May 15, 2018
By Erin Voegele
Gevo Inc. recently released first quarter 2018 financial results, reporting that the company currently sees ethanol as a pathway to profitability. The company’s near-term plans include making improvements its plant in Luverne, Minnesota.
“In the first quarter of 2018 we continued the drive to achieve our commercial objectives and worked to extend our runway,” said Patrick Gruber, CEO of Gevo. “We see a pathway to making Gevo profitable by addressing low carbon fuels. We intend to do it first with ethanol by improving our production facility in Luverne which will also benefit isobutanol production. We can see a path to profitability without building a large isobutanol and hydrocarbons plant. We have not abandoned our long-term goal of building large scale plants, but they take time to build out and generate cash. We think that we can get to cash positive sooner rather than later, independent of building out a large isobutanol plant. We expect to describe in more detail what this plan looks like in the relatively near further. Our plan to drive down cost across the entire company has been working and the numbers in our financials reflect our efforts.”
“To be clear, we are continuing to gain commercial traction with isobutanol, isooctane, and jet fuel,” Gruber continued. “We expect that in the relatively near future we will be able to finalize one or more of these contracts. We recently have been reviewing the market opportunities for our products, including the costs to produce our ethanol, isobutanol, isooctane, and jet fuel, and potential selling prices for these products. We are pleased with the results and see enormous commercial potential. We are one of the few biofuel producers that have real data and operating experience gained from a commercial production facility. This data and experience are competitive advantages for us as we discuss offtake arrangements with potential customers and strategic partners. Tim Cesarek, Gevo’s recently hired chief commercial officer, has hit the ground running and is having discussions with several potential customers and strategic partners.”
During an investor call, Gruber noted that the Luverne plant site has good corn economics, good transportation, good rail and good logistics. He said improvements the company is considering making to the Luverne plant would benefit not only ethanol production, but the company’s future plans for isobutanol, isooctane, jet fuel and other products.
Gruber also spoke briefly about a proposed rule published by the U.S. EPA in April that would enable 16 percent isobutanol blends to be used in gasoline for on-road use. He said that previously the 16 percent blend could only be used for off-road use. Gruber called the rulemaking a good step forward in the ability to supply isobutanol through retail distribution channels.
Gevo reported first quarter revenues of $8.2 million, up from $5.6 million during the same quarter of last year. Revenues derived at the Luverne facility related to ethanol sales and related products reached $8.2 million, up $2.7 million when compared to the same period of 2017. The increase is primarily attributed to increased ethanol production and distillers grain prices.
First quarter gross loss was $2.3 million, compared to a $3.8 million gross loss during the first quarter of last year. Net loss was $2.5 million, compared to a net loss of $5.9 million during the same quarter of 2017. The non-GAAP adjusted net loss was $5.8 million, compared to $7.9 million during the first quarter of last year.
Read the original article: Gevo to Focus on Ethanol production, Improvements at Luverne