Gevo, Inc. (GEVO) Earnings Call Transcript & Summary

Thank you. Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Jibo Incorporated Q2 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. And if you'd like to withdraw your question, simply press star one again. Thank you.

I would now like to turn the call over to Eric Frey. Eric. Good afternoon, everyone. And thank you for joining us on today's call to discuss Jivo's second quarter results. I'm Eric Frey, Vice President of Finance and Strategy at Jivo. With me today we have Paul Bloom, our Chief Executive Officer, and Leike Aguirre, our Chief Financial Officer. We also have Kyle James, our Chief Commercial Officer, and Greg Hanselman, our Executive Vice President of Operations and Engineering. Earlier Earlier today we issued a press release that outlines our second quarter 2026 results and some of the topics we plan to discuss. Copies of the press release are available on our website at www.jibo.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 potential expansion and de-bottlenecking of our Jibo North Dakota plant, our expected future cash flows and adjusted EBITDA, our expected carbon business revenues, our expected future tax credit monetizations, and other activities described in our filings with the Securities and Exchange Commission, which are incorporated by reference. We disclaim any obligation to update these forward-looking statements. In addition, we may provide certain non-GAAP financial information on this call. The relevant definitions and GAAP reconciliations may be found in our earnings release, which can be found on our website at www.jiba.com in the investor relations section. Following the prepared remarks, we'll open the call for questions. I'd like to remind everyone that this conference call is open to the media, and we're providing a simultaneous webcast to the public. A replay of this call and other past events will be available via the company's investor relations page at www.jibo.com.

