Optimizing utilization and cash flows of
Luverne plant by producing both isobutanol and ethanol
- Reports EPS of ($0.35)
- Ended the fourth quarter with cash and cash equivalents of
$24.6 million
- Transitioning Luverne plant to the production of both
isobutanol and ethanol
- Produced isobutanol from mash using our yeast biocatalyst and
GIFT®
- Signed licensing LOI with Porta Hnos S.A. to become exclusive
licensee in Argentina
- Began selling bio-isooctane for high performance fuel
applications
Gevo, Inc. (Nasdaq:GEVO) today announced its financial results for
the three months ended December 31, 2013 and provided an update on
recent corporate highlights.
Gevo also announced that it is transitioning the Luverne plant
to the production of both isobutanol and ethanol. Gevo's decision
to transition to the simultaneous production of both products is a
direct result of (1) the steady progress made in executing Gevo's
flexible production technology strategy and (2) today's high
ethanol margin environment. Producing both ethanol and isobutanol
allows Gevo to fully utilize the Luverne plant and increase cash
flow as Gevo continues to commercialize its isobutanol production
capabilities.
Luverne Update
The Company has successfully demonstrated its two key
technologies (its yeast biocatalyst and its GIFT system) at
commercial scale using full corn mash to produce isobutanol,
although the process is still being optimized. The enhanced plant
configuration permits the Company to scale-up the isobutanol
production process while taking advantage of high ethanol margins.
The expected benefits of this integrated production configuration
include:
- Producing ethanol improves Luverne's operating environment for
the optimization of isobutanol production by creating a continuous,
stable mash flow and consistent recycle of water back to the
fermenters.
- Increases available cash flow to the Company, as Gevo optimizes
its isobutanol production technology.
- Broadens the potential market to license, as partners
increasingly see the benefit of co-producing isobutanol and ethanol
at a single site, the "side-by-side" model.
"This has been a very focused quarter for the Company.
Fundamentally, our technology works at scale with corn mash as a
feedstock. As we have advanced on our isobutanol learning curve, we
have demonstrated that the isobutanol technology not only works,
but can work concurrently with ethanol production, giving our plant
more earning power and flexibility. We are learning how to optimize
our procedures, processes, and equipment, effectively writing the
"owners manual" making it possible for us to confidently produce
isobutanol on a continuous basis. Our original vision was to focus
our efforts on one product; however we now are confident that we
can leverage the flexibility of our technology and more fully
utilize all the operating units in the plant to produce ethanol
simultaneously with isobutanol. Needless to say, the expected
additional cash flow is a benefit as we work to maximize the
learning per dollar as we scale up our technology. Therefore, we
plan to run three of our fermenters to produce ethanol, while the
fourth fermenter will remain dedicated to isobutanol
production. We are calling this configuration "side by side",
meaning both ethanol and isobutanol could be produced
concurrently.
"Regarding the isobutanol production process, we've made a lot
of progress on learning how to run isobutanol at scale. In
particular, we have:
- Commissioned our proprietary system to sterilize corn
mash.
- Proven that our two key technologies, our isobutanol producing
yeast and our GIFT system, work at commercial scale utilizing full
corn mash to produce isobutanol.
- Achieved up to 71% of our targeted gallons per batch
goal.
- Produced isobutanol that met quality targets.
- Demonstrated that we can manage infections during fermentation,
achieving over 100% of our goal, although not with the consistency
or reliability that we need.
- Operated all of the fermenters and GIFT systems and they
performed as expected.
- Begun the integration of the water recycle streams, and have
achieved greater that 90% water recycle in fermentation.
Learning to run a 'new-to-the-world' process at the scale of our
Luverne plant with 1 million liter fermenters requires a lot of
work. Working through the issues that arise creates the crucial
know-how needed for steady full scale production, expansion, and
licensing," said Dr. Gruber.
