Verbio Se

Good afternoon, ladies and gentlemen, and welcome to today's earnings call of the Verve U.S.E. following the publication of the nine-month and Q3 figures of 2023-2024. We are delighted to welcome the CEO, Klaus Sauter, and the CFO, Olaf Trüber, who will speak shortly and guide us through the presentation and the results. Afterwards, we will move over to our Q&A session, in which you will be allowed to ask your questions directly to them. And having said this, Mr. Sauter, I hand over to you.

Thank you very much, Mrs. Marlock. Good afternoon. or in my case, good morning, and thank you very much for joining today's earnings call. With me on this call today is Olaf Dröber, our CFO. At the moment, I am in the United States in our headquarter in Stanford, Connecticut. We are making good progress here. in South Bend, in Nevada, the ethanol plants, as well as in Welland, and also in Europe. Our strategy remains steadfast, even in the dynamic renewable market. We are now 10, almost 11 months in our financial year. And as we had anticipated with our guidance cut in January, for the actual financial year. The market in renewables was more challenging in the third quarter. But let me first give you a quick run through of our key figures for the first nine months. So as you can see, In good verbio fashion, we continue to deliver strong production volumes, increasing our production across all key products. The biodiesel volume increased year on year was mainly driven by the acquisition of South Bend ethanol in the US. the plant which we bought in May 2023, and what we ramped up the last month. So at South Bend Ethanol, we have managed to increase our production about the nominal capacity, which represents a 30% increase from just a few months ago. technical changes, but mainly operational changes. So despite the increase in volumes, Group Epic DA for the nine months, 2023, 2024, reached 82 million down year on year from 214 million. The main reason remain largely unchanged from what we have seen for the first six months. So let me quickly reiterate. In the financial year 2022-2023, we still benefited from the exceptional contribution of the biodiesel segment. We made more than 90 million in the first quarter alone with our bio-deal. Meanwhile, we are getting up for further growth, which led to additional fixed costs year on year. Considering that our European operations still have to cover all growth investments and that we are facing short-term headwinds in the European biofuel market, the results are largely within our own expectations. Net debt stands at 55 million, especially our investments in growth projects of close to 130 million weighed against our positive operating cash flow. Still, our equity ratio is at a level of 68.4%. came down slightly. And now I would like to hand over to Olaf Dröbe, our CFO.

Thank you, Klaus, and a warm welcome also from my end. I'm here today at Bitterfeld, where we hold our groundbreaking ceremony for the etinolysis plant. But first, let me turn to our Q3 results. before we delve deeper into our strategic update. The chart shows the APTA bridge from Q3-22-23 to Q3-23-24 left to right and gives you an overview of how both segments have developed. Once again, The biodiesel segment safeguards our earnings as ethanol segment covers all the costs related to the US expansion. The decline in the biodiesel segment year over year is mostly due to unrealized changes in the fair value of open commodity derivatives. Excluding this effect, The biodiesel segment result would have stood at 21.1 million euro close to the level in the previous year. Overall, we posted an EBITDA of 7.3 million euro in Q3 23-24 down from 43.2 million euro in Q2 last year and from 26.1 million euro sequentially. But let us dive a bit deeper and look at the key drivers. While our sales volumes were roughly stable year over year, sales came down by 29% year over year. The main reason for the sales development in biodiesel segment were the lower biodiesel and greenhouse gas quota sales prices in Europe compared to the same quarter of the previous year. Additionally, changes in the presentation of the sales revenues in Canada led to a significant reduction in revenues. What does it mean? Since December 23, the contracts for the production volumes in Canada are treated as tolling contracts. The change in reporting has no impact on our EBITDA. However, the unrealized changes in fair value of open commodity do. As you know, we only opportunistically choose to hedge. And considering that Q4 forward spread stood at attractive levels, and we are operating in volatile markets, we decided to take a position, including the effect our Q3 reported EBITDA came in at 11.44 million Euro. This chart, you can see how the market spreads, in this case, biodiesel price per tonne minus rapeseed oil price per tonne have developed over the past two years and specifically during our Q3. This year's market spreads shown as the dark green line were below previous year's spreads, but remained roughly stable throughout the quarter. Considering that we buy our rapeseed oil approximately two to three months in advance, we couldn't lock into spreads in financial year 22, 23, though. Over the first quarter of the year 2024, which is our third quarter, biodiesel prices and rapeseed oil prices increased slightly. While demand was stable, biodiesel prices increased on the back of higher raw material prices and rising fossil markets. Now, moving to the ethanol and biomethane or ING segment. Production and sales volumes increased mainly thanks to the acquisition of South Bend Ethanol in May last year, where we greatly advanced in terms of efficiency, as Klaus mentioned before. With this, revenues were up despite lower sales prices in Europe. Grain prices came also down. But the lower greenhouse gas premiums in the contracts that started in January 2024 had a negative effect on overall margins. On top came, of course, US expansion costs. And last year, we earned about 10 million euro more by additional quota sales compared to Q3 this year. Overall, We returned a negative 5 million euro EBITDA, which includes a positive effect from unrealized commodity futures. As you might be able to identify from the chart, the average quarterly market spreads were roughly stable quarter over quarter and year over year. During the quarter, Spreads increased, and here in the chart on the right, you can see why. Ethanol prices recovered, while prices continued the downward trend. Reduced imports, in particular from Brazil, led to a reduction in ethanol stocks in Rotterdam from 2023. due to increased blending mandates and the introduction of E10 in Poland and elsewhere. There was healthy demand for spot quantities. The ongoing backwardation is making ethanol imports more difficult and should contribute to a positive price trend. In Germany, however, the low greenhouse gas quota prices continue to slow the E10 growth. the incentive to expand the market share of fuels with a higher proportion of biofuels remains limited in the short term. Yet, the ongoing anti-dumping investigations at European level, as well as the media attention, in particular with regard to cases of fraud involving upstream emission reductions, allow us to stay optimistic that missing control mechanism will be installed and that we will return to fair market conditions in the future. Klaus will now give you an update on that and share the latest news.

