Gevo, Inc. (GEVO) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call highlights strong financial metrics, including substantial ethanol and carbon credit production, and optimistic guidance on future projects like the ATJ-30 and Verity software. The Q&A section reinforced confidence with detailed plans for EBITDA growth and DOE financing. While there were some vague responses, the overall sentiment is positive due to strategic partnerships, market opportunities, and technological advancements, suggesting a likely positive stock price movement.

Key Financial Performance

Cash, cash equivalents, and restricted cash $108 million at the end of the quarter.

Combined operating revenue, interest, and investment income $43.6 million for the quarter.

Loss from operations $3.7 million for the quarter.

Non-GAAP adjusted EBITDA Positive $6.6 million for the quarter.

Gevo North Dakota income from operations $12.3 million for the quarter.

Gevo North Dakota non-GAAP adjusted EBITDA Positive $17.8 million for the quarter.

Gevo RNG income from operations $0.5 million for the quarter.

Gevo RNG non-GAAP adjusted EBITDA Positive $2.7 million for the quarter.

Net loss per share attributable to Gevo $0.03 per share for the third quarter.

Third quarter revenue year-over-year change Increased from approximately $2 million last year to approximately $43 million this year, an increase of approximately $41 million. The increase was driven by improved financial performance at Gevo North Dakota, including reliable energy production, efficient carbon capture, and monetization of clean fuel production credits.

Third quarter adjusted EBITDA year-over-year change Increased from approximately negative $16.7 million last year to approximately $6.6 million this year, an increase of approximately $23 million. The improvement was attributed to Gevo North Dakota's performance and monetization of Section 45Z tax credits.

Section 45Z clean fuel production credits $52 million worth of credits sold for 2025 production. The credits are based on production volumes and carbon intensity scores.

Carbon dioxide removal credits Expected to grow from $1 million in Q2 to $3 million to $5 million by the end of 2025. Certified under the Puro.earth standard.

Corn processed at Gevo North Dakota Over 5 million bushels of corn processed in Q3.

Fuel ethanol production at Gevo North Dakota Over 16 million gallons of fuel ethanol produced in Q3.

High-protein animal feed production at Gevo North Dakota 46,000 tons produced in Q3.

Corn oil production at Gevo North Dakota Nearly 5 million pounds produced in Q3.

Carbon dioxide sequestered at Gevo North Dakota 42,000 tons sequestered in Q3, bringing the total to over 550,000 metric tons since June 2022.

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Operating Highlights

Carbon Sequestration Certification: Gevo's North Dakota carbon sequestration well is certified as a 1,000-year performance well by Puro.earth, making it the only alcohol production site globally with this certification.

Carbon Credits Monetization: Gevo sold all 2025 production tax credits for $52 million, with potential adjusted EBITDA from carbon and ethanol operations at GND exceeding $100 million annually.

ATJ-30 Jet Fuel Plant: Plans to build a 30 million gallon jet fuel plant at GND, expected to add $150 million in adjusted EBITDA, with financing targeted for mid-2026.

Low-Carbon Fuel Markets: Gevo is expanding its presence in low-carbon fuel markets by applying for more pathway approvals and selling carbon credits in high-return markets.

Carbon Dioxide Removal Credits: Signed a $26 million 5-year agreement with Biorecro for carbon dioxide removal credits, with sales expected to grow to $3-5 million by end of 2025.

Ethanol Plant Operations: Gevo North Dakota produced over 16 million gallons of ethanol, 46,000 tons of animal feed, and sequestered 42,000 tons of CO2 in Q3 2025.

Financial Performance: Q3 2025 revenue increased to $43 million from $2 million YoY, with adjusted EBITDA improving to $6.6 million from negative $16.7 million YoY.

Strategic Shift to North Dakota: Department of Energy is considering shifting its loan guarantee to Gevo North Dakota, recognizing its existing infrastructure and profitability.

Carbon Management Platform: Partnership with Frontier Infrastructure Holdings to offer integrated carbon management solutions for ethanol producers without direct geological storage access.

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Risk or Challenges

Regulatory and Legal Risks: The company faces significant regulatory and legal challenges in monetizing production tax credits and carbon credits. This includes extensive auditing, legal, and insurance requirements to ensure compliance and mitigate risks in credit transfer transactions.

Economic and Market Risks: The company is exposed to market risks related to the pricing and demand for ethanol, carbon credits, and sustainable aviation fuel (SAF). The ability to optimize returns depends on market conditions and approval pathways in low-carbon fuel markets.

Operational Risks: Operational challenges include maintaining and improving the efficiency of the ethanol plant, carbon sequestration operations, and scaling up SAF production. Weather-related risks, such as early frost, could impact corn supply and production.

Strategic Execution Risks: The company faces risks in executing its strategic plans, including the construction and financing of the ATJ-30 plant, which is estimated to cost $500 million. Delays or cost overruns could impact financial performance.

Supply Chain Risks: The company relies on a steady supply of corn from farmers, which could be disrupted by adverse weather conditions or other agricultural challenges.

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Guidance & Outlook

Revenue Expectations: Gevo anticipates generating more than $100 million annually in adjusted EBITDA from the Gevo North Dakota (GND) site without deploying large capital projects or building a jet fuel plant. Additionally, the addition of a 30 million gallon jet fuel plant at GND is projected to contribute an additional $150 million in adjusted EBITDA.

Capital Expenditures: The ATJ-30 project, designed to produce sustainable aviation fuel (SAF), is estimated to have an installed capital cost of approximately $500 million, excluding financing-related costs. Financing for the ATJ-30 plant is expected to close by mid-2026.

