Gevo Reports Fourth Quarter 2016 Financial Results
-
- Reports net loss per share of
($0.33) for the quarter - Reports non-GAAP adjusted net loss per share1 of
($1.14) for the quarter - Ended the quarter with cash and cash equivalents of
$27.9 million - Reports revenue of
$5.8 million for the quarter - Reports loss from operations of
$6.5 million for the quarter - Reports non-GAAP cash EBITDA loss2 of
$4.7 million for the quarter
Gevo produced approximately 190,000 gallons of isobutanol during the quarter at Gevo’s isobutanol production facility located in Luverne,Minnesota (the “Agri-Energy Facility”).- Cash and Cash Equivalents at
February 28, 2017 were$22.6 million and the total principal face value of the debt outstanding was$17.7 million 3. - On
February 13, 2017 ,Gevo signed a letter of intent withHCS Holding GmbH (HCS) to supply isooctane under an offtake agreement. HCS is a manufacturer of specialty products and solutions in the hydrocarbons sector, operating under such brands as Haltermann Carless. In the first phase of the contemplated binding offtake agreement, HCS is expected to purchase isooctane produced at Gevo’s demonstration hydrocarbons plant located in Silsbee,Texas , commencing in 2017. During the first phase, expected revenue would be in the range of $2-3 million per year and would continue until completion of Gevo’s future, large-scale commercial hydrocarbon plant. In the second phase, HCS is expected to purchase approximately 300,000 to 400,000 gallons of isooctane per year under the contemplated binding offtake agreement for a period of five years. Gevo expects to supply this isooctane from its first large-scale commercial hydrocarbons facility, which is likely to be built at the Agri-Energy Facility. - On
February 13, 2017 , the holder of Gevo’s 10% Convertible Senior Notes, due 2017 (the “2017 Notes”), agreed to extend the maturity date of the 2017 Notes fromMarch 15, 2017 toJune 23, 2017 (the “2017 Notes Extension Transaction”). The terms of the 2017 Notes Extension Transaction included, among other things, the following: (i) an increase in the coupon on the 2017 Notes by two percent (2%) to twelve percent (12%); and (ii) the requirement thatGevo pay down$8 million of principal on the 2017 Notes as follows:$2 million on each ofMarch 13, 2017 ,April 13, 2017 ,May 12, 2017 andJune 13, 2017 , with an option forGevo to prepay all$8 million at any time in our sole discretion. In addition, as part of the 2017 Notes Extension Transaction,Gevo agreed to pay the holder fifteen percent (15%) of the net proceeds from its next underwritten public offering, completed prior toJune 23, 2017 , to be used to reduce the then-outstanding principal of the 2017 Notes. - On
February 17, 2017 , in an underwritten offeringGevo sold 5,680,000 Series G units, with each Series G unit consisting of one share of common stock, a Series K warrant to purchase one share of common stock and a Series M warrant to purchase one share of common stock.Gevo also sold 570,000 Series H units, with each Series H unit consisting of a pre-funded Series L warrant to purchase one share of common stock, a Series K warrant to purchase one share of common stock and a Series M warrant to purchase one share of common stock. The gross proceeds from this offering were approximately$11.9 million , not including any future proceeds from the exercise of the warrants. - On
February 23, 2017 ,Gevo paid down the principal balance on the 2017 Notes with 15% of the net proceeds from the offering referred to above, along with the$8.0 million in prepayments under the supplemental indenture, for an aggregate total payment of$9.6 million , which reduced the principal balance on the 2017 Notes to approximately$16.5 million . - In
December 2016 andJanuary 2017 ,Gevo entered into private exchange agreements with holders of its 7.5% convertible senior notes due 2022 (the “ 2022 Notes”) to exchange an aggregate of$9.8 million of principal amount of 2022 Notes for an aggregate of 2,407,214 shares of common stock. These exchanges reduced the outstanding principal amount of the 2022 Notes to$1.175 million .
