Gevo, Inc. (GEVO) Q2 2021 Earnings Call Transcript

Gevo, Inc. (GEVO 1.31%)
Q2 2021 Earnings Call
Aug 12, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to Gevo's second-quarter 2021 earnings conference call. My name is Liz, and I will be your operator for today. [Operator instructions] Please note that this conference is being recorded. I will now turn the call over to Geoffrey Williams, Gevo's vice president, general counsel, and secretary.

Please go ahead, Mr. Williams.

Geoffrey Williams -- Vice President, General Counsel, and Secretary

Good afternoon, everyone, and thank you for joining Gevo's second-quarter 2021 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; and Carolyn Romero, Gevo's chief accounting officer. Earlier today, we issued a press release that outlines the topics we plan to discuss.

A copy of this press release is available on our website at www.gevo.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 Gevo'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 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 earlier 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 Gevo's Net-Zero 1 project and our operating activities for the remainder of 2021 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 Gevo's Form 10-K for the year ended December 31, 2020, that was filed with the U.S.

Securities and Exchange Commission and in our subsequent reports and other filings made with the SEC by Gevo, including Gevo'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 date, and Gevo 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 a discussion of Gevo's business developments, Carolyn will then review Gevo's financial results for the second quarter of 2021, and following the presentation, we'll open up the call for questions.

I'll now turn the call over to Patrick Gruber. Pat?

Patrick Gruber -- Chief Executive Officer

Thanks, Geoff. Today, I'm pleased to be able to report an update on our engineering work and financial projections for Net-Zero 1. The results are good. We are on track to complete the next phase of engineering work, the next iteration, if you will, by the end of December this year.

This next iteration will tighten up the capital estimates further. Of course, this is all in preparation for the debt deal getting done in the first half of 2022. Now. hydrocarbon capacity is sold out.

In fact, it's oversubscribed based upon our take or pay contracts already in place. This is very, very good. We did decide to change the scope of Net-Zero 1 a little bit because we figured out how to potentially make more money sooner. We have added capacity for increased amounts of isobutanol, about 44 million pounds per year, which we plan on selling as a specialty chemical.

In addition, we are planning to increase our production of nutritional products like protein and animal feed by 40 million pounds. That brings us to a total of 340 million pounds of those products. And then we plan on making 46 million gallons per year of hydrocarbons rather than 45, and we still expect to produce about 30 million pounds of corn oil. Now, as a result of that change scope and with updated pricing assumptions based upon the pricing in our existing contracts, the Net-Zero 1 project revenue is currently projected to be approximately $340 million to $350 million per year.

This includes the hydrocarbon products, the carbon values, nutritional product value, the corn oil value and the revenue from IVA that we expect to produce in excess of what is needed for the feedstock for the hydrocarbon capacity. Now, the really good part is that the current projected EBITDA for the Net-Zero 1 project is approximately $150 million to $160 million per year. Now, that's an increase of approximately $50 million to $60 million compared to what we had previously discussed or previously had told investors. That's really good news.

The current projected levered IRR to Gevo is approximately 18% to 20% and includes all the revenue streams and that's the distributable cash, the OEM fees and all the rest. The distributed cash to Gevo from the Net-Zero 1 project after debt service and major maintenance is currently projected to be approximately $80 million to $90 million once the plant is up at steady state, and that's based upon an assumed 65% debt load. The capital cost projection is currently expected to be approximately $720 million for equipment and build out. Those are the installed hard costs.

Now, on a fully financed, fully installed bases, fully deployed and paying for all the provisional interest during construction, debt reserves and all the rest, that brings it up to a total of $980 million. Now, included in these costs or the increased capacity for the hydrocarbons and additional capital for more IVA capacity to serve the specialty markets, infrastructure to facilitate an easier capacity expansion and then adoption of certain unit operations to facilitate greenhouse gas reduction, more efficiently, and then, of course, the increased cost of steel and equipment based on the latest data in the market. Wastewater treatment and on-site biogas production are currently planned to be a separate project with separate funding and anticipated cost of capital commensurate with infrastructure returns using a third-party build own operate model. On-site biogas production is expected to meet the thermal demand for the plant.

