- Gevo to Host Conference Call Today at 4:30 p.m.
EST/2:30 MST -
Gevo, Inc. (NASDAQ:GEVO) today announced financial results for the
quarter ended March 31, 2017. Key highlights for the first quarter
of 2017 and key subsequent events included:
- On April 28, 2017, Gevo signed a supply agreement with HCS
Holding GmbH (HCS) to supply isooctane under a five-year offtake
agreement. HCS is a manufacturer of specialty products and
solutions in the hydrocarbons sector, operating under such brands
as Haltermann Carless. In the first phase of the supply agreement,
HCS will purchase isooctane produced at Gevo’s demonstration
hydrocarbons plant located in Silsbee, Texas, commencing in
May 2017. The pricing is fixed over the first phase and Gevo
estimates that this could generate up to $2-3 million of gross
revenue per year. In the second phase of the supply
agreement, HCS agreed to purchase 300,000 gallons of isooctane per
year, with an option to purchase an additional 100,000 gallons of
isooctane per year, under a five-year offtake arrangement upon
commencement of production at Gevo’s first commercial hydrocarbon
facility. The supply agreement contains a pricing formula which is
intended to provide Gevo a fixed margin. Gevo expects to
supply this isooctane from its first commercial hydrocarbons
facility, which is likely to be built at Gevo’s isobutanol
production facility located in Luverne, Minnesota (the “Luverne
Facility”).
- On April 19, 2017, the holder of Gevo’s outstanding Convertible
Senior Secured Notes, due June 23, 2017 (the “2017 Notes”), and
Gevo entered into an Exchange and Purchase Agreement (the “Purchase
Agreement”) pursuant to which the holder agreed to exchange (the
“Exchange”) all $16.5 million aggregate principal of the existing
2017 Notes for Gevo’s newly created 12.0% Convertible Senior
Secured Notes due 2020 (the “2020 Notes”). The Exchange and
the issuance of the 2020 Notes require stockholder approval due to
the potential issuance of more than 19.99% of Gevo’s outstanding
common stock upon conversion of, or related to, the 2020 Notes. On
April 19, 2017, Gevo and the holder of the 2017 Notes also entered
into the Eleventh Supplemental Indenture relating to the 2017
Notes. This provided for, amongst other things, the elimination of
the $2.6 million interest reserve for the 2017 Notes. As a result,
these funds were released on April 20, 2017, which resulted in an
increase to Gevo’s cash and cash equivalents by $2.6 million.
- Assuming the Exchange occurs following stockholder approval,
Gevo expects that its current cash and cash equivalents are
sufficient to fund Gevo into 2018 without any additional
financings.
Operational Summary for the Quarter
Gevo produced approximately 100,000 gallons of isobutanol at its
Luverne Facility during the first quarter of 2017. Consistent with
Gevo’s previous isobutanol production guidance, production this
quarter was focused on producing sufficient quantities of
isobutanol to meet immediate customer demand while also providing
enough inventory to support additional market and customer
development efforts in the future. Gevo’s production goals are not
to maximize production, but rather to align such production with
its isobutanol sales efforts. As a result, during certain periods
of the first quarter of 2017, Gevo only produced ethanol at the
Luverne Facility, and in the second quarter of 2017, Gevo may elect
to produce only ethanol.
In the first quarter, Gevo’s isobutanol market development
efforts were focused on gaining market acceptance in its core
gasoline blendstock markets such as marinas and on-road gasoline
fueling stations, while maintaining its targeted selling price.
Gevo continued to work with its distribution partners to make
investments to develop end-customer relationships, as well as to
establish value chains to deliver its isobutanol to those
end-customers.
Gevo’s market development efforts related to its renewable
hydrocarbon products were mainly targeted towards entering into
binding supply agreements to underpin the economics of the proposed
expansion of the Luverne Facility. Gevo has been in discussions
with numerous potential alcohol-to-jet fuel (ATJ) and isooctane
customers to enter into long term supply agreements, with a goal in
2017 of signing contracts representing the majority of the
isobutanol production volumes to be produced at the expanded
Luverne Facility. In April 2017, as noted above, Gevo entered into
its first long term supply agreement with HCS, which Gevo estimates
would represent approximately 10-15% of the isooctane production
from an expanded Agri-Energy Facility.
