Cathie Wood is Even More Positive About Innovative Companies with Global Turmoil

 

Does the sudden increase in traditional energy prices indicate a need to retreat back to drilling and fracking, or is it a sign of the need for renewables? Cathie Wood, founder of Ark Invest said the sudden increase in oil’s price will further drive a switch to new technologies like electric cars (EVs). She believes the longer-term move is that, as she predicted, Ark Invest funds will see outsized returns as innovation prevails in the coming years.

 

Russia exports a third of all crude oil and is also a large exporter of natural gas, nickel, and wheat. The troublesome conflict in Ukraine has driven an increase in commodity prices, as the US and its allies consider whether they should implement a ban on oil from Russia.

 

On Sunday Cathie Wood was on CNBC’s “Capital Connection and expressed, “We’re going to be looking at a lot of demand destruction and substitution into innovation. Electric vehicles, as opposed to gas-powered vehicles, would be the biggest one.” Ark Invest’s flagship Ark Innovation exchange-traded fund (ARKK) has dropped more than 35% so far in 2022. Part of this fall-oof was Russia’s attack on Ukraine which caused investors to shun high-risk assets. Wood expects the conflict will further tech innovation, which is the mainstay of Ark Invest. The new set of challenges, she believes, are solved by many of the innovative companies that are represented in the ARK portfolios. Wood expects automation and EVs to counteract concerns like higher gas prices and labor shortages.

 

Cathie Wood admitted, “We’ve been in a terrible bear market for innovation.” She now sees a pattern developing similar to the early days of the pandemic, which resulted in gains for the Ark Innovation ETF that reached a high in early 2021. She reminded the CNBC interviewer, “… if you look from the bottom of the coronavirus to that peak in February of 2021, we were up 358%. Why? Because innovation solves problem.”

 

Ark’s funds have seen significant inflows since January 17, Ms. Wood believes investors are now averaging down, and as a strategy buying at lower levels. She said, “Given our expectations for growth in these new technologies, I think we’re going to see some spectacular returns.” The well-followed investor reminded that while public markets are pricing cutting-edge tech stocks lower, private markets have seen a 20% increase. She attributed this to the tendency of investors in public markets to be focused on benchmarks, which she called a massive misallocation of capital last month. Wood also dismissed the role of the tech giants in the S&P 500, saying, “Our technology stocks are going to be the future successes, and they will end up in the indexes.”

Paul Hoffman

 

Managing Editor, Channelchek

 

Suggested Reading

Michael Burry’s Public Investments in SPACs, Prisons, and Electric Hogs

Cathie Wood Thinks if There is No Blood in Your Street, You Should Move

Is the SEC conducting Unfounded Investigations on Elon Musk?

Seizing Assets of Wealthy and Powerful Russians to Help Weaken Resolve

 

Sources

https://www.cnbc.com/2022/03/07/cathie-wood-says-she-still-expects-to-see-spectacular-returns-over-the-next-5-years.html

 

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  Image: Jennifer Granholm, US DOE

The International Energy Agency Takes Steps to Put a Ceiling on Oil Prices

 

As a proactive step to prevent oil price increases from further dampening global economic growth and household budgets, the International Energy Agency (IEA) has agreed to a coordinated and strategic release of 60 million barrels of its oil stockpiles, according to its press release. Half of the 60 million barrels to be spread to various countries will come from the U.S. Strategic Petroleum Reserve, with the rest from Europe and Asia.

The U.S. portion of the petroleum release represents approximately 5% of the country’s reserves. It is the second time the U.S. has dipped into its petroleum stockpile during the year the Biden administration has occupied the White House.

 

About the IEA

The IEA is made up of 30
member countries. It was created during the oil crisis in 1974 to help coordinate a collective response to major disruptions in the supply of oil. Over the years, the agency has evolved, but petroleum remains a key aspect of its work. Additionally, the IEA has evolved and expanded significantly, taking an “all-fuels, all-technology” approach. Today the IEA recommends policies that enhance the reliability, affordability, and sustainability of energy. It looks at the full spectrum of issues, including renewables, oil, gas, and coal supply along with demand, energy efficiency, clean energy technologies, electricity systems and markets, access to energy, demand-side management, and others.