Thank you, Olaf. Yes, to come back to main, to fair market conditions. in short future, in short term. So now you can see on that slide the development of the quota prices. So quota prices remain under pressure. But again, we see a new story of Chinese Sprout. So the new story is UER. First of all, What we can see on the chart is that from January 23, the quota prices came down from €400 per metric ton of €100, €120. And I think what we can see here on the chart is that we found ground. Makes sense because On this level, with 100, 120, 150 euro per metric ton of CO2 savings, even the proud from China labeling as advanced biofuel doesn't make sense. But what is now about UER? So UER is upstream emission reduction. There were a few reports recently on television, in newspapers. And upstream emission reduction is another option to meet German regulation on greenhouse gas reduction. It was implemented in 2020. And it is limited to up 1.2% maximum. So for example, if there is a greenhouse gas reduction quota of 10%, from this 10%, 1.2% can be fulfilled by upstream emission reduction, which means 8.8% have to be done by biofuels or renewable electricity. So it is significant. we are talking about one and a half million tons of CO2 savings per year coming from UERs. And UER, for example, is greenhouse gas reduction measurements at oil rigs, at gas rigs. So everywhere in the world where emissions coming from fossil crude and fossil gas upstream. All the measurements which take place to reduce these emissions are counting for greenhouse gas reduction in Germany and several other European countries, not all of them. So what came out is that with this UER project, where already 95% are located in China, that there is similar fraud, like with imports of fake biodiesel. So it turns out that at least 10 projects are not existing or not eligible. So some of these projects are simply not existing. They are not there, even though they have been certified. And the place of certification is the Deutsche Emissions Handelsstelle, which is part of Deutsche Bundesumweltamt. And because fraud could easily be demonstrated, the German government quickly presented an amendment to the 36 Bundes-Emissionsschutzverordnung. So the draft and the counting of upstream emission reduction certificates towards the greenhouse gas quota in 2024. But this is two years earlier than originally planned. And at least what makes me happy is that this is the first time that the German government related to Chinese Sprout is really reacting fast. The announcement resulted in a small jump in greenhouse gas quota prices from the lows, but let me go through this specific implication on the following slide. I mentioned that UER were firstly implemented in 2020. In 2020, the greenhouse gas reduction quota was 6%. And from these 6%, 1.2% were UER. So at least coming from 2019, where the greenhouse gas quota was 4%, to 2020 with 6%, but with UER, the increase at least was just 1% from 2019 to 2020. So if we compare now and look on the chart, so the chart shows the yearly growth in market size of greenhouse gas savings in biofuel and e-mobility. So without UER, only biofuels and e-mobility. So there we can see in 2020, it even came down, the use of biofuels minus 0.2. And then it went up again in 2022 by 1.9% and in 2023 by 2%. So that is the logic behind that chart. And since the introduction of the greenhouse gas quota in 2015. The set increase of 1.25% plus the elimination of the UER as a compliance option leads to the highest ever increase of about 5 million tons of CO2 savings year on year. So without upstream emission reduction disappearing at the end of 2024, the demand for liquid biofuels and e-mobility, the greenhouse gas reduction, which has to come from that part, will increase to approximately about or even more than 5 million tons. This is huge. So this adds up to a total market size of renewable fuels of more than 21 million tons of CO2 equivalent. So altogether, this means that the cushion of the CO2 savings that oil majors have on their balance sheets should deteriorate. eventually leading to a buying spree and supporting prices again. On top comes the decline in Chinese imports. This provides additional upside for all other renewable fuels and e-mobility market players and is fueled by the EU anti-dumping investigation. So taking into