I'd now like to turn the call over to the CEO of Jibo, Paul Bloom. Paul. Good afternoon, everyone. Jibo is a strong growing business. Our operating results this quarter demonstrate that our company is set to deliver revenue growth and positive cashflow from operations. Our carbon strategy is working well, and we are positioning the business for three stages of expansion that build on our existing operations and capture near and medium-term opportunities. Long term, we believe the businesses we are building today will serve as the blueprint for future growth. Our results also demonstrate that Jibo is not just a future story. Revenue increased 7% compared to the last quarter and gross profit increased 70% in the past quarter. the past six months compared to the same period last year. Some of that increase reflects six full months of benefit from the Red Trail assets we acquired instead of five months during the same period last year. The majority of that increase reflects a durable strengthening of our core low-carbon ethanol and renewable natural gas businesses. In the second quarter, our team continued to deliver on critical milestones we've communicated previously. Our de-bottlenecking activities in our Jibo North Dakota facility remain on target to increase our low carbon ethanol capacity to 75 million gallons per year by the end of 2026. We also advanced new carbon market pathways identified new cost efficiencies, and optimized the sale of carbon attributes. As a result, we now expect full-year 2026 non-GAAP adjusted EBITDA of more than $60 million, which is double our previous estimate. These developments are significant, and they reflect a disciplined execution to unlock new revenue opportunities. A particularly important milestone is our recent Canada Clean Fuel Regulation, or CFR, pathway approval for low carbon ethanol with carbon capture and sequestration, which was granted in the second quarter. This pathway gives GEVO access to a more than 1 billion gallon per year compliance market for our low carbon ethanol beginning in the third quarter and further diversifies our cash flows internationally. It also gives us another lever to improve returns from our carbon business by directing carbon value to the markets where it is worth the most, whether bundled with our fuels in compliance markets or sold separately in voluntary markets. Importantly, the approval also applies retroactively to credits we banked for low-carbon ethanol sold into Canada beginning in 2025. And we've already sold approximately 17 million of these bank credits to be recognized in the third quarter. Going forward, we believe our carbon business, based on current capacity and market conditions, can deliver over $30 million per year in revenue on a run rate basis, excluding our bank CFR credit sales. We're not simply producing low carbon ethanol co-products in RNG. Those commodity products are a means to deliver energy that drops into supply chains today while also driving down carbon intensity, producing more efficiently, capturing and storing carbon, and selling high-quality credits into compliance and voluntary carbon markets. And importantly, we believe the carbon business model we are building today will be the same durable model we use in the future for SAF, isobutanyl, and other renewable fuels and chemicals powered by our Verity Carbon Accounting Digital Solutions platform. We expect to grow with discipline by scaling the businesses we have today and delivering the products and solutions our customers and markets demand. At Jibo North Dakota, we are focused on growing our low carbon fuel and carbon businesses through a three stage plan. First demodel necking the plant, second expanding capacity to double low carbon ethanol and carbon capture, and third producing SAF. Stage one is our de-bottle-lecking initiative to increase low-carbon ethanol co-products, carbon capture and associated incentive volumes by approximately 10 to 15% by the end of this year. Meaningful progress was made during the second quarter, and we remain on track and on budget to deliver this anticipated extra capacity, thereby enhancing revenues, growing adjusted EBITDA, and expanding our margins in 2027. This near-term expansion is fully funded and budgeted for this year and builds on our asset already own and operate. We believe our Jivo North Dakota complex can create more value in the near term while also supporting longer term growth. Stronger cash generation from Jivo North Dakota helps us reduce risk and enhances our future financing flexibility. Our Jibo North Dakota complex is better suited to support a strategic platform growth than the Lake Preston, South Dakota site we were previously developing. Jibo North Dakota combines one of the strongest active on-site carbon capture and sequestration capabilities in the world with access to advantaged local feedstocks, established rail and truck logistics, and experienced operating workforce, available land and pore space capacity for future growth, and it's in a business-friendly state that supports agriculture, energy, and carbon management. Given the strengths of the Jivo North Dakota complex and other business factors we considered, we have finalized their decision to exit our ATJ 60 project activities in South Dakota and formally discontinued other non-core project activities. As a result, we recognized $176 million one-time non-cash impairment charge. Leike will talk more about this non-cash charge. Continuing with our growth plans, stage two at GEBO North Dakota targets doubling our capacity to about 150 million gallons per year of low-carbon ethanol with associated carbon capture and sequestration and tax incentive opportunities. Financing efforts for this expansion are on track and are targeted to be completed in the second half of 2026, consistent with our previously announced arrangement and timeline with Aura Energy. Engineering, permitting, and initial equipment procurement for the expansion project are underway. We anticipate completion of the expansion in 2028 once financing is complete and construction commences. This expansion is expected to result in meaningful revenue and gross profit growth. Stage three of our growth plan contemplates the conversion of approximately one-third of JIVO North Dakota's expanded low-carbon ethanol capacity into higher-value synthetic aviation fuel through Project North Star, also known as ATJ30, which is our 30 million gallon-per-year alcohol-to-jet development project. We are making good progress on this medium-term, multi-year effort and provided details on our milestones in our recent business update. The team delivered our FEL3 engineering estimates on schedule in the second quarter. As we moved from FEL2 to FEL3, the capital estimate was refined based on substantially more detailed engineering, vendor engagement and execution planning. The updated estimate of $600 million remains the expected range and accuracy associated with an FEL2 estimate, and we believe it provides much higher level of confidence as we approach FID. FEL-3 showed very favorable results for the underlying alcohol-to-jet process modules, which were within 2% of the previous estimates. That's a good sign for enabling the development in a repeatable fashion at other locations in the future. The site-specific engineering and equipment logistics cost increased in FEL3, but we believe that the project's ROI remains attractive. Securing additional financeable offtake agreements is needed to reach FID and remains a gating item. These are complex multi-year economic commitments. We are making progress advancing these agreements from the current term sheet stage. We remain committed to advancing our ATJ30 initiative in a disciplined way, sequencing capital based on customer demand, project financeability, and policy support. And as a reminder, we are currently pursuing non-dilutive project level financing for the project. We do not have to choose between becoming a cash generating, low carbon fuels and carbon management business and building future ATJ projects. The Jiva North Dakota site and its near-term cash generation are expected to support ATJ in the future. We continue to target final investment decision for this initiative by the end of the year. I will now turn the call over to Lake to discuss our financial results and outlook in more detail.

