Executive Summary / Key Takeaways

• Gevo is transforming into an operational carbon abatement company, leveraging proprietary technology and strategic acquisitions to capitalize on the growing demand for low-carbon fuels and chemicals.
• The recent acquisition of Red Trail Energy (Gevo North Dakota) is a significant catalyst, immediately boosting revenue and providing a platform for future growth, including a planned 30 MGPY Alcohol-to-Jet (ATJ) plant.
• Policy developments, particularly the outlook for the 45Z tax credit and the approval of a significantly lower carbon intensity score for the Renewable Natural Gas (RNG) business, are expected to substantially enhance profitability and drive the goal of achieving positive adjusted EBITDA in 2025.
• Gevo's differentiated technology suite, including its integrated ATJ plant design, Ethanol-to-Olefins (ETO) process, and Verity carbon accounting platform, provides a competitive edge by enabling lower carbon intensity scores and potentially lower costs compared to alternatives.
• Key factors for investors to monitor include progress on project-level financing for the flagship ATJ-60.00 project, successful integration and monetization of the Gevo North Dakota assets (especially 45Z credits), continued operational performance of the RNG business, and advancements in the ATJ project pipeline.

Setting the Scene: A New Era for Carbon Abatement

Gevo, Inc. is positioning itself as a leader in the burgeoning carbon abatement industry, specifically targeting sectors like transportation that are challenging to decarbonize through electrification or hydrogen alone. The company's core mission revolves around transforming renewable energy and carbohydrate feedstocks into energy-dense, "drop-in" liquid hydrocarbons, including Sustainable Aviation Fuel (SAF), motor fuels, and chemicals. This approach aims to achieve a net-zero or even carbon-negative footprint across the full lifecycle of its products, measured by the Argonne National Laboratory's GREET model.

The global push towards decarbonization is creating significant market opportunities. Projections indicate substantial growth in SAF demand, with some estimates suggesting it could comprise 11% of aviation fuel by 2035 and potentially 36% by 2050. Airlines and international bodies like IATA are setting ambitious net-zero targets, driving the need for scalable, cost-effective low-carbon fuel solutions. Gevo believes its carbohydrate-to-alcohol process offers the most economically viable pathway to meet this rising demand.

Within this landscape, Gevo operates as a project developer, technology licensor, and increasingly, an asset operator. Its business model is built on proprietary technology and integrated business systems designed to capture value across the entire supply chain, from sustainable agriculture to finished fuel or chemical products. This differentiates Gevo from competitors who may focus on only one part of the value chain or rely on less carbon-efficient processes. While larger, diversified players like Archer Daniels Midland (ADM), Valero Energy (VLO), and BP plc (BP) have significant scale and established infrastructure, Gevo aims to compete by offering products with superior environmental attributes and leveraging its technological edge.

Technological Edge: Driving Carbon Abatement and Cost Efficiency

Gevo's competitive strategy is fundamentally rooted in its differentiated technology suite, designed to maximize carbon abatement and improve cost efficiency. The core of its fuel production strategy lies in the proprietary Alcohol-to-Jet (ATJ) process. This multi-step system converts carbohydrates from sustainably grown crops into alcohols via fermentation, which are then catalytically converted into olefins, and finally into energy-dense hydrocarbon fuels like SAF. Gevo owns the integrated plant designs, engineering details, and has filed patents on process improvements.

A key benefit of Gevo's integrated ATJ plant design is its potential to significantly lower the carbon intensity (CI) score. The company estimates its design can reduce the CI score of ATJ production by 55 to 59 points compared to unintegrated plants, even before accounting for carbon capture or climate-smart agricultural practices. While some industry benchmarks for ATJ are in the 70-80 CI range, Gevo's inherent design advantage positions it favorably to achieve very low, potentially even net-zero or negative, CI scores. This is critical for accessing premium markets and maximizing value from carbon credits and incentives.

Beyond the ATJ process, Gevo is developing its Ethanol-to-Olefins (ETO) technology, currently advanced through a joint development agreement with LG Chem. This technology aims to convert ethanol directly into olefins, including bio-propylene, which are building blocks for chemicals and fuels. Management believes ETO offers significant savings in capital and operating costs compared to existing methods for converting alcohols to hydrocarbons. While still in the scale-up phase, this technology holds the potential to further reduce costs and enhance the competitiveness of future ATJ facilities and enable the production of low-carbon chemicals for a market estimated at $400-$500 billion for low-carbon solutions.

