Significant Progress Made on Commercial
Production of Isobutanol at Luverne, Focus Turns to
Licensing
- Reports EPS of ($0.11) for the fourth quarter
- Ended the fourth quarter with cash and cash equivalents of $6.4
million
- In February 2015, closed an offering of common stock units
representing gross proceeds of $6.65 million; have subsequently
received an additional $2.0 million of gross proceeds through the
exercise of warrants associated with this offering
- Revenue in fourth quarter 2014 was $9.5 million, as compared to
$1.7 million for the same quarter in 2013
- Met milestone of producing greater than fifty thousand gallons
of isobutanol in one month at Luverne in December 2014
- Achievements and data at Luverne support the acceleration of
Gevo's isobutanol licensing program
- Luverne focus switched to the maximization of plant-level cash
flows, while continuing to seed key isobutanol markets in chemicals
and fuels
- Introduced new ethanol-to-hydrocarbons technology which could
provide the ethanol industry a much broader set of end-product
market and margin opportunities
Gevo, Inc. (Nasdaq:GEVO) today announced its financial results for
the three months ended December 31, 2014 and provided an update on
recent corporate highlights.
In the fourth quarter of 2014, Gevo continued to progress the
commercial operation of isobutanol at Luverne under the
Side-by-Side mode of production (SBS), meeting its stated milestone
in December 2014 of producing greater than fifty thousand gallons
of isobutanol in one month. This achievement was a result of the
introduction of Gevo's second-generation yeast biocatalyst at the
plant, as well as significant process improvements learned by Gevo
since switching the plant to SBS production earlier in 2014.
The data generated at the Luverne plant and in the labs in
Denver continues to support ultimate, optimized isobutanol
production costs that would support EBITDA margins for isobutanol
of $0.50-$1.00 per gallon. In the fourth quarter, Praj Industries
Limited (Praj), a global leader in process engineering and
equipment manufacturing for the ethanol and brewing industries,
conducted extensive due diligence at the Luverne plant, and has
confirmed these cost projections. Praj has subsequently signed a
memorandum of understanding (MOU) wherein Praj will undertake to
license up to 250 million gallons of isobutanol capacity for
sugar-based ethanol plants over the next ten years.
With this data in hand, Gevo's focus has turned to the licensing
of its isobutanol technology. In addition to the Praj MOU, Gevo
signed a letter of intent (LOI) in the fourth quarter to license
its technology to Highland EnviroFuels' sugar cane and sweet
sorghum project based in Florida. These supplement the LOIs that
were previously entered into with IGPC Ethanol Inc.based in Canada,
and Porta Hnos S.A. based in Argentina. As a result of this
interest, Gevo is targeting signing a binding agreement with at
least one licensee for its isobutanol technology in 2015.
In the fourth quarter, Gevo continued to develop key segments of
the isobutanol market, with a focus on those where renewable
isobutanol performance attributes solve customer problems. Brenntag
Canada began sales of isobutanol to the specialty chemical markets,
while Gulf Racing Fuels began introducing isobutanol for use in
off-road applications, including sales to retail consumers through
NAPA Auto Parts in North Dakota.
Significantly, a consortium of leading organizations from the
recreational marine industry announced the completion of more than
four years of testing of Gevo's isobutanol for use in boat
engines. They determined that isobutanol performs well across
several gasoline marine engines platforms. The testing was
performed in collaboration with the National Marine Manufacturers
Association, the American Boat and Yacht Council and several engine
and boat manufacturers across the industry, and was also supported
by The US Department of Energy, the Office of Energy Efficiency and
Renewable Energy and Argonne National Laboratory.
Gevo's hydrocarbons business continued to show progress, with
strengthening demand being shown for the jet fuel, isooctane and
paraxylene derived from isobutanol produced at Luverne. Certain
parties have shown interest in offtake agreements for these
products, and Gevo anticipates achieving both ASTM (American
Society for Testing and Materials) and MIL-SPEC (Defense
Specification) certifications for its jet fuel in 2015, which would
help accelerate the commercial adoption of Gevo's product in both
the commercial and military jet markets.
To augment the strategic interest in this hydrocarbons business
segment, Gevo announced the introduction of a new technology it has
developed to convert ethanol into a tailored mix of end-products,
including propylene (an ingredient in consumer plastics, fibers,
films, and superabsorbants) and renewable
hydrogen. Preliminary technical and economic analyses indicate
that the products, sourced from renewable feedstock, would be cost
competitive with traditional petrochemical approaches. Following
successful scale-up, we believe this technology would open up a
much broader set of end-product market and margin opportunities for
ethanol producers.
