Good day and thank you for standing by. Welcome to the Gevo Incorporated Q1 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the conference over to your speaker for today, John Richardson, Investor Relations. You may go ahead..

Good afternoon, everyone. This is John Richardson, Gevo's Director of Investor Relations. Thanks for joining us to discuss Gevo's first quarter results for the period ended March 31, 2023. I would like to start by introducing today's participants from the company. With us today are Dr.

Patrick Gruber, Gevo's Chief Executive Officer, and Lynn Smull, Gevo's Chief Financial Officer. 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.gevo.com.

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.

Those statements include projections about the timing, development, engineering, financing and construction of our sustainable aviation fuel projects, our recently executed agreements, our renewable 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 and 10-Q, which can be found on our website at www.gevo.com in the Investor Relations section.

Following the prepared remarks, we'll open the call to your questions. I would like to remind everyone that this conference call is open to media, and we're providing simultaneous webcast to the public. A replay will be available via the company's Investor Relations page at www.gevo.com. I'd now like to turn the call over to the CEO of Gevo, Dr.

Patrick Gruber.

Pat?.

Thanks, John. Good afternoon, everyone. And thanks for joining us on our call. We are filing our Form 10-Q today and we ask that you refer to it for more detailed information after this call.

Now, last earnings call, I said that I expect that Gevo will play the role of project originator, developer and investor in most of our business development projects and that then we expect to generate cash using a developer business model. Well, today, I am glad that I can finally talk about two deals that have been in the work for a long time.

The deal with ADM and P66 is an example, in my opinion, of our demonstrating leadership by enabling the production of SAF, the anticipated potential revenue of $125 million from this deal. [indiscernible] mix of milestone and royalty payments provided certain conditions are met. I like that we are expected to deploy Gevo capital in these projects.

And we stand ready to assist ADM and Phillips 66 if they need our assistance. We want them to be successful. We believe it reinforces the view of the readiness of the technology. I think it's a great outcome for Gevo.

A piece of what we bring in building the SAF business is knowledge around the most commercially ready technology and that is Axens' ETJ technology, Jetanol, integrated to ethanol.

Based on interactions and discussions with potential strategic investors and sophisticated Wall Street investment funds working through diligence as they consider investment in our SAF projects, I believe my opinion is shared.

Combining access technology with Gevo's low carbon integration technologies, we believe, makes for the winning combination, that of low cost production, reliable operations, which is something most people forget about, and low CI potential for SAF and carbohydrate-based renewable diesel.

We at Gevo, [indiscernible], we have learned, as we integrate these business systems and technologies, the combination of Axens along with Gevo's know-how technology, we believe, makes all these hydrocarbons solutions better.

Axens has been a great partner, we share a common vision to see the technology is widely deployed and enabled to produce multiple hydrocarbon products and drive CI scores down and even potentially go negative. It's a business system approach. We want everyone who makes SAF from alcohols using Axens and Gevo technologies.

So this is just one example of us at Gevo leveraging our expertise and converting carbohydrates to fuels and chemicals going through alcohols, coupled with our knowledge and partnerships with farms who grow feedstocks. It puts us in a unique position to seed a number of businesses.

That is one example where we've identified and brought together the best technologies and partners to deliver low CI SAF.

Our expertise and competitive advantage is also being applied to create carbohydrate to chemicals, especially fuel business opportunities, and build the capability to measure and track sustainability attributes and do carbon accounting across the supply chain and teach brand owners about these better ways of doing business.

So I'm glad we can finally talk about our development and licensing deal with LG Chem too. At Gevo, we've developed several proprietary technologies to convert alcohol to hydrocarbons. In the past, we've talked primarily about these being used for SAF diesel fuel and gasoline.

Well, these technologies can also be used to make chemicals materials like polymers and plastics. That's what the LG Chem development licensing deal is all about. We develop an elegant technology to convert alcohols into a range of drop in polymers and plastics that are used in components for cars, consumer goods, carpet, diapers, packaging and such.

Think about what's possible here, carbon from the atmosphere, captured through climate smart agricultural systems and converted into carbohydrates that have that carbon transformed into durable goods using a Gevo type net zero business system and technologies.

