- Reports EPS of ($0.34) including $1.6 million non-cash gain
from the change in fair value of embedded derivatives contained in
Gevo's convertible notes
- Ended the quarter with cash and cash equivalents of $25.7
million
- Net cash used of $14.9 million in third quarter of 2013
- Commissioning Luverne on corn mash for fully integrated
production
- Producing isobutanol as we work through commissioning in Q4
2013 and plan to start steady production in Q1 2014
- Signed supply agreement with U.S. Navy for bio-jet fuel
- Began commercial licensing business; signed licensing LOI with
IGPC Ethanol
- Opened biorefinery for fully renewable paraxylene and started
production
Gevo, Inc. (Nasdaq:GEVO) today announced its financial results for
the three months ended September 30, 2013 and provided an update on
recent corporate highlights.
"After successfully running our Luverne plant using dextrose
feedstock in single and dual train modes, in October we moved to
our ultimate goal of using corn mash, our commercial feedstock,"
said Patrick Gruber, Gevo's chief executive officer. "We are
encouraged by what we have accomplished in the third quarter, as we
achieved several key technology milestones. We have:
- Proven that our yeast grows and produces isobutanol using corn
mash feedstock at commercial scale;
- Made clean corn mash, the essential foundation for the
commercial production of isobutanol;
- Run our GIFT® systems on full corn mash and produced
isobutanol; and
- Begun the commissioning of new equipment to aid in the control
of infections which will permit us to bring Luverne up to full
operation."
"It's a completely different game compared to last year. We've
made great progress in controlling infections in the plant. My team
is doing an excellent job of safely working through the mechanical
and operational issues as we commission the new equipment and
operate and integrate the entire plant using the corn mash
feedstock. It is exciting to see the Gevo proprietary yeast
biocatalyst and GIFT® systems perform in line with our
expectations, and based on this performance, we can begin licensing
discussions in earnest."
Recent Highlights
On July 24, 2013 Gevo announced that it had signed a supply
agreement to supply the U.S. Coast Guard with up to 18,600 gallons
of finished 16 percent renewable isobutanol-blended
gasoline. The U.S. Coast Guard is using the Gevo-blended fuel
as part of a 12-month, long-term durability study on marine engines
that began in June. The testing is being performed under a
Cooperative Research and Development Agreement between the U.S.
Coast Guard, Honda, and Mercury and will focus on the Coast Guard's
two platform boats – the 38-foot Metal Shark with twin 300
horse-power Mercury Verado outboard engines, and the 25-foot SAFE
vessel with twin 225 horse-power Honda outboard
engines. Testing will take place at the U.S. Coast Guard
Training Center in Yorktown, Va. Gevo provided the first shipment
of 750 gallons of renewable isobutanol-blended gasoline to the U.S.
Coast Guard in mid-June.
On August 1, 2013, Gevo announced that it had increased
commercial production of isobutanol at its Luverne facility by
bringing online a second production train utilizing its proprietary
GIFT® system. By bringing online a second million-liter
fermenter and GIFT® system at its facility in Luverne, Gevo has
significantly increased its current isobutanol production capacity
following the initial resumption of production in June 2013.
In August, isobutanol was certified by ASTM International for
use with spark ignition fuel for all automobile engines, creating a
global framework for the use of isobutanol as a gasoline
blendstock. The Butanol Task Force, chaired by Gevo's Glenn
Johnston, was made up of representatives from the Petroleum
Refining Industry, Ethanol Industry, Major Automobile OEMs, and
other industry experts from around the world. The specification
request went through the very robust ASTM consensus process. Gevo
also worked with the Analytical Subcommittee of D02 to establish
testing methods for isobutanol to be used in validating the
specification.
On August 26, 2013 Gevo announced the opening of its biorefinery
for fully renewable paraxylene at South Hampton Resources. Gevo is
working with The Coca-Cola Company and Toray Industries to deliver
a new production technology for renewable paraxylene, a key
building block for producing fully renewable PET for beverage
bottles, fibers, textiles and films. Research and development
support for this plant was provided by The Coca-Cola Company under
a Joint Development Agreement. Toray has provided capital for
the construction of the Silsbee facility and has signed an offtake
agreement for paraxylene produced at that facility.