Thank you, Paul. This last quarter was an important one for JIVO. We delivered solid operating performance and completed planned maintenance and the bottlenecking activities to expand capacity at our flagship North Dakota site. DURING THE SECOND QUARTER, WE REPORTED REVENUE OF $47 MILLION, COMPARED TO $43 MILLION IN THE SAME QUARTER LAST YEAR. This 7% year-over-year growth reflects consistent operations of our low-carbon businesses, even with modest impact of planned downtime at our Ojibwe North Dakota site for maintenance and deep bottlenecking activities. IN COMPARISON TO THE FIRST HALF OF 2025, REVENUE DURING THE FIRST HALF OF 2026 GREW BY 23% TO 89 MILLION, REFLECTING A FULL SIX MONTHS OF THE BENEFIT OF OUR RED TRAIL ENERGY ACQUISITION COMPARED TO JUST FIVE MONTHS LAST YEAR. coupled with continued solid performance in our carbon business. Gross profit was 20 million in the second quarter, representing a gross margin of 43% compared to gross profit of 19 million and gross margin of 44% in the same quarter last year. Relative to revenues alone, we believe that gross profit is a meaningful barometer of a business performance. It captures not only our revenue performance, but also the impact of optimizing carbon, commodities, and incentives that are monetized as part of our business model. During the first half of 2026, gross profit was 36 million, an increase from 21 million in the first half of 2025, reflecting a full six months of the benefit of our retro energy acquisition, coupled with dynamic efforts to optimize 45 Z tax credit generation from our assets. NOTE THAT WE RECOGNIZE THE BENEFIT OF 45Z TAX CREDIT AS A REDUCTION TO COST OF GOODS SOLD. OPERATING EXPENSES IN THE SECOND QUARTER INCLUDED A ONE-TIME NONCASH AND PAYMENT CHARGE OF $176 MILLION. THIS WAS RELATED TO CAPITALIZED DEVELOPMENT AND ENGINEERING EXPENSES PREVIOUSLY INCURRED, WHICH WAS PRIMARILY ASSOCIATED WITH PRIOR ATJ 60 PROJECT IN LAKE PRESTON, SOUTH DAKOTA, AND OTHER PRIOR INITIATIVES THAT ARE NO LONGER IN ALIGNMENT WITH OUR STRATEGICAL PROJECT. PRIORITIES. THIS NONCASH IMPAIRMENT CHARGE DOES NOT IMPACT OUR CASH POSITION, LIQUIDITY, OR OPERATING CASH FLOW OUTLOOK. IT DOES NOT TRIGGER ADDITIONAL CASH PAYMENT OBLIGATION OR AFFECT THE UNDERLYING ECONOMICS OF CHIVO NORTH DAKOTA OR ABILITY TO EXECUTE OUR DEVELOPMENT PLAN THERE AS OUR CORE GROWTH PLATFORM. Excluding the non-cash impairment charge, operating expenses in the second quarter were up 18% over the second quarter of 2025, which reflects an increase in G&A expenses primarily due to non-recurring employee severance and accelerated equity award charges. On a gap basis, net loss attributable to Jivo was $177 million or $0.75 per share in the second quarter. ON A NONE-GAAP BASIS, ADJUSTED NET LOSS ATTRIBUTABLE TO GIVO WAS $1 MILLION ON $0.01 PER SHARE. Reconciliation of this amount to the GAAP measure is included in today's earnings release. NUN-GAP adjusted EBITDA for the second quarter was $11 million. Note that the second quarter results did not include revenue related to our recently approved CFR pathway, which is expected to show up in the third quarter. We believe that this quarter's adjusted net loss, coupled with the growing adjusted EBITDA, reflect an ongoing improvement in our underlying earnings power of our business. This quarter establishes a strong foundation from which we expect meaningful adjusted EBITDA and operating cash flows during the second half of the year. As we look to the full year, we now expect 2026 adjusted EBITDA of more than 