaller.
Speaker Change: Theres enough ethanol capacity to pull this off Theres also enough corn capacity with no expansion of farming.
Land use.
Speaker Change: All of us across the whole value chain are getting this figured out yes, we recognize that there's a lot of noise in the market.
Speaker Change: We like the fundamentals and the fundamentals indicate that this is an exciting time.
Lynn: I'll turn it now over to Lynn.
Lynn: To go over the numbers.
Lynn: Thanks, Pat let's go over the numbers, we ended the quarter with $135 million in cash cash equivalents and restricted cash.
Lynn: Combined operating revenue and other net income was $30 9 million for the first quarter.
Lynn: RMG subsidiary generated $5 7 million in revenue during the quarter.
Lynn: This reflects an increase of $1 7 million compared to the previous year.
Lynn: Primarily driven by the increased CFS credit generation due to our improved carbon score in that program, partially offset by lower RIN prices.
Lynn: Regarding our income from operations and non-GAAP adjusted EBITDA numbers.
Lynn: Zebra, North Dakota, or zero and be for the two months of February and March.
Lynn: Income from operations was $5 million and adjusted EBITDA was $1 8 million, which does not include expected growth. This year from monetizing the ethanol 45.
Lynn: At zero RMG income from operations was $1 1 million and adjusted EBITDA was $2 7 million last quarter. This also does not include <unk>.
Lynn: <unk> growth for this year for monetizing the biogas 45.
Lynn: So we have positive momentum with adjusted EBITDA in those two segments turning to our <unk> and <unk> fuels segments, which include R&D project development and other operating costs, including the development of our <unk> J projects combined net loss from operations was $21 7 million and adjusted EBITDA loss.
Lynn: As a combined $19 9 million last quarter.
Lynn: Companywide consolidated loss from operations was $20 1 million last quarter with non-GAAP adjusted EBITDA loss of $15 4 million.
Lynn: We expect continued adjusted EBITDA improvement throughout the year driven by the monetization of 45 D increased RMG value from our new negative $3 39, Ci score and ongoing performance at <unk> North Dakota.
Chris: With that I'll turn it over to Chris.
Chris: Thanks, I'll expand a bit more on operations this past quarter since.
Chris: Since completing the acquisition of <unk> in North Dakota at the end of January we've been working towards integrating that site and to the overall business of GMO and laying the foundation for growth of the site.
Chris: We're evaluating a number of great opportunities and we have made progress on engineering and a T J, our alcohol to jet plant that we could deploy there.
Chris: This engineering effort has leveraged our atg design of our Lake Preston site, which is saving us time and money for development and this is all part of our copy paste approach to building out a T J capacity for ourselves and for others.
Chris: Regarding operations at <unk>, North Dakota, Steve US first quarter 2025 results reflect the impact of just two months of February and March from <unk> North Dakota.
Chris: During those two months Hugo North Dakota operated exceptionally well producing over 11 million gallons of low carbon ethanol, while selling over 40000 tons of high protein animal feed.
Chris: 3 million pounds of corn oil all from less than 4 million bushels of corn ground.
As a yield of about $2 nine gallons of ethanol per bushel, which we're really happy with.
Chris: We see those as strong volumes and yields during two months of production and this reflects the consistent operational excellence of the facility.
In addition to producing those value added energy and food products, we captured and sequestered 29000 metric tons of carbon dioxide at the sites.
Chris: And with an estimated Ci score of 21 for our ethanol using the 45 Z greet model. We've avoided an additional 47000 metric tons of carbon emissions as a result of the use of our low carbon fuels.
Chris: At <unk>, where we convert Gary manure into renewable natural gas, we produced about 80000 million btu's of renewable natural gas last quarter, so across the <unk> operations, including the two months from <unk>, North Dakota, and three months of RMG, we generated over 100.
<unk> metric tons of carbon abatement last quarter.
Chris: With that I'll hand, it over.
Speaker Change: Thanks, Chris on the commercial front, we continue to make solid progress for our adjusted EBITDA generating businesses that Chris just discussed.
Speaker Change: And our alcohol to jet growth projects.
Speaker Change: Let me start with Jabil, North Dakota, and R&D as we are negotiating our first 40 <unk> tax credit sales.
Speaker Change: In December we received our form 630 separate approval notifications.
Speaker Change: From the U S Department of Treasury, and internal revenue service, which are required for section 45 Z credit generation the.