Other Recent Highlights
On March 6, 2014, Gevo announced that Porta Hnos S.A. ("Porta")
has signed a letter of intent to become the exclusive licensee of
GIFT in Argentina to produce renewable isobutanol. Porta is a
131 year old family owned company in Argentina that produces
liquor, vinegars and has a 120 m3/day corn ethanol plant
(approximately 12mgpy). In addition, Porta has designed and
built two 250 m3/day ethanol plants for others and they are working
on two more ethanol plants for 2014. Half of all current
ethanol plants in Argentina were designed by Porta, and they have a
joint venture with Alpha Laval to provide separation and
evaporation expertise.
In the fourth quarter of 2013, Gevo began selling bio-isooctane
for specialty fuel applications such as racing fuel. Gevo's
renewable isobutanol from Luverne, Minn. is being converted into
bio-isooctane at its biorefinery at South Hampton Resources.
Initial volumes are being used for testing purposes with the goal
of approving its use in racing competitions, amongst other
applications.
On December 23, 2013, Gevo announced that the U.S. Army has
successfully flown the Sikorsky UH-60 Black Hawk helicopter on a
50/50 blend of Gevo's ATJ-8 (Alcohol-to-Jet). Alcohol-to-Jet is a
renewable, drop in alternative fuel for JP8 that addresses the Army
Energy Security Strategy and Plans' mandate that the Army certify
100% of its air platforms on alternative/renewable fuels by 2016.
This flight marks the first ever Army Aircraft to fly on the
isobutanol ATJ blend. This testing is being performed as part of
the previously announced contract with Gevo to supply more than
16,000 gallons to the U.S. Army. Gevo's patented ATJ fuel is
designed to be the same as petroleum jet fuel, and to be fully
compliant with aviation fuel specifications and provide equal
performance, including fit-for-purpose properties.
On December 23, 2013, Gevo announced that Underwriter
Laboratories (UL) has approved the use of up to 16% isobutanol in
UL 87A pumps, providing all of the service stations across the
country with the assurance that isobutanol blended gasoline will
work in their current gasoline pumps without the need to purchase
new equipment. Every gasoline pump across the country is
required by law to meet the UL specifications. Gevo has been
working with UL for many years to approve the use of isobutanol in
UL 87A pumps. Gevo sponsored a research study with UL to
confirm the suitability of using isobutanol in UL pumps and based
on the results of that study and other resources, UL has approved
the use of up to 16% isobutanol in UL 87A pumps.
Financial Highlights
Revenues for the fourth quarter of 2013 were $1.7 million
compared to $1.9 million in the same period in 2012. Revenues in
the fourth quarter included proceeds from sales of production from
Gevo's hydrocarbons demonstration facility of $0.9 million,
including sales of biobased jet fuel to the U.S. Air Force and the
U.S. Army and initial sales of isooctane for specialty fuel
applications, revenue under Gevo's agreement with The Coca-Cola
Company, and revenue from ongoing research agreements. In 2012,
fourth quarter revenues benefited from the sale of excess corn
inventory of $1.0 million.
Research and development expense was $3.9 million in the fourth
quarter of 2013, compared to $4.4 million in the comparable period
in 2012. During the fourth 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, production of bio-jet fuel to the USAF
and production of bio-para-xylene at the Silsbee demonstration
plant. Research and development expense decreased $0.5 million in
the fourth quarter of 2013 compared with the same period in 2012,
primarily resulting from lower compensation-related expenses and
consulting and license fee expenses. These decreases partially
were offset by production costs of bio-jet fuel and
bio-para-xylene.
Selling, general and administrative expense decreased to $5.8
million in the fourth quarter of 2013 from $7.8 million for the
fourth quarter of 2012. This 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 fourth quarter of 2013 was $2.0 million
compared to $2.2 million for the same period in 2012. The decrease
primarily resulted from a decline in the outstanding principal
balance of our convertible notes as holders elected 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 primarily due to scheduled payments on our principal
balance.
The company reported a non-cash loss of $2.4 million during the
fourth quarter of 2013 related to changes in the fair value of
derivative warrant liability and embedded derivatives contained in
the convertible notes. We reported a $2.0 million gain during the
fourth quarter of 2012 associated with the changes in the fair
value of the 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 December 31, 2013.