Gevo has continued to strengthen its intellectual portfolio
position. Recent decisions at the U.S. Supreme Court and at the
U.S. Patent Office (USPTO) continue to support Gevo's freedom to
operate, as well as reinforce key aspects of Gevo's own technology.
These are of paramount importance as Gevo accelerates its licensing
program. In particular, the USPTO recently confirmed the validity
of several Gevo patents covering key genetic engineering
technologies, which Gevo believes are needed to make commercially
viable isobutanol yeast biocatalysts.
"Having validated many aspects of our isobutanol production
technology under SBS production, whereby we co-produce isobutanol
and ethanol at Luverne, we now plan on operating the plant to
maximize cash flows. We expect to continue the production of
isobutanol at Luverne, and we expect the key drivers for such
operations to be 1) customer demand for seeding key markets; and 2)
proving out new facets of our technology. Isobutanol continues to
be a very attractive product from a commercial point of
view. The progress we have made in proving out isobutanol
production at a commercial scale, in addition to the increasing
demand from customers, reinforces the ramping up of our licensing
efforts, including opportunities outside the United States, using
non-corn feedstocks. We also have several licensing
opportunities in North America that we are looking to sign up,"
said Dr. Patrick Gruber, Gevo's Chief Executive Officer.
"The conversion of alcohols to hydrocarbons is also generating
significant interest from potential strategic investors. It is
our goal in 2015 to establish multiple new strategic partnerships
to accelerate the development of this hydrocarbons business,
inclusive of Gevo's new ethanol-to-hydrocarbons
technology. The ability to produce cost competitive renewable
propylene, which is used in a multitude of consumer products, as
well as renewable hydrogen, have been "holy grails" of the
bio-based economy. We believe that we have an effective
proprietary technology to do this based on feedback from partners
and potential strategic investors," added Gruber. "Overall, we are
very pleased with the results from Luverne operating under SBS, the
demand for our isobutanol and the interest we are generating from
potential licensees and strategic partners."
Financial Highlights
Revenues for the fourth quarter of 2014 were $9.5 million
compared to $1.7 million in the same period in 2013. The increase
in revenue during 2014 is primarily a result of the production and
sale of approximately $8.8 million of ethanol and distiller's
grains following the transition of the Luverne plant to the SBS
configuration.
During the fourth quarter of 2014, hydrocarbon revenues were
$0.5 million, primarily related to the shipment of bio-jet fuel to
the U.S. military during the quarter. Gevo also continued to
generate revenue during the fourth quarter of 2014 associated with
ongoing research agreements.
Cost of goods sold increased by $5.8 million during the three
months ended December 31, 2014, as compared to the same quarter in
2013, due primarily to the increased production activity at the
Luverne plant under the SBS configuration. Gross loss was $1.4
million for the three months ended December 31, 2014. After adding
back $1.4 million of depreciation expense, the cash gross margin
was a positive $0.1 million for the fourth quarter of 2014.
Research and development expense decreased by $1.2 million
during the three months ended December 31, 2014, as compared to the
same quarter in 2013, due primarily to a $0.5 million reduction in
salary and consultant-related expenses and a $0.5 million decrease
in expenses at the hydrocarbons demo facility located in
Silsbee.
Selling, general and administrative expense decreased $0.9
million during the three months ended December 31, 2014, as
compared to the same quarter in 2013, due primarily to a decrease
of $1.0 million in legal expenses, largely related to litigation
matters.
Interest expense in the fourth quarter of 2014 was $2.0 million,
which was slightly higher than the interest expense in the same
period in 2013.
The company reported a non-cash loss of $0.2 million during the
fourth quarter of 2014, as compared to a non-cash loss of $2.4
million during the same period in 2013, related to changes in the
fair value of its derivative warrant liabilities and embedded
derivatives contained in the convertible notes issued in 2012 (2022
Notes). The company did not have any holders of 2022 Notes opt to
convert their note holdings into shares of Gevo common stock during
the three months ended December 31, 2014.
The company also reported a non-cash gain of $0.1 million during
the fourth quarter of 2014 related to a change in the fair value of
the convertible notes issued in the second quarter of 2014 to
Whitebox.