Speaker Change: The team has been working to put all the necessary pieces of these agreements in place and we anticipate finalizing them in Q2.
Speaker Change: As Pat mentioned, we're also developing our market position for the sale of durable carbon dioxide renewable credits where CVR.
Speaker Change: <unk> North Dakota is actively generating high quality carbon removals via Ccs for Biogen at carbon.
Speaker Change: Under the previous owners are GMO North Dakota facility was the first ethanol plant in the world to a Cvs or a public carbon registry and they made initial sales.
Speaker Change: Now we are in the process of expanding sales into that market in structuring the team under the leadership of our Chief business Development Officer, Alex Clayton.
Speaker Change: We expect to share more announcements soon.
Speaker Change: We help meet the needs of global customers looking to reduce their carbon footprint with high quality <unk>.
Speaker Change: On the SaaS front, we signed a groundbreaking offtake agreement with future energy global.
Speaker Change: Under this deal <unk> will acquire scope, one and scope three emissions credits tied to 10 million gallons per year of fuel from our future Atg production.
Speaker Change: That value is in addition to and separate from the physical fuel RIN value and other state and federal tax credits, we expect to obtain.
Speaker Change: And it shows the market value of our carbon attributes are separated with carbon attributes from the physical fuel. We anticipate this unique book and claim approach with <unk> will be a market accelerator that will expand as we work together to provide greater flexibility for corporate customers Airlines and airway lessors.
Speaker Change: To access the solutions they need.
Speaker Change: Finally, we are actively pursuing opportunities to develop and deploy our atg plant designs and business system with partners around the world.
Speaker Change: We have the IP engineering playbook commercial capabilities digital supply chain tracking solutions through Verity and the network of partners to Derisk and scale this new industry.
Speaker Change: We don't plan to own 100% of every plant in many cases will be developers licenses. The strategic investors will have more to share in the future as these opportunities to develop.
Pat: That back to you Pat.
Pat: Thanks, Paul.
Speaker Change: I want to conclude by saying that we are showing the domestic energy production can go hand in hand, with economic growth carbon reduction production of food.
Speaker Change: You can get all of these things together it is done right and that's what we're all about.
Speaker Change: It's more than about just fuel, it's about creating American jobs supporting farmers strengthening the real economy and unlike a lot of others. In this space, we don't have to sit around and wait for government guidance.
Speaker Change: How sustainable agricultural impacts the 40 <unk> tax credit we plan on monetizing the 45 day this year, because you've already got attractive Ci score even without the sustainable agriculture.
Speaker Change: Stable agricultural via further upside potential for us if that happens.
Speaker Change: We believe that our verity business, where we can track and trace land use AG practices carbon put their crops in other raw materials.
Speaker Change: In addition to we can track the process energy needed to produce the products and consider all of the impacts across the across the whole of the lifecycle, making it all auditable by anyone ideally visible and most importantly, all based on science and data. This is going to be extremely important in the few.
Speaker Change: Sure.
Speaker Change: Want customers consumers to know that they're getting something REO for their money.
Speaker Change: We know that with data we can push back on the false narratives around land use yes, we can measure land any of us can anyone in this industry can if the desire to do so it's a balance sheet that they can we have the ability to do so we can push back on the food and fuel narrative real data shows that by using row crops.
Speaker Change: That adds protein in nutrition to the food chain, it's more economical and yet you can still produce.
Speaker Change: Materials to make energy products. The right paradigm is about producing energy and food concurrently it's better for the world better for economic development.
Speaker Change: Verity will help make this all clear there.
Speaker Change: There is certainly more to talk about but that wraps up our prepared remarks.
Speaker Change: We're now ready to go to the open line for questions. Operator. Please go ahead.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Sean: Our first question comes from Sean <unk> with Jefferies. Your line is open.
Rodney Mcmullen: Hey, Tim This is Rodney Mcmullen with dialing in we're just Sean Delaney.
Speaker Change: Congratulations on a solid quarter, despite a weaker than expected crush margin environment.
Speaker Change: You ended the quarter with 135 million in cash equivalents and restricted cash I'm aware you don't normally provide guidance for cash, but given then G for North Dakota acquisition.
Speaker Change: <unk> million Capex span for T J <unk> and just some other general maintenance spend how should we think about the cash cadence for the year sure, where we're going to be spending $40 million this year on.
Speaker Change: <unk> 60, we dialed back the spending on that although we are doing some work and shifting resources into the Atg 30, as we're waiting for the timelines to start out for the survey.