As Gevo develops markets for its products, there will likely be
a mismatch in timing between isobutanol production and sales. As a
result, at times Gevo will likely build isobutanol inventory
levels. At March 31, 2017, Gevo had approximately 288,000
gallons of isobutanol and approximately 52,000 gallons of renewable
hydrocarbons in inventory.
"During our year end update, we set out a number of key
strategic initiatives and I am proud to say that we have made
meaningful progress towards those goals. So far in 2017 we have
significantly improved our balance sheet, as well as signed the
exchange agreement with Whitebox that will extend the maturity of
our senior debt, assuming a positive stockholder vote in June. This
will provide us with additional time to pursue our strategy moving
forward. As I have communicated many times, we had to clear this
critical financial hurdle before we could more effectively drive
customer development and better execute on our long-term expansion
plan." said Dr. Patrick Gruber, Gevo’s Chief Executive Officer.
Mr. Gruber continued, "As a reminder, our objective is to sell
at least 50% of the capacity at the expanded Luverne facility.
Although we still have significant work ahead of us, we are excited
by the definitive supply agreement with HCS which is a key first
step in achieving our targets. The entire Gevo organization is
intensely focused on continuing our momentum throughout 2017 and
beyond.”
Financial Highlights
Revenues for the first quarter of 2017 were $5.6 million
compared with $6.3 million in the same period in 2016. During the
first quarter of 2017, revenues derived at the Luverne Facility
related to ethanol sales and related products were $5.5 million, a
decrease of approximately $0.3 million from the same period in
2016. This was primarily a result of lower ethanol production and
distiller grain prices in the first quarter of 2017 versus the same
period in 2016.
During the first quarter of 2017, hydrocarbon revenues were $0.1
million, $0.2 million lower than the same period in 2016. Gevo’s
hydrocarbon revenues are comprised of sales of ATJ, isooctane and
isooctene.
Gevo generated grant and other revenue of $32,000 during the
first quarter of 2017, down $0.2 million as compared to the same
period in 2016, mainly as a result of Gevo’s contract with the
Northwest Advanced Renewables Alliances ending in 2016.
Cost of goods sold was $9.4 million for the three months ended
March 31, 2017, compared with $9.2 million in the same period in
2016. Cost of goods sold included approximately $7.9 million
associated with the production of ethanol, isobutanol and related
products and approximately $1.5 million in depreciation
expense.
Gross loss was $3.8 million for the three months ended March 31,
2017, versus $2.9 million in the same quarter in 2016.
Research and development expense increased by $0.2 million
during the three months ended March 31, 2017, compared with the
same period in 2016, due primarily to an increase in
employee-related expenses.
Selling, general and administrative expense increased by $0.3
million during the three months ended March 31, 2017, compared with
the same period in 2016, due primarily an increase in
employee-related expenses.
Loss from operations in the three months ended March 31, 2017
was $7.2 million, compared with $5.9 million in the same period in
2016.
Non-GAAP cash EBITDA loss in the three months ended March 31,
2017 was $5.4 million, compared with $3.9 million in the same
period in 2016.
Interest expense in the three months ended March 31, 2017 was
$0.7 million, down $1.4 million as compared to the same period in
2016, due to a decrease in outstanding principal balances of our
debt.
During the three months ended March 31, 2017, there was no
change in the value of the embedded derivatives in the 2022 Notes,
as the derivatives have had no meaningful value since the third
quarter of 2014. However, Gevo did incur a non-cash loss of
$1.0 million in the quarter as a result of exchanging an aggregate
of $8.4 million principal amount of the 2022 Notes for shares of
Gevo’s common stock in January 2017.
During the three months ended March 31, 2017, Gevo also incurred
a non-cash loss of $0.3 million during the quarter due to the
quarterly mark-to-market valuation of the 2017 Notes.
During the three months ended March 31, 2017, the estimated fair
value of the derivative warrant liability decreased by $3.3
million, resulting in a non-cash gain from a change in the fair
value of derivative warrant liability.
The net loss for the three months ended March 31, 2017 was $5.9
million, compared with $3.6 million during the same period in
2016.