The IEA’s decision to tap oil reserves represents its first release since the Libyan civil war eleven years ago. Prior to that, the IEA released oil reserves during the 1991 Gulf War and the 2005 hurricane season that included Hurricane Rita and Katrina.

Market Reaction

Despite the additional supply soon to hit world markets, Brent and WTI crude oil is still surging and at over $100 per barrel the commodity has surpassed its highest price since 2014. Around the world, this increase in energy costs is adding to inflationary pressures.

 

 

Historical Meeting

The extraordinary IEA Governing Board meeting was chaired by U.S. Secretary of Energy Jennifer Granholm who is the current Chairman.

The meeting was openly partisan, showing solidarity with the people of Ukraine and their democratically elected government against Russia’s lack of recognition of Ukraine’s sovereignty and territories. According to the press release, the IEA Ministers noted with concern the energy security impacts of the egregious actions by Russia and voiced support for sanctions imposed by the international community in response.

What Else?

The IEA Ministers noted that Russia’s invasion comes against a backdrop of tight global oil markets, heightened price volatility, commercial inventories that are at their lowest level since 2014, and a limited ability of producers to provide additional supply in the short term.

IEA members hold emergency stockpiles of 1.5 billion barrels. The announcement of an initial release of 60 million barrels, or 4% of those stockpiles, is equivalent to 2 million barrels a day for 30 days. The coordinated drawdown is the fourth in the history of the IEA.

Russia is the world’s third-largest oil producer and the largest exporter. Its exports of about 5 million barrels a day of crude oil are roughly 12% of all global trade. Russia’s 2.85 million barrels a day of petroleum products are approximately 15% of global refined product commerce. An estimated 60% of Russia’s oil exports go to Europe and another 20% to China.

IEA Ministers also discussed Europe’s significant reliance on Russian natural gas and the need to look to other suppliers. On Thursday (March 3), the IEA Secretariat will release a 10-Point Plan for how European countries can reduce their reliance on Russia.

Paul Hoffman

Managing Editor, Channelchek

 

Suggested Reading

Russia/Ukraine War and Reliance on Crypto and Blockchain

Price Target Raised On Higher Oil Price Estimates (Research)

Trouble Ahead for Microchips, Energy, Food, Metals, and Transportation

Using Warren Buffett’s SEC Filing as an Oracle

 

Sources

https://www.iea.org/news/iea-member-countries-to-make-60-million-barrels-of-oil-available-following-russia-s-invasion-of-ukraine

https://www.iea.org/about/mission

https://rigcount.bakerhughes.com/

https://www.washingtonpost.com/business/energy/how-the-us-strategic-petroleum-reserve-works-quicktake/2022/02/28/c7e2c27a-98a5-11ec-9987-9dceee62a3f6_story.html

https://www.washingtonpost.com/business/energy/how-the-us-strategic-petroleum-reserve-works-quicktake/2022/02/28/c7e2c27a-98a5-11ec-9987-9dceee62a3f6_story.html

www.koyfin.com

 

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Tuesday, March 01, 2022

Indonesia Energy Corp (INDO)
Price Target Raised On Higher Oil Price Estimates

Indonesia Energy Corp Ltd is an oil and gas exploration and production company focused on Indonesia. It holds two oil and gas assets through its subsidiaries in Indonesia: one producing block (the Kruh Block) and one exploration block (the Citarum Block). The Kruh Block is located to the northwest of Pendopo, Pali, South Sumatra. The Citarum Block is located to the south of Jakarta.

Michael Heim, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are raising our twelve-month price target on the shares of INDO. The shares have been extremely strong as of late rising more than 600% since the beginning of the year. The increase comes after a private placement of convertible debt in January that may have removed a financing overhang on the stock. However, there have been only limited operational developments. The stock has a history of being very volatile due to its small trading volumes and we have downgraded the stock in the past when it crossed our price objective. The recent strength has forced us to relook at our rating and price target, an action we had planned to take next month after the company reported financial results.