Speaker Change: So that'll be that'll be less.
Speaker Change: We also well I know for a fact, we're also planning on refinancing.
Speaker Change: Our R&D plant, we announce that.
Speaker Change: Shortly as to what we're doing there.
Speaker Change: Alright.
Speaker Change: Also free up some cash so you're right, we don't give guidance on cash, but we should be a pretty pretty strong shape through the rest of the year.
Speaker Change: Got it I understand and then just as a follow up on.
Speaker Change: Relating to Atg 30, I don't believe there is a timeline disclosed on this project, obviously, it's smaller and modular how would that timeframe compared to Atg 60, yes that will be all thank you seem or sooner than <unk> 60 is my guess.
Speaker Change: We have been working on the Atg <unk> for for quite a time here and it is.
Speaker Change: Copy edit paste type of an approach and that we already have these designs worked out for the Atg 60. This is about making it smaller and but the concepts are the same which is that's actually the harder part getting lot of companies are going to fail because they simply don't know how to design a commercial plant well, we do that's our background so those kind of things.
Speaker Change: Have already been thought through so we expect it to be more straightforward. We also expect that it's going to generate a lot of interest because it's going to be a lot cheaper to build.
Speaker Change: Then in Atg 60 that has project financing so that's going to be very soon we will talk more about it once they have more numbers baked in and who also is going to participate with us up there, but it would be a project level.
Speaker Change: Game again for us in that.
It's going to be adding onto our site. So it's a pretty.
Speaker Change: Hi, it's actually quite exciting up there between the all of that is happening around the 45 Z I don't know and the ways and means committee and stuff and.
Speaker Change: Whats being proposed.
Speaker Change: Alright, this is going our direction finally.
Speaker Change: Thank you. Our next question comes from Amit Dayal with H C. Wainwright Your line is open.
Amit Dayal: Thank you good afternoon, everyone. Congrats Matt on all the progress great to see.
Speaker Change: Operating revenues and EBITDA is starting to come through.
Speaker Change: I'm, just curious with respect to the carbon abatement product great. It looks very interesting.
Speaker Change: <unk>.
Is there an established market for this already that you can tap into immediately or will there be some work.
Speaker Change: <unk> to be done to build that product and create the market work.
Speaker Change: Paul Why don't you go ahead and take this question. This is your this is your.
Paul Bloom: Yes sure.
Speaker Change: Amidst the question.
Speaker Change: There is already a market that's growing for these durable carbon dioxide renewables right. So if we choose to take that value and sell it separate from the fuel.
Speaker Change: They are traditionally classified as Beck's cvr's, so thats called bioenergy with carbon capture and sequestration. So.
Speaker Change: So that's really the market that we're that we're in today and continuing to grow our presence there, which again was really started with.
Speaker Change: With the work that the retro understood before we acquired Cubo North Dakota, now, we're really going to grow that business and look at it is the optionality between selling that carbon value with the fuel or separate from that fuel depending on what we see in the market.
Speaker Change: Understood. Thank you.
Speaker Change: And then with respect to 45, it looks like Youre getting a an extension on that.
Speaker Change: What has been proposed so far so that's really good news for you guys.
Speaker Change: <unk>.
Speaker Change: Are you potentially going to start monetizing this right away in <unk>.
Speaker Change: Potentially.
Speaker Change: Just wanted to see if I heard it correctly, we're getting positive EBITDA.
Speaker Change: In Q potentially or.
Speaker Change: Later in the year.
Speaker Change: Wanted to get.
Speaker Change: We had a little bit more concrete color on that yeah. So.
Speaker Change: Yes, we can we expect to monetize that sooner rather than later these are credits that exist.
Speaker Change: Theyre already proven our Ci scores are solid enough that unlike most companies ours are really solid I mean, we're metering carbon going down a hole.
Speaker Change: So, yes, we expect to monetize it and that will surprise the heck out of people right.
And then as far as the EBITDA positive go.
Speaker Change: That should be overall for the year, we should be EBITDA positive is what wed expect thats were shooting for it we're managing the cost side of things carefully.
Speaker Change: We see that we have these.
Speaker Change: Streams money that can come into us and we will use those but thats. Our goal is to do this because one of the questions that people always have they always ask me when you can raise more money Pat youre going to run out of cash or no we arent.