Picture in your mind seeing automobile interiors and exteriors, flooring, diapers and realizing that the carbon in those products came from captured CO2 in the atmosphere, but it's now sequestered right in front of your eyes. It's a new paradigm of what is possible.

The agreement we executed with LG Chem is specifically designed to develop bio propylene for the production of renewable chemicals using Gevo's proprietary Ethanol-to-Olefins technology or ETO technology. Our plan is to have LG Chem take the lead in the scale of the process.

In this deal, we are co-developing the ETO technology with LG, which will allow Gevo to conserve its financial resources to pursue other projects.

The agreement includes a combination of direct payments to Gevo beginning in 2023, commercial licensing terms and potential options for the parties to form a joint venture if the research and development activities prove successful.

LG Chem is a large world class company and is proven to be an excellent partner, sharing our vision for a more sustainable future. I am excited to work together towards our collective success. We also have been developing a new business called Verity Carbon Solutions or VCS.

This business is an outgrowth of our proprietary system of accounting for carbon and sustainability across business systems using Blockchain based tools we have previously called Verity Tracking. This business focuses on accounting for, validating, monetizing carbon insets created in the value chain.

Carbon insets are carbon reduction credits created inside of a value chain. Gevo's business system approach and technologies that reach across the whole value chain have provided us with this unique business opportunity.

And we originally developed this intellectual property for NZ1, but realized that this technology could be applied to all types of renewable resource based fuels, chemicals, foods and such. The first test of a new business idea though is showing that someone besides us thinks is valuable.

Therefore, I'm very pleased that we've entered into a joint development agreement with Southwest Iowa Renewable Energy, or SIRE. It's an initial validation of our VCS business.

SIRE is a leading ethanol a seed company that is using VCS technology to begin tracking carbon reductions across its supply chains and products with the intent of creating carbon insets that can also ultimately be monetized. We expect to grow this business working with other ethanol, nutrition and non-ethanol biofuels companies.

An important aspect of this business is to enable farmers to get credit, and by that I mean get paid for that carbon value that they are delivering. The same is true for production plants. We intend to ensure that real data is used and reported about reductions in carbon and capturing carbon.

We believe the potential for this business is vast, given the agricultural industry is so large that it applies broadly to tracking environmental attributes for any supply chain. As we develop this business, we expect to add more customers and partners. We will continue to inform you all and eventually put forth revenue projections.

Final note, the VCS business model as a capital light business model. VCS is developing software tools, providing businesses system advice, engineering, sustainability consulting services, and creating the carbon insets.

Ultimately, we'd expect the carbon insets can be monetized one way or another, and that we share that value with our customers and our partners. Before I turn to the SAF projects, I want to make very clear an important point. We are primarily project developers, licensors and business developers. We may indeed invest equity into projects.

Our cost of capital is expensive, and we will be prudent with our cash. We expect to secure third party debt investment for our net zero projects. We also expect to secure third party equity. We expect to make money through development fees, licenses, and what commonly is called a carry in the project.

A carry means that we expect to receive an equity interest in the project without necessarily making a cash investment per se. The SAF and hydrocarbon markets are so big, we want to enable as many projects as possible and make money while we're doing it.

In addition to playing the role of enabler and project developer, we expect that for certain projects we can provide operation, maintenance engineering and even trading services or other support as necessary.

Now turning to our net zero SAF projects, specifically NZ1, one since our last call, there have been several things that have impacted our thinking. First, interest rates are high and expected to go higher. After discussions with potential equity investors, we believe that the right approach is to secure financing using the DOE loan.

This is expected to be the lowest cost source of debt and require the least amount of equity. However, this will delay the timeframe for financial close, pushing financial close into 2024 based on current expectations and assumptions. The DOE has a lengthy and time consuming process that must be followed.

A 2024 close would mean the earliest possible plant startup for NZ1 would be in 2026. In any event, the schedule and timing of NZ1 will be driven by our ability to obtain third party financing, both debt and equity.