It may be that we choose to finance the water treatment plant, that is a future decision. A separate but related wind power project is being developed to meet the majority of the Net-Zero 1 electricity demand. The wind project will be wired directly to Net-Zero 1. The wind project would be a separate project with separate funding, again, anticipated lower cost of capital using a build own operate model.

We also plan to making green hydrogen. Current scope of capex includes the capacity of hydrogen wine for our products, we are still determining if and how much excess to make for the marketplace and the corresponding economic benefit to Gevo. Now, we know the world wants green hydrogen. Since we are developing the capability to make it, we are working to figure out the best ways to make excess quantities and take it to market.

Now, I'm extremely pleased with these results. We are continuing to optimize and try to figure out ways to bring more cash and profit back to Gevo sooner, while reducing risk in our operations and business systems as we get Net-Zero 1 operational. Now for more information, please see our updated investor presentation that is available on our website at www.gevo.com. We are also planning to do a fireside chat on Wednesday, August 18 at 4:00 p.m.

Eastern Daylight time with Chris Ryan, our president and COO; and Lynn Smull, our CFO, who will together take questions and discuss the Net-Zero 1 project and give a little more detail as to what's going on there and how we're thinking about it. Please join Chris and Lynn you can. We expect to be announcing the location of customers for our second Net-Zero project in the near future. Our discussions with potential customers have shifted.

They are much, much much larger, and you'll see that in the updated deck and looking at it. The customer pipeline is now approaching about $20 billion of contracts in discussion. That's quite something. And we are working out then how to figure out, how to grow capacity much faster, so we can achieve many hundreds of millions of gallons of production and sales within five years.

There a lot of moving parts. The game has changed. Bigger and faster, that's what we're driving for, that's what I'm driving my team for at Gevo to achieve. Switching gears to RNG, I am pleased to report that RNG project is on track in terms of construction.

We expect it to start up on time and begin producing gas early next year. I'm pleased to work with BP to sell the RNG that will be produced. On Monday of next week, we expect to publish our first ESG report on our website. This ESG report is, I say, well done.

In it, you will see our thinking. And if you invest in us, please read it. Overall, we had an excellent quarter and we continue to make progress on our goals for this year. Now, I will turn the call over to Carolyn, who will take us through the financials.

Carolyn?

Carolyn Romero -- Chief Accounting Officer

Thank you, Pat. Gevo reported revenue in the second quarter of 2021 of $0.4 million, as compared to $1 million in the same period in 2020. During the second quarter of 2021, hydrocarbon revenue was $0.3 million, compared with $0.9 million in the same period in 2020. Hydrocarbon sales decreased because of lower production volumes at the South Hampton Resources facility in Silsbee, Texas.

During the second quarter of 2020, no revenue was derived at the Luverne facility from ethanol sales and related products compared to $0.1 million during the same period in 2020. As a result of an unfavorable commodity market during the three months ended March 31, 2020, we terminated our production of ethanol and distillers grains, which resulted in no sales for the period. Cost of goods sold was $2.8 million in the second quarter of 2021 versus $2.6 million in the same period in 2020. We increased maintenance and preparation for isobutanol production that began in July 2021.

Cost of goods sold included approximately $1.6 million associated with the maintenance of the Luverne facility and approximately $1.2 million in depreciation expense. Gross loss was $2.4 million for the second quarter of 2021 versus $1.7 million for the second quarter of 2020. Research and development expense increased by $0.7 million during the second quarter of 2021 compared with the same period in 2020 due primarily to an increase in personnel and consulting expenses as we work to improve our process for growing and fermenting yeast strains. Selling, general and administrative expense increased by $2.1 million during the second quarter of 2021 compared with the same period in 2020, due primarily to increases in personnel, professional fees and insurance to support the growth in our operations and an increase in consulting related to creating our first Environmental, Social and Governance report and documenting our compliance with Section 404(b) of the Sarbanes-Oxley Act.

Preliminary stage project costs increased by $5.3 million during the three months ended June 30, 2021, compared with the same period in 2020, due primarily to an increase in consulting for preliminary engineering costs and personnel expenses to support the growth in business activity at our Net-Zero projects. As a result of the business activities noted above, during the second-quarter 2021, we reported a loss from operations of $19.0 million, compared to $5.3 million for the same period in 2020. In the second quarter of 2021, cash EBITDA loss, a non-GAAP measure that is calculated by adding back depreciation and non-cash stock-based compensation to GAAP loss from operation, was $17.1 million, compared to $3.1 million in the same quarter of 2020. Interest expense in the three months ended June 30, 2021, was $6,000, a decrease of $0.5 million as compared to the same period in 2020 due to the conversion of all of our 12% convertible senior secured notes due 2021 to common stock during 2020.