Speaker Change: Sorry, that's not the plan. The plan is we already have enough operations to be self sufficient that's the idea and we can execute projects. We have a wealth of golf to electro property portfolio Engineering portfolio project project portfolio of mature projects. It's time to go execute those things, but the idea of big burn with no outcome.
Speaker Change: No we will have to still get money for projects to execute whether we expand ethanol or we do a.
Speaker Change: But.
Speaker Change: Or we do atg do we expand ethanol well thats, what <unk> said, they're interested in great we'll find out.
Speaker Change: So we're pretty we feel pretty confident in.
Speaker Change: And where we are now in terms of 45 Z I was in D. C. All last week talking to Senators Representatives and their staff and I got to tell you. It's pretty strong support for 45, So I think they're going to get it done if they get the big the big Beautiful Bill done I think we're going to be in good shape.
Speaker Change: The principals in play I think our paper for pay for performance you've got to do something in order to get into the money. It's a very it's more narrow rather than wide, meaning you have to actually do something in the criteria remain stringent we are in good shape.
Speaker Change: Think that.
Speaker Change: Extending it through 2031 was at least a year better than I was expecting so I was kind of excited to see that.
Speaker Change: And the rest of it.
Speaker Change: One of the really important months theyre getting rid of the indirect land use.
As a component of measuring Ci score.
Speaker Change: Scanning because thats focused anyway, theres not any data that science space that supports that.
Speaker Change: And so that is one of the problems.
Speaker Change: And games that people play as they say well gosh, I guess I kind of waste feedstock it has a zero.
Speaker Change: No. They don't have a zero not really that's bogus.
Speaker Change: They have a charge distribute don't want to look at that well guess, what now they said low corn doesn't have it.
Speaker Change: Has a zero feedstock ILEC score as well cool that'll make it and improve.
Speaker Change: In the future of the Ci score even at our G by North Dakota plant to ending at our other operations and it also will help benefit the soybean people.
Speaker Change: And so this is one of the big Theres been a lot of game, playing and in the in the <unk> area.
Speaker Change: And how far where people are using counterfeit or the claims that people are using counterfeit.
Speaker Change: Oils and stuff. So it just goes along it's a brilliant idea they did a good job it makes sense it levels the playing field. The ICP is still scope pound oncor Sia and Europe.
Speaker Change: Because of their bias against U S agriculture, but overall I have to say.
Speaker Change: Pleasantly shocked surprised it's great. It's really good I hope, we get it done hope the OBL works and make.
Speaker Change: It will happen, but even if they don't we're in good shape. We're in the we're in the money from 40 <unk> already.
Speaker Change: Understood good to hear that congratulations guys. That's all I have thank you.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone again that is star one to ask a question.
Speaker Change: Our next question comes from Derrick Whitfield with Texas Capital. Your line is open.
Derrick Whitfield: Hey, good afternoon patent team.
Speaker Change: Hey, how you doing.
Speaker Change: Maybe staying on 45 would be for the first question clearly some positive news yesterday on the extension of the credits through 2031 removal of indirect land use but also decretion of a dairy R&D pathway, yes could you speak to the amount you expect to receive for ethanol dairy orange molecules.
Speaker Change: Well I'd say, it's proportional to the.
Speaker Change: The Ci scores so.
Speaker Change: When you have we are already at about a 20, Chris mentioned in his comments a 'twenty one and he rounded upward I'm rounding downward because I think theres a couple of other things we can do so but so it will be down in the <unk> before taking out indirect land use so that puts us down another eight to 10 points.
Speaker Change: That will be the lowest.
Speaker Change: The lowest for ethanol plant.
Speaker Change: And so when you figure there worse, what a couple of cents you got to get below 50% you've got to get a 50% reduction for you get the money okay.
Speaker Change: And then.
Speaker Change: We should be <unk> <unk> per Ci point so that's.
Speaker Change: It's going to be pretty healthy now what they are trying to do a sponsor economic development growth.
Speaker Change: Investment jobs, that's actually what they are trying to do.
Speaker Change: We are firm believers that tax credits have to have a sunset they should not last forever because that creates wrong behavior everything stick and.
Speaker Change: When you do that it really.
Speaker Change: People get Starry eyed and what they think they can do no the actually should help pay for our plant and its capital and the jobs that are created and that's the right idea and that is the approach that we're seeing this congress tick and their attitude that's great.
Speaker Change: So.
Speaker Change: It's significant.
Speaker Change: And then.