Our price objective increase comes due to higher oil price assumptions.  Oil prices continue to soar rising from the mid sixties at the beginning of the year to a current level in the mid nineties. In response, we are raising our 2022 WTI oil price estimate, our 2023 estimate and our 2024 estimate. More importantly, we are raising our long-term oil …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Monday, February 28, 2022

Gevo (GEVO)
Another Quarterly Loss But Year of Progress

Gevo Inc is a renewable chemicals and biofuels company engaged in the development and commercialization of alternatives to petroleum-based products based on isobutanol produced from renewable feedstocks. Its operating segments are the Gevo segment and the Gevo Development/Agri-Energy segment. By its segments, it is involved in research and development activities related to the future production of isobutanol, including the development of its biocatalysts, the production and sale of biojet fuel, its Retrofit process and the next generation of chemicals and biofuels that will be based on its isobutanol technology. Gevo Development/Agri-Energy is the key revenue generating segment which involves the operation of the Luverne Facility and production of ethanol, isobutanol and related products.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

EBITDA losses continued in 4Q2021. Given the early stage of development of the renewable fuels concept, it isn’t surprising that EBITDA was negative $10.9 million due to limited revenue and continuing corporate/development costs. We expect negative EBITDA to continue into at least late next year. Gross losses of $4.3 million were slightly higher than $1.4 million last year due to operating expenses of $2.8 million, but total development and overhead costs dropped $4.4 million to $12.2 million.


Funding is visible into next year, but development goal of 1 BGPY by 2030 likely to require added capital.  Given 4Q2021 cash of $476 million and the scheduled financial closing of Net Zero One in 1Q2023, we don’t believe that added capital is required right now. Current cash creates a funding fairway into late 2022/early 2023, and we expect the recently refreshed $500 million ATM program will not …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Gevo Reports Fourth Quarter 2021 Financial Results

Research, News, and Market Data on Gevo

 

ENGLEWOOD, Colo., Feb. 24, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) today announced financial results for the fourth quarter of 2021 and summarized recent corporate highlights.

Recent Corporate Highlights

• On December 7, 2021, Kolmar Americas Inc and Gevo entered into a financeable fuel supply agreement for 45 million gallons per year of renewable, energy-dense liquid hydrocarbons.
• On November 16, 2021, Gevo signed a memorandum of understanding (MoU) with Sweetwater Energy, Inc., regarding the use of sustainably sourced agricultural residues and woody biomass as a feedstock for producing cellulosic alcohols and energy-dense renewable liquid hydrocarbons.
• On October 25, 2021, ADM, a global leader in nutrition and agricultural origination and processing, and Gevo signed a MoU to support the production of sustainable aviation fuel and other low carbon-footprint hydrocarbon fuels.
• On October 12, 2021, Gevo and Axens North America, Inc. (“Axens”) entered into an agreement that establishes a strategic alliance aimed at accelerating the commercialization of sustainable ethanol-to-jet projects in the United States.
• In December 2021, Argonne National Laboratory (“ANL”), a U.S. Department of Energy multidisciplinary science and engineering research center, reported the preliminary results of its life cycle analysis of Gevo’s planned Net-Zero plant to Gevo. ANL’s preliminary findings were consistent with Gevo’s findings that when renewable energy is used to power production processes, and the corn is produced with climate smart ag practices that drive the carbon intensity score of corn down, then the sustainable aviation fuel (“SAF”) that would be produced could achieve net-zero life-cycle emissions when measured using ANL’s GREET Model. When carbon capture sequestration technology is added as a de-carbonization tool, the life-cycle emissions should be negative according to the model. ANL is currently working through the scientific peer reviewed publication process.
• In January 2022, Gevo’s renewable natural gas (“RNG”) facilities in NW Iowa began to start-up operations. The start-up process is expected to take a few months and reach a steady state operation in the second quarter of 2022 which will allow time for Gevo to apply for credits under the federal Renewable Fuel Standard Program (“RFS”) and the Low Carbon Fuel Standard (“LCFS”) in California, including verification of carbon intensity levels and other requirements. Depending on the timing of the qualification and approval processes for obtaining credits under RFS and LCFS, Gevo expects to generate biogas revenues starting in the second quarter of 2022 and sales of credits under RFS and LCFS in the second half of 2022. Gevo expects that the RNG Project EBITDA¹ should generate approximately $16-22 million per year by 2023 depending on a variety of assumptions, including the value of credits under RFS and LCFS.   

