Gevo suffers second-quarter revenue dip and net loss

Gevo has reported a 10% decrease in revenue to $8.1 million (€ 7.2m) for the second quarter of 2016, compared to $8.9 million the year before. The company’s net loss for the quarter was $21.5 million, compared with $14.4 million during the same period in 2015.

The company released its results on 9 August, 2016.

Although the company did not expand on the reasons why its net loss increased, in a conference call, Gevo’s chief financial officer Mike Willis said: “The decrease in revenue during 2016 is primarily result the production and sale of approximately $7.2 million of ethanol, isobutanol and distillers grains at the Luverne plant (isobutanol plant based in Minnesota) as compared to $8 million in the second quarter of 2015.

“This change was principally a result of lower ethanol production, ethanol prices, and the distiller's grains prices in the second quarter of 2016 versus the same period in 2015.”

During the second quarter of 2016, hydrocarbon revenues were $0.7 million, flat as compared to the same period in 2015. Gevo's hydrocarbon revenues were comprised of sales of jet fuel, isooctane and isooctene.

Gevo generated grant revenue of $0.2 million during the second quarter of 2016, also flat as compared to the same period in 2015.

Gevo's grant revenue is primarily generated through the work it is doing with the Northwest Advanced Renewables Alliance to produce isobutanol from cellulosic feedstocks, such as wood waste, which can then be converted into Gevo's alcohol to jet fuel.

Cost of goods sold was flat during the three months ended June 30, 2016, compared with the same quarter in 2015. Cost of goods sold included approximately $8.5 million associated with the production of ethanol, isobutanol and related products and approximately $1.5 million in depreciation expense.

Gross loss was $1.9 million for the three months ended June 30, 2016.

Research and development expense decreased by approximately $0.3 million during the three months ended June 30, 2016, compared with the same quarter in 2015, due primarily to a reduction in employee related expenses.

Alcohol to jet fuel

In June, two commercial flights used Gevo’s renewable alcohol to jet fuel. Gevo reiterated this announcement in its statement. It said the flights originated in Seattle and flew to San Francisco International Airport and Ronald Reagan Washington National Airport, respectively. The two Alaska Airlines flights utilized a 20% alcohol to jet fuel blend.

"The first half of 2016 has been a significant inflection point for Gevo. We have achieved a number of key milestones year-to date, including restarting isobutanol production at Luverne, demonstrating successful commercial airline flights using our fuel, signing a key distribution agreement with Musket targeting the specialty fuel markets, and strengthening our balance sheet to include $22.6 million in cash as of the end of the second quarter," said Patrick Gruber, Gevo's CEO.

He added: "I am pleased that all operations, including the distillation system, at our plant in Luverne are up and running and that the fermentations are going well. In fact, we are seeing up to 20,000 gallons of isobutanol per batch, and we remain on track to achieve our cost targets. 

“While the technologies are working, we still need to continue the plant optimisation learning curve, turning our attention to shortening batch cycle times and, given the importance of jet and isooctane, tailoring specific grades for those applications, particularly as it relates to the design of a large scale hydrocarbon plant.

"On the market and sales front we have made good progress.  Conducting commercial airline flights using our alcohol to jet fuel was a tremendous milestone. While all the testing had previously been completed during the six years of work with ASTM International, flying actual flights with our jet fuel demonstrates to people that this really can be done commercially. 

“We are grateful to Alaska Airlines for being a good partner and we continue to have positive conversations with several potential customers in the aviation industry.  We also made further progress in the development of the gasoline blendstock markets.  We are extremely pleased to have a national player such as Musket as a partner, and it is good to see they are already distributing isobutanol-blended fuel into their customer network.”

This story was written by Liz Gyekye, editor of Biofuels International