60 million, which is more than double our prior outlook of 30 million. This is a meaningful acceleration from our first AF2026 operating performance and is supported by four main drivers. FIRST, THE RECENTLY APPROVED CANADA CFR PATHWAY AND ASSOCIATED SALES. we expect to begin realizing those sales in the third quarter. Second, our assets are on track to generate more than 70 million or 45 Z tax credits that we expect to monetize in 2026 compared to 52 million last year. This is driven by updated policy guidance and our operational efficiencies this year that improve the carbon intensity of our operating assets. Third, continued operational execution of low-carbon fuel sales, including revenue growth from our specialty fuels. And fourth, further fiscal discipline. OF THE MORE THAN 70 MILLION IN 4-5Z MONETIZATION WE EXPECT TO ACHIEVE THIS YEAR, already closed on the sale of $20 million in 45-day credit after the end of the second quarter. With our current engagement with seasoned tax credit buyers, we expect to monetize the remaining approximately 50 million of credits and receive the associate proceeds by year end. A reminder that our 45Z tax credit incentives are generated rateably each quarter based on the volume and carbon intensity of our low carbon ethanol and RNG production. These credits show up as a reduction in our cost of goods sold on our income statement and are a benefit to our adjusted EBITDA. Note that the cash proceeds from 45Z can lag behind the quarter in which the credit is generated. This results in some quarter-to-quarter variability in our cash flow from operations. While we continue to expect operating cash flow to be neutral to positive for full year 2026, we also expect meaningful positive operating cash flow in the second half of the year. This further demonstrates the underlying cash-generating power of a business's continued to threaten. TURNING TO LIQUIDITY, WE HANDED THE QUARTER WITH CASH, CASH EQUIVALENT, AND RESTRICTED CASH OF $58 MILLION. IMPORTANTLY, THIS DOES NOT INCLUDE APPROXIMATELY 16 MILLION OF CASH PER SEES FROM THE MONETIZATION OF 45Z CREDITS THAT WE HAVE COLLECTED SINCE THE END OF THE SECOND QUARTER. We are also excited about our performance in 2027 and beyond. Our debottlenecking project remains on track and on budget. We expect 2027 adjusted EBITDA to be broadly in line with our current 2026 full-year target after we factor in some non-recurrent revenue this year and the debottlenecking production uplift started at the end of this year. OUR EXPANSION OF JIVO NORTH DAKOTA TO DOUBLE ITS PRODUCTION CAPACITY IS ADVANCING, WITH FINANCING ON TRACK FOR COMPLETION IN THE SECOND HALF OF 2026. THIS IS CONSISTENT WITH OUR PREVIOUSLY ANNOUNCED ARRANGEMENT WITH OUR FINANCING PARTNER, AERA ENERGY. And as Paul mentioned earlier, we also continue to push forward on securing bankable offtake contracts to enable securing accrued financing of our HCJ 30 project. We are engaged with various project level capital providers and remain focused on moving forward to FID by year end. In closing, we are seeing continued improvement in adjusted EBITDA and cash flow generation supported by the strong underlying fundamentals of our business. We are confident in our ability to sustain our positive momentum as our near-term group projects at G4 North Dakota continue to mature on schedule. Today's results anchors GVOTE's growth trajectory for their strengthening our capacity to execute our long-term objectives while delivering sustainable value to our shareholders.