As a result of the business activities noted above, during the second-quarter 2021, we reported a net loss of $18.3 million or a loss of $0.09 per share based on a weighted average shares outstanding of 198,137,420. This compares to a loss of $6 million in the second-quarter 2020 or a loss of $0.40 per share based on weighted average shares outstanding of 15,071,105. In the second-quarter 2021, Gevo recognized net non-cash gain totaling $43,000 due to the changes in fair value of certain of our financial instruments such as warrants and embedded derivatives. Adding back these non-cash losses resulted in a non-GAAP adjusted net loss of $18.3 million in the second quarter of 2020 or a non-GAAP adjusted net loss per share of $0.09.

This compares to a non-GAAP adjusted net loss of $5.8 million in the second quarter of 2020 or a non-GAAP adjusted net loss per share of $0.39. Now, I'll turn it back over to Pat to wrap things up.

Patrick Gruber -- Chief Executive Officer

Thanks, Carolyn. So, we're looking forward to this. We have a lot of exciting things coming and we are fired up. Our engineering work is -- whenever you do these things, it's an enormous quantity of work that we're cramming into a small period of time given that we just got the money to do these things at the beginning of in 2021, and we're making great progress and the engineering results really are good.

I like having our EBITDA go up, that's exciting, and I certainly like the way our pipeline is growing. And I know everybody wants us to get more contracts signed faster, but these are really big. That's what they look like. So we're excited looking forward to it.

With that, we'll take questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from the line of Sameer Joshi with H.C. Wainright.

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

Good afternoon Pat, Carolyn, thanks for taking my questions. So, with this increased scope to 46 million gallons per year, how does that impact or affect the subsequent Net-Zero projects that you would do? Will those be of so larger size as well? And what is the plan going forward?

Patrick Gruber -- Chief Executive Officer

Well, so let me comment first to just say that one thing we just put up and published on our investor presentation on our website, all the stuff that I just set out loud, so you can see it written down, and so it makes it much easier. And then to answer your question specifically is we think about it as that we've done the work in the engineering for this that we're in the process of it for the Net-Zero 1. We could translate that directly into make it a similar sized plan. So, think of it as a copy of Net-Zero 1.

That's the comment paradigm. However, we've got people we're working with were challenging us to think much bigger. And so we're asking ourselves that question as to how to go about doing that. So, we're running -- it's a very simple path to just simply copy Net-Zero 1, right.

So, that's kind of the incumbent hypothesis and it makes sense because the demand is so much greater than the product supply. So, we're asking things like, well, why not a 100 million gallon plant. How can we go bigger? How can you achieve 500 million, 700 million gallons in five years? Is that the kind of stuff we're trying to address. And of course, there's a whole bunch of chicken and eggs here because, all right, people who actually is going to buy this exactly and when and what are you going to do.

And yes, we can do it this technically possible. It's just a matter of capital. So, it's getting to be quite interesting for us. Right now, there is definitely, definitely, definitely a shift that has occurred in the last several months.

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

Yeah. No, that was the reason for the call that instead of 46 million gallons, what if you would be able to do bigger if the industry demands it?

Patrick Gruber -- Chief Executive Officer

Yeah, we can. There's no limit. So, the reason -- what we're doing right now is we took what we had. We're trying to stay with it something we already had well defined, and we're trying to optimize the returns and capital.

So, I noted that in our models, they project that the EBITDA has increased from about $100 million a year that you talked about. That's pretty good. That's like a 50% increase from optimizing. I think we should spend certain money on optimizing.

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

It's exciting, certainly.

Patrick Gruber -- Chief Executive Officer

I mean, that was a better result than I ever expected from our people, well done. There's still so many variables and stuff. Everybody always ask me, well, what happens if corn stays high forever. And all this -- you know what, we've got enough economics to work with and we have additional things that we can do with the technology where we feel pretty comfortable that we're in a good spot in terms of what project and yes the details are going to move around a little bit in terms of specific IRRs.

