Gevo, Inc. (NASDAQ: GEVO) (“Gevo” or the “Company”), a renewable
fuels company focused on the production of sustainable aviation
fuel (“SAF”), today provides updates on the Company and projects
currently in process.
Follow-on Equity OfferingOn June 5th, 2022, the
Company executed a registered direct offering of 33.3 million
shares to certain institutional investors. That offering closed on
June 8th, 2022, and the net proceeds of $139.2 million combined
with the Company’s existing cash, cash equivalents, restricted cash
and marketable securities provide the Company with approximately
$555.7 million of liquidity (as of June 15, 2022) to fund future
operations and capital projects. As part of the offering, the
Company issued 33.3 million Series 2022-A Warrants with an exercise
price of $4.37 per share. If all 33.3 million Series 2022-A
Warrants were to be exercised in cash at the exercise price of
$4.37 per share, the Company would receive additional net proceeds
of approximately $145.7 million.
The recent offering has further strengthened the Company’s
balance sheet, which is expected to facilitate the financing of the
Company’s Net-Zero 1 project (”NZ1”) and provide financial
resources for the Company’s numerous growth opportunities. Given
the forecasts of a recession in the near future and a generally
negative market outlook, the Board of Directors made the decision
to raise equity capital to ensure to the highest probability that
Gevo has enough cash on hand to close its NZ1 financing, even if
Gevo is responsible for 100% of the equity in the project. Gevo is
in the process of developing additional plant sites to meet demand
under its existing SAF and hydrocarbon supply agreements, and some
of the proceeds are expected to be used to advance those
efforts.
Market DevelopmentGevo now has more than 200
million gallons per year (“MGPY”) of predominantly take-or-pay,
financeable SAF and hydrocarbon fuel supply agreements, which are
expected to support project debt financing. This level of demand
would require three additional plants of equal size to the expected
capacity of NZ1 (currently expected to be approximately 55 million
gallons per year) to be built over the next four years to satisfy
those agreements. Based on current market projections,
collectively, these agreements represent approximately $1.2 billion
in expected sales per year.
Net-Zero 1 StatusGevo’s NZ1 project is on
schedule with initial volumes of SAF expected to be delivered in
2025 to fulfill a portion of existing SAF and hydrocarbon supply
agreements. NZ1 is expected to produce approximately 55 MGPY of SAF
or 62 MGPY of total hydrocarbon volumes, which would satisfy part
of the 200 MGPY of financeable SAF and hydrocarbon supply
agreements that are currently in place.
The transition to an ethanol-to-SAF design from Gevo’s original
isobutanol-to-SAF and isooctane design has resulted in an expected
increase of output capacity which should result in increased cash
flow. Gevo’s engineering design work to date has resulted in an
expected 35% uplift in hydrocarbon output and a 22% expected uplift
in co-product volume. These higher projected volumes suggest a 33%
improvement in project EBITDA1, or an expected increase from $150
million per year to $200 million per year of project EBITDA when
comparing the two designs.2 The difference in capital cost
between the two designs is negligible; however, the uplift in
volumes associated with the ethanol-to-SAF design leads to
increased cash flows per unit of capital invested.
Key NZ1 development milestonesThrough year-end
2022:
- Close the purchase of the land for NZ1 in Lake Preston, South
Dakota
- Execute commercial development, build, own and operate
agreements for:
- Water
- Wind energy
- Green hydrogen
- Select engineering, procurement and construction (“EPC”)
contractor
- Select fabricator for hydrocarbon plant modules
- Substantial Completion of Front End Engineering Design
- Break ground and begin site preparation at Lake Preston
- Order long lead equipment
Through first-half 2023:
- Close the construction financing, including non-recourse
debt
Throughout the remainder of 2022 and 2023, Gevo will update
stockholders about certain key milestones related to the
development, financing, and construction of NZ1. Updates to those
milestones will be found in the Company’s press releases and
investor presentations in the IR section of Gevo’s website.
Additional Plant SitesThe Company is in the
process of identifying and performing early site development work
for additional SAF production locations. These sites include
several greenfield locations that are particularly advantageous in
terms of potential economics, opportunities to decarbonize, and
time to market. Gevo is also pursuing prospects with several
existing ethanol plant sites, including those of ADM. Existing
ethanol plants need to be decarbonized with renewable energy or
de-fossilized energy and/or carbon sequestration. Gevo has
developed a preferred list of partners and sites with
decarbonization in mind and is engaged in preliminary feasibility
and development discussions with several of them, including
ADM.
RNG Project StatusGevo’s renewable natural gas
(“RNG”) project in Northwest Iowa (the “RNG Project”) has been
producing biogas and is now upgrading and injecting RNG into the
natural gas pipeline. The RNG Project generates renewable natural
gas captured from dairy cow manure. The manure for the RNG Project
is supplied by three dairy farms located in Northwest Iowa totaling
over 20,000 milking cows. When at full operational capacity, the
RNG Project is expected to generate approximately 355,000 MMBtu of
RNG per year, which will be transported and sold in California. BP
Canada Energy Marketing Corp. and BP Products North America Inc.