Speaker Change: On the R&D side that was fascinating caught me by surprise I was shocked that they included that because I wasn't expecting him to the issue had been that the one of the things when youre using a biogas or make you, but I guess, if you could do it rather than letting.
Speaker Change: Ever that raw material is just digestion spew methane in the atmosphere you can by using.
Speaker Change: The.
Speaker Change: R&D techniques or the processing you can collect that and you also avoid than methane to methane avoidance factor that goes into the LCA calculations. The appointed at the original 45 Z calculations. They just arish, everyone together, it was landfill or dairy or whatever.
Speaker Change: And what that means is for instance, if he was worth I don't remember exactly Derek was like 20 points or something.
Speaker Change: It was a.
Speaker Change: It was only like a negative 20 or something very small, but the averaged all types all LNG methodologies altogether.
Speaker Change: What they are calling out here now is that you kind of do it discreetly.
Speaker Change: More of like a California, where we are at a minus $3 33 to 39.
Speaker Change: Score so a bit of work to do to go figure that part out.
Speaker Change: In the meantime that doesn't stop us from already monetizing.
Speaker Change: That R&D credit, but I'll be very keen on seeing how all that dust settles the argument that the IRS.
Speaker Change: IRS had last time.
Speaker Change: There's too much work.
Speaker Change: And the working group in the prior administration is just too much work to keep track of it also based averaged everything.
This one called out that the critical go calculated that's very good for us because we have one of the best.
Speaker Change: R&D facilities in the country.
Speaker Change: So I can say I was this was a good week in terms of.
Speaker Change: What I am seeing in these bills and what's fascinating and good is that the Republican leadership, they understand what we're doing they know us pretty well.
Speaker Change: And they know that were abating carbon, but they also have evergreen cost effective products and creating jobs.
Speaker Change: And helping agriculture and rural development, it's all of those things together that matter.
Speaker Change: Clearly a great path and we're hearing from industry that you're potentially going to see you appeal against the transferability.
Speaker Change: That was stated in that house Bill.
Speaker Change: Senate perspective, what would you guys I mean would you expect this to be very similar to what we saw from the house are there things that youre looking for out of that side that may be more favorable or less favorable for that matter no I thought it was about I honestly.
Speaker Change: The thing that Youre right on the transferability after 2027 of the tax credits I actually think that that's a good thing and here's why I think it can be a good thing and this is this is a can be a good thing.
Speaker Change: Is that it forces investment.
Speaker Change: Plants.
If you want that.
Speaker Change: To take advantage of that so someone who has a tax burden needs to put up capital into our plant in order to get that tax credit and actually makes a lot of sense from if thats. The intent is real.
Speaker Change: Real capital deploy plants.
Speaker Change: So I kind of like that.
Speaker Change: Of course the alternative.
Speaker Change: So you can just sell the tax credit to anybody that is convenient.
Speaker Change: Got it I like from a policy standpoint, I kind of favor I like these things that favor industrial investment in growth I also liked.
Speaker Change: The other languages I forget what bill was just looking at it today, where it was talking about depreciation and all that kind of stuff. We're trying to make it favorable for investment in America outstanding. Good guys. This is a good thing so I like that quite a lot.
Speaker Change: So.
Speaker Change: It's pretty good now remind me the second part of your question there Derek.
Speaker Change: I lost track of my mind.
Speaker Change: I think you covered it well.
Speaker Change: Relates to any changes you would expect coming out of the Senate side versus the house.
Speaker Change: I think I expect noise in the Senate side, and the reason I expect noise. If there is a fight that's a foot and it's not in that it's not.
Speaker Change: It's not a Senate fight, it's a fight of people.
Speaker Change: There's a group that wants blenders credit well the blenders credit benefits a narrow group of people work production tax credit benefits a whole huge number of people and so there is strong support for a.
Speaker Change: Okay.
Speaker Change: Producing a producers tax credit versus a blenders tax credit.
Speaker Change: And.
Speaker Change: People like us are the ones doing the work anyway and taken the risk guys downstream blending aren't doing that.
Speaker Change: Lending so there so there's that noise, that's going to create some noise is going to show up in the form of maybe some alternatives, but I think they'll get feedback. So we've heard strong support on the Senate side same way as on the <unk>.
House However.
Speaker Change: However.
Speaker Change: So I've got to go through markup there'll be twists and turns into the and I think it is going to look a lot like what we just saw from the house to be with a couple of tweaks, but nothing substantial.
