Luverne plant commences Side-by-Side
production
- Reports EPS of ($0.18)
- Ended the first quarter with cash and cash equivalents of $8.4
million
- Luverne plant commenced Side-by-Side production
- Closed a $25.9 million financing with Whitebox Advisors
- Lufthansa testing Gevo's bio-jet fuel
Gevo, Inc. (Nasdaq:GEVO) today announced its financial results for
the three months ended March 31, 2014 and provided an update on
recent corporate highlights.
Luverne Update
On May 5th, Gevo successfully started up the Side-by-Side
operation at its plant in Luverne, MN, and currently has three of
four fermenters actively producing ethanol. The intent of the
Side-by-Side configuration to produce isobutanol and ethanol
simultaneously is to:
1) facilitate the process optimization
of commercial-scale isobutanol production;
2) maximize the utilization of the
plant to generate cash by utilizing all the fermentation assets,
and
3) demonstrate the simultaneous
production of isobutanol and ethanol, for the benefit of potential
licensee partners who are interested in augmenting the fermentation
capacities of their ethanol plants to co-produce isobutanol.
"The start-up is going well and we are running at a rate of
30,000 gallons per day, and by next week we expect to be at our
target rate of more than 40,000 gallons per day. Our target run
rate for ethanol is greater than 15 million gallons per year. We
also have begun the work to optimize the process for isobutanol
production in Side-by-Side mode," said Dr. Gruber.
"The Side-by-Side operation facilitates the process optimization
of isobutanol by having ethanol serve as a 'flywheel' that keeps
the corn mill, the animal feed, and the water recycle streams
flowing continuously. We are able to consistently run the corn mill
and produce animal feed. We have also verified the consistency of
the water recycle stream and feel confident it's suitable for
isobutanol fermentations."
"Our next steps with isobutanol are to achieve our batch
fermentation targets. We've already achieved 70% of our goal in
terms of gallons of isobutanol produced per fermentation batch. We
now need to achieve 1) progress towards 100% of our goal, and 2)
consistency in the batches, which is facilitated by consistent
water recycle quality, consistent corn milling (front end)
operation, and consistent animal feed production."
"Since the last quarterly call, we have:
- Modified our plant to enable a Side-by-Side production
mode;
- Learned what is important for recycle water impurities, their
impact on fermentation, and routes to ensure acceptable water
quality to achieve successful isobutanol batches;
- Made progress in optimizing the fermentation process conditions
in order to minimize the risk of bacterial infections; and
- Improved our techniques, especially the consistency of cleaning
the fermenters and process between batches.
We like being able to produce ethanol and thereby eliminate the
need for frequent starting and stopping of the plant, which would
otherwise be necessary during optimization of isobutanol
production. Side-by-Side production is expected to make our
optimization work on isobutanol easier by maintaining continuous
mash flow, providing more consistent water recycle streams and more
consistent production of animal feed."
Other Recent Highlights
On May 9, 2014, Gevo closed a private debt financing with
Whitebox Advisors consisting of a senior secured term loan,
exchangeable into senior secured convertible debentures. The
aggregate proceeds to Gevo from this financing are approximately
$25.9 million. Whitebox may, under certain circumstances,
invest up to an additional $37.2 million in the senior term loan
and/or senior secured convertible debentures.
Gevo used a portion of the proceeds from the financing to repay
approximately $9.3 million in outstanding long-term debt
obligations with TriplePoint Capital. Gevo intends to use the
remaining proceeds from the financing to ramp up production and
sales at its Luverne, MN plant, to fund working capital and for
other general corporate purposes.
On March 24, 2014, Gevo came to an agreement with Lufthansa to
evaluate Gevo's renewable jet fuel with the goal of approving
Gevo's alcohol-to-jet fuel (ATJ) for commercial aviation
use. Lufthansa's testing is being supported through work with
the European Commission. By using isobutanol as a renewable raw
material for producing jet fuel, the resulting jet fuel has the
same mixture of molecules typical of petro-based jet fuel making it
directly compatible with existing engines and infrastructure.
Renewable jet embodies the potential of cleaner, greener, and as we
scale up, cost competitive drop-in fuels. Through initiatives like
this, the commercial airlines are seeking to prove out ATJ and move
it towards commercialization. ATJ produced from Gevo's isobutanol
is a clean burning, homegrown, drop-in jet fuel, and provides a
potential route to deliver aviation biofuels at scale and at
competitive cost. Gevo's patented ATJ fuel is truly a drop-in
fuel, designed to be fully compliant with aviation fuel
specifications and provide equal performance, including
fit-for-purpose properties.
