Gevo looks to acquire two additional plant sites

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Wednesday, August 12, 2020

Gevo CEO Patrick Gruber indicated on Aug. 10 that duress caused by the COVID-19 pandemic may offer an opportunity for the company to acquire additional ethanol plant sites needed to meet expected demand for its renewable hydrocarbon products.

Gruber discussed the issue during a second quarter earnings call held Aug. 10.

Gruber opened the call by noting Gevo continues to produce and sell hydrocarbon products from its facility in Texas. Interest in the company’s renewable hydrocarbon products remains strong, he said, noting that the company soon expects to secure some of its biggest contracts ever.

“We believe that the size of these contracts collectively should enable us to change our business model to that of a…project developer, a technology licensor, and a plant operator,” Gruber said. “To fulfill demand from these contracts, we expect that we will need three plant sites.” That would be two additional plants in addition to the current facility in Luverne, Minnesota. “In fact, we have two additional sites under [letters of intent (LOI)] and are developing more options,” Gruber continued. “As it turns out, it’s a good time for acquiring ethanol plants, given the duress they are under with COVID.”

According to Gruber, Gevo plans to set up a special purpose entity whereby each plant build out is a project, and other people invest the capital in that project while Gevo would retain a minority ownership interest. He said the company’s working with Citigroup on that project-based approach to raise the debt and equity needed to build the plants. “We’re getting good time and attention from prospective investors,” Gruber said.

Gevo idled its Luverne facility in March due to impacts caused by the COVID-19 pandemic. Gruber did not provide an update of the facility’s operations during the Aug. 10 earnings call. Earlier this year, however, he indicated the facility is expected to remain idle for the remainder of the year.

Gevo reported revenue of $1 million for the second quarter of 2020, down from $5.1 million during the same period of last year. Hydrocarbon revenue for the quarter was $900,000, compared to $100,000 during the second quarter of 2019.

Gross loss was $1.7 million for the second quarter, compared to $3.4 million gross loss for the same period of last year. Net loss was $6 million, compared to a net loss of $7.1 million during the same period of 2019. Non-GAAP adjusted net loss for the second quarter was $5.8 million, compared to a non-GAAP adjusted net loss of $7.2 million during the same period of 2019.