What does this mean for Gevo? This means that recovery of our development costs and fees for NZ1 will be delayed until the financial close of NZ1 expected in 2024. As a result of this delay, we are reducing our spend of capital for NZ1 to better align with the timing of the DOE loan.

Said differently, we are being prudent, careful with our cash, given the timing of the DOE loan and the volatile macroeconomic conditions in the world today. Another issue that we're watching closely is a rulemaking regarding Section 45Z for SAF in the Inflation Reduction Act, or IRA law.

What is weird is that Section 45Z refers to CORSIA, which it just turns out isn't even a method of counting carbon. CORSIA is a policy framework, not a scientific method, to measure carbon intensity. We note that according to ICAO's website, they're sponsors of CORSIA.

CORSIA "moves away from the patchwork of national and regional regulatory initiatives and offers a harmonized way of reducing emissions from international aviation, while respecting special circumstances in respect of capabilities of ICAO member states." Having CORSIA cited in this bill for counting carbon doesn't make practical sense.

It isn't a method of counting carbon. However, applied correctly as a framework and taking into account modern US data in the gold standard for counting carbon that is the Argonne GREET model, I could see how it could work.

Contrast this to the sections of 45Z regarding transportation fuels that are specifically called out to use the Argonne GREET model. So something strange is going on in the SAF section that needs to be resolved through rulemaking. It is, of course, the government. So I do expect some sausage making. It'll eventually come clear. The world needs SAF.

And the world really does need to use these excess carbohydrates to make it happen. But enough of that. So to be really clear, for SAF, we do not have a traditional build, own, operate business model. We are pursuing a capital light project developer role that is projected to give an attractive return on our investment, such as in the P66, ADM deal.

The idea that Gevo puts up all the money or is obligated to put up the billions of dollars needed to build the plant is wrong. Wrong paradigm. We expect to play the role of market developer, project developer, technology developer, licensor, all the while managing our cash wisely.

When we bring products to financial close, we would expect to recover a project development cost and keep that carry interest in the project. Capital light model. Now, we may choose to invest in particular projects along the way too, but it depends upon our view at the time of what's the best use of cash on our balance sheet.

What generates the greatest potential for Gevo? In this difficult economic environment, we are glad that we have a very strong balance sheet. We expect to have multiple routes to generate cash for this balance sheet going forward.

These routes are expected to include RNG business, Verity business solutions, our project development, businesses, licensing, and eventually our retained interest or equity in the projects that we develop. We're just beginning. Now I'll pass it off to Lynn to talk through the operations and numbers..

Thanks, Pat. To start off, we have moved our RNG business into normal operations. And I'm pleased to report that we have revenue that exceeds expectations for the quarter on RNG.

Given consistent uptime and strong RIN generation, driven in part by a catch up of RINs received for production in the fourth quarter of 2022, our revenue from operations was $4 million.

We received some LCFS revenue in Q1 and we'll continue that going forward based on a default temporary CI score of negative 150 until we receive the final pathway approval from CARBS, expected early next year, which should improve to something like negative 350.

We're off to a great start in Iowa and I expect continued improvement as our capacity expansion from 355,000 MMBtu to 400,000 MMBtu is implemented later in the year. We ended the first quarter of 2023 with a strong liquidity position of $453 million in cash, restricted cash and other liquid investments.

Restricted cash totaled $77.8 million and is associated with the Northwest Iowa RNG bonds and certain collateral related to the development of Net-Zero 1. Long term debt outstanding of $67 million is related to the Northwest Iowa RNG project.

Our corporate spend – that is, SG&A – was approximately $6.2 million for the quarter, net of non-cash stock-based compensation of $4.6 million.

During the first quarter of 2023, we invested and capitalized $11.4 million cash in capital projects, comprised of $8 million into Net-Zero 1, $1.5 million into the Northwest Iowa RNG project, and $2 million into other projects.

We intend to finance the majority of construction capital at the NZ1 subsidiary level, with project finance debt and third party equity. We have strong interest from several potential equity investors based on the amount of due diligence they are doing, although the macro issues Pat talked about are on everyone's minds.