The non-GAAP adjusted net loss for the three months ended March
31, 2017 was $7.9 million, compared with $8.0 million during the
same period in 2016.
The cash position at March 31, 2017 was $20.4 million and the
total principal face value of the debt outstanding was $17.7
million.
Webcast and Conference Call Information
Hosting today’s conference call at 4:30 p.m. EST (2:30 p.m. MST)
will be Dr. Patrick Gruber, Chief Executive Officer, Mike Willis,
Chief Financial Officer, and Geoff Williams, General Counsel. They
will review Gevo’s financial results and provide an update on
recent corporate highlights.
To participate in the conference call, please dial 1(888)
771-4371 (inside the U.S.) or 1 (847) 585-4405 (outside the U.S.)
and reference the access code 44704548. A replay of the call and
webcast will be available two hours after the conference call ends
on May 9, 2017. 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 44704548#. The archived webcast will be
available in the Investor Relations section of Gevo's website at
www.gevo.com.
About Gevo
Gevo is a 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, Minnesota. Gevo has also developed
technology to produce hydrocarbon products from renewable alcohols.
Gevo currently operates a biorefinery in Silsbee, Texas, in
collaboration with South Hampton Resources Inc., to produce ATJ,
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 the ability of Gevo to develop
markets for its products, Gevo’s ability to enter into binding
offtake, sales or supply agreements for its products, Gevo’s
ability to produce isobutanol or related hydrocarbon products at
its Luverne Facility, Gevo’s ability to finance, construct and
operate the contemplated expanded Luverne Facility, Gevo’s 2017
operational and financial targets and milestones, Gevo’s cash
operating and financing expectations, the supply agreement with HCS
Holding, stockholder approval of the Exchange and the issuance of
the 2020 Notes, the Purchase Agreement, Gevo’s ability to secure
new customer relationships across core markets, 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, 2016, and in subsequent reports on Forms 10-Q
and 8-K and other filings made with the U.S. Securities and
Exchange Commission by Gevo.
Non-GAAP Financial Information
This press release contains financial measures that do not
comply with U.S. generally accepted accounting principles (GAAP),
including non-GAAP Cash EBITDA Loss and non-GAAP Adjusted Net Loss
Per Share. Non-GAAP Cash EBITDA Loss excludes non-cash items such
as depreciation and stock-based compensation. Non-GAAP Adjusted Net
Loss Per Share excludes non-cash gains and/or losses recognized in
the quarter due to the changes in the fair value of certain of
Gevo’s financial instruments, such as warrants, convertible debt
and embedded derivatives.
Management believes these measures are 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.
Reverse Stock Split
On December 21, 2016, our Board of Directors approved a reverse
split of our common stock, par value $0.01, at a ratio of
one-for-twenty. This reverse stock split became
effective on January 5, 2017 and, unless otherwise indicated, all
share amounts, per share data, share prices, exercise prices and
conversion rates set forth in this press release and the
accompanying consolidated financial statements have, where
applicable, been adjusted to reflect this reverse stock split.
1 Adjusted Net Loss Per Share is calculated by adding back
non-cash gains and/or losses recognized in the quarter due to the
changes in the fair value of certain of our financial instruments,
such as warrants, convertible debt and embedded derivatives; a
reconciliation of Adjusted Net Loss Per Share to GAAP net loss per
share is provided in the financial statement tables following this
release.
2 Cash EBITDA Loss is calculated by adding back
depreciation and non-cash stock compensation to GAAP loss from
operations; a reconciliation of Cash EBITDA Loss to GAAP loss from
operations is provided in the financial statement tables following
this release.