(collectively, “bp”) will market the RNG in California on behalf of
Gevo, and Gevo expects that the RNG Project will generate between
$16 and $22 million of Project EBITDA1 per year beginning by
2023 depending on a variety of assumptions, including the value of
credits under the federal Renewable Fuel Standard Program (“RFS”)
and the Low Carbon Fuel Standard (“LCFS”) in California. Gevo
expects to be able to get approval for Renewable Identification
Numbers (“RINs”) through RFS and carbon credits from LCFS later
this year or next year.
Verity TrackingVerity Tracking is developing
the tools, techniques, software, data access to track carbon score
and other sustainability attributes using “blockchain” technology.
The benefit is having audited, transparent, immutable
sustainability data attached to biofuels and is expected to be
valuable to our customers, colleague companies, and partners.
Verity has continued to develop 3rd party partnerships that will
contribute to its development objectives over the coming quarters.
Gevo and Blocksize-Capital have identified a series of internal
milestones that Verity will need to achieve over the next few
quarters in order to develop into a stand-alone business unit,
either as part of Gevo or as a separate entity.
ChevronThe letter of intent between Gevo and
Chevron that was signed in September of 2021 and scheduled to
expire on March 31, 2022, has been extended until August 31, 2022.
Chevron has a strong interest in Gevo’s isobutanol-to-SAF,
isobutylene and isooctane technology. Chevron and the Company have
mutually agreed upon an extension that allows discussions and
negotiations to continue.
Management CommentDr. Patrick Gruber, CEO of
Gevo commented, "While this has been a productive quarter and
year-to-date, the financial markets have been chaotic. Our recent
decision to issue equity was made to ensure Gevo’s balance sheet
could withstand the challenging financial markets that we expect
over the next two years while continuing to move forward with our
NZ projects. As we move closer to FID and financial close on the
debt component for NZ1, it should be clear to investors that Gevo
has the capital needed to execute its development plan and that the
value proposition of the SAF that will be produced by NZ1 is
remarkable. Over time, as demand from the aviation industry
continues to exceed supply, there should be opportunities for early
movers, like Gevo, to create additional, accretive partnerships
that will benefit our stockholders.”
Upcoming Investor ConferencesPresentations
provided in conjunction with these events will be available on
Gevo's website at www.gevo.com in the Investor Relations section on
the morning of the respective presentation. Members of Gevo’s
senior management will participate in the following hosted investor
events:
Enercom Denver Annual Energy
Conference - August 9, 2022 Denver,
COCiti Midstream/Energy Infrastructure Conference
– August 16-17, 2022 Las Vegas, NVCredit Suisse Carbon
Negative Conference - September 14-15, 2022 San Diego,
CA
About Gevo Inc.
Gevo’s mission is to transform renewable energy and carbon into
energy-dense liquid hydrocarbons. These liquid hydrocarbons can be
used for drop-in transportation fuels such as gasoline, jet fuel,
and diesel fuel, that when burned have potential to yield net-zero
greenhouse gas emissions when measured across the full lifecycle of
the products. Gevo uses low-carbon renewable resource-based
carbohydrates as raw materials and is in an advanced state of
developing renewable electricity and renewable natural gas for use
in production processes, resulting in low-carbon fuels with
substantially reduced carbon intensity (the level of greenhouse gas
emissions compared to standard petroleum fossil-based fuels across
their lifecycle). Gevo’s products perform as well or better than
traditional fossil-based fuels in infrastructure and engines, but
with substantially reduced greenhouse gas emissions. In addition to
addressing the problems of fuels, Gevo’s technology also enables
certain plastics, such as polyester, to be made with more
sustainable ingredients. Gevo’s ability to penetrate the growing
low-carbon fuels market depends on the price of oil and the value
of abating carbon emissions that would otherwise increase
greenhouse gas emissions. Gevo believes that its proven, patented,
technology enabling the use of a variety of low-carbon sustainable
feedstocks to produce price-competitive low carbon products such as
gasoline components, jet fuel, and diesel fuel yields the potential
to generate project and corporate returns that justify the
build-out of a multi-billion-dollar business.
Gevo believes that Argonne National Laboratory GREET model is
the best available standard of scientific based measurement for
life cycle inventory or LCI.
Important Cautions Regarding 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, Gevo’s financial condition as of June 15, 2022, Gevo’s
business development activities, Gevo’s ability to the
commercialize its projects, Gevo’s supply agreements, financial
projections, whether any of the Series 2022-A Warrants will ever be
exercised and the amount of proceeds Gevo may receive in connection
therewith, Gevo’s ability to successfully develop, construct and
finance its projects, whether Gevo’s supply agreements are
financeable, Gevo’s ability to achieve cash flow from its planned
projects, Chevron and whether Gevo and Chevron will enter into
binding, definitive agreements and other statements that are not
purely statements of historical fact. These forward-looking
statements are made based on 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, 2021, 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.
Company Contact:John Richardson (Director of
Investor Relations)Gevo Inc.Tel 720-360-7794E-mail: IR@gevo.com
1 Project EBITDA is a non-GAAP financial measure that we define
as total operating revenues less total operating expenses for the
project.2 Under similar long run market price assumptions for key
modeling inputs such as corn, SAF, co-products, and environmental
benefits.
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