The net loss for the fourth quarter of 2014 was $11.1 million
compared to $17.3 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, Mike Willis,
Chief Financial Officer and Brett Lund, Chief Legal Officer. They
will review the company's financial results for the three months
ended December 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 39142759. A replay of the call and
webcast will be available two hours after the conference call ends
on March 26, 2015. 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 39142759. The archived webcast will be available
until Midnight EDT on April 25, 2015 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 has developed proprietary
technology that uses a combination of synthetic biology, metabolic
engineering, chemistry and chemical engineering to focus primarily
on the production 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
fermentation plant in Luverne, MN. Gevo has also developed
technology to produce hydrocarbon products from renewable alcohols.
Gevo currently operates a 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, Toray Industries Inc. and Total SA, among
others. Gevo is committed to a sustainable bio-based economy that
meets society's needs for plentiful food and clean air and
water.
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 relate to a variety of matters, including, without
limitation, statements related to optimized isobutanol production
costs, the future market for isobutanol, ethanol and their
derivatives and other statements that are not purely statements of
historical fact. 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 Gevo
undertakes no obligation to update or revise these statements,
whether as a result of new information, future events or otherwise.
Although Gevo 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 Forms 10-Q
and 8-K and other filings made with the SEC by Gevo.
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, |
|
2014 |
2013 |
2014 |
2013 |
Revenue and cost of goods
sold |
|
|
|
|
Ethanol sales and related
products, net |
$ 23,549 |
$ -- |
$ 8,830 |
$ -- |
Hydrocarbon revenue |
3,949 |
2,157 |
$ 523 |
142 |
Grant revenue, research and
development program revenue and corn sales |
768 |
6,067 |
148 |
1,553 |
Total revenues |
28,266 |
8,224 |
9,501 |
1,695 |
|
|
|
|
|
Cost of goods sold |
35,582 |
17,913 |
10,873 |
5,048 |
|
|
|
|
|
Gross loss |
(7,316) |
(9,689) |
(1,372) |
(3,353) |
|
|
|
|
|
Operating expenses |
|
|
|
|
Research and development |
14,120 |
20,179 |
2,706 |
3,899 |
Selling, general and
administrative |
18,341 |
25,647 |
4,833 |
5,750 |
Total operating expenses |
32,461 |
45,826 |
7,539 |
9,649 |
|
|
|
|
|
Loss from operations |
(39,777) |
(55,515) |
(8,911) |
(13,002) |
|
|
|
|
|
Other income (expense) |
|
|
|
|
Interest expense |
(12,024) |
(9,301) |
(2,031) |
(1,980) |
Loss on conversion of debt |
-- |
(2,038) |
-- |
-- |
Gain from change in fair value
of embedded derivative of the 2022 Notes |
3,470 |
3,114 |
-- |
834 |
Gain (loss) from change in fair
value of derivative warrant liability |
6,530 |
(3,195) |
(242) |
(3,195) |
Gain from change in fair value
of 2017 Notes |
648 |
-- |
104 |
-- |
Other income |
8 |
129 |
1 |
14 |
Total other expense |
(1,368) |
(11,291) |
(2,168) |
(4,327) |
|
|
|
|
|
Net loss |
$ (41,145) |
$ (66,806) |
$ (11,079) |
$ (17,329) |
|
|
|
|
|
Net loss per share attributable to Gevo,
Inc. common stockholders - basic and diluted |
$ (0.51) |
$ (1.48) |
$ (0.11) |
$ (0.35) |
Weighted-average number of common
shares outstanding - basic and diluted |
80,492,432 |
45,071,618 |
98,667,424 |
49,758,100 |
|
Gevo, Inc. |
Condensed Consolidated
Balance Sheet Information |
(Unaudited, in
thousands) |
|
|
December
31, |
|
2014 |
2013 |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 6,359 |
$ 24,625 |
Accounts receivable |
2,361 |
1,358 |
Inventories |
4,292 |
3,581 |
Prepaid expenses and other
current assets |
732 |
1,163 |