The net loss for the fourth quarter of 2013 was $17.3 million
compared to $13.2 million during the same period in 2012.
In December 2013, we raised gross proceeds of $28.8 million
associated with the issuance of 21,303,750 common stock
units. During the fourth quarter of 2013, we used $7.8 million
of cash to repay principal on our secured debt with TriplePoint
Capital ("TriplePoint"), including $5.1 million associated with the
restructuring of the TriplePoint facility that was done in
conjunction with the December common stock unit issuance. As
part of that restructuring, TriplePoint agreed to, among other
things, waive Gevo's obligation to make principal payments on the
secured debt through December 31, 2014.
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 December 31, 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 36623383. The presentation will be
available via a live webcast
at: http://edge.media-server.com/m/p/kwstnb72/lan/en.
A replay of the call will be available two hours after the
conference call ends on March 25, 2014 until Midnight EDT on April
24, 2014. 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 36623383#. 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 |
|
Year Ended
December 31, |
December
31, |
|
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 and corn sales |
8,224 |
4,477 |
1,695 |
1,924 |
Total revenues |
8,224 |
24,385 |
1,695 |
1,924 |
|
|
|
|
|
Cost of goods sold |
17,913 |
32,410 |
5,048 |
2,811 |
|
|
|
|
|
Gross loss |
(9,689) |
(8,025) |
(3,353) |
(887) |
|
|
|
|
|
Operating expenses |
|
|
|
|
Research and development |
20,179 |
19,431 |
3,899 |
4,352 |
Selling, general and
administrative |
25,647 |
43,981 |
5,750 |
7,806 |
Total operating expenses |
45,826 |
63,412 |
9,649 |
12,158 |
|
|
|
|
|
Loss from operations |
(55,515) |
(71,437) |
(13,002) |
(13,045) |
|
|
|
|
|
Other income (expense) |
|
|
|
|
Interest expense |
(9,301) |
(6,338) |
(1,980) |
(2,177) |
(Loss) gain from change in fair
value of derivatives |
(81) |
17,000 |
(2,361) |
2,000 |
Loss on conversion of debt |
(2,038) |
-- |
-- |
-- |
Other income |
129 |
63 |
14 |
45 |
Total other expense |
(11,291) |
10,725 |
(4,327) |
(132) |
|
|
|
|
|
Net loss |
$ (66,806) |
$ (60,712) |
$ (17,329) |
$ (13,177) |
|
|
|
|
|
Net loss per share attributable to Gevo, Inc.
common stockholders - basic and diluted |
$ (1.48) |
$ (1.86) |
$ (0.35) |
$ (0.34) |
Weighted-average number of common shares
outstanding - basic and diluted |
45,071,618 |
32,619,091 |
49,758,100 |
39,300,054 |
|
Gevo, Inc. |
Condensed Consolidated
Balance Sheet Information |
(Unaudited, in
thousands) |
|
|
|
|
December
31, |
|
2013 |
2012 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 24,625 |
$ 66,744 |
Accounts receivable |
1,358 |
698 |
Inventories |
3,581 |
6,659 |
Prepaid expenses and other
current assets |
1,163 |
1,779 |
Total current assets |
30,727 |
75,880 |
|
|
|
Property, plant and equipment, net |
83,475 |
77,093 |
Deposits and other assets |
2,153 |
3,138 |
Total assets |
$ 116,355 |
$ 156,111 |
|
|
|
Liabilities |
|
|
Current liabilities: |
|
|
Accounts payable, accrued
liabilities and other current liabilities |
$ 13,030 |
$ 8,256 |
Derivative warrant
liability |
7,243 |
-- |
Current portion of secured
debt, net |
788 |
8,513 |