We do, however, expect to secure one or more investors and we are working through the due diligence process with a number of premier infra funds. It's also worth mentioning that while the DOE loan is the primary track to secure the debt, we are running a second commercial debt track as we want to keep our options open.

Now I'll turn the call back over to Pat. .

Thanks, Lynn. Let's open it up for questions..

[Operator Instructions]. I have the first question that is coming from Dushyant Ailani of Jefferies..

My first one was just on the PSX/ADM agreement. Just want to quickly touch on what are the next steps in that. When can we expect to kind of see that cash flow come in? Just any kind of more color or thoughts around that..

The details on how and when Gevo gets paid, they're confidential and won't be disclosed yet. ADM and P66, we've got to go do their thing. We do expect payments begin as early as late 2023 and they last approximately five to seven years. But we don't make milestones [indiscernible] whatever happens, so it's not a guaranteed income.

They've got to go deploy, build plants, get on with it..

Similarly, on the second question was just on the LG agreement.

To what extent – or maybe if you can show, what is the magnitude of the direct payments that you can receive from LG?.

It's several millions of dollars as direct payments over the next few years. As it moves forward, then it would come from licensing or even potential for participation. We'd contemplate a joint venture with them. But it's too early to say what that might look like. But the opportunity can be really significant.

And so, what's interesting is that – refer to LG's press release, how they talk about [indiscernible].

They said, "biobased plastic production in 2022 marked 4.5 million tonnes with an expected compound annual growth rate of 14% up until 2027, and we think that biopropylene can be used in eco-friendly raw material for various plastic products and it's expected play a pivotal role in the rapid growth of the bioplastics market.".

Operator:.

Just a second. Before we go on to the next question, I just got word here that we got $187 million of private activity bonds approved. I just got that. I was hoping to have it just before the call started, but we just got the word of it. So that's good.

The State of South Dakota is stepping up and doing their part to help us get the private activity bonds done. That's great. And that'll help us as we put together the overall financing package. Cool..

The next question, it will be coming from Derrick Whitfield of Stifel..

Regarding NZ1, I completely understand your decision to pursue the DOE loan.

Based on your prepared remarks on licensing, are you suggesting that you will sell down nearly all of your equity ownership in NZ1? And if so, does that – or any timing of first production impacts in any way impact your supply contracts that you have as offtake?.

Let me address that latter one first. We announced last week that we just couldn't come to agreement with Trafigura about what to do, how to do it. So we parted ways. And they had a real reservation on the capacity of Net-Zero 1. So this gives us a little more breathing room. The airlines want to pick it up and pick up the pace.

And so we have an opportunity to work with the airlines and bring them in and solve some of their problems. So that's all good because we've got – everybody knows, we have a whole lot of offtake agreements in place. So that part's all good, I think. And it'll be interesting to see who we sell the plant up, who wants that volume, et cetera.

There'll be a bit of a discussion, negotiation along that. We recognize that airlines really got to have their stuff. So I think I feel pretty good about it, straight away. And then your second question was what? Remind me..

Just on your prepared remarks on licensing, are you suggesting that you're going to sell down your equity ownership almost entirely in NZ1?.

No, I don't know what for sure we'll do right now. It depends. We think that there's opportunities for many plants. And so, what we're doing is we're doing a really a lot of work to modularize these ETJ plants based on 100 million gallons of ethanol input to make 65 million gallons hydrocarbon output.

We're getting it pinned down, so we can put them anywhere. And the idea would be to – instead of field building these plants, stick build, build them in modules at a factory, and then be able to deliver those plants. We've got enough interest in enough plants. It looks like we want to do multiples at once.

Everybody's always wondering about how we're going to afford all this stuff. Well, the way you afford it is to make a turnkey project that's ready to execute straight away. We think that's a better return on our money. However, we still may invest, it depends on how much cash we have in the balance sheet.

I'm not a big fan of money – raising money up here at Gevo, Inc. level. I do not. We can do project financing, and it's ripe for it. We should use it..

As my follow up, perhaps building on your comment on modularization, if we were to think about NZ1 and your modularization approach, what could the install costs be if you were to pursue a brownfield plant with an existing ethanol plant as a partner?.