Outlook for 2017
- Restructure Gevo’s balance sheet in a manner that addresses the
$17.7 million of debt represented by its outstanding convertible notes and that allowsGevo to execute on its long-term strategy and business development plan. - Obtain binding supply contracts for a combination of isobutanol and related hydrocarbon products equal to at least fifty percent (50%) of the capacity of the expanded Agri-Energy Facility that
Gevo plans to construct (the “Agri-Energy Facility Expansion”). Gevo estimates that its maximum annual isobutanol production capacity at the Agri-Energy Facility to be currently over 1 million gallons per year. As described below, however,Gevo expects to produce isobutanol at levels that better match market development sales in 2017. As such,Gevo expects to produce approximately 500,000 gallons of isobutanol during 2017.- Achieve a cash EBITDA loss of between
$18.0-$20.0 million for the fiscal year endingDecember 31, 2017 .4
Market Development Sales and Production Strategy for 2017
In addition,
In terms of isobutanol production,
Agri-Energy Facility Expansion
“We came a long way in 2016. On the isobutanol production front, we brought a full production line online that enabled us to hit our fermentation cycle times and our product quality and cost targets. This data is critical for building out the expanded plant and for developing appropriate pricing for sales contracts in support of this expansion. The
Dr. Gruber continued, “2016 allowed us to better pin down the cost side of our products and determine more clearly which markets make sense for our isobutanol and hydrocarbon products. In 2017, our core goals relate to market development with a focus of securing supply agreements from customers to off-take isobutanol, ATJ and isooctane from our expanded plant in Luverne. We can see the customer interest, and we need to translate that interest into binding agreements to build a profitable business. We want to know with as much certainty as possible who is going to buy what and when, while targeting product margins to become profitable as a company.”
Financial Highlights
Revenues for the fourth quarter of 2016 were
During the fourth quarter of 2016, hydrocarbon revenues were
Cost of goods sold was
Gross loss was
Research and development expense was flat during the three months ended
Selling, general and administrative expense decreased by
Loss from operations in the fourth quarter of 2016 was
Non-GAAP cash EBITDA loss in the fourth quarter of 2016 was
Interest expense in the fourth quarter of 2016 was
During the three months ended
During the three months ended
During the three months ended
The net loss for the fourth quarter of 2016 was
The non-GAAP adjusted net loss for the fourth quarter of 2016 was
The cash position at
Webcast and Conference Call Information
Hosting today’s conference call at
To participate in the conference call, please dial 1 (888) 771-4371 (inside the U.S.) or 1 (847) 585-4405 (outside the U.S.) and reference the access code 44557047. A replay of the call and webcast will be available two hours after the conference call ends on
About
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, statements related to the ability of
Non-GAAP Financial Information
This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), including non-GAAP cash EBITDA loss and non-GAAP adjusted net loss per share. On a non-GAAP basis, non-GAAP cash EBITDA excludes non-cash items such as depreciation and stock-based compensation. On a non-GAAP basis, non-GAAP adjusted net loss per share excludes non-cash gains and/or losses recognized in the quarter due to the changes in the fair value of certain of Gevo’s financial instruments, such as warrants, convertible debt and embedded derivatives. Management believes these measures are useful to supplements to its GAAP financial statements with this non-GAAP information because management uses such information internally for its operating, budgeting and financial planning purposes. These non-GAAP financial measures also facilitate management's internal comparisons to Gevo’s historical performance as well as comparisons to the operating results of other companies. In addition,
Reverse Stock Split
On
1 Adjusted Net Loss Per Share is calculated by adding back non-cash gains and/or losses recognized in the quarter due to the changes in the fair value of certain of our financial instruments, such as warrants, convertible debt and embedded derivatives; a reconciliation of Adjusted Net Loss Per Share to GAAP net loss per share is provided in the financial statement tables following this release.
2 Cash EBITDA loss is calculated by adding back depreciation and non-cash stock compensation to GAAP loss from operations; a reconciliation of cash EBITDA Loss to GAAP loss from operations is provided in the financial statement tables following this release.