But overall, we feel pretty -- we got a handle on it, much incredible speed, I think. So--

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

And just one more clarification on Net-Zero. The green hydrogen that is going to be produced is part of the $720 million to $980 million capex. But then for the excess that you are planning to or may produce, is there any additional capex incremental to this $980 million?

Patrick Gruber -- Chief Executive Officer

So, on the $980 million, right now, we're at -- if you're going to far us to other projects, it'd be $720 million, it's a number to use to compare us to other people. Once it's financed and installed and you do the prepaid accounts and all the other craft that goes with project financing that I really don't like, by the way. You add all that up, now you get to $980 million. So, in addition to the $720 million would it take additional capital if we want to make a whole lot more hydrogen interest, yes.

So, the game plan for us is to figure out who actually wants to buy hydrogen, where, what, does it make sense, and just do your -- do the calculation. And if it makes economic sense, you can get equivalent returns or better than -- so if it has attractive returns, 18%, 20% or better or something, then we'd say that may be a word to use of our capital. That's how we think about it. So--

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

Yeah. Thanks for that clarification. Moving to the RNG, the 355,000 MMBtu plus capacity, is that all going to be taken by BP for the recent press release, just wanted to clarify that.

Patrick Gruber -- Chief Executive Officer

It is. We're going to send it down the pipeline to California because that's how you maximize value. And that's attractive. And we could later on take gas up to the burn, which we do, we are running it again.

But we could take it up there as we expand liver and make it into a hydrocarbon plant or it's a Net-Zero 1. But right now, the way you make the most money is just send it to California is through BP.

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

Right. And this next question probably has been asked before, but just wanted to understand the preliminary stage project costs are being expensed as against capitalized. That is because they're not associated with a particular project, but it is just pre to the project. Is that correct?

Patrick Gruber -- Chief Executive Officer

I know that -- yeah, I was going to say, there's some that we capitalized to some that we don't, so but Carolyn can explain.

Carolyn Romero -- Chief Accounting Officer

Right. So, the R&D-related costs are being capitalized effective with the second quarter. That's because we've got the financing and we're able to move forward with the project. The cost related to Net-Zero are being expensed until we get past all of the FEL 3.

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

OK. So, there could be something in the future.

Patrick Gruber -- Chief Executive Officer

Yeah, yeah, it will be. When we get to the near the closings and stuff is what she is talking about. Well, short handling go for some of the focus to call it FEL 3, but FEL 3 is not well understood by a broad group. What it is, when we get down to that plus or minus -- when we get down to that plus or minus 10% level and say, we're going to do the financing now here it is.

That's the time when the stuff would be capitalized and will it be a look back as well because we are keeping track of our expenses and putting them into buckets in a very onerous process of tracking all of our time. Carolyn makes us do it, Lynn makes us to do it.

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

No, that's great. OK, thanks. That's all I have right now. Congratulations on the progress, and good luck.

Patrick Gruber -- Chief Executive Officer

Thanks.

Operator

[Operator instructions] Our next question comes from Poe Fratt with NOBLE Capital Markets.

Poe Fratt -- NOBLE Capital Markets -- Analyst

Good afternoon, Pat. I was hoping to -- with the project costs moving around a little bit, I was hoping to get your current estimate of what you think the equity investment from Gevo into the first SPB would be?

Patrick Gruber -- Chief Executive Officer

We're assuming 65% debt, so if it's $980 million, that's like $340 million or something like that line there. Lynn are you there. I got that right. Right, Lynn?

Lynn Smull -- Chief Financial Officer

Yes, $345 million, yup.

Patrick Gruber -- Chief Executive Officer

That's up from $270 million is what we thought earlier. But it's good. It's all in the space of good and nice and doable. And you know what, getting those -- one of the questions that has come up over and over again, you've even asked me, how can you get more return sooner back? How more distributable cash sooner? Well, here you go.

We deploy more capital sooner with a good return sooner.

Poe Fratt -- NOBLE Capital Markets -- Analyst

And then have you firmed up or is there any potential -- or could you give us maybe potential timing of Net-Zero 2? If you and then but take us -- and I know it's tough, Pat, but can you take a stab at when we're going to see additional capacity at Net-Zero 2 sold down?