Probably these are swag ranges. So depending upon what infrastructure they have on their site [indiscernible] railway or tanks or something could be repurposed or something like that – maybe that'll be on the cheaper side, maybe $400 million of capital. And if they have to build in something else new, that's maybe $500 million of capital.

So we're actively looking at several brownfield sites and discussions. We like some of these sites we see. So, when we first chose the Net-Zero 1 site, that was several years ago. And it's a great site. Don't get me wrong. But you know what? Incremental returns look like they're going to be better from certain brownfield sites.

And what's happened in the ethanol industry is some of these people woke up a few years ago and started really paying attention to how to decarbonize their ethanol. So they've been doing the work of decarbonizing ethanol.

And so, we bring along the integration packages, the knowledge of how to put it all together, the acts and stuff, the Jetanol process, and put it together. And these can be pretty darn interesting. And it'd took a lot less of a capital bite from us. And I like that approach. So that's some – we're all over.

Pat, just to build on to that last part of the comment, when you think about the modularization approach that you guys are perfecting, as you think about scaling that up to, let's say, an NZ2, which would be 3x, are you seeing some capital efficiencies now with this modernization approach that you guys could articulate?.

Well, what's interesting about it is we are doing that designing and finishing that design for a 3x size. And one option actually is to do three of these plants, that is one option. That is a possibility. And we're evaluating it.

Now, what's different about that, the 300 gallon design is that we're spending the time to learn how to do it from nuclear power. In other words, so it's a nuclear electric plant and it makes a massive reduction in carbon. Well, that's interesting to the marketplace at large.

Well, we don't have – that's still a big capital bite, right, even with efficiencies at that scale. So, we don't have the capital ourselves to do that. So that's done more with the eye of big strategic partners. So, you get the idea of what we're doing, is two size of plants.

I think this idea of – remember that any ETJ plant, if you're using grid electricity, any ETJ plan, I don't care whose it is, and it's got 100 million gallons of ethanol coming in and a high yield of product coming out, it's going to be – that's going to cost, I don't know, 20 to 25 CI points on grid electricity, grid gas.

And we don't want that increase. So this is what we're doing, is figuring out how to wipe that out and get it down to net zero..

And our question will come from of Brian Koslow of Tomas Capital [ph]..

Can you talk a little bit more about, like, some of the specific benefits of waiting to get the DoE funding before you kind of move forward with the NZ1 capital deployment?.

We don't have to go blazing speed. And, of course, the world's changing around long lead equipment to – I don't expect to spend much of anything on long lead equipment between now and then. So that's good. I don't have to put money out. We have to do engineering work and spend some money on that. And that feels pretty good.

It gives us time to get the financing in order, make sure that we've got everything clarified that we can do the best deal. It's driven by the DoE schedule, and there's just no way that they can get it – that'd be the timeframe. We've got to go along with their path. Everybody views that as be a really low interest rate.

And helps with the overall financing. When we're out talking to people in Wall Street, and in strategics too, actually, we think we should try to get that. Why don't we try to get that? Why wouldn't you want to do that? We do want to do it. And so, before we're beholden to the trough, we're so as a consequence, but now we don't. We're basically no.

We want to make sure we spend our money wisely, and we're going to keep our cash on our balance sheet. My God, we have $450 million here. I'm going to keep it here and use it for development and deploy it when I have to deploy it to move the ball ahead. We don't have to go whole hog. The world has changed. So we don't have to. We've got interest.

And this example of the ADM/P66, you can see how we think. We're like, well, dang, those guys got billions. I don't have to spend money and I can get paid. I like it.

So, at the end of the day, you end up keeping more of NZ1 post-DOE than you would if you just raised a bunch of money to try to do it now..

That's right. Yeah, that's true. And we have more optionality around it to make that decision of how we do it. Remember, we're doing the modularized ETJ plan. That ETJ plant design could be anywhere. We could put it anywhere. In other words, NZ1, cool. That exact ETJ part of the plant, same design, can be plopped down at other sites.

So we're getting a two for a three-for here in what we're doing..