Speaker Change: Getting rid of leveling the playing field Lane direct land use is a huge deal. This is the main way indirectly on US is the way that and virus Panelize U S agriculture and raise money for themselves and.
Speaker Change: It's not okay Europe uses it as a bit.
Speaker Change: A hammer against feedstocks that.
Speaker Change: Could win their business <unk> from an economic standpoint.
Speaker Change: The ban it then they go ahead and turnaround and allow their own farmers to do things. So.
Speaker Change: It's going to be very very interesting to see but all of the dust settle and the 45 Z in the Grand scheme of things is pretty small potatoes in that bill.
Just a tiny tiny thing on the tail of the dog.
Speaker Change: And the greater thing Pat.
Speaker Change: And Pat I'd be remiss, if I didn't ask this one last question on your offtake agreements with future energy global.
Speaker Change: Could you speak to the amount of value youre, receiving for scope, one and scope readmission credits in dollars per ton and again just in generalities here I'm not looking for the exact number just so that we can start to think about that incremental value from our voluntary perspective, and then just confirm that it's driven by additionality requirements for the production of staff.
Yes.
Paul Bloom: So I'm gonna have Paul answer those questions, but Paul if you can give it to give a range of what's out there in the marketplace of the kind of credits and just kind of kind of what you're seeing and what's happening because I think this is an important question because it is.
Speaker Change: I know that the analysts in general Theyre always looking at the <unk>.
Speaker Change: You will see a faster.
Paul Bloom: Five <unk>.
Paul Bloom: They know what those are this is a new thing, though so it kind of got to give guidance on that.
Paul Bloom: Dollars per ton, yes, sure. It's a great question appreciate that and I mean these these values are.
Paul Bloom: Well north of the types of.
Paul Bloom: Carbon value that we see any CFS markets today, So we can't give so.
Paul Bloom: 101, hundreds of dollars a ton type of range. So we're pretty excited about that.
Paul Bloom: And really makes the case for the.
Paul Bloom: The value of the carbon abatement in the book and claim case, because youre not going to have staff at every airport, but you've got customers, who want to access that and Thats, where future energy global Kevin really help customers by taking these scope ones for for airlines or the operators and the scope III for the customer.
Paul Bloom: And basically giving them options.
Paul Bloom: To do this in bucket claim style. So it really expands the capability and market reach.
Paul Bloom: And that's why we've got.
Paul Bloom: Not just this first deal, but we hope that it's a series of deals that turn out this way.
Paul Bloom: Yes.
Paul Bloom: The other thing that is a.
Paul Bloom: We're trying to make sure that we have access to that market directly rather than losing it to somebody who is blending in the middle because that's historically, what's happened with some of our competitive companies is that those scope III in particular get lost in the channel somewhere and then someone else monetize that we're going to try to keep that for ourselves.
Paul Bloom: And it's an important part of our strategy and that's of course, the whole reason of Verity and all the rest and that really does help us.
Speaker Change: Extremely helpful. Thanks for your time guys.
Paul Bloom: Yeah.
Speaker Change: Thank you. Our next question comes from Peter gas Rich with water Tower Research. Your line is open.
Speaker Change: Thank you thanks for the presentation today and congratulations on your progress you've got some nice momentum here.
Speaker Change: Three questions I have about 80 day 30 in North Dakota.
Speaker Change: First of all it's great to hear that you have more than 50% of that capacity. That's sold for ATK 30 are these the entirely new discussions you are having or does this 50% reflects some excess demand perhaps from your volumes at <unk>. So effectively on these customers you already have until in South Dakota.
Speaker Change: And now you have the additional volume that you can get them in North Dakota.
Speaker Change: They are different and the reason they're different is because the contract structures are different the contracts for the Doe.
Speaker Change: We've done in a certain kind of format to lend itself.
Speaker Change: I think we're.
Speaker Change: We think there'll be more equity financed up there in North Dakota.
Speaker Change: And so it's a different kind of a contract <unk> is representative of it.
Speaker Change: And there is other deals that we've done where we sold the jet fuel and part of the carbon to somebody else and we keep the carbon and sell that to sum up yet again on third party. So it's pretty darn interesting. We're on the right track. It's about time, we figured this out and part of it is because the dose.
Speaker Change: The <unk> process is onerous I mean, its owners Theres no question Theyre very thorough there very good they've been a huge success rate with a 97% track record of success awesome, but my God, It's tedious and it's got dumped braces suspenders and protections and blah blah blah blah blah and one of those things is how contracts are written here we can do.