2021 Fourth Quarter Financial Highlights

• Ended the quarter with cash, cash equivalents, restricted cash and marketable securities of $475.8 million compared to $522.4 as of the end Q3 2021
• Revenue of $0.1 million for the quarter compared to $0.5 million in Q4 2020
• Loss from operations of ($16.5) million for the quarter compared to ($7.6) million in Q4 2020
• Non-GAAP cash EBITDA loss² of ($10.9) million for the quarter compared to ($5.7) million in Q4 2020
• Net loss per share of ($0.08) for the quarter compared to ($0.15) in Q4 2020
• Non-GAAP adjusted net loss per share³ of ($0.08) for the quarter compared to ($0.07) in Q4 2020

Net-Zero 1 Update

Gevo continues to make progress on the design and engineering work related to its Net-Zero 1 Project. As a result of Gevo’s agreement and relationship with Axens, Gevo recently made the decision to utilize ethanol fermentation technology instead of isobutanol fermentation technology to produce SAF and other renewable hydrocarbon products at Net-Zero 1.

Gevo believes that there are several advantages of using ethanol fermentation technology at Net-Zero 1, including the following:

• Lower capital costs per gallon of hydrocarbon produced
• Increased production capacity of renewable hydrocarbons from 45MGPY to 60MGPY
• Process guarantees from Axens on the conversion of ethanol into SAF
• Lower technology and execution risk which are expected to make debt financing more readily available
• Leverages previous Net-Zero 1 engineering and design work from 2021
• The hydrocarbon plant design for Net-Zero 1 can be used at any ethanol plant that meets certain sustainability and carbon intensity score requirements which should enable Gevo to grow more rapidly to meet demand

Gevo currently expects to construct Net-Zero 1 in Lake Preston, South Dakota. In addition to Lake Preston, Gevo has identified several other attractive greenfield sites that are at least as attractive as Lake Preston from the standpoint of fundamental economics, access to sustainable feedstocks, deployment of renewable energy and transportation of finished product to market. Lake Preston is the furthest developed of the sites that Gevo has identified for Net-Zero 1. Gevo expects final site selection for Net-Zero 1 to occur later in 2022.

Gevo is targeting Net-Zero 1 to be mechanically complete in late 2024 and operational in 2025. Based on current assumptions, including those around future commodity pricing and future environmental benefit credit values, and preliminary engineering work, Gevo estimates Net-Zero 1 will have a fully installed and non-recourse project financed capital cost of approximately $900 million, to generate approximately $150-200 million of Net-Zero 1 Project EBITDA⁴ per year. Because Gevo can leverage a substantial amount of the work already done for Net-Zero 1, Gevo expects to order long lead equipment and begin site preparation in late 2022 with full construction commencing in 2023.

Commenting on the fourth quarter of 2021 and recent corporate developments, Dr. Patrick R. Gruber, Gevo’s Chief Executive Officer, said “It’s an exciting time to work for Gevo with plans moving forward on our first of its kind, fully-decarbonized alcohol-to-SAF plant that will produce commercial volumes of SAF. Our relationship with Axens is bearing fruit. Knowing how to convert ethanol into net-zero SAF and other hydrocarbons is key to our growth strategy, especially with the potential commercial relationships with ADM and other partners.”

Dr. Gruber continued, “Over the last twelve months, we’ve hired the leaders for our Net-Zero 1 Project. We are focused on engineering Net-Zero 1 so that we can get it built and operating.”