I guess that's what kind of has me interested that when you look at what you guys can do and what you can control, you have over $400 million of cash. That's plenty of capital to do lots of different parts of at ETJ across the value spectrum.

I have to imagine those rates of returns are better than NZ1 at the end of the day, given how what's happened in the financing market over the last 12 months..

Yeah, I'd say that the brownfield sites generally – it's the right sites. We have particular sites that we like where those are incrementally better returns than NZ1. But the NZ1s are still real good. But, yeah, you're right. There's ones that we could envision could be better.

And so, the game here for us is to spend our money and make sure we got this modularization right, so that we can crank out multiple plants at once. For us, the way we think of it is, this is the basic reality is, throwing money at NZ1 for speed, just to drive it is like, man, that's crazy. We wouldn't do that.

Why would you do that? We've got to have the financing. The critical issue is about getting the financing in place, to get it done rationally and get it built. We've got a huge balance sheet for a developer like us. And we get to have a carry. A carry is a meaningful portion of the plant we can invest over that if we want.

So, it's a little bit different mentality game to play, how to think about it, how to set it up, so we get licensing. And so, it's a different world than what we thought..

You guys have so much capital and you're going to the capital light model. It seems that you have all of these options on your table. Taken to the extreme, if you guys went completely capital light, you could pay out $1.50 dividend right now and still have enough cash and capital to go the constrained capital light model.

I'm not suggesting that you guys do that. But it seems like if you took it to the extreme, that's where you would end up..

It could be. It depends upon how much money we want to make on investments and all the rest. And there's always the unknown unknowns. So, yeah, it's not lost on us..

Can you come in at all on where things stand on the Chevron LOI right now?.

The Chevron thing, people ask me, are we still working with them? And the answer is, yes, we are still working with them. And I can't say something specifically, although I think folks ought to scan the press and see what's been done by them lately. That'd be a useful thing to do.

And I will point out that we are the only ones in the world who make large quantities of isooctane and gasoline..

When you think about these other bigger companies that are out there that you're doing deals with and are talking to you, have any of them approached you around, okay, you've got $450 million in cash, trading at $280 million worth of market cap, let's just do a deal where we build this and you become the public vehicle.

Like, some private equity firm rolls in, their navigator pipeline or something into that, and now you have like a well-funded, publicly traded vehicle out there. There's just so many opportunities with that much cash sitting there for someone to utilize all around the ETJ value chain.

So, yeah, like so many opportunities exist, right?.

Well, it is. So I think the – it's a question again of timing. But in general, those are natural conversations to have. So what happens when we're talking to these equity firms, any of the strategics and talking about how you move this forward, it's not lost on anyone, that we have money.

We're unusual in that we have enough money to go ahead and be successful developing stuff. And some of these things, we don't know what it's going to take fully for financing yet or what guarantees that we'll have to help or there's other things we don't know yet. So I think it's all premature at the moment.

But these are natural conversations that do occur. And everybody wants to see things like, I think it's really good on – this Axens technology is the one that's the most developed of anybody's out there for making jet fuel from an alcohol. And I think we've seen enough data for that.

And so, it's about – we've got to work on the banks, we've got to work on the DOE, we've got to work on whatever skeptics, we've got to get through whatever committees that we have for equity financiers and stuff like that. So there's still – we've got – we ourselves have some sausage to make still as we work through that process.

But, yeah, those conversations do come up and it's not lost on us, any of it..

And the next question will be coming from Amit Dayal of HCW..

Pat, is that a given that you are now basically just going to pursue the DOE option to close on the financing for NZ1?.

No. What we said in our comments was, DOE should be the primary one. And the reason is, is that you can get more debt loaded onto a project than you could for commercial debt.

So therefore it takes less equity, and it would be at a lower interest rate, kind of a win-win-win all around, right? However, because the DOE is the DOE, they've got work to do and we've got to go make it happen, you don't leave that as your only – one and only option. You develop the commercial debt market opportunities as well.

And you bring everybody along to go get that done. That's how you manage..

Could you, say, go to the commercial market and then refinance this from the BOE or is that not a path for these types of [indiscernible]?.