consideration less imports from China, from advanced biofuels, investigation from the EU, coupled with no more UER, and the increase The further increase in obligation in 2025 should create a significant higher demand for biofuels and greenhouse gas reduction in 2025. What about the investigation? So for now, there is no retroactive cancellation of fake quotas planned. But the industry, of course, and our association are still fighting for. So as we have received particular interest from shareholders who want to support the fight against green product fraud, We or Alina have added a few sources in the appendix. So you can refer to those links after the call if you are interested. I think Verveo was one of the first companies who pointed out very strong on that fraud already one, one and a half years ago. Now it is everywhere. It appeared everywhere in Europe. The European Commission politicians recognized that high greenhouse gas targets and an open market without control will not work. So now let's switch over to the, I guess it is the last slide, about our guidance. So, guidance remains unchanged, specified to the lower end. So, turning out to our guidance, which was updated in January for the current financial year, remains unchanged. As of now, we expect or we do expect to come in at the lower end of the epita guidance based on the current market environment this still translates into a very strong increase in epita in q4 year over year and quarter over quarter so aside from better spread in biodiesel, which we can only partially capture due to some hatched volumes. This is specifically driven by the better performance of South Bend ethanol. On top come biodiesel production volumes with higher CO2 efficiency, as we have successfully commissioned our advanced biodiesel capacity in Sweden. With this, we are doubling our total second generation biodiesel production capacities to 100,000 tons. So at least these are the results of our investment program in Europe, what we started about two years ago. So having said that, let me turn to our strategic update. So at Nevada, the production of renewable natural gas was already successfully commissioned in March and is currently running at about a capacity of 30%. The next step is to start up the ethanol production. Right now, we are working on it, and the plan is to have the first significant volumes of ethanol by the end of May. So, as you can probably tell, this means that we are able, that we were able to repair the sulfur separate container. Yes, a lot of Small stuff had to be eliminated the last month, but our team made there a very good job. So full capacity utilization of the biorefinery in Nevada is expected in six to nine months from now. Furthermore, the biomethane plant is eligible for an investment tax credit regarding the IRA in the inflation reduction of 30% of the investment costs, but it is only the part of the RNG plant, not the ethanol plant. So right now, Verbio North America is currently in final negotiations to sell the ITC in the amount of about 40 million US dollar. And we want to complete the process before the end of the current financial year. Honestly, I'm surprised how easy it works to create the ITC and to find a customer who is interested in buying an ITC. We have to give a discount here, higher single percentage so not a big deal and compared with the actual inflation rate it is really moderate but that is a very interesting experience for me how the United States are financing their investment in renewables and knowing that now I think Germany could learn a lot of a lot from this system. So the rules are simple and the market works, transferring tax credit to other companies. So to come back to Nevada, specifically, so the near-term start of the full commercial production at the refinery in Nevada, as well as the advancement at South Bend Ethanol means that we are ready for the next step. And the next step is we will begin the expansion into a combined bioethanol and biomethane production in South Bend. So the official groundbreaking with some politicians is scheduled for May 23. So May is an interesting and successful month in the business year 2024 so let me know let me now hand back to ola who will give you an update on our european activities olaf please take over well thanks speaking of groundbreaking ceremonies