Patrick Gruber -- Chief Executive Officer

We've already sold since earlier this year, we have announced like 10 million more gallons, so that I think we're up there's like 10 million more -- that's a lot -- 10 million more gallons, so to do another 35 million gallons. So, I think what's going to happen is we're going to be well over that. So, we're probably -- we're up in another 50 million or 60 million gallons immediately and there's discussions for several hundred million gallons, actual real stuffing negotiated that's way, way, way bigger, like order of magnitude bigger. But -- so we're sitting here trying to figure out how to do it.

So the opportunity is here in front of us. It's an outstanding problem to have, but how do we go bigger sooner, much bigger. And that is part of the question. Yes, we can keep the point Net-Zero copies kind of like that because I can understand it is straightforward.

It's relatively bite size for this market space. But we want to be bigger. And we have one of the very few technologies that actually works. So, we've got to figure it out.

And that's one of the active things we're working on. So, as far back to your question, when can I announce the Net-Zero 2, I'd expect soon. I always say that, though, Poe. And I expect these contracts to be done.

They're not gone. And I know why the -- it is this final negotiations. These are big contracts. Remember, a 45 million gallon offtake that's worth about $1.5 billion across the life of it.

So, these aren't chunk change for people. They all play serious and doing it and they're inching along, inching along, getting done. And but then I think we'll see ones that are bigger or intent for ones that are bigger.

Poe Fratt -- NOBLE Capital Markets -- Analyst

Understood. So, on the engineering work that you're doing, you've gotten the estimate down to plus or minus 30%. I think I heard you say that you need to get to plus or minus 10% to get the bond closed. When do you expect -- it sounded like you might expect that by the end of the year.

Is that what I heard?

Patrick Gruber -- Chief Executive Officer

I think that what we'll see is it mostly in that range by the end of the year. But what we're going to really need to get it closed is take those numbers and have the EPC company. We will announce in the not too distant future. Who they say, here's the wrap that goes with it.

That's actually what's needed to get to the bond financing. And so what will happen is we'll get those engineering numbers refined around the end of the year kind of a thing. And we'll continue to work on and keep refining. We'll never -- we won't stop the engineering.

We'll just keep plugging along. But we'll get to a point where now the EPC company goes, here's the number that they're willing to guarantee.

Poe Fratt -- NOBLE Capital Markets -- Analyst

OK. And then do you have a working estimate for the wastewater and then the wind component of Net-Zero 1?

Patrick Gruber -- Chief Executive Officer

Lynn, what's the wastewater treatment plant is what, $100 million-ish.

Lynn Smull -- Chief Financial Officer

It's less than that, but it's less -- it's a little less than $100 million. But these numbers are incorporated in our models as cost of service estimating the capital cost, return on capital to a build on operate, as well as their operating costs. That's the same thing we've been doing all along with the wind. We're doing the same thing now with water -- with wastewater and AD.

Patrick Gruber -- Chief Executive Officer

So, what you should expect, I think, and what I expect is that we'll wind up being a co-investor with other people to get everybody see it, everybody feels more comfort when we do that, just like we did with our wind project done at Luverne and then we go build it out. And we have a lots -- several parties who want to play with us here. So, that's good.

Poe Fratt -- NOBLE Capital Markets -- Analyst

Yup. I just wanted to make -- clarify and make sure that the $720 million does not include the wastewater nor the wind at this point in time?

Patrick Gruber -- Chief Executive Officer

You'll see that in our slide deck that we just put up when you get a chance to go through it. And we try to be -- for all of you listening who go look at her, we put out an enormous quantity of data into that slide deck that we just put up. It goes on and really tries to be crystal clear about the assumptions we're making and what we're thinking about things. We're trying to be really transparent.

But I need everyone to understand where we are. We're in the midst of sorting out making sausage, figuring things out. We're trying to manage it, and I even laid out principles of how we're thinking about things as we design, because it'd be easy to go super, super fast. And a lot of people go, tell me, Pat go faster, how we can you those.

Yes, I can go faster and I can waste like $100 million or $200 million, that's what I can do or we can do what we just did, optimize it, figure it out, incrementally increase capital and boost the EBITDA and distributions. And so that's the work to be done here is to be smart about how we figure this out to make the most money at least risk.