No, what we want to know is – the big deal is everybody is worried about how much equity is it going to take, right? Because even with our – all the cash we got, that's still not enough to do that, provide you the guarantees we might need to do or whatever. So we want to know is what is that equity bit.

And the DOE one is substantially different than what we'd get from a commercial lending. We've got to know what that answer is yet. And of course, everyone who's sitting around talking to us is going, yeah, we'd like to know what that is too. It's just practical. .

The logic makes sense, Pat. But I guess, maybe investors probably – they are now keen to understand how the model cash flows because if you pursue the DOE path and we sort of push everything out by maybe a year, year-and-a-half cash flows and the valuation aspects, those types of calculations come into play.

So how would you sort of go – how do you suggest investors think about this from a modeling perspective about sort of these variables?.

Well, you take the RNG business, you saw that we exceeded expectations for the revenue, we're expanding that plant. So, people can calculate that. It's going to be at 400,00 million Btus a year in the third quarter, we'd expect. And we'd also expect to move from 150 – negative 150 CI score to something like minus 300.

Once we get that, from the CARBS, so that's part of it, we've got several million dollars of income coming in over the next few years. We've said that. So, several is not tens, you know. It's several. So, you've got that coming in. You heard us talk about the developer fees. So think about that. Here's how developer model works.

Developer recovers usually, upon financial close, all the money invested upfront to develop the project. Okay? Along with profit.

So we said that we close it early next year, you can expect that we're going to see that money we've invested so far, we've invested about $75 million for NZ1 so far, plus it will take like another $30 million at a minimum, and people need to see extra stuff to get to the close, maybe it takes $80 million to get close, but we get paid that back at FID unless we decide to leave it in there.

So we're going to have a revenue stream from that. And so, when you're getting paid from – you're getting paid like that with profit from recovering your costs, you can do that with multiple projects. Okay. So that's part of this game.

Now, it also is true that we could take – we'll take a retained interest, but it seems to me that everyone is discounting our ability to count any of the profit from an NZ plant anyway. That's what it looks like to me, given our stock price, for God's sakes. So I'm looking at it going, no one values that, it seems. That's what, I think, is crazy.

But it's because it's too far out in time. So how do you make this a credible story? People look at us and go, well, you don't have enough money to execute all that billions of dollars that you need. You're going to have to go to loot us. Blah, blah, blah. What are you, kidding me? Think. What? That's not how this works.

That's not what you do, if you manage the money. So, yeah, it is a – I think that we're really – obviously trying to beat home about what rationality looks like as we do this and we're managing our cash. We're going to use it. Yeah, we've got uncertainties to work through, but we're in a darn good situation here..

Yeah, Pat. It makes sense. I'll take other questions offline. Just one last question for me.

Are we deploying the cash balance in a way that we can take advantage of this interest rate environment and generate some additional…?.

Yeah, I think in our Q, you'll see that. Yeah. .

Thank you. And this does conclude our Q&A session today. And I would like to turn the call back over to Dr. Patrick Gruber for closing remarks. Go ahead, sir..

Yeah. Thanks. So, obviously, what we're trying to get across is to think rationally about how to deploy our money. We actually are in really good financial shape. We are finding that there are people who want to invest in these projects. We don't have to make investments ourselves to make money on the projects that we've been working on.

We have multiple opportunities along different threads of business from RNG to chemicals with LG to – I was serious. I'd like to see everybody use the process to make jet fuel from alcohol. I want everyone to do that. And I'd like to take a nick on it too. And so, it's a different paradigm. And we are developing an intellectual property position.

People forget that. We really are technology developers too. We're really good at patents. Anyone knows our history knows that that's the truth, given our track record of winning things. So it is a little bit different. I think our low stock price frustrates me. So I look at it and it's like, that makes no sense at any level.

But I get that people are just doing kind of a simple calculation that I think doesn't make any sense. So, we're trying to blow that up and pay attention to what we're actually doing here. So I appreciate everybody's investment in us and people listening the call. And it's going to be fun as we work through all these things and make progress.

Thank you..

Thank you, everyone, for attending today's conference call. You may all disconnect, everyone. Enjoy the rest of your evening..