Financial Highlights
Revenues for the first quarter of 2014 were $0.9 million
compared to $3.5 million in the same period in 2013. The decline in
revenue during 2014 is the result of recognizing $2.4 million in
revenue during the first quarter of 2013 associated with the sale
of excess corn inventory. During the first quarter of 2014, we
successfully shipped biobased ATJ to the U.S. Air Force and the
U.S. Army and isooctane specialty fuel applications, which
generated approximately $0.6 million of revenue in the quarter. We
also continued to generate revenue during the 2014 first quarter
associated with our ongoing research agreements.
Our cost of goods sold during the three months ended March 31,
2014 increased from the same period in 2013 as we continued to
perform startup operation activities during the 2014 period. These
startup costs were partially offset by a decrease in cost of goods
sold of $2.5 million that was incurred during the first quarter of
2013 associated with the sale of excess corn inventory.
Research and development expenses decreased during the three
months ended March 31, 2014 primarily due to a $0.4 million
decrease in costs at the demonstration plant located at South
Hampton's facility in Silsbee Texas. During three months ended
March 31, 2013, we began to incur costs to establish our bio-PX
demonstration plant under our agreement with Toray, which was
substantially completed during the third quarter of 2013.
Additionally, we experienced a decrease of $0.4 million during the
first quarter of 2014 associated with a reduction in laboratory
consultants and supplies.
Selling, general and administrative expense decreased $1.9
million during the three months ended March 31, 2014 primarily
related to a reduction in compensation-related expenses and lower
litigation-related costs.
Interest expense decreased during the three months ended March
31, 2014 primarily resulting from a decrease of $0.6 million
associated with the decline in the outstanding principal balance of
our convertible senior notes and our debt with TriplePoint. In
addition, we experienced a decline of $1.1 million in non-cash
interest expense also due, in part, to the lower outstanding debt
balances.
The company reported a non-cash gain of $2.5 million during the
first quarter of 2014 related to changes in the fair value of
derivative warrant liability and embedded derivatives contained in
the convertible notes. We reported a $1.3 million loss during the
first quarter of 2013 associated with changes in the fair value of
the embedded derivatives contained in the convertible notes. 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 March 31, 2014.
The net loss for the first quarter of 2014 was $12.0 million
compared to $18.4 million during the same period in 2013.
Webcast and Conference Call Information
Hosting today's conference call at 4:30 p.m. EDT (2:30 p.m. MDT)
will be Dr. Patrick Gruber, Chief Executive Officer, and Mike
Willis, Chief Financial Officer. They will review the company's
financial results for the three months ended March 31, 2014 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 37075054. The presentation will be
available via a live webcast at:
http://edge.media-server.com/m/p/pv7r5dw9/lan/en.
A replay of the call and webcast will be available two hours
after the conference call ends on May 14, 2014. To access the
replay, please dial 1-888-843-7419 (inside the US) or
1-630-652-3042 (outside the US) and reference the access code
3707A5054. The archived webcast will be available until Midnight
EDT on June 13, 2014 in the Investor Relations section of Gevo's
website at www.gevo.com.
About Gevo
Gevo is a leading renewable technology, chemical products, and
next generation biofuels company. Gevo's underlying technology uses
a combination of synthetic biology, metabolic engineering,
chemistry and chemical engineering to focus primarily on the
production and sale of isobutanol, as well as related products from
renewable feedstocks. Gevo's strategy is to commercialize biobased
alternatives to petroleum-based products to allow for the
optimization of fermentation facilities' assets, with the ultimate
goal of maximizing cash flows from the operation of those
assets. Gevo produces isobutanol, ethanol and high-value
animal feed at its first fermentation plant in Luverne, MN. Gevo
has also developed technology to produce hydrocarbon products from
renewable alcohols. Gevo currently operates its first biorefinery
in Silsbee, TX, in collaboration with South Hampton Resources Inc.,
to produce renewable jet fuel, octane, and ingredients for plastics
like polyester. Gevo has a marquee list of partners
including The Coca-Cola Company, Total SA, 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, 2013
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 March 31, |
|
2014 |
2013 |
Revenue and cost of goods
sold |
|
|
Ethanol sales and related
products, net |
$ - |
$ - |
Hydrocarbon revenue |
630 |
739 |
Grant and other revenue and
corn sales |
273 |
2,804 |
Total revenues |
903 |
3,543 |
|
|
|
Cost of goods sold |
4,680 |
4,503 |
|
|
|
Gross loss |
(3,777) |
(960) |
|
|
|
Operating expenses |
|
|
Research and development |
4,105 |
4,976 |
Selling, general and
administrative and other |
5,040 |
6,950 |
Total operating
expenses |
9,145 |
11,926 |
|
|
|
Loss from operations |
(12,922) |
(12,886) |
|
|
|
Other income (expense) |
|
|
Interest expense |
(1,601) |
(3,276) |
Gain loss gain from change in
fair value of derivatives |
2,542 |
(1,330) |
Loss on conversion of debt |
- |
(926) |
Other income |
9 |
48 |
Total other expense |
950 |
(5,484) |
|
|
|
Net loss |
$ (11,972) |
$ (18,370) |
Net loss per share attributable to Gevo, Inc.