Poe Fratt -- NOBLE Capital Markets -- Analyst

Yup. Yeah, I looked at Slide 28 and so I was just trying to figure out what else -- what other capital costs might be associated with the entire project. Let's--

Patrick Gruber -- Chief Executive Officer

Poe, let me just go back. So, look, on Slide 28, you'll see that table. And there's enough information there now. People can build a pretty darn good model and then do sensitivities around it with various assumptions and look at Slide 29 as well.

And on Slide 29, you'll see some more information. We decided to just put that out there. One of the things about people I was asking about is corn, what happens if corn stays at this high price? Well, guess what, that has a relatively minor impact on the overall project. Now, guess what, over 50% of the cost of corn is offset by the co-products, the nutritional products and corn oil value.

That's an internal hedge we have. That helps us. This is what helps make these projects attractive. It isn't quite as volatile as people would think just looking at simple commodities.

Poe Fratt -- NOBLE Capital Markets -- Analyst

Yup. That slide -- those two slides are really helpful. If we could talk about the timing of capex now that the R&D bond financing proceeds are on your balance sheet or on your financial statements, can you talk about the timing of capex on the RNG plant?

Patrick Gruber -- Chief Executive Officer

Lynn?

Lynn Smull -- Chief Financial Officer

Yeah, we'll be complete. The project is on schedule and the anticipation is that we'll start up operations and begin producing very early next year. The way it works is we pay our contractors and then we submit to the trustee for reimbursements out of those bond proceeds. So, there's always a lag of a month or so from when we put the cash out till we get it back.

Poe Fratt -- NOBLE Capital Markets -- Analyst

And so that full, Lynn, that full what $70 million will be laid out and reimbursed over -- laid out over the next three quarters, is that sort of how we should cash lock that down?

Lynn Smull -- Chief Financial Officer

No, I think it will -- we expect to be complete by year-end. So that we will have done all the work and paid all the bills, but it may drip into the first quarter on recovery of those last bill -- last contractor payments.

Poe Fratt -- NOBLE Capital Markets -- Analyst

OK, great. And then on Net-Zero 1, if you could just highlight what you are going to spend in the third and fourth quarter on that project?

Lynn Smull -- Chief Financial Officer

I will take that. The -- I think the largest uncertainty is around the long lead equipment deposits. We have budgeted $20 million for long lead deposits. The timing of that is uncertain, but we need to get that out before year-end to secure equipment to maintain schedule.

We probably -- I don't really have the numbers in front of me in terms of a cash burn for the other elements around engineering and site development, but it's going to be a fairly substantial number. I think we've always said that the total development cost, including engineering and long lead and financing up to close would be somewhere around $45 million. And then we recovered that at financial close as contributed equity.

Poe Fratt -- NOBLE Capital Markets -- Analyst

Perfect. Great. Thanks for your time.

Operator

That concludes today's question-and-answer session. I'd like to turn the call back to Patrick Gruber for closing remarks.

Patrick Gruber -- Chief Executive Officer

Well, thank you all for joining us. I encourage you to take a good look at that. Our recent investor presentation, you will see that we did go into more detail about where we are on our Net-Zero project, how we're thinking about capital, the results are turning out, as I said, better than I expected. In fact, the EBITDA has gone up and stuff.

Yes, we still got a lot of work to do to sort it out. We're working it. This customer pipeline thing is a big deal and there's no one more in patients for getting contracts done than me. I can make my people crazy from bugging them, but we are moving it forward.

And the size of the discussions, these are like getting to be big. It's in the billions of dollars of capital, many, many billions of dollars of capital in the future. And people wanting to participate with us. And so all those things have to be sorted out.

Net-Zero 2, much more straightforward, that one is far along, and I can see that one being Net-Zero, a copy of the Net-Zero 1. But we got to grow bigger and faster. And that's where our attention is turning, how will we do that. So, there'll be more to come as this all unfolds, but it's an interesting time in place.

Thanks for joining us.

Operator

[Operator signoff]

Duration: 36 minutes

Call participants:

Geoffrey Williams -- Vice President, General Counsel, and Secretary

Patrick Gruber -- Chief Executive Officer

Carolyn Romero -- Chief Accounting Officer

Sameer Joshi -- H.C. Wainwright & Co. -- Analyst

Poe Fratt -- NOBLE Capital Markets -- Analyst

Lynn Smull -- Chief Financial Officer

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