Fourth Quarter 2021 Financial Results

Revenue for the three months ended December 31, 2021 was $0.1 million compared with $0.5 million in the same period in 2020.

During the three months ended December 31, 2021, hydrocarbon revenue was nil compared to $0.4 million during the three months ended December 31, 2020. Gevo’s hydrocarbon revenue is comprised of sales of SAF and renewable premium gasoline.

During the three months ended December 31, 2021 and 2020, no significant revenue was derived at Gevo’s production facility in Luverne, Minnesota (the “Luverne Facility”) related to ethanol sales and related products.

As a result of COVID-19 and in response to an unfavorable commodity environment, Gevo terminated its production of ethanol and distiller grains in March 2020. As previously announced, the Luverne Facility is currently producing isobutanol that will be used as a feedstock for us to produce SAF and renewable premium gasoline to fulfill existing sales contracts. We also expect to utilize some of the isobutanol produced to develop certain isobutanol specialty markets. These renewable hydrocarbons will be produced at Gevo’s demonstration plant at the South Hampton Resources, Inc. facility in Silsbee, Texas (the “South Hampton Facility”).

Cost of goods sold was $2.8 million for the three months ended December 31, 2021, compared with $0.9 million in the same period in 2020. We began producing isobutanol during the third quarter 2021 resulting in higher production costs. The cost of goods sold was significantly higher for isobutanol without the coproduction of ethanol as operated in previous years as we worked to improve and refine our production processes. Cost of goods sold included costs associated with the production of isobutanol, SAF and isooctane as well as maintenance of the Luverne Facility and the South Hampton Facility.

Depreciation and amortization for the three months ended December 31, 2021 totaled approximately $1.1 million related to production costs. Depreciation and amortization for the three months ended December 31, 2021 totaled approximately $0.5 million related to research and development expense and sales, general and administrative expense.

Gross loss was ($3.8) million for the three months ended December 31, 2021, compared with a ($1.4) million gross loss in the same period in 2020.

Research and development expense increased by approximately $1.1 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020, due primarily to an increase in personnel and recruiting costs related to increased headcount and stock-based compensation as we work to improve our process for growing and fermenting yeast strains.

Selling, general and administrative expense increased by approximately $4.5 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020, due primarily to increases in personnel costs and recruiting related to increased headcount and stock-based compensation, increased professional fees, higher costs for insurance and increased consulting fees related to documenting our compliance with Section 404(b) of the Sarbanes-Oxley Act.

Preliminary stage project costs related to our RNG and Net-Zero projects were approximately $2.1 million during the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. During the three months ended December 31, 2021, the preliminary stage project costs were primarily related to consulting for preliminary engineering costs and for personnel expenses to support the growth in business activity at our Net-Zero projects. During the three months ended December 31, 2020, the preliminary stage project costs were primarily related to consulting for preliminary engineering costs and for personnel expenses to support the growth in business activity at our RNG project. During the three months ended December 31, 2021, we began capitalizing our Net-Zero 1 project costs after completing certain front-end engineering studies and determining it was probable that we would build the Net-Zero 1 project.

Loss from operations in the three months ended December 31, 2021 was ($16.5) million, compared with a ($7.6) million loss from operations in the same period in 2020.

Non-GAAP cash EBITDA loss⁵ in the three months ended December 31, 2021 was ($10.9) million, compared with a ($5.7) million non-GAAP cash EBITDA loss in the same period in 2020.

Interest expense decreased by $0.4 million in the three months ended December 31, 2021 as compared to the same period in 2020, due to the conversion of all Gevo’s 12% convertible senior secured notes due 2020/2021 to common stock during 2020.

Interest and dividend income during the three months ended December 31, 2021 increased $0.2 million compared to the three months ended December 31, 2020, primarily due to income received on marketable securities and restricted cash.

Gevo incurred a net loss for the three months ended December 31, 2021 of ($16.5) million, compared with a net loss of ($18.1) million during the same period in 2020. Non-GAAP adjusted net loss⁶ for the three months ended December 31, 2021 was ($16.5) million, compared with a non-GAAP adjusted net loss of ($8.1) million during the same period in 2020.