3 Cash and Cash Equivalents is unaudited and preliminary, and does not present all information necessary for an understanding of our financial condition as of
4 A reconciliation of projected cash EBITDA Loss to projected GAAP loss from operations for the year ending
Condensed Consolidated Statements of Operations Information
(Unaudited, in thousands, except share and per share amounts)
Three Months Ended | ||||||||||||||||
Year Ended December 31, |
December 31, |
|||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenue and cost of goods sold | ||||||||||||||||
Ethanol sales and related products, net | $ | 24,613 | $ | 27,125 | $ | 5,325 | $ | 6,521 | ||||||||
Hydrocarbon revenue | 1,929 | 1,694 | 467 | 245 | ||||||||||||
Grant and other revenue | 671 | 1,318 | 44 | 531 | ||||||||||||
Total revenues | 27,213 | 30,137 | 5,836 | 7,297 | ||||||||||||
Cost of goods sold | 37,017 | 38,762 | 8,156 | 9,001 | ||||||||||||
Gross loss | (9,804 | ) | (8,625 | ) | (2,320 | ) | (1,704 | ) | ||||||||
Operating expenses | ||||||||||||||||
Research and development expense | 5,216 | 6,610 | 1,546 | 1,596 | ||||||||||||
Selling, general and administrative expense | 8,965 | 16,692 | 2,627 | 3,286 | ||||||||||||
Total operating expenses | 14,181 | 23,302 | 4,173 | 4,882 | ||||||||||||
Loss from operations | (23,985 | ) | (31,927 | ) | (6,493 | ) | (6,586 | ) | ||||||||
Other income (expense) | ||||||||||||||||
Interest expense | (7,837 | ) | (8,243 | ) | (1,342 | ) | (2,057 | ) | ||||||||
Gain (loss) on extinguishment of debt | (763 | ) | 232 | 157 | (53 | ) | ||||||||||
Gain on extinguishment of warrant liability | (918 | ) | 1,775 | - | - | |||||||||||
Gain (loss) from change in fair value of derivative warrant liability | 1,783 | 577 | 5,954 | 2,938 | ||||||||||||
Gain from change in fair value of 2017 Notes | (4,204 | ) | 3,895 | (574 | ) | 313 | ||||||||||
Loss on issuance of equity | (1,519 | ) | (2,523 | ) | - | (2,523 | ) | |||||||||
Other income | 215 | 20 | 9 | 6 | ||||||||||||
Total other expense | (13,243 | ) | (4,267 | ) | 4,204 | (1,376 | ) | |||||||||
Net loss | $ | (37,228 | ) | $ | (36,194 | ) | $ | (2,289 | ) | $ | (7,962 | ) | ||||
Net loss per share - basic and diluted | $ | (9.68 | ) | $ | (51.61 | ) | $ | (0.33 | ) | $ | (8.87 | ) | ||||
Weighted-average number of common shares | ||||||||||||||||
outstanding - basic and diluted | 3,847,421 | 701,252 | 6,840,316 | 897,723 | ||||||||||||
Condensed Consolidated Balance Sheet Information
(Unaudited, in thousands)
December 31, | |||||||
2016 | 2015 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 27,888 | $ | 17,031 | |||
Accounts receivable | 1,122 | 1,391 | |||||
Inventories | 3,458 | 3,487 | |||||
Prepaid expenses and other current assets | 850 | 731 | |||||
Total current assets | 33,318 | 22,640 | |||||
Property, plant and equipment, net | 75,592 | 76,777 | |||||
Deposits and other assets | 3,414 | 3,414 | |||||
Total assets | $ | 112,324 | $ | 102,831 | |||
Liabilities | |||||||
Current liabilities: | |||||||
Accounts payable, accrued liabilities and other current liabilities | $ | 6,193 | $ | 7,476 | |||
Current Portion of 2017 Notes recorded at fair value | 25,769 | - | |||||