In September, Gevo signed a supply agreement with the U.S. Navy
to supply them with 20,000 gallons of Gevo's renewable
alcohol-to-jet-5 (ATJ-5) jet fuel and an option to increase the
order to 90,000 gallons. Gevo has the largest isobutanol ATJ
production facility in the world and has produced and sold more
isobutanol ATJ jet fuel than anyone else. Gevo has previously
supplied ATJ-8 jet fuel under its contracts with the U.S. Air Force
for 56,000 gallons and the U.S. Army for 16,150 gallons.
In October, Gevo signed its first letter of intent to
commercially license its GIFT® technology to IGPC Ethanol
(IGPC). IGPC is a farmer owned co-op that owns a 150 million
liter plant in Ontario, Canada and has been producing ethanol since
2008. IGPC is interested in licensing Gevo's GIFT® technology
to incorporate isobutanol production at its ethanol facility.
In October, Gevo began commissioning Luverne on corn mash for
isobutanol production on an integrated basis. Current
production of isobutanol is intended to be sold into the specialty
chemicals market with Sasol, specialty fuels market and converted
into bio-jet fuel for the U.S. military.
Financial Highlights
Revenues for the third quarter of 2013 were $1.1 million
compared to $0.6 million in the same period in 2012. Revenues in
the third quarter included proceeds from sales of biobased jet fuel
to the U.S. Air Force (USAF) of $0.4 million, revenue under Gevo's
agreement with The Coca-Cola Company, and revenue from ongoing
research agreements.
Research and development expense was $5.5 million in the third
quarter of 2013, compared to $5.4 million in the comparable period
in 2012. During the third quarter of 2013, Gevo's development
efforts were focused on startup operations for the production of
isobutanol at its Luverne facility, optimization of specific parts
of its isobutanol production technology to further enhance
isobutanol production rates, investment in bio-para-xylene
processing equipment at the Silsbee demonstration plant and
delivery of bio-jet fuel to the USAF. Research and development
expense increased $1.3 million in the third quarter of 2013, when
compared to the comparable quarter in 2012, as a result of the
Company's investment in bio-para-xylene processing equipment, and
delivery of bio-jet fuel to the USAF. This increase was partially
offset by decreases in compensation-related costs, consulting and
lab supply costs. Funding used in the development of the
bio-para-xylene facility was received from Toray Industries, Inc.
under a definitive agreement previously announced in 2012. The
bio-jet fuel delivered to the USAF in the third quarter of 2013 was
produced at the Silsbee facility.
Selling, general and administrative expense decreased to $6.7
million in the third quarter of 2013 from $13.5 million for the
third quarter of 2012. The decrease in selling, general and
administrative expense in the third quarter of 2013 reflected lower
compensation and operating expenses, including cost saving benefits
resulting from actions taken during 2012 to focus Gevo's operations
as well as lower litigation-related costs.
Interest expense for the third quarter of 2013 was $1.7 million
compared to $2.6 million in the third quarter of 2012. The decrease
is primarily due to a decline in the outstanding principal balance
of our convertible notes resulting from holders electing to convert
their note holdings into shares of Gevo common stock and a decline
in the outstanding principal balance of our debt with TriplePoint
Capital LLC due primarily to scheduled payments on our principal
balance.
The company reported a non-cash gain of $1.6 million related to
changes in the fair value of embedded derivatives contained in the
convertible notes. These derivatives result from the rights that
holders of the convertible notes have upon conversion, and under
certain circumstances, will result in non-cash amounts being
recorded in the company's statement of operations in each reporting
period while the convertible notes remain outstanding. The company
did not have any holders of convertible debt opt to convert their
note holdings into shares of Gevo common stock during the three
months ended September 30, 2013. Since the beginning of 2013,
holders of $18.1 million of convertible notes have opted to convert
their note holdings into shares of Gevo common stock receiving an
aggregate of 6,137,383 shares upon conversion and in settlement of
make-whole payments. The effective issue price in full settlement
of the convertible notes converted during the nine months ended
September 30, 2013 was $3.75 per share.
