Gevo issues corporate update, reduces staff

Gevo Inc. recently issued a corporate update, reaffirming the company’s focus on the commercial development of renewable jet fuel, isooctane, isobutanol and related products. The company says it aims to aggregate enough confirmed commercial off-take to support the capital expense of expanding its biorefinery in Luverne, Minnesota.

Gevo also said it is undertaking several initiatives to improve the cash profile of its business. This includes increasing sales of isobutanol into the ethanol-free marketplace, increasing sales of its alcohol-to-jet (ATJ) fuel and isooctane produced at its demonstration plant in Silsbee, Texas, improving the cash flow profile at the Luverne plant, and reducing overall corporate expenses. In addition, Gevo said it expects to sign its first commercial license in India through its partnership with Praj Industries this year.

Moving into 2018, Gevo said it expects to optimize the ethanol production process at its Luverne plant, develop value-added products for ethanol and animal feed produced at the plant, and further reducing the cost of the plant’s feedstock. The company said these actions are expected to improve cash flow of the facility and will also benefit the cost of producing isobutanol at the plant in the future.

To reduce corporate expenses, certain executive officers have agreed to take a pay cut. Gevo is also reducing the number of employees at its Englewood, Colorado, office by approximately 40 percent. In addition, the company said its employees will forego annual 2017 bonuses and Gevo’s chief financial officer is expected to leave the company and will not be replaced.

“In 2017, we again showed that isobutanol can be produced in full scale equipment, we were able to meet the variable cost targets that we set out for our isobutanol production and we continued to demonstrate that there is growing demand for our products.  That said, we have a “chicken and egg” problem.  Large scale product demand requires us to drive cost out of our production processes, which we expect to be able to achieve through greater production scale. However, raising the capital necessary to expand the Luverne Facility is more easily achieved, and at lower cost of capital, if we had large scale offtake agreements with customers. In 2017, we did make progress in this regard, including the contract we signed with HCS Holding (Haltermann Carless) to supply isooctane, but we need more.  In 2018 the goal is to obtain off-take agreements for our products that will support financing the Luverne Facility expansion.  Concurrently, we are looking extensively into ways to extend our cash runway as far as possible to give us the time to land and negotiate these contracts properly,” said Patrick Gruber, Gevo’s CEO.

“We also see significant opportunity to improve the performance of the Luverne Facility in the near term, which is expected to benefit the company regardless of whether we are producing ethanol, isobutanol, or both.  Luverne is an excellent plant site given the low cost and low environmental footprint of its corn supply,” Gruber continued.

In December, Gevo announced progress with testing its biobased jet fuel. The company indicated that GE Aviation had begun jet engine combustor component testing of its ATJ. The testing is being performed as part of the Federal Aviation Authority’s Continuous Lower Energy, Emissions and Noise Program. CLEEN is the FAA's principal environmental effort to accelerate the development of new aircraft, engine technologies, and to advance sustainable alternative jet fuels, in conjunction with aviation industry leaders such as GE Aviation.