Derivative warrant liability | 2,698 | 10,493 | |||||
Current portion of secured debt, net | - | 330 | |||||
Total current liabilities | 34,660 | 18,299 | |||||
Long-term portion secured debt, net | - | 153 | |||||
2017 notes recorded at fair value | - | 21,565 | |||||
2022 notes, net | 8,221 | 14,341 | |||||
Other long-term liabilities | 179 | 147 | |||||
Total liabilities | 43,060 | 54,505 | |||||
Total stockholders’ equity | 69,264 | 48,326 | |||||
Total liabilities and stockholders' equity | $ | 112,324 | $ | 102,831 | |||
Condensed Consolidated Cash Flow Information
(Unaudited, in thousands)
Three Months Ended | ||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Operating Activities | ||||||||||||||||
Net loss | $ | (37,228 | ) | $ | (36,194 | ) | $ | (2,290 | ) | $ | (7,962 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
(Gain) from the change in fair value of derivative warrant liability | (1,783 | ) | (577 | ) | (5,953 | ) | (2,938 | ) | ||||||||
Loss/(Gain) from the change in fair value of 2017 Notes | 4,204 | (3,895 | ) | 575 | (313 | ) | ||||||||||
Loss/(Gain) on exchange or conversion of debt | 763 | (232 | ) | (157 | ) | 53 | ||||||||||
Loss/(Gain) on extinguishment of warrant liability | 918 | (1,775 | ) | - | - | |||||||||||
Loss on issuance of equity | 1,519 | 2,523 | - | 2,523 | ||||||||||||
Stock-based compensation | 886 | 2,647 | 77 | 694 | ||||||||||||
Depreciation and amortization | 6,747 | 6,573 | 1,709 | 1,676 | ||||||||||||
Non-cash interest expense | 3,977 | 3,772 | 637 | 1,032 | ||||||||||||
Other non-cash expenses | (1 | ) | (7 | ) | (3 | ) | (7 | ) | ||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 269 | 970 | (43 | ) | (257 | ) | ||||||||||
Inventories | 29 | 805 | (255 | ) | (784 | ) | ||||||||||
Prepaid expenses and other current assets | (119 | ) | 1 | (6 | ) | (113 | ) | |||||||||
Accounts payable, accrued expenses, and long-term liabilities | (697 | ) | (2,771 | ) | 1,398 | (752 | ) | |||||||||
Net cash used in operating activities | $ | (20,516 | ) | $ | (28,160 | ) | $ | (4,311 | ) | $ | (7,148 | ) | ||||
Investing Activities | ||||||||||||||||
Acquisitions of property, plant and equipment | (5,938 | ) | (1,464 | ) | (418 | ) | (1,193 | ) | ||||||||
Restricted certificate of deposit | - | - | - | - | ||||||||||||
Proceeds from sales tax refund for property, plant and equipment | - | 144 | - | - | ||||||||||||
Net cash used in investing activities | (5,938 | ) | (1,320 | ) | (418 | ) | (1,193 | ) | ||||||||
Financing Activities | ||||||||||||||||
Payments on secured debt | (504 | ) | (318 | ) | - | (82 | ) | |||||||||
Debt and equity offering costs | (3,144 | ) | (3,519 | ) | 151 | (734 | ) | |||||||||
Proceeds from issuance of common stock upon exercise of stock options and employee stock purchase plan |
- | 3 | - | |||||||||||||
Proceeds from issuance of common stock and common stock warrants | 28,661 | 33,820 | - | 9,970 | ||||||||||||
Proceeds from issuance of convertible debt, net | - | - | - | |||||||||||||
Proceeds from the exercise of warrants | 12,298 | 10,166 | 1,403 | 15 | ||||||||||||
Net cash provided by financing activities | 37,311 | 40,152 | 1,554 | 9,169 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 10,857 | 10,672 | (3,175 | ) | 828 | |||||||||||