common stockholders - basic and diluted |
$ (0.18) |
$ (0.45) |
Weighted-average number of common shares
outstanding - basic and diluted |
67,760,721 |
40,996,922 |
|
|
Gevo,
Inc. |
Condensed Consolidated
Balance Sheet Information |
(Unaudited, in
thousands) |
|
|
|
|
March 31, |
December 31, |
|
2014 |
2013 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 8,422 |
$ 24,625 |
Accounts receivable |
1,664 |
1,358 |
Inventories |
3,723 |
3,581 |
Prepaid expenses and other
current assets |
1,128 |
1,163 |
Total current assets |
14,937 |
30,727 |
|
|
|
Property, plant and equipment, net |
83,242 |
83,475 |
Deposits and other assets |
2,076 |
2,153 |
Total assets |
$ 100,255 |
$ 116,355 |
|
|
|
Liabilities |
|
|
Current liabilities: |
|
|
Accounts payable, accrued
liabilities and other current liabilities |
$ 9,859 |
$ 13,030 |
Derivative warrant
liability |
5,965 |
7,243 |
Current portion of secured
debt, net |
1,288 |
788 |
Total current liabilities |
17,112 |
21,061 |
Long-term portion secured debt, net |
8,735 |
9,339 |
Convertible notes, net |
13,808 |
14,501 |
Other long-term liabilities |
468 |
479 |
Total liabilities |
40,123 |
45,380 |
|
|
|
Total stockholders'
equity |
60,132 |
70,975 |
Total liabilities and
stockholders' equity |
$ 100,255 |
$ 116,355 |
|
|
Gevo,
Inc. |
Condensed Consolidated
Cash Flow Information |
(Unaudited, in
thousands) |
|
|
|
|
Three Months
Ended March 31, |
|
2014 |
2013 |
Operating Activities |
|
|
Net loss |
$ (11,972) |
$ (18,370) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
Non-cash expenses |
2,468 |
4,091 |
Loss (gain) from change in fair
value of derivatives |
(2,542) |
1,330 |
Loss on conversion of debt |
-- |
926 |
Changes from working
capital |
(940) |
3,017 |
Net cash used in operating
activities |
(12,986) |
(9,006) |
|
|
|
Investing Activities |
|
|
Acquisitions of property, plant
and equipment, net |
(2,869) |
(1,997) |
Other |
-- |
-- |
Net cash used in investing
activities |
(2,869) |
(1,997) |
|
|
|
Financing Activities |
|
|
Payments on secured debt |
(250) |
(1,639) |
Other financing activities |
(98) |
-- |
Net cash used in financing
activities |
(348) |
(1,639) |
|
|
|
Net decrease in cash and and cash
equivalents |
(16,203) |
(12,642) |
|
|
|
Cash and cash equivalents |
|
|
Beginning of period |
24,625 |
66,744 |
Ending of period |
$ 8,422 |
$ 54,102 |
|
|
Gevo,
Inc. |
Non-GAAP Financial
Information |
(Unaudited, in
thousands) |
|
|
|
|
Three Months
Ended March 31, |
|
2014 |
2013 |
Gevo Development, LLC / Agri-Energy, LLC |
|
|
Loss from operations |
$ (5,068) |
$ (2,473) |
Depreciation and
amortization |
585 |
533 |
Non-cash stock-based
compensation |
39 |
50 |
Non-GAAP loss from operations |
$ (4,444) |
$ (1,890) |
|
|
|
Gevo, Inc. |
|
|
Loss from operations |
$ (7,854) |
$ (10,413) |
Depreciation and
amortization |
241 |
316 |
Non-cash stock-based
compensation |
826 |
1,037 |
Non-GAAP loss from operations |
$ (6,787) |
$ (9,060) |
|
|
|
Gevo Consolidated |
|
|
Loss from operations |
$ (12,922) |
$ (12,886) |
Depreciation and
amortization |
826 |
849 |
Non-cash stock-based
compensation |
865 |
1,087 |
Non-GAAP loss from operations |
$ (11,231) |
$ (10,950) |
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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