The net loss for the third quarter of 2013 was $15.9 million
compared to $12.1 million for the third quarter of 2012.
Gevo reported cash and cash equivalents on hand of $25.7 million
as of September 30, 2013.
Webcast and Conference Call Information
Hosting today's conference call at 4:30 p.m. EST (2:30 p.m. MST)
will be Dr. Gruber, Chief Executive Officer, and Mike Willis, Chief
Financial Officer. They will review the company's financial results
for the three months ended September 30, 2013 and provide an update
on recent corporate highlights.
To participate in the conference call, please dial 1 (800)
708-4540 (inside the U.S.) or 1 (847) 619-6397 (outside the U.S.)
and reference the access code 35948602. The presentation will be
available via a live webcast at:
http://edge.media-server.com/m/p/toid9nf6/lan/en.
A replay of the call will be available two hours after the
conference call ends on November 5, 2013 until Midnight EST on
December 4, 2013. To access the replay, please dial 1-888-843-7419
(inside the U.S.) or 1-630-652-3042 (outside the U.S) and reference
the access code 35948602#. The archived webcast will be available
for 30 days in the Investor Relations section of Gevo's website at
www.gevo.com.
About Gevo
Gevo is a leading renewable chemicals and next-generation
biofuels company. Gevo's patent-protected, capital-light business
model converts existing ethanol plants into bio-refineries to make
isobutanol. This versatile chemical can be directly integrated into
existing chemical and fuel products to deliver environmental and
economic benefits. Gevo has executed initial commercial-scale
production runs at its isobutanol facility in Luverne, Minn.,
constructed in conjunction with ICM, a leading provider of
proprietary ethanol process technology, and has a marquee list of
partners including The Coca-Cola Company, Sasol Chemical
Industries, and LANXESS, Inc., an affiliate of LANXESS Corporation,
among others. Gevo is committed to a sustainable bio-based economy
that meets society's needs for plentiful food and clean air and
water. For more information, visit www.gevo.com.
Forward-Looking Statements
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include statements that are not purely statements of
historical fact, and can sometimes be identified by our use of
terms such as "intend," "expect," "plan," "estimate," "future,"
"strive" and similar words. These forward-looking statements are
made on the basis of the current beliefs, expectations and
assumptions of the management of Gevo and are subject to
significant risks and uncertainty. Investors are cautioned not to
place undue reliance on any such forward-looking statements. All
such forward-looking statements speak only as of the date they are
made, and the company undertakes no obligation to update or revise
these statements, whether as a result of new information, future
events or otherwise. Although the company believes that the
expectations reflected in these forward-looking statements are
reasonable, these statements involve many risks and uncertainties
that may cause actual results to differ materially from what may be
expressed or implied in these forward-looking statements. For a
further discussion of risks and uncertainties that could cause
actual results to differ from those expressed in these
forward-looking statements, as well as risks relating to the
business of Gevo in general, see the risk disclosures in the Annual
Report on Form 10-K of Gevo for the year ended December 31, 2012,
as amended, and in subsequent reports on Form 8-K and other filings
made with the SEC by Gevo.
Non-GAAP Financial Information
Consolidated financial information has been presented in
accordance with GAAP as well as on a non-GAAP basis. On a non-GAAP
basis, financial measures exclude non-cash items such as
stock-based compensation. Management believes that it is useful to
supplement its GAAP financial statements with this non-GAAP
information because management uses such information internally for
its operating, budgeting and financial planning purposes. These
non-GAAP financial measures also facilitate management's internal
comparisons to Gevo's historical performance as well as comparisons
to the operating results of other companies. In addition, Gevo
believes these non-GAAP financial measures are useful to investors
because they allow for greater transparency into the indicators
used by management as a basis for its financial and operational
decision making. Non-GAAP information is not prepared under a
comprehensive set of accounting rules and therefore, should only be
read in conjunction with financial information reported under U.S.