Cash and cash equivalents | ||||||||||||||||
Beginning of year | 17,031 | 6,359 | 31,063 | 16,203 | ||||||||||||
Ending of year | 27,888 | 17,031 | 27,888 | 17,031 |
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited, in thousands)
Year Ended | Three Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Gevo Development, LLC / Agri-Energy, LLC | ||||||||||||||||
Loss from operations | $ | (12,940 | ) | $ | (12,204 | ) | $ | (3,044 | ) | $ | (2,636 | ) | ||||
Depreciation and amortization | 6,009 | 5,717 | 1,557 | 1,429 | ||||||||||||
Non-cash stock-based compensation | 11 | 43 | - | 14 | ||||||||||||
Non-GAAP cash EBITDA loss | $ | (6,920 | ) | $ | (6,444 | ) | $ | (1,487 | ) | $ | (1,193 | ) | ||||
Gevo, Inc. | ||||||||||||||||
Loss from operations | $ | (11,045 | ) | $ | (19,723 | ) | $ | (3,449 | ) | $ | (3,950 | ) | ||||
Depreciation and amortization | 738 | 856 | 152 | 247 | ||||||||||||
Non-cash stock-based compensation | 875 | 2,604 | 77 | 680 | ||||||||||||
Non-GAAP cash EBITDA loss | $ | (9,432 | ) | $ | (16,263 | ) | $ | (3,220 | ) | $ | (3,023 | ) | ||||
Gevo Consolidated | ||||||||||||||||
Loss from operations | $ | (23,985 | ) | $ | (31,927 | ) | $ | (6,493 | ) | $ | (6,586 | ) | ||||
Depreciation and amortization | 6,747 | 6,573 | 1,709 | 1,676 | ||||||||||||
Non-cash stock-based compensation | 886 | 2,647 | 77 | 694 | ||||||||||||
Non-GAAP cash EBITDA loss | $ | (16,352 | ) | $ | (22,707 | ) | $ | (4,707 | ) | $ | (4,216 | ) | ||||
Non-GAAP Adjusted Net Loss: | ||||||||||||||||
Gevo Consolidated | ||||||||||||||||
Net Loss | $ | (37,228 | ) | $ | (36,194 | ) | $ | (2,289 | ) | $ | (7,962 | ) | ||||
(Loss)/Gain on exchange or conversion of debt | (763 | ) | 232 | 157 | (53 | ) | ||||||||||
(Loss)/Gain on extinguishment of warrant liability | (918 | ) | 1,775 | - | - | |||||||||||
(Loss)/Gain from change in fair value of the 2017 Notes |
(4,204 | ) | 3,895 | (574 | ) | 313 | ||||||||||
(Loss)/Gain from change in fair value of derivative warrant liability |
1,783 | 577 | 5,954 | 2,938 | ||||||||||||
Loss on issuance of equity | (1,519 | ) | (2,523 | ) | - | (2,523 | ) | |||||||||
Non-GAAP Net Loss | $ | (31,607 | ) | $ | (40,150 | ) | $ | (7,826 | ) | $ | (8,637 | ) | ||||
Weighted-average number of common shares outstanding - basic and diluted |
3,847,421 | 701,252 | 6,840,316 | 897,723 | ||||||||||||
Non-GAAP Adjusted Net loss per share - basic and diluted | $ | (8.22 | ) | $ | (57.25 | ) | $ | (1.14 | ) | $ | (9.62 | ) | ||||
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited, in thousands)
Year Ended | ||
December 31, 2017 | ||
Projected Non-GAAP Cash EBITDA Loss | Estimated Range | |
Gevo Consolidated | ||
Loss from operations | $ (24,000) - (28,000) | |
Depreciation and amortization | 5,500 - 7,000 | |
Non-cash stock-based compensation | 500 - 1,000 | |
Non-GAAP cash EBITDA loss | $ (18,000) - (20,000) | |
Media ContactDavid Rodewald The David James Agency, LLC +1 805-494-9508 gevo@davidjamesagency.com Investor ContactShawn M. Severson EnergyTech Investor, LLC +1 415-233-7094 gevo@energytechinvestor.com @ShawnEnergyTech www.energytechinvestor.com