As I said at the beginning of the call, the groundbreaking ceremonies for the etinolysis plant is actually happening today, I think in half an hour or so. So let me sum up the project specifics for you again. We are doubling down on the chemical sector to gain a foothold in the world's third largest industry. The challenges for green chemistry are enormous. Green chemistry is not just a question of environmental protection. It's also an economic necessity. After all, markets are changing and consumers, the public and legislators are increasingly demanding environmentally friendly products. Now, since 2019, we have been operating a pilot plant in Hungary in which we produce samples, means small, very small volumes. We are constantly optimizing this innovative process there. Now, we are taking the next steps. We are investing in the world's first etinolysis plant on an industrial scale. What does it mean in figures? Verbu is investing a total of 80 to 100 million euro in the new etinolysis plant at the Bitterfeld site. And we will be receiving a double-digit investment grant of approximately 20%. The nominal capacity of our plant will be 32,000 tons per year of nine damas. and the 17,000 tons per year of one decane. We plan to produce a total of 60,000 tons per year of renewable product for the chemical industry at the plant. The aim is to commission the etinolysis plant next year in 2025. We would then like to start regular production the following year in 2026. And with this, we would like to conclude today's prepared remarks and start the Q&A session. Thanks.

Thank you so much for your presentation, Mr. Sautter and Mr. Truebers. And now we will move over to our Q&A session. For a dynamic conversation, we appreciate if you could ask your questions in person via audio line. To do so, please click on the virtual Raise Your Hand button on the lower part of your screen. And if you have dialed in by phone, you can use the key combination star key 910 to the cue, followed by pressing star key 6 to unmute yourself. And if you're not able to speak freely today because you're maybe in Frankfurt, you can also place your questions in our chat box. And we will start with the questions from Niklas Janik-Becker. So please go ahead and ask your questions.

Yes, good afternoon. It's Niklas from Deutsche Bank. Thanks for the call and thank you very much for the update, especially on the Chinese biodiesel flows in combination with the German greenhouse gas quota. I have one question regarding the quota prices. Is the market still as illiquid as it was back in the second quarter? And where do you see the greenhouse gas quota prices progressing to in 2025?

Yeah, interesting question. Well, yes, the market is, so if you are dealing with pure greenhouse gas quotas, there are just a few players and the market is illiquid. But you know that most of our greenhouse gas savings, we are placing in the market linked with our liquid molecules. So the second part, where we see the quota prices, we don't know yet how much greenhouse gas savings the oil companies really have on their books. we estimate something between six and seven million tons which is a lot compared with 2023 obligation but with going uer away less imports from china i think i mentioned it during the call these amounts are going to detail to deteriorate fastly so We think that a healthy CO2 price must be in the area of about €250 per metric ton of CO2 savings. This is something where additional investments and additional investments in more production capacities are needed, especially heading into 2030, because, you know, the curve of obligation is a hockey stick and is very much increasing in 2026, 2027, 8, 29. So at the end of the curve, we need additional investments. And therefore, we as Verveo say, we need CO2 prices of about 250 euro per metric ton. And on that level, it will attract additional and necessary investments in new capacity. But if we will reach already in 2025 or in 2026 that level of 250, this we don't know and it is very much dependent on the amounts of CO2 savings oil companies are having on their books.

Thank you. That's very helpful. Maybe a question attached to that. In your prepared remarks, you mentioned that it is economically not attractive for Chinese biodiesel to continue flowing into the European Union at these greenhouse gas quota prices. Could you just elaborate on the reasoning behind that? Because my understanding is that we still have seen substantial volumes in the first quarter of 2024 flowing from China into the European Union.

Yes, we see imports. But this is nothing compared to what we saw one year ago. So it came now down to a more reasonable level. But, you know, if you are creating the double amount of CO2 savings, and if we are right, and most of it is coming from Proud, Then what are the two effects? The first effect is that palm oil is about $100 per metric ton, $150, it depends on the market situation, cheaper than rapeseed oil. And on the other side, you have higher logistic costs. So logistic costs, it has to come from Indonesia to China, go through a tank, go on the boat again, go to Europe, come in. So if you just get for your CO2 savings, 100 or 120 Euro per metric ton, then you are close that this additional money will not cover your costs anymore. So, and because of this, I say, It was attractive when the CO2 saving was at 400 euro per metric ton because you make about five tons of CO2 savings with double counting on one ton of biodiesel. So that was about If we talk about 400 euro, we were about 2000 euro additional money per metric ton just from the greenhouse gas savings. And now if we are talking about 120, it's just 600. And on the other side, you have to deduct your additional costs. So with 400 euro per metric ton, it was much more attractive. Also to accept the additional logistic costs at 120 it doesn't make so much sense anymore. Understood?