Carbon Credit Sales: Gevo has sold all of its 2025 Section 45Z clean fuel production credits for a total of $52 million. The company expects to generate $3 million to $5 million in carbon dioxide removal (CDR) credit sales by the end of 2025, with continued growth in subsequent years.

Market Trends and Growth: Gevo is expanding its carbon credit market presence, including voluntary carbon credits and low-carbon fuel markets. The company is also pursuing pathway approvals in additional low-carbon fuel markets to optimize returns. The global carbon credit market is valued at over $10 billion, presenting significant growth opportunities.

Strategic Plans: Gevo plans to build the ATJ-30 plant at the GND site, leveraging existing infrastructure and feedstock. The company aims to replicate this model across other strategic locations in the U.S. and globally. Incremental and step-change expansions at the ethanol plant are expected to substantially increase adjusted EBITDA.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Could you elaborate on the incremental capital and steps required to optimize your operation and a reasonable timeline to achieve $110 million of EBITDA?

A:The incremental capital required is approximately $15 million, plus or minus a few million. The steps include debottlenecking the ethanol plant, optimizing energy use, and capturing more carbon dioxide. The timeline to achieve $110 million of EBITDA is estimated to be 18 to 24 months, depending on external factors.

Q:Could you elaborate on how the DOE loan extension and the change of scope increase the likelihood of DOE financing?

A:The DOE loan extension and change of scope improve the likelihood of financing by shifting the focus to North Dakota, where the ethanol plant is operational and profitable, with sequestration capabilities. This reduces the need for external financing and makes the project more attractive to the DOE.

Q:Can you provide color on whether EBITDA drivers for next year will primarily come from sequestration capacity expansion or debottlenecking efforts?

A:EBITDA growth will come from a combination of sequestration capacity expansion, debottlenecking efforts, and improvements in carbon intensity (CI) scores. The company is also focusing on selling carbon credits in both compliance and voluntary markets, which is expected to add significant value.

Q:If you had to choose between ATJ-30 and a larger expansion of ethanol capacity, which would you prioritize?

A:The ATJ-30 project is prioritized as it offers an uplift of about $150 million in EBITDA annually and is less dependent on 45Z tax credits compared to ethanol expansion. However, the company will evaluate market conditions and opportunities for both options.

Q:How much more development work is needed before aggressively commercializing the Verity offering?

A:The Verity offering is nearing the point of aggressive commercialization. Implementation at Gevo North Dakota will serve as a showcase for potential customers, demonstrating its ability to simplify carbon tracking and compliance.

Q:Can you update us on conversations with potential customers for using your well in Richardton for carbon sequestration?

A:The company is in discussions with potential partners for co-locating facilities and using the well for carbon sequestration. They are also exploring options like transporting CO2 by rail to maximize the well's capacity.

Q:How should we project or forecast incremental CI improvements over the next few quarters?

A:CI improvements will be driven by the Big Beautiful Bill, which reduces CI scores and increases 45Z tax credits by $0.10 per gallon. Additional decarbonization measures could further increase credits to $1 per gallon. Inflation adjustments will also impact the value of these credits.

Q:What did Gevo do right in the commissioning of their well compared to others?

A:Gevo benefited from the expertise of Gerald Bachmeier, who had experience in drilling and selected the right contractors. The team focused on high-quality execution, leveraging local expertise in the region.

Q:How should we think about Frontier's entry into the market for CO2 sequestration?

A:Frontier is focusing on ethanol plants that lack access to geological sequestration or pipelines. They provide a rail-based solution for transporting CO2 to sequestration sites, complementing existing pipeline infrastructure.

Q:Could you discuss the agreement with Haush in Europe and the strategy for SAF feedstock restrictions?

A:The partnership with Haush focuses on using waste and residue-based carbohydrate feedstocks to comply with ReFuelEU restrictions. The strategy involves identifying suitable feedstocks and evaluating economic viability in Europe and other global markets.

Q:Review of Unclear Management Responses

A:Management avoided providing a direct timeline for achieving $110 million EBITDA, stating it depends on external factors. They also did not offer concrete plans for using the Richardton well's full capacity or for the commercialization timeline of the Verity offering, using vague language about ongoing discussions and nearing readiness.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

GEVO Transcript

Gevo, Inc. (GEVO) Q3 2025 Earnings Call Transcript

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Gevo, Inc. (GEVO) Q2 2025 Earnings Conference Call Transcript

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The earnings call summary and Q&A indicate positive aspects such as strong revenue generation, strategic tax credit monetization, and expansion plans. Despite some unclear timelines for projects, the company's focus on high-quality carbon credits and partnerships for growth is promising. The management's optimistic guidance on EBITDA improvement and cash position further supports a positive outlook. However, the lack of specific timelines for ATJ projects and management's avoidance of detailed responses slightly temper the overall sentiment.

Gevo, Inc. (NASDAQ:GEVO) Q1 2025 Earnings Call Transcript

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The earnings call summary indicates mixed signals. While there are positive developments like EBITDA growth and the potential monetization of the 45Z tax credit, there are significant risks including regulatory uncertainties and competitive pressures. The Q&A section highlights management's evasiveness on key details, adding to uncertainties. Despite a strong cash position, the company's overall net loss and dependency on government support temper optimism. Given these factors, the stock price is likely to remain stable, resulting in a neutral sentiment rating.

Gevo, Inc. (GEVO) Q1 2025 Earnings Call Transcript

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The earnings call presents mixed signals: positive revenue growth and strong liquidity position are countered by ongoing losses and market uncertainties. The Q&A highlights concerns about cash flow and lack of concrete guidance on key financial metrics. While the anticipation of monetizing 45Z credits and potential EBITDA positivity offer optimism, competitive pressures, supply chain challenges, and economic factors temper enthusiasm. The lack of a shareholder return plan further contributes to a neutral outlook.

GEVO Report

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