GAAP when understanding Gevo's operating performance. A
reconciliation between GAAP and non-GAAP financial information is
provided in the financial statement tables below.
|
|
|
|
|
Gevo,
Inc. |
Condensed Consolidated
Statements of Operations Information |
(Unaudited, in thousands,
except share and per share amounts) |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September30, |
September30, |
|
2013 |
2012 |
2013 |
2012 |
Revenue and cost of goods
sold |
|
|
|
|
Ethanol sales and related products,
net |
$ -- |
$ -- |
$ -- |
$ 19,908 |
Grant revenue, research and development
program revenue, corn sales and other revenue |
1,127 |
562 |
6,529 |
2,553 |
Total revenues |
1,127 |
562 |
6,529 |
22,461 |
|
|
|
|
|
Cost of goods sold |
4,746 |
6,079 |
12,865 |
29,599 |
|
|
|
|
|
Gross loss |
(3,619) |
(5,517) |
(6,336) |
(7,138) |
|
|
|
|
|
Operating expenses |
|
|
|
|
Research and development |
5,476 |
5,401 |
16,280 |
15,079 |
Selling, general and administrative |
6,668 |
13,508 |
19,897 |
36,175 |
Total operating expenses |
12,144 |
18,909 |
36,177 |
51,254 |
|
|
|
|
|
Loss from operations |
(15,763) |
(24,426) |
(42,513) |
(58,392) |
|
|
|
|
|
Other (expense) income |
|
|
|
|
Interest expense |
(1,733) |
(2,624) |
(7,321) |
(4,161) |
Gain from change in fair value of
embedded derivative |
1,587 |
15,000 |
2,280 |
15,000 |
Loss on extinguishment of debt |
-- |
-- |
(2,038) |
-- |
Other income (expense) |
24 |
(1) |
115 |
18 |
Total other (expense) income |
(122) |
12,375 |
(6,964) |
10,857 |
|
|
|
|
|
Net loss |
$ (15,885) |
$ (12,051) |
$ (49,477) |
$ (47,535) |
|
|
|
|
|
Net loss per share attributable to Gevo, Inc.
common stockholders - basic and diluted |
$ (0.34) |
$ (0.31) |
$ (1.14) |
$ (1.56) |
Weighted-average number of common shares
outstanding - basic and diluted |
46,052,867 |
38,547,441 |
43,492,291 |
30,374,378 |
|
|
|
Gevo,
Inc. |
Condensed Consolidated
Balance Sheet Information |
(Unaudited, in
thousands) |
|
|
|
|
September 30,
2013 |
December 31,
2012 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 25,661 |
$ 66,744 |
Accounts receivable |
867 |
698 |
Inventories |
4,196 |
6,659 |
Prepaid expenses and other current
assets |
1,364 |
1,779 |
Total current assets |
32,088 |
75,880 |
|
|
|
Property, plant and equipment, net |
82,697 |
77,093 |
Deposits and other assets |
2,344 |
3,138 |
Total assets |
$ 117,129 |
$ 156,111 |
|
|
|
Liabilities |
|
|
Current liabilities: |
|
|
Accounts payable, accrued liabilities and
other current liabilities |
$ 19,229 |
$ 8,256 |
Current portion of secured debt, net |
10,477 |
8,513 |
Total current liabilities |
29,706 |
16,769 |
Long-term portion of secured debt,
net |
7,432 |
15,445 |
Convertible notes, net |
14,815 |
25,554 |
Other long-term liabilities |
413 |
512 |
Total liabilities |
52,366 |
58,280 |
|
|
|
Total stockholders'
equity |
64,763 |
97,831 |
Total liabilities and stockholders'
equity |
$ 117,129 |
$ 156,111 |
|
|
|
|
|
Gevo,
Inc. |
Condensed Consolidated
Cash Flow Information |