Gevo, Inc. Condensed Consolidated
Statements of Operations Information(Unaudited, in
thousands, except share and per share amounts)
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Revenue and
cost of goods sold |
|
|
|
Ethanol sales and
related products, net |
$ |
5,494 |
|
|
$ |
5,757 |
|
Hydrocarbon
revenue |
|
90 |
|
|
|
298 |
|
Grant and other
revenue |
|
32 |
|
|
|
265 |
|
Total revenues |
|
5,616 |
|
|
|
6,320 |
|
|
|
|
|
Cost of goods sold |
|
9,408 |
|
|
|
9,223 |
|
|
|
|
|
Gross loss |
|
(3,792 |
) |
|
|
(2,903 |
) |
|
|
|
|
Operating
expenses |
|
|
|
Research and
development expense |
|
1,217 |
|
|
|
1,044 |
|
Selling, general and
administrative expense |
|
2,173 |
|
|
|
1,919 |
|
Total operating
expenses |
|
3,390 |
|
|
|
2,963 |
|
|
|
|
|
Loss from
operations |
|
(7,182 |
) |
|
|
(5,866 |
) |
|
|
|
|
Other (expense)
income |
|
|
|
Interest expense |
|
(714 |
) |
|
|
(2,151 |
) |
(Loss) on exchange or
conversion of debt |
|
(964 |
) |
|
|
- |
|
(Loss) from change in
fair value of the 2017 Notes |
|
(339 |
) |
|
|
(836 |
) |
Gain from change in
fair value of derivative warrant liability |
|
3,259 |
|
|
|
5,248 |
|
Other income |
|
6 |
|
|
|
- |
|
Total other expense,
net |
|
1,248 |
|
|
|
2,261 |
|
|
|
|
|
Net loss |
$ |
(5,934 |
) |
|
$ |
(3,605 |
) |
|
|
|
|
Net loss per
share - basic and diluted |
$ |
(0.51 |
) |
|
$ |
(3.13 |
) |
Weighted-average number
of common shares outstanding - basic and diluted |
|
11,584,595 |
|
|
|
1,150,817 |
|
Gevo, Inc. Condensed Consolidated
Balance Sheet Information(Unaudited, in
thousands)
|
March 31, |
|
December 31, |
|
2017 |
|
2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
20,393 |
|
$ |
27,888 |
Accounts
receivable |
|
1,204 |
|
|
1,122 |
Inventories |
|
4,178 |
|
|
3,458 |
Prepaid
expenses and other current assets |
|
860 |
|
|
850 |
Total
current assets |
|
26,635 |
|
|
33,318 |
|
|
|
|
Property,
plant and equipment, net |
|
74,538 |
|
|
75,592 |
Deposits
and other assets |
|
3,414 |
|
|
3,414 |
Total
assets |
$ |
104,587 |
|
$ |
112,324 |
|
|
|
|
Liabilities |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable, accrued liabilities and other current liabilities |
$ |
4,998 |
|
$ |
6,193 |
Derivative warrant liability |
|
4,942 |
|
|
2,698 |
2017
Notes recorded at fair value |
|
16,492 |
|
|
25,769 |
Total
current liabilities |
|
26,432 |
|
|
34,660 |
2022
Notes, net |
|
1,088 |
|
|
8,221 |
Other
long-term liabilities |
|
167 |
|
|
179 |
Total
liabilities |
|
27,687 |
|
|
43,060 |
|
|
|
|
Total
stockholders’ equity |
|
76,900 |
|
|
69,264 |
Total
liabilities and stockholders' equity |
$ |
104,587 |
|
$ |
112,324 |
Gevo, Inc. Condensed Consolidated Cash
Flow Information(Unaudited, in
thousands)
|
|
|
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
Operating
Activities |
|
|
|
Net loss |
$ |
(5,934 |
) |
|
$ |
(3,605 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
(Gain)
from change in fair value of derivative warrant liability |
|
(3,226 |
) |
|
|
(5,248 |
) |
Loss from
change in fair value of the 2017 Notes |
|
339 |
|
|
|
836 |
|
Loss on
exchange or conversion of debt |
|
964 |
|
|
|
- |
|
(Gain) on
extinguishment of warrant liability |
|
(33 |
) |
|
|
- |
|
Stock-based compensation |