Underpinning Gevo's carbon abatement claims is its wholly-owned subsidiary, Verity. This carbon accounting tech startup provides an end-to-end digital Measure, Report, and Verify (MRV) platform. Verity utilizes Distributed Ledger Technology (blockchain) to track, measure, and verify carbon intensity and other sustainability attributes across the entire supply chain, from the farm to the final product. This transparency is crucial for substantiating claims, accessing compliance and voluntary carbon markets, and ensuring value capture without double-counting. Verity is expanding its services to external customers and integrating capabilities from the acquired CultivateAI, positioning Gevo to provide high-quality, auditable carbon data across various agricultural and industrial value chains.

Strategic Transformation and Operational Momentum

Gevo's strategic trajectory has recently accelerated with the transformative acquisition of substantially all the assets of Red Trail Energy, which closed on January 31, 2025, and now operates as the Gevo North Dakota segment. This acquisition immediately brought an operational low-carbon ethanol plant and a fully permitted Class VI carbon capture and sequestration (CCS) well into Gevo's portfolio. The facility boasts a low estimated CI score of 21 gCO2e/MJ under the GREET model, making it one of the lowest CI ethanol plants in the industry.

The impact of this acquisition was immediately visible in Gevo's first-quarter 2025 financial results. Total operating revenues surged to $29.1 million, a significant increase compared to $4.0 million in the prior-year period. This increase was primarily driven by $22.8 million in revenue generated by the Gevo North Dakota segment during the two months of operations included in the quarter. The segment produced over 11 million gallons of low-carbon ethanol, along with valuable co-products like high-protein animal feed and corn oil, demonstrating strong operational performance with a yield of approximately 2.9 gallons of ethanol per bushel of corn ground.

The Gevo North Dakota segment also contributed positively to profitability in its initial period, reporting $0.5 million in income from operations and $1.8 million in adjusted EBITDA for the two months. This performance, coupled with the improving results from the Renewable Natural Gas (RNG) segment, is central to management's outlook for achieving overall positive adjusted EBITDA for the full year 2025.

The RNG project in Northwest Iowa continues to be a source of growing revenue and profitability. In the first quarter of 2025, the RNG segment generated $5.7 million in revenue, a 42% increase from the prior year. This growth was primarily driven by a significant increase in LCFS credit generation, following the approval in March 2025 of a provisional Tier 2 pathway by the California Air Resources Board (CARB). This new pathway reflects a substantially lower CI score of approximately -339 MJeCO2, a marked improvement from the temporary -150 MJeCO2 score, and is expected to generate approximately 70,000 additional carbon credits annually based on current production levels. The RNG segment achieved $1.1 million in income from operations and $2.7 million in adjusted EBITDA in Q1 2025, demonstrating positive momentum. The company is also exploring further low-capital expansion opportunities for the RNG facility to increase production towards 500,000 MMBtu per year.

Project Pipeline and Future Outlook

While the Gevo North Dakota acquisition and the RNG business provide a foundation for near-term profitability, the long-term growth story remains centered on the deployment of large-scale ATJ production capacity. The flagship ATJ-60.00 project in Lake Preston, South Dakota, designed to produce 60 MGPY of SAF, continues to advance. Engineering design is substantially complete, with detailed engineering and modularization efforts ongoing. The project received a conditional commitment for a $1.6 billion loan guarantee from the DOE in October 2024, a significant validation of its integrity and a key component of the financing plan. Gevo is working towards securing project-level equity and debt financing, expecting its cumulative development spend ($90 million - $125 million range from Jan 2024 to close) to be recovered and contributed as equity. The start-up of the ATJ-60.00 plant is expected approximately 36 months after financial close, though the timing of close remains uncertain.

Leveraging the assets acquired in North Dakota, Gevo has also commenced engineering and development for a 30 MGPY ATJ plant (ATJ30) at the site. This project is expected to benefit from the existing infrastructure, including the CCS well, and can utilize designs developed for ATJ-60.00, potentially accelerating the timeline and reducing capital costs compared to a greenfield ATJ60 project. Commercial interest for this potential ATJ30 capacity is already strong, with approximately half of the potential output already spoken for through voluntary carbon abatement and fuel contracts. This includes a groundbreaking agreement with Future Energy Global (FEG) to acquire Scope 1 and Scope 3 emissions credits tied to 10 million gallons per year of future ATJ fuel, demonstrating the market value of Gevo's carbon attributes separate from the physical fuel.