Yeah, that's very clear. And then one last question before I go back into the queue on your hedging in the biodiesel segment. Can you provide a little more color on the hedging initiatives? And specifically, I'm looking for how much of your biodiesel sales volumes in the fourth quarter you have secured and also at what prices, i.e. what kind of EBITDA tailwind can we expect from those hedges in the fourth quarter, given you should have visibility on your reposite oil prices you have logged in already?

Okay, I think these numbers, the detailed numbers, Olaf will provide immediately. just about the strategy behind, well, the last few calls, we were always talking about the uncertainty in Europe, what is coming from China. So we saw reasonable margins coming in for, especially for rapeseed oil-based biodiesel. And that That was one point where we said, okay, let's do some hedging. Numbers will come now from Olaf. And, you know, it's a little bit ironical. I said the margins were good for rapeseed biodiesel. We were surprised about that. But, you know, most of the imports which are coming from China are off spec. So they don't fulfill the spec. the specification. The best biodiesel in the market is biodiesel from rapeseed oil, and especially from Verbio, because most of our product is distilled. So the market needs biodiesel from rapeseed oil, high-quality product, to blend the off-spec import from China. So it's a little bit ironical that especially The first generation biodiesel, biodiesel made from rapeseed oil, is taking advantage about it. So, Ola, could you provide more details about Q4?

Yeah. Regarding the biodiesel, we had close to 50% of our European production in Q4. um and the reason we disclosed already it's simply um to shield us a little bit against the higher expected volatility within the market regarding the prices well we achieved a good margin And good means healthy and good enough that we expect to reach the lower end of our financial year, 2023-2024 guidance. And just to give you a little bit more column, we had a negative value of this derivative of a little bit more. I think it was 11 million euros. So, I mean, that's a result that is already given in the fourth quarter. And that means in turn, we have to achieve a little bit less than a 10 million APDA in each month in the fourth quarter. It should be achievable. And that's also the reason why we said we will come in at the lower end of our guidance.

Sorry, just to confirm this. The lower end of your guidance, does this only assume contribution from biodiesel or are you also counting on your ethanol segment too?

Yes, also from a certain contribution from the ethanol segment is needed to achieve the lower end, the 120 million for the entire financial year. But right now we see quite good margins, not very healthy, but good margins. The ethanol price stands approximately at 680, 690 euros per cubic. And we already locked in the raw material prices for most of the needs for Q4 of this financial year. there is a good visibility. You never know. It's commodity markets with a high volatility, but it's a good visibility right now.

Yeah. And, you know, we are quite sure now also with ethanol, the arbitrage for import volumes to Brazil and to the United States are for single counting ethanol are closed at the level what Olaf mentioned 690, 700 euro per cubic meter. On the other side, what I can report here from the US is we had, and I mentioned it during our presentation, we make significant progress in South Bend. We increased the production volumes by 30%. And that means that the whole economics is changing. You have more volumes with the same amount of fixed costs. So that means the contribution, the negative contribution to our ethanol segment in the last quarters are going down. So it's, US is still not profitable, but we are heading now into reducing costs and saying that means our European ethanol business was never negative, was always profitable, but The costs of increasing the capacities in the United States and all these investment projects are covered in our ethanol and RNG segment. So ethanol and RNG European production has to cover all the costs. So that is the reason. So what all I've said for the last quarter, better and stable margins in Europe. something we locked already in what he referred to. And on the other side, reduction of cost contribution for the US expansion. And I would say we are through the valley. Now we are able to increase our profitability. And with all the arguments and the facts around higher quotas in 2025, we are very positive that we can come back to real and attractive profitability. But now somebody else should come in and ask questions. Niklas, thank you very much. But some more questions from other parties.

Absolutely. So we will now move over to the questions from Adrian Peer.

Yes, hi, everyone. Thanks for taking my questions, actually. So, first one, because we just had the flow of discussing that regarding hedging. Just to be clear on what you did. So, is it basically hedging on the input side? So, being a grape seed in wheat, or are you also hedging the output side to some degree? That's my first question. The second one is, I'm still... Wondering if with, I mean, obviously you had negative EBTA contributions from, from hatching. And on the other hand, is it fair to assume that if you had not done that, um, your guidance would rather look for, uh, let's say the midpoint. I mean, on the other hand, you're probably sacrificing some stability in Q4, but, uh, any thoughts and clarification on that, uh, would be, would be helpful.