Total current assets |
13,744 |
30,727 |
|
|
|
Property, plant and equipment, net |
81,240 |
83,475 |
Deposits and other assets |
3,944 |
2,153 |
Total assets |
$ 98,928 |
$ 116,355 |
|
|
|
Liabilities |
|
|
Current liabilities: |
|
|
Accounts payable, accrued
liabilities and other current liabilities |
$ 8,623 |
$ 13,030 |
Derivative warrant
liability |
3,114 |
7,243 |
Current portion of secured
debt, net |
288 |
788 |
Total current liabilities |
12,025 |
21,061 |
Long-term portion secured debt, net |
485 |
9,339 |
2017 notes recorded at fair value |
25,460 |
-- |
2022 notes, net |
13,679 |
14,501 |
Other long-term liabilities |
315 |
479 |
Total liabilities |
51,964 |
45,380 |
|
|
|
Total stockholders'
equity |
46,964 |
70,975 |
Total liabilities and
stockholders' equity |
$ 98,928 |
$ 116,355 |
|
Gevo, Inc. |
Condensed Consolidated
Cash Flow Information |
(Unaudited, in
thousands) |
|
|
|
|
Three Months
Ended |
|
Year Ended
December 31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
Operating Activities |
|
|
|
|
Net loss |
$ (41,145) |
$ (66,806) |
$ (11,079) |
$ (17,329) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
|
|
Non-cash expenses |
15,666 |
13,273 |
3,716 |
3,061 |
(Gain) loss from change in fair
value of derivative warrant liability |
(6,530) |
3,195 |
242 |
5,475 |
Gain from change in fair value
of embedded derivative of the 2022 Notes |
(3,470) |
(3,114) |
-- |
(3,114) |
Gain from change in fair value
of 2017 Notes |
(648) |
-- |
(104) |
-- |
Loss on conversion of debt |
-- |
2,038 |
-- |
-- |
Changes from working
capital |
(2,863) |
4,366 |
841 |
(3,421) |
Net cash used in operating
activities |
(38,990) |
(47,048) |
(6,384) |
(15,328) |
|
|
|
|
|
Investing Activities |
|
|
|
|
Acquisitions of property, plant
and equipment, net |
(4,894) |
(7,800) |
(341) |
(5,172) |
Other |
(2,611) |
125 |
-- |
125 |
Net cash used in investing
activities |
(7,505) |
(7,675) |
(341) |
(5,047) |
|
|
|
|
|
Financing Activities |
|
|
|
|
Proceeds from issuance of
common stock |
18,000 |
28,761 |
-- |
28,761 |
Payments on secured debt |
(9,824) |
(14,529) |
(104) |
(7,814) |
Proceeds from issuance of 2017
Notes |
25,907 |
-- |
-- |
-- |
Debt and equity offering
costs |
(5,873) |
(1,711) |
(822) |
(1,711) |
Other financing activities |
19 |
83 |
-- |
103 |
Net cash provided by (used
in) financing activities |
28,229 |
12,604 |
(926) |
19,339 |
|
|
|
|
|
Net decrease in cash and cash
equivalents |
(18,266) |
(42,119) |
(7,651) |
(1,036) |
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
Beginning of period |
24,625 |
66,744 |
14,010 |
25,661 |
Ending of period |
$ 6,359 |
$ 24,625 |
$ 6,359 |
$ 24,625 |
|
|
|
|
|
Gevo, Inc. |
|
|
|
|
Non-GAAP Financial
Information |
|
|
|
|
(Unaudited, in
thousands) |
|
|
|
|
|
Year
Ended |
Three Months
Ended |
|
December
31, |
December
31, |
|
2014 |
2013 |
2014 |
2013 |
Gevo Development, LLC / Agri-Energy, LLC |
|
|
|
|
Loss from operations |
$ (13,210) |
$ (15,770) |
$ (2,310) |
$ (5,485) |
Depreciation and
amortization |
3,943 |
2,233 |
1,445 |
582 |
Non-cash stock-based
compensation |
79 |
160 |
5 |
30 |
Non-GAAP loss from operations |
$ (9,188) |
$ (13,377) |
$ (860) |
$ (4,873) |
|
|
|
|
|
Gevo, Inc. |
|
|
|
|
Loss from operations |
$ (26,567) |
$ (39,745) |
$ (6,601) |
$ (7,517) |
Depreciation and
amortization |
937 |
1,160 |
221 |
253 |
Non-cash stock-based
compensation |
2,781 |
3,751 |
493 |
798 |
Non-GAAP loss from operations |
$ (22,849) |
$ (34,834) |
$ (5,887) |
$ (6,466) |
|
|
|
|
|
Gevo Consolidated |
|
|
|
|
Loss from operations |
$ (39,777) |
$ (55,515) |
$ (8,911) |
$ (13,002) |
Depreciation and
amortization |
4,880 |
3,393 |
1,666 |
835 |
Non-cash stock-based
compensation |
2,860 |
3,911 |
498 |
828 |
Non-GAAP loss from operations |
$ (32,037) |
$ (48,211) |
$ (6,747) |
$ (11,339) |
CONTACT: Media & Investor Contact:
Mike Willis
Gevo, Inc.
T: (720) 267-8636
mwillis@gevo.com
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