|
128 |
|
|
|
358 |
|
Depreciation and amortization |
|
1,676 |
|
|
|
1,621 |
|
Non-cash
interest expense |
|
80 |
|
|
|
1,057 |
|
Changes in operating
assets and liabilities: |
|
|
|
Accounts
receivable |
|
(82 |
) |
|
|
523 |
|
Inventories |
|
(720 |
) |
|
|
500 |
|
Prepaid
expenses and other current assets |
|
(11 |
) |
|
|
(278 |
) |
Accounts
payable, accrued expenses, and long-term liabilities |
|
(1,228 |
) |
|
|
(1,268 |
) |
Net cash
used in operating activities |
|
(8,047 |
) |
|
|
(5,504 |
) |
|
|
|
|
Investing
Activities |
|
|
|
Acquisitions of
property, plant and equipment |
|
(673 |
) |
|
|
(2,247 |
) |
Net cash
used in investing activities |
|
(673 |
) |
|
|
(2,247 |
) |
|
|
|
|
Financing
Activities |
|
|
|
Payments
on secured debt |
|
(9,616 |
) |
|
|
(84 |
) |
Debt and
equity offering costs |
|
(205 |
) |
|
|
(589 |
) |
Proceeds
from issuance of common stock and common stock warrants |
|
11,044 |
|
|
|
- |
|
Proceeds
from the exercise of warrants |
|
2 |
|
|
|
65 |
|
Net cash
provided (used) by financing activities |
|
1,225 |
|
|
|
(608 |
) |
|
|
|
|
Net decrease in cash
and cash equivalents |
|
(7,495 |
) |
|
|
(8,359 |
) |
|
|
|
|
Cash and cash
equivalents |
|
|
|
Beginning
of period |
|
27,888 |
|
|
|
17,031 |
|
End of
period |
$ |
20,393 |
|
|
$ |
8,672 |
|
Gevo, Inc. Reconciliation of GAAP to
Non-GAAP Financial Information(Unaudited, in
thousands)
|
Three Months Ended March 31, |
Non-GAAP Cash
EBITDA: |
2017 |
|
2016 |
|
|
|
|
Gevo Development, LLC /
Agri-Energy, LLC |
|
|
|
Loss from
operations |
$ |
(4,117 |
) |
|
$ |
(3,559 |
) |
Depreciation and amortization |
|
1,539 |
|
|
|
1,453 |
|
Non-cash
stock-based compensation |
|
3 |
|
|
|
3 |
|
Non-GAAP cash
EBITDA |
$ |
(2,575 |
) |
|
$ |
(2,103 |
) |
|
|
|
|
Gevo, Inc. |
|
|
|
Loss from
operations |
$ |
(3,065 |
) |
|
$ |
(2,307 |
) |
Depreciation and amortization |
|
137 |
|
|
|
168 |
|
Non-cash
stock-based compensation |
|
125 |
|
|
|
355 |
|
Non-GAAP cash
EBITDA |
$ |
(2,803 |
) |
|
$ |
(1,784 |
) |
|
|
|
|
Gevo Consolidated |
|
|
|
Loss from
operations |
$ |
(7,182 |
) |
|
$ |
(5,866 |
) |
Depreciation and amortization |
|
1,676 |
|
|
|
1,621 |
|
Non-cash
stock-based compensation |
|
128 |
|
|
|
358 |
|
Non-GAAP cash
EBITDA |
$ |
(5,378 |
) |
|
$ |
(3,887 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjusted Net Loss: |
|
|
|
Gevo Consolidated |
|
|
|
Net
Loss |
|
(5,934 |
) |
|
|
(3,605 |
) |
(Loss) on
exchange or conversion of debt |
|
(964 |
) |
|
|
- |
|
(Loss)
from change in fair value of the 2017 Notes |
|
(339 |
) |
|
|
(836 |
) |
Gain from
change in fair value of derivative warrant liability |
|
3,259 |
|
|
|
5,248 |
|
Non-GAAP
Net Loss |
$ |
(7,890 |
) |
|
$ |
(8,017 |
) |
Weighted-average number
of common shares outstanding - basic and diluted |
|
11,584,595 |
|
|
|
1,150,817 |
|
Non-GAAP Adjusted Net
loss per share - basic and diluted |
$ |
(0.68 |
) |
|
$ |
(6.97 |
) |
Media Contact
David Rodewald
The David James Agency, LLC
+1 805-494-9508
gevo@davidjamesagency.com
Investor Contact
Shawn M. Severson
EnergyTech Investor, LLC
+1 415-233-7094
gevo@energytechinvestor.com
@ShawnEnergyTech
www.energytechinvestor.com
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