Okay. Second question. First, you are right. Without hedging, it would be even better. But all I've mentioned it, we didn't hedge all the volumes. We had half of it. But anyway, margins became even better. That is the reason why the hedging position at the end of March was negative with minus 11. But you saw also that the margins came back, so that also the hedging there for Q4 is now on a more positive side. But you are right, without hedging, we would be closer to the middle of our guidance than on the lower end. But, but, okay. So second input, how is the hedging? Well, When we talk about hatching, then we talk about sales hatching because usually our input is priced at a fixed price. So that means the wheat or the, let's say cereal, not wheat, the cereals, because it's a bunch of different cereals, the cereals for ethanol production are bought fixed and we don't need additional amounts now until the new harvest 2024. So with cereals, we are more or less done. The same with the rapeseed oil. And then on the sales side, we did the hatching to secure our sales prices. On biodiesel and Yeah, on ethanol, we are doing more or less the same through our trading department. So everything there is on a healthy way.

All right. Thanks for that. And actually, the second question is, as always, we are very curious to hear the amount of biomethane that's still stored. and the balance sheet, because it looks to me like at first glance, not going through everything, that you sold more biomethane in Q3. Is that correct?

Yes, it's correct.

And do you have a number for us where we stand with the stored methane?

Well, we are not disclosing this number in detail, but you are on the right way. So I think you have a feeling. So we were selling some greenhouse gas reduction, what we had to sell amounts from 2023. And yes, we sold also more biomethane, even into different markets like transport.

Yeah.

But we are not disclosing the volumes.

That's unfortunate. But I take it as it is. The next question that I have is actually, I was surprised to see actually that your headcount in the ethanol business was actually coming off a little bit from the peak that we saw in the quarter before. So what's the background for that?

Well, at the end of, so in October, November, is in the United States, the season where we are harvesting the corn stover. So there is a seasonal work. So we had to hire there some drug drivers and drivers for the balers. And when the season is over, in our third quarter, so first quarter 2024, we released these people. Okay. Simple answer. So it is just this seasonal part. On the other side, what means the teams in the production, South Bend as well as Nevada, we are still hiring people. We did already a lot, but small amount. So there will be further increase on the yearly average. We are investing there in people. We saw that the former owner, especially in South Bend was running the plant really at the lower end of what is necessary really from employees and especially blue colors to run such a plant. So our strategy is different. We are more technical driven and Oliver with his team is now building up their team. And I think the results are great. more or less with the same team and 30%. The last 10 years, the plant didn't make so much ethanol like we are doing now since February. And there is further space to go up. So our real target is to achieve 100 million gallons ethanol with that plant, which is about 385,000 cubic meters.

Okay. Just two very quick ones, actually. Do you have the number for us, actually, on the production of ethanol that you had in the US? And the second one is phasing on CapEx. I mean, I would assume that the fourth quarter we'll see quite some CapEx versus the previous quarters. Is that fair to assume, or are you going lower on the CapEx side of things? Thank you.

Okay. All right. So ethanol, right now it's just South Bend, and we are doing now close to 8 million gallons per month. So that is the actual capacity. So the target for 2024, 2025 is 90 million gallons. The previous year before we overtook the plant was 65. 65 million gallons. So I think for this business year, I don't have the real numbers in mind for the first six months of the business year, but I guess we are coming out at 75, 80 million gallons for the business year. The first half was unbefriedigend, was not sufficient. The first half, but as I said now, since February, we are doing good progress. And I think overall, we should come out at 70, 75, 80 in that range. And for the next business year is 90. Let's see if we are really even able to reach the 100 million gallon. So for the capex, well, maybe Olaf can give more meat on the bone, but I don't expect so much capex now in the last quarter. Yeah, we are doing groundbreaking in Bitterfeld and we are doing we are doing groundbreaking in South Bend, but that's not related to so much costs. Right. So the real costs are coming during 2025 when you are ordering equipment, destillations, you know, everything like this. So, but Olaf, can you approve my statement?

Yeah, actually, the plan is that we will face additional investments in Q4 of close to 60 million. But based on my experience, that is at a very high end of our planning. I would rather expect a 40, 45 million for the Q4 this financial year.