(Unaudited, in
thousands) |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September30, |
September30, |
|
2013 |
2012 |
2013 |
2012 |
Operating Activities |
|
|
|
|
Net loss |
$ (15,885) |
$ (12,051) |
$ (49,477) |
$ (47,535) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
|
|
Non-cash expenses |
3,209 |
2,679 |
10,212 |
10,820 |
Gain from change in fair value of
embedded derivative |
(1,587) |
(15,000) |
(2,280) |
(15,000) |
Loss on extinguishment of debt |
-- |
-- |
2,038 |
-- |
Changes from working capital |
1,730 |
1,487 |
7,787 |
4,403 |
Net cash used in operating
activities |
(12,533) |
(22,885) |
(31,720) |
(47,312) |
|
|
|
|
|
Investing Activities |
|
|
|
|
Acquisitions of property, plant and
equipment, net |
130 |
(16,434) |
(2,628) |
(50,936) |
Other |
-- |
40 |
-- |
(607) |
Net cash provided by (used in) investing
activities |
130 |
(16,394) |
(2,628) |
(51,543) |
|
|
|
|
|
Financing Activities |
|
|
|
|
Payments on secured debt |
(2,574) |
(6,026) |
(6,715) |
(7,267) |
Proceeds from issuance of common stock,
net |
50 |
57,705 |
59 |
57,442 |
Proceeds from issuance of convertible
debt, net |
-- |
40,922 |
-- |
40,922 |
Proceeds from issuance of secured debt,
net |
-- |
-- |
-- |
4,947 |
Other financing activates |
-- |
73 |
(79) |
583 |
Net cash (used in) provided by financing
activities |
(2,524) |
92,674 |
(6,735) |
96,627 |
|
|
|
|
|
Net (decrease) increase in cash and and cash
equivalents |
(14,927) |
53,395 |
(41,083) |
(2,228) |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Beginning of period |
40,588 |
38,602 |
66,744 |
94,225 |
End of period |
$ 25,661 |
$ 91,997 |
$ 25,661 |
$ 91,997 |
|
|
|
|
|
Gevo,
Inc. |
Non-GAAP Financial
Information |
(Unaudited, in
thousands) |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September30, |
September30, |
|
2013 |
2012 |
2013 |
2012 |
Gevo Development, LLC / Agri-Energy, LLC |
|
|
|
|
Loss from operations |
$ (4,852) |
$ (6,401) |
$ (10,285) |
$ (10,544) |
Depreciation and amortization |
584 |
531 |
1,651 |
1,581 |
Non-cash stock-based compensation |
80 |
62 |
130 |
164 |
Non-GAAP loss from operations |
$ (4,188) |
$ (5,808) |
$ (8,504) |
$ (8,799) |
|
|
|
|
|
Gevo, Inc. |
|
|
|
|
Loss from operations |
$ (10,911) |
$ (18,025) |
$ (32,228) |
$ (47,848) |
Depreciation and amortization |
280 |
367 |
907 |
956 |
Non-cash stock-based compensation |
877 |
1,468 |
2,953 |
6,826 |
Non-GAAP loss from operations |
$ (9,754) |
$ (16,190) |
$ (28,368) |
$ (40,066) |
|
|
|
|
|
Gevo Consolidated |
|
|
|
|
Loss from operations |
$ (15,763) |
$ (24,426) |
$ (42,513) |
$ (58,392) |
Depreciation and amortization |
864 |
898 |
2,558 |
2,537 |
Non-cash stock-based compensation |
957 |
1,530 |
3,083 |
6,990 |
Non-GAAP loss from operations |
$ (13,942) |
$ (21,998) |
$ (36,872) |
$ (48,865) |
CONTACT: Media Contact:
Robin Peak
Gevo, Inc.
T: (720) 267-8632
rpeak@gevo.com
Investor Contact:
Mike Willis
Gevo, Inc.
T: (720) 267-8636
mwillis@gevo.com
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