Gevo, Inc.

Welcome to GVO's second quarter 2020 earnings conference call. My name is Andrew, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll be conducting a question-and-answer session. Please note that this conference is being recorded. I'll now turn the call over to Jeffrey Williams, GVO's general counsel and secretary. Please go ahead, Mr. Williams.

Good afternoon, everyone, and thank you for joining GEVO's second quarter 2020 earnings conference call. I would like to start by introducing today's participants from the company. With us today is Patrick Gruber, GEVO's chief executive officer, Lynn Small, GEVO's chief financial officer, and Carolyn Romero, our vice president controller. Earlier today, we issued a press release that outlined the topics we plan to discuss today. A copy of this press release is available on our website at www.jivo.com. I would like to remind our listeners that this conference call is open to the media and that we are providing a simultaneous webcast of this call to the public. A replay of today's call will be available on Jivo's website. On the call today and on this webcast, you will hear discussions of certain non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in the press release distributed today, which is posted on our website. We will also make certain forward-looking statements about events and circumstances that have not yet occurred, including but not limited to projections about Juvo's operating activities for the remainder of 2020 and beyond. These forward-looking statements are based on management's current beliefs, expectations, and assumptions and are subject to significant risks and uncertainties, including those disclosed in GVO's Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission, and in subsequent reports and other filings made with the SEC by GVO, including GVO's quarterly reports on Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements. Such forward-looking statements speak only as of today's day, and Jivo disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise. On today's call, Pat will begin with the discussion of Jivo's business developments. Carolyn will then review Jivo's financial results for the second quarter of 2020. and following the presentation, we will open up the call for questions. I'll now turn the call over to Pat.

Thanks, Jeff. We continue to produce and sell hydrocarbon products from the hydrocarbon plant in Texas. The interest in our products remains strong. And in fact, on the business development front, we continue to make progress on additional contracts and we'll get them done pretty soon, I expect. These contracts actually should be our biggest ever. Yeah, they're taking a lot longer to get done than I wanted to, but we are focused on getting them completed in the near term, and so are the counterparties. We believe that the size of these contracts collectively should enable us to change our business model to that of a developer, a project developer, a technology licensor, and plant operator. To fulfill the demand from these contracts, We expect that we will need three plant sites, two more plant sites in addition to that at La Verne. In fact, we have two additional sites under LOI and are developing more options. As it turns out, it's a good time for acquiring ethanol plants given the duress they are under with COVID. We plan on setting up special purpose entity whereby each plant build out is a project and other people invest the capital, both debt and equity, in the project, while GEVO would retain a minority ownership interest. This would be, sometimes we'll talk about this as off-balance sheet financing. It's project financing approach. On this project-based approach, we are working with Citigroup to raise the debt and equity needed to build these plants. So far, we are getting initial interest from several potential investors, having done management meetings whereby we explain the details of our projects including what appear to be attractive project returns. Pro forma unlevered returns at the project level, counting for all the construction hard and soft costs, including the various fees paid to GEVO over the project construction and operating periods, are in excess of 15%. That's good. It could be higher depending upon financing and structure. It's the returns that make us interesting for people, especially combined with the potential for whole gallons of hydrocarbon fuels with net zero greenhouse gas emissions. We are getting good time and attention from prospective investors. The questions are good. We have lots of work to make it all come together. We need to bring it home and get it done. We are encouraged by the discussions. Citigroup tells me that they're encouraged. We have the numbers in a mix of financial groups and strategic investors that Citigroup expected to have when we began the process.