With that, I would turn the call back to Paul. Thanks, Leke. We strengthened our financial position, doubled our expected 2026 adjusted EBITDA outlook, and are starting to show that Jibo North Dakota can serve as a scalable blueprint for profitable growth. We've talked before about the potential for a capital licensing or franchise type model, and that opportunity is becoming more tangible as we demonstrate how our technology, operating model and carbon capabilities can be deployed to meet customer demand and capture value across markets. We'll have more to share as these initiatives advance. For now, I want to thank our employees, partners, customers, and shareholders for their continued support. We're building JIVA with discipline, focus, and a clear path to creating long-term value. With that, we'll open the call for questions.

All right. Thank you very much. And at this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Once again, star one. And we will pause just a moment to compile the Q&A roster. All right. Looks like our first question today comes from the line of Jeff Gramp with Northland. Jeff, please go ahead.

Good afternoon, guys. Thanks for the time. Hey, Jeff, how are you? Hey, Paul. Thanks. I wanted to dive into the, the $60 million EBITDA target that you guys have refreshed here lately. I just wanted to understand some of the moving parts with, with respect to the approval to reach the Canadian markets. It sounded like some of that 60 million is a little bit of a one-time bump related to some volumes prior to getting that approval, like a retroactive credit, if you will. Can you help us understand how much of a windfall that might be just to kind of level set.

I guess, kind of what the true earnings power of the business is in 26? Yes, sure thing. And that's a perfect question, right? Because, you know, we're really excited that the carbon business itself, right, has grown now to what we think is a run rate of about $30 million a year going forward, right? So that's going to be the part that goes forward as well. This was a big part of what we wanted to get done because we had made a bet that we were going to be able to capture the value from the CFR credits once we got the approval. And, you know, we had sold a lot of fuel in 2020. and the first half of 2026 here. So we haven't been able to monetize those credits yet, but about 40%, a little more than 40% are actually credits that were realized this year. So when we think about that, there's a big component of those bank credits that really are in a run rate for 2026. So that is a big component going forward. But I would say that when you think about the 60 million that we're talking about, going forward, remember we're going to be completing the de-bottle decking by the end of the year. So we believe that this is really the upside of that, minus maybe these one-time events. We're really kind of flattish going INTO 2027. SO WE THINK MOST OF THE 60 MILLION IS GOING TO BE A REPEATABLE RUN RATE ON THE FORWARD BASIS. I DON'T KNOW, LAKE, IF YOU HAVE ANY OTHER COMMENTS ON THAT. THANKS, PAUL. GENERALLY AGREE WITH THE DESCRIPTION THERE. SO THE WAY TO THINK ABOUT IT IS WHAT PAUL JUST MENTIONED.

As we complete the bottlenecking, there's going to be uplift in terms of production volume. That increases just our revenue profile. And then when we subtract out the non-recording basis from 2026, effectively we end up at that flattish.

a projection as to what we offer 2026. Yes. And remember, this is like, we're really thinking about how are we going to grow this EBITDA nicely? It's also about the increase in the 45 Z tax credits that we've got. Right. So we're kind of putting all of these different levers together to make sure that we can have this durable business going forward that hits that exceeds that 60 really.

Got it. Thanks for the details. For my follow-up, just to stick in the Canadian market, What person, do you have like an estimate? I know this changes as market prices and dynamics change, but like round numbers, how much of your ethanol do you expect to send to Canada in the second half of this year? I mean, seeing some of the pricing points, it seems like that's the most economic market for you, but perhaps there's some other factors.

at play that might, I don't know, make sense to send to other markets or if there's any constraints to how much you can send to Canada? Thanks. Yes, no, again, great question. And this is the whole point of our business on carbon arbitrage, right? So we want to make sure that we've got all the levers that we can pull to maximize the returns for Jivo and our shareholders. And so having this new lever that we can send is, you know, as Canada is a very strong market over, you know, a billion gallon opportunity for us. Obviously, we're a lot smaller than that. So we want to continue to maximize the volumes to where we're going to get the highest returns. So really no limitations. on how much we can send. We're going to continue to make sure that we've got the right certifications and everything in place to do that. But then we have to look at the other markets. We have to take a look at, how's the voluntary market developing? That's something that we talked about because we've got more interest in that side. You saw that in our business update, We talked about NASDAQ, you know, is a second year that they bought carbon from us on a substantial size buy. So we're always weighing, you know, how do we place the carbon in either a compliance market or a voluntary market? What's going to give us the total return that we're looking for? How do we diversify our business too? Because we don't want all our eggs in one basket. I think that's the thing that we've learned you know, about being in the fuels and carbon markets that, you know, we want a good mix there and be able to play these off of each other.

That makes a lot of sense. I appreciate the details. I'll turn it back.