Total current liabilities |
21,061 |
16,769 |
Long-term portion secured debt, net |
9,339 |
15,445 |
Convertible notes, net |
14,501 |
25,554 |
Other long-term liabilities |
479 |
512 |
Total liabilities |
45,380 |
58,280 |
|
|
|
Total stockholders'
equity |
70,975 |
97,831 |
Total liabilities and
stockholders' equity |
$ 116,355 |
$ 156,111 |
|
Gevo, Inc. |
Condensed Consolidated
Cash Flow Information |
(Unaudited, in
thousands) |
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Year Ended
December 31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Operating Activities |
|
|
|
|
Net loss |
$ (66,806) |
$ (60,712) |
$ (17,329) |
$ (13,177) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
|
|
Non-cash expenses |
13,273 |
13,554 |
3,061 |
2,734 |
Loss (gain) from change in fair
value of derivatives |
81 |
(17,000) |
2,361 |
(2,000) |
Loss on conversion of debt |
2,038 |
-- |
-- |
-- |
Changes from working
capital |
4,366 |
(3,900) |
(3,421) |
(8,303) |
Net cash used in operating
activities |
(47,048) |
(68,058) |
(15,328) |
(20,746) |
|
|
|
|
|
Investing Activities |
|
|
|
|
Acquisitions of property, plant
and equipment, net |
(7,800) |
(52,432) |
(5,172) |
(1,496) |
Other |
125 |
(607) |
125 |
-- |
Net cash used in investing
activities |
(7,675) |
(53,039) |
(5,047) |
(1,496) |
|
|
|
|
|
Financing Activities |
|
|
|
|
Proceeds from issuance of
common stock |
28,761 |
61,875 |
28,761 |
-- |
Payments on secured debt |
(14,529) |
(10,406) |
(7,814) |
(3,139) |
Proceeds from issuance of
convertible debt |
-- |
42,300 |
-- |
-- |
Proceeds from issuance of
secured debt |
-- |
5,000 |
-- |
-- |
Other financing activities |
(1,628) |
(5,153) |
(1,608) |
128 |
Net cash provided by (used in)
financing activities |
12,604 |
93,616 |
19,339 |
(3,011) |
|
|
|
|
|
Net decrease in cash and cash
equivalents |
(42,119) |
(27,481) |
(1,036) |
(25,253) |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Beginning of period |
66,744 |
94,225 |
25,661 |
91,997 |
End of period |
$ 24,625 |
$ 66,744 |
$ 24,625 |
$ 66,744 |
|
Gevo, Inc. |
Non-GAAP Financial
Information |
(Unaudited, in
thousands) |
|
|
|
|
|
|
Year
Ended |
Three Months
Ended |
|
December
31, |
December
31, |
|
2013 |
2012 |
2013 |
2012 |
Gevo Development, LLC / Agri-Energy, LLC |
|
|
|
|
Loss from operations |
$ (15,770) |
$ (12,600) |
$ (5,485) |
$ (2,056) |
Depreciation and
amortization |
2,233 |
2,113 |
582 |
532 |
Non-cash stock-based
compensation |
160 |
216 |
30 |
52 |
Non-GAAP loss from operations |
$ (13,377) |
$ (10,271) |
$ (4,873) |
$ (1,472) |
|
|
|
|
|
Gevo, Inc. |
|
|
|
|
Loss from operations |
$ (39,745) |
$ (58,837) |
$ (7,517) |
$ (10,989) |
Depreciation and
amortization |
1,160 |
1,200 |
253 |
244 |
Non-cash stock-based
compensation |
3,751 |
7,763 |
798 |
937 |
Non-GAAP loss from operations |
$ (34,834) |
$ (49,874) |
$ (6,466) |
$ (9,808) |
|
|
|
|
|
Gevo Consolidated |
|
|
|
|
Loss from operations |
$ (55,515) |
$ (71,437) |
$ (13,002) |
$ (13,045) |
Depreciation and
amortization |
3,393 |
3,313 |
835 |
776 |
Non-cash stock-based
compensation |
3,911 |
7,979 |
828 |
989 |
Non-GAAP loss from operations |
$ (48,211) |
$ (60,145) |
$ (11,339) |
$ (11,280) |
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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