Yeah, that's what I thought. So definitely below 200 million for the full year, right?

Yeah, for the full year, definitely below the 200 million. Yes. Awesome.

Thank you. Thank you.

Good.

Thank you, Adrienne. So by now we just have one question from the chat box left and we do not want to leave Camille without the answer. So the question is, does the guidance also include the sales of US IRA tax credits or is that on top?

Ola?

Yeah, it's not a contribution. It's a tax credit. And we have to write down the tax credit over the next 16 years. So it will be approximately a yearly contribution of 2.5 million US dollar per year, EBITDA wise. But I mean, it's not now just a couple of weeks left. So there won't be any kind of contribution for the current financial year.

And to come to the clear answer, yes, it is on top. It's a tax credit. It doesn't go through our P&L. It's a tax credit. Therefore, it has even a higher value than just a subsidy. And yeah, the cash comes on top. And the rest of the value of our assets, it's not... impacted immediately by the tax credit. So it is really a very nice and attractive instrument to finance all the investments into renewables. Very, very smart system here in the United States. Okay. Then I think we are done.

Yeah, I guess we just come back to Niklas with a really, really quick follow-up.

Okay, okay, okay. Yes. Niklas, go ahead.

Just one follow-up question on the ramp-up costs in Nevada. You previously expected some 20 million headwinds in the current financial year. Is this still a valid assumption? And how much additional, if any, should we assume for the next financial year?

Well, overall, and I think we also mentioned this, the costs for our US expansion without investment was about 30 million, not only 20, it was 30. But South Bend is included there. So right now we are commissioning and we start up the ramp-up phase. Olaf can give you here more information, but the only thing what I want to say is that the full utilization Due to our planning at the moment, we are expecting, let's say, during the first quarter of 2025. So that we need, I mentioned it, six to nine months now for the ramp-up phase. Let's see if it goes faster. What is at the moment very helpful is that... Corn prices in the United States are very low. Farmers had a good harvest 2023. So corn prices came down from $8.50 per bushel to $4.50 right now. So nearly 50%, which is huge. And that is also reducing our commissioning costs Because the gas, and I mentioned it during my speech, the gas what we are right now producing is not sold to the transport sector. It goes to the voluntary market. And this is more or less very much fixed price. But Olaf, do you have a feeling now what will be the real commissioning costs for 2025 for Nevada?

I first would answer the past. So we're talking around the midpoint for Nevada, EBITDA rise between 20 and up to 30 million, so rather 25 plus minus EBITDA rise. For the next financial year, I mean, it's a little bit difficult. We are planning with at least a black figure, let's say, plus 5 million EBITDA, including the South Bend. But you have to keep in mind, first, it's a ramp-up phase with the one or other uncertainty which might arise. That's a downside. But the upside is actually, and that's Yeah, that's not on the table right now, but with the increase of the production volumes with South Bend, plus the healthier margins in the United States and the upcoming or actually the driving season. So. We have also a substantial upside potential regarding the EBITDA for the next financial year coming from our US ethanol operations. But again, it's a ramp up phase. So don't expect very, very good figures at the very beginning of the year. It's more or less aligned going up. So break even plus X.

And I think, you know, as Olaf mentioned it, it's a ramp-up phase. Once the production is running like we have it in Europe, we have much better visibility. So stay in contact with Alina. She will inform you, give you short-term guidance, information. And I think that is really the right strategy for the next 12 months that all the analysts stay in close contact with Alina.

All right. Will do. Thank you very much. Okay.

Thank you very much. So with this answer, yeah, our Q&A session ends. And this means we come to the end of today's earnings call. So thank you, everyone, for joining and to show an interest in Verveo. Should further questions arise at a later time, please feel free to contact Investor Relations. And Mr. Sauter and Mr. Trubach, also a big thank you to you for the presentation and the time you took today. So from my side, I wish you all a lovely remaining day and a hand over again to you, Mr. Sauter, for some final remarks.

Yeah, nothing more to add. Thank you very much for everybody who was joining the call and contributing to the discussion. And I am, we are, Olaf, me and Alina, looking forward to our next call soon. reporting the successful final of 2023, 2024, which was a very challenging year, I had to admit. Okay, thank you very much again. Have a nice day and enjoy. We are looking forward to our next call. Goodbye.