Cash, cash equivalents, restricted cash and marketable securities at December 31, 2021 totaled $475.8 million compared to $522.4 as of the end Q3 2021.

Webcast and Conference Call Information

Hosting today’s conference call at 4:30 p.m. EDT (2:30 p.m. MDT) will be Dr. Patrick R. Gruber, Chief Executive Officer, L. Lynn Smull, Chief Financial Officer, Heather Manuel, Vice President – Investor Relations & Communications and John Richardson, Investor Relations Manager. They will review Gevo’s financial results and provide an update on recent corporate highlights.

To participate in the conference call, please dial 1 (833) 729-4776 (inside the U.S.) or 1 (830) 213-7701 (outside the U.S.) and reference the access code 3465026# or through the event weblink https://edge.media-server.com/mmc/p/38zwqbqa.

A replay of the call and webcast will be available two hours after the conference call ends on February 24, 2022. To access the replay, please visit https://edge.media-server.com/mmc/p/38zwqbqa. The archived webcast will be available in the Investor Relations section of Gevo’s website at www.gevo.com.

About Gevo

Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel, and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full lifecycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their lifecycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented, technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low carbon products such as gasoline components, jet fuel, and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that Argonne National Laboratory GREET model is the best available standard of scientific based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

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, Gevo’s business development activities, Gevo’s agreement with Kolmar Americas Inc., Gevo’s Net-Zero Projects, Gevo’s RNG project, fermentation technologies, the status of the engineering and design work for the Net-Zero 1 Project, the timing of Net-Zero 1, projections concerning Net-Zero 1, including projected capital costs, projected internal rates of return and projected EBITDA, Gevo’s ability to the commercialize its projects, Gevo’s offtake agreements, Gevo’s plans to develop its business, Gevo’s ability to successfully construct and finance its operations and growth projects, Gevo’s ability to achieve cash flow from its planned projects, the ability of Gevo’s products to contribute to lower greenhouse gas emissions and other statements that are not purely statements of historical fact. These forward-looking statements are made based on the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2021 and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

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, non-GAAP adjusted net loss and non-GAAP adjusted net loss per share. Non-GAAP cash EBITDA loss excludes depreciation and amortization and non-cash stock-based compensation. Non-GAAP adjusted net loss and 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 supplement 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, Gevo believes these non-GAAP financial measures are useful to investors because they allow for greater transparency into the indicators used by management as a basis for its financial and operational decision making. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under GAAP when understanding Gevo’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided in the financial statement tables below.

¹ RNG Project EBITDA is a non-GAAP financial measure that we define as total operating revenues less total operating expenses for the project.
² Cash EBITDA loss is a non-GAAP measure calculated by adding back depreciation and amortization 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 Adjusted net loss per share is a non-GAAP measure 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, to GAAP net loss per share. A reconciliation of adjusted net loss per share to GAAP net loss per share is provided in the financial statement tables following this release.
⁴ Net-Zero 1 Project EBITDA is a non-GAAP financial measure that we define as total operating revenues less total operating expenses for the project.
⁵ Cash EBITDA loss is a non-GAAP measure calculated by adding back depreciation and amortization 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.
⁶ Adjusted net loss is a non-GAAP measure 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, to GAAP net loss. A reconciliation of adjusted net loss to GAAP net loss is provided in the financial statement tables following this release.

Gevo, Inc.
Condensed Consolidated Balance Sheets Information
(Unaudited, in thousands, except share and per share amounts)

Gevo, Inc.
Condensed Consolidated Statements of Operations Information
(Unaudited, in thousands, except share and per share amounts)

Gevo, Inc.
Condensed Consolidated Statements of Operations Information
(Unaudited, in thousands, except share and per share amounts)

Gevo, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, in thousands, except share and per share amounts)

Gevo, Inc.
Condensed Consolidated Statements of Stockholders’ Equity Information
(Unaudited, in thousands, except share amounts)

Gevo, Inc.
Condensed