Policy tailwinds, particularly the outlook for the Inflation Reduction Act's Section 45Z tax credit, are expected to significantly enhance the economics of future SAF production. The guidance for the preceding 40-B credit, while expiring, set positive precedents by recognizing CI reductions, using the GREET model, including CCS, and moving towards accounting for climate-smart agricultural practices. Management is optimistic that 45Z will build upon this, potentially offering up to $1.75 per gallon for SAF with a net-zero CI score. The low CI score of the Gevo North Dakota ethanol plant (around 20) already positions it favorably for 45Z monetization, which is expected to begin impacting the P&L in Q2 2025. The proposed inclusion of a dairy RNG pathway in 45Z is also seen as a significant benefit for Gevo's RNG business.

Gevo's liquidity position remains a key strength, with $134.9 million in cash, cash equivalents, and restricted cash as of March 31, 2025. While cash was used in operating and investing activities in Q1 2025 (primarily for the Red Trail acquisition and capital projects), financing activities provided significant cash, largely from the OIC credit agreement and equity investment related to the acquisition. The company believes its current cash, combined with expected cash flows from operations (Gevo ND, RNG, Verity), is sufficient to meet obligations and fund project development efforts, with large construction capital expected to be raised at the project level.

Risks and Challenges

Despite the positive momentum, Gevo faces notable risks and challenges. The successful integration and optimization of the acquired Gevo North Dakota assets introduce operational complexities. The preliminary purchase price allocation for the acquisition is subject to change, potentially impacting future financial reporting. While management is optimistic about monetizing 45Z credits, the final rules and market dynamics for these credits and for durable carbon dioxide removal (CDR) credits could impact expected revenue streams.

The path to profitability hinges on the continued strong performance of the Gevo North Dakota and RNG segments and the successful monetization of associated environmental attributes and tax credits. The company has incurred losses since inception and expects to continue doing so until large-scale ATJ production comes online. The transition to sustained profitability depends on the successful development and commercialization of its projects, including securing financing and completing construction.

The timing and terms of project-level financing for ATJ-60.00 remain uncertain, and securing third-party equity and debt is critical for moving into the construction phase. The expected 36-month construction timeline post-financial close means significant SAF production from this facility is still several years away. Furthermore, securing access to CCS at the ATJ-60.00 site is necessary. While Gevo has options, including potentially railing CO2 to its North Dakota site, the resolution of issues surrounding the Summit Carbon pipeline in South Dakota could impact the preferred logistics for the Lake Preston facility.

The company's financial results rely on estimates and assumptions, and changes in underlying conditions could lead to revised estimates. Market risks, including volatility in environmental attribute and commodity pricing, could impact revenues and costs. Additionally, the company has identified a material weakness in internal controls related to handling complex transactions, although remediation efforts are underway.

Conclusion

Gevo is undergoing a significant transformation, shifting from a primarily R&D and development-focused entity to one with operational assets contributing meaningful revenue and driving towards profitability. The acquisition of Gevo North Dakota is a pivotal step, providing immediate revenue, positive segment-level EBITDA, and a strategic platform for future ATJ expansion. Coupled with the improving performance and enhanced carbon credit value of the RNG business, this positions Gevo to potentially achieve its goal of overall positive adjusted EBITDA in 2025.

The company's proprietary technology suite, including its integrated ATJ design, ETO process, and the Verity carbon accounting platform, offers a compelling competitive differentiation by enabling lower carbon intensity products and potentially reducing future costs. Policy tailwinds, particularly the positive outlook for the 45Z tax credit, are expected to significantly enhance the economic viability of Gevo's low-carbon fuels and chemicals. While challenges remain, including securing project financing for the flagship ATJ-60.00 plant and navigating market and operational risks, Gevo's strategic focus on integrated, data-driven carbon abatement solutions positions it to capitalize on the growing global demand for sustainable energy and materials. Investors should closely monitor the company's progress in executing its project pipeline, monetizing its carbon assets, and demonstrating sustained operational performance as it works towards its profitability targets.