Gevo releases Q1 results, launches side-by-side operations

Gevo Inc. has released its first quarter financial results, reporting it recently closed on $25.9 million in financing and has successfully begun side-by-side operation at its Luverne, Minn., plant, with the intent to produce ethanol and isobutanol simultaneously.

Gevo began side-by-side operation at its Luverne facility on May 5. The company currently has three of four fermenters actively producing ethanol. According to Gevo, the intent of the side-by-side configuration is to facilitate the process optimization of commercial-scale ethanol production, maximize use of the plant to generate cash through the utilization of all fermentation assets, and demonstrate the simultaneous production of isobutanol and ethanol.

Gevo CEO Pat Gruber said startup is going well and the facility is currently running at rate of 30,000 gallons per day. The company’s target rate of more than 40,000 gallons per day is expected to be achieved by next week. According to Gruber, Gevo is targeting an ethanol run rate of more than 15 million gallons per year.

During a call to discuss the quarterly results, Gruber explained that the purpose of side-by-side production is to use ethanol production as a flywheel to drive the plant flow while the company works through the learning curve of isobutanol production. This method of operation is expected to keep the corn mill, the animal feed and the water recycling streams flowing continuously. Gruber also stressed that the side-by-side production model also makes financial sense because it contributes cash to the business through the utilization of assets that otherwise would remained unused. He also noted that the ability to produce ethanol eliminates the need for frequent starting and stopping of the plant, which would otherwise be necessary during the isobutanol optimization process. “Side-by-side production is expected to make our work on isobutanol easier by maintaining continuous mash flow, providing more consistent water recycle streams and more consistent production of animal feed,” Gruber continued.

With regard to isobutanol production, Gruber said the next step is to achieve the company’s batch fermentation process. “We’ve already achieved 70 percent of our goal in terms of gallons of isobutanol produced per fermentation batch,” he said, noting the company now needs to achieve progress towards reaching 100 percent of its goal. Gevo also needs to reach goals related to consistency in the batches, which Gruber said is facilitated by consistent water recycle quality, consistent corn milling and consistent animal feed production.

In addition, Gruber discussed progress related to yeast production for isobutanol. He said the company has been working on procedures to more effectively produce its yeast. Those procedures include techniques for cleaning, sterilizing and adding of the nutrient packages.

During the call, Gruber noted that the per-gallon cost of production tends to be higher when working at the learning curve than it would be once the process is fully optimized. For that reason, the company plans to make relatively modest quantities of isobutanol during the next several months. Once that process is complete, Gruber said the company will determine how many fermenters will produce isobutnaol and how many will produce ethanol.

On May 9, Gevo closed a private debt financing with Whitebox Advisors consisting of a senior secured term loan, exchangeable into senior secured convertible debentures. The aggregate proceeds to Gevo are approximately $25.9 million. According to Gevo, Whitebox may, under certain circumstances, invest up to an additional $37.2 million in the senior term loan and/or senior secured convertible debentures.

Gevo has also recently announced progress with its biobased jet fuel. On March 24, the company announced an agreement with Lufthansa to evaluate Gevo’s renewable jet fuel with the goal of approving its alcohol-to-jet for commercial aviation use. During the first quarter, Gevo also successfully shipped its biobased jet fuel to the U.S. Air Force and U.S. Army and isooctane specialty fuel applications.

Gevo reported revenues of $903,000 for the first quarter, down from $3.54 million for the same period of 2013. The company reported a gross loss of $3.78 million for the quarter, compared to $960,000 for the same quarter of last year. The net loss for the quarter was $11.97 million, or 18 cents per share, compared to a net loss of $18.37 million, or 45 cents per share, during the first quarter of 2013.