Speaker Change: We have a wider range of latitude on what we can do.
Speaker Change: So that makes it and that makes more sense will eventually I think get that roped into <unk> as well, but we got to get it going first and make it happen.
Speaker Change: So we don't tie our contracts.
Speaker Change: Two one location, we can make it anywhere and move treatment move contracts around we have the ability to do that.
Speaker Change: Just that here, we didn't have to start with the burden constraints.
Speaker Change: Okay got it thank you.
Speaker Change: Second question is how much expansion as theoretically possible North Dakota side, I know you can get up to 1 million tons for the Cps capacity, but have you done any preliminary work on how much further you could scale up on ATK. If you wanted to go beyond <unk>.
Speaker Change: Yeah, So here's how we're thinking about it is that we've had people know about the.
Speaker Change: People in the industry. So colleague companies know that we're working on the CTG 30 plants.
Speaker Change: And the economies of scale for Atg 30 are still pretty good there way way way better than a smaller plant. So it's already in the flat part of the curve and we've made some optimizations. So the economics are pretty good.
Speaker Change: Even with and comparing it to <unk> 60, so we see.
Speaker Change: The opportunity to do it in Atg 30, but then do carbon copies of them in other places and other locations in the U S and around the world and remember our paradigm is we're building using a factory with flash and so.
Speaker Change: That derisked, the limon heck out of it because everything will be known to work by the time the module show up on site. They have to be assembled that you can.
Speaker Change: Regional.
Speaker Change: Contractors to put it together and avoid these lump sum turnkey EPC project financing.
Speaker Change: Projects.
Speaker Change: Really just add a lot of cost so we like it a lot we would see that the site up there has room to expand ethanol as well that's an important thing because it's actually ethanol that generates more cotwo that would keep you put down a hole.
Speaker Change: So that's something we're looking at too and I got to say, it's pretty darn exciting I like a lot and secret imagine that we do this we would do this in a series of things we're going to want that ATK 30, because I think thats the commercially viable plant that we can sell.
Speaker Change: Around the U S and around the world we have other opportunities for ATK 60 that are copied from a.
Speaker Change: From the one in South Dakota, we have a couple of sites that are that will play really well.
Speaker Change: Could expand that ethanol plant up there and then added yet another atg <unk> up there.
Speaker Change: So it's I think that's more how the business will unfold in the meantime, we'll have parallel projects, where we've sold the plant to somebody.
Speaker Change: Else further deployment or we've licensed the technology to them. One I think Paul mentioned Englisher property people forget that we have 100 plus patents are so that cover the supply chain. We will first to do ethanol to jet even though other companies claimed to have done. So we have the technologies that work with our partners with accidents.
Speaker Change: Have a lower cost technology in the future.
Speaker Change: <unk> believes that we can win.
Speaker Change: So people forget that part of it that intellectual property is a key component will use it here.
Speaker Change: Along the way too so.
Speaker Change: A very interesting game I'm, so glad and thankful that we're on solid financial footing.
Speaker Change: It's really good and I liked.
Speaker Change: What I'm seeing coming out of Congress.
Speaker Change: Okay, Great. That's all my questions. Thanks, Pat I appreciate it and again congratulations.
Speaker Change: You bet. Thank you very much.
Speaker Change: Thank you.
Speaker Change: This concludes the question and answer session.
Pat Gruber: I would now like to turn it back to Pat Gruber for closing remarks.
Pat Gruber: I want to thank you all for listening in on our call. This has been a very exciting quarter for US I think next one is even going to be better and is that.
Speaker Change: You know we're putting.
Speaker Change: Getting revenue up we're going to get EBITDA contributing we're offsetting the costs are going to continue to make progress through the year, it's quite transformational year actually and as I just got through saying, we have well developed projects and technologies. He is ready for deployment and Theres. Many people around the world interest that we got to go make that happen if it doesn't come at a big cost to us anymore.
We've already paid the upfront fees to go into that done all the learning curve stuff, we pretty much done at its now its all about deploying things.
And what we've got a balance sheet that we can live on with along with the income that we expect going forward.
Speaker Change: Pretty exciting time for Jabil.
Speaker Change: Sorry, it's the best that I think I've ever seen here the best opportunity.
Speaker Change: Thank you all for joining us.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Yes.
Speaker Change: [music].