All right. Thank you, Jeff. And our next question comes from the line of Amit Dayal with H.C. Wainwright. Amit, please go ahead.

Thank you. Good afternoon, everyone. Thanks for taking my questions. Congrats on all the progress. Hi, Paul. On the ethanol expansion, Paul.

Can you remind us what the CAPEX requirements are going to be on this project? Yes. So we haven't disclosed the capital requirements on the ethanol expansion. You know, we, if you, you know, flip back to the deval necking, we said we were deploying about a $24 million of capital in that range, about half of that was going to operational reliability. The other half was going to the actual de-bottlenecking to improve the output from 67 million gallons to 75 million gallons. So we'll have more details as we get further along here, but it's really about getting this done and getting our deal done with our energy WE'RE FEELING REALLY GOOD ABOUT THAT AND EXPECT TO GET THIS DONE WITHIN THE NEXT FEW MONTHS BECAUSE WE WANT TO THEN MOVE DIRECTLY INTO THE EXECUTION. AS WE MENTIONED, WE'RE MOVING QUICKLY ON THIS AND LOOKING AT PERMITTING. WE'RE LOOKING AT A LOT OF THE OTHER ENGINEERING THINGS. ALL THAT'S WELL UNDERWAY BECAUSE IT ESSENTIALLY DOUBLES WHAT WE'RE we're already doing today at Jibo North Dakota. And because the carbon business is working, because we're able to monetize and kind of firing on all cylinders, monetizing tax credits, this is the most accreted project that we have in the hopper. We want to get this to the finish line.

Understood. So we'll have maybe more color on this in the 3Q earnings column.

MOST LIKELY. I THINK THE BIGGEST THING, AND GREG, YOU CAN JUMP IN HERE TOO. GREG HANSELMAN IS ON THE LINE WITH US. SO GREG, YOU WANT TO TALK ABOUT WHAT YOUR EXPECTATIONS ARE?.

capital? We don't know the exact timing, but the engineering team is working hard on designing an integrated plant. This isn't like two separate facilities. We really want to optimize the CapEx and the OpEx to drive the best synergies for the long term. And we don't have all those answers yet, but we're working hard to solidify that so we have the answers.

or when the time is right and we bring that together later in H2. Yes, and very much like what we're doing on ATJ working through an FEL2, FEL3, we're refining these estimates. So, you know, today we're not there yet on refining that estimate to where we want to be, but we'll keep moving that forward so we have a much finer.

your point on this when we're able to communicate that. OK, understood. No, thank you for that. So for ATG 30, would you potentially go with Aira or are you looking at other financing options and partners?.

Yes, I'll let Lakey chime in here on some of the updates we've got on financing. But this has been something that we've been working on for a long time. So the key thing again is that we've completed the FEL three estimates like we talked about, we're working on these financeable off takes. And really when we think about the FEL, about financing, you need to make sure you've got a bankable project. And the discipline that we're putting in this is making sure that we not only have the off takes, but we've got the right customers, the right customers who are going to be there because it's going to take us a few years to build this plant and then have long term, very complex, multi year you know, financial arrangements that are going to support this project. So it's, it's a mix of making sure that we've got the off takes and that we've really got the right set of customers who, who see us. And then, you know, the financing at that point, um, it kind of falls into place because then you can start to look at what's your risk profile on the overall project, but we are working through that de-risking today. Like, I don't know if you wanna make comments on the other- yes.

I think just to probably sum it up, in terms of cap raise or capital raise profile, we're engaged with multiple project level lenders and equity providers. So just not... era at this point. But also just to express really the excitement that we have is as we look to the development of ATJ30, what's also very important is to highlight our existing operations, the cash flows that we're generating now, those actually enable the ability for us to fund ATJ30 from a development perspective, but also fund our portion of the construction capital as well. So that's the really exciting part. I think the engagement with the project level capital is on the right track. And as Paul mentioned, as we secure the bankable offtakes with the right partners, with the right economics, then the puzzle comes together in terms of.