Gevo discusses financial status, market development activities

By Erin Voegele | March 29, 2018

Gevo Inc. released fourth quarter 2017 financial results on March 28, providing an overview of the company’s financial status, production and sales, and market development activities.

Patrick Gruber, CEO of Gevo, opened the investor call by discussing the market for ethanol-free gasoline. At the beginning of 2017, he said, there were just a few ethanol-free gasoline pumps at retail locations. By the end of the year, Gruber said that number had grown to nearly 200 pumps. “This gave us all confidence to expand our relationship with Musket,” he said.

Gruber discussed a market study completed by Stillwater Associates that looked at the niche market where Gevo’s fuel products might be most valuable. That study found that the ethanol-free market is approximately 7 billion gallons in the U.S. Approximately 2 billion gallons of that volume is in reformulated gasoline (RFG) areas, which require oxygenates to be blended with gasoline. Those RFG markets are Gevo’s current area of focus, he said.

He also noted that Gevo has been developing the EU market for isooctane and said the company’s been able to sell the entire volume produced at its demo plant.

In addition, Gruber stressed that Gevo’s alcohol-to-jet (ATJ) fuel was used to fuel planes associated with several different commercial airlines during the Nov. 8 Fly Green Day at Chicago O’Hare Airport. “The purpose of this day was to show that he logistics and cost would be similar to petro-based fuel,” Gruber said.

Regarding Gevo’s partnership with Praj Industries, Gruber noted the company announced in July that it is ready with a process design package. “They successfully adapted our technology so that it can be used in sugar mills,” he said. During the fourth quarter, Praj refined engineering details. The company has also identified a couple of initial licensees, Gruber added, noting that a licensing agreement is expected to be complete sometime this year.

Gruber also discussed operations at its Luverene, Minnesota, biorefinery. He said the company is excited about the continued improvements it has made in its isobutanol production process. According to Gruber, Gevo achieved its cost goals for the variable cost of isobutanol. He also noted that the plant ran well on isobutanol. “In fact, we made enough improvements that we can cut back on development resources,” he said, noting that many development employees have been let go.

Since Gevo has enough isobutanol inventory to cover expected demand for this year, Gevo said the plant “can focus on the production of ethanol and on improving the general process improvements that add value and will benefit both ethanol and isobutanol.”

Information released by Gevo shows the company produced 15.6 million gallons of ethanol last year, along with 47,000 tons of animal feed and 1,050 tons of corn oil, resulting in a $26.3 million in revenue. The company also produced approximately 206,000 gallons of isobutanol. During the year, Gevo sold approximately 49,368 gallons of isobutanol, either directly as isobutanol or as renewable hydrocarbons, resulting in $1.1 million in revenue.

Revenues for the fourth quarter were $6.7 million, up from $5.8 million during the same period of last year. Revenues derived from the Luverne plant were $6.6 million, up $1.2 million when compared to the same period of 2016. The increase is primarily attributed to higher ethanol production and increased distillers grains prices. Fourth quarter hydrocarbon revenues were $50,000, down $400,000 million when compared to the fourth quarter of 2016.

Gross loss for the fourth quarter was $2.7 million, compared to $2.3 million during the same three-month period of 2016. Net loss for the quarter was $4.4 million, compared to $2.3 million during the fourth quarter of the previous year. The non-GAAP adjusted net loss for the fourth quarter was $5.6 million, compared to $7.8 million during the third quarter of 2016.

Revenues for the full year reached $27.54 million, up slightly from $27.21 million in 2016. Gross loss was $10.63 million compared to $9.8 million in 2016. Net loss for 2017 was $24.63 million, compared to $37.23 million during the previous year. Net loss per share was $1.51 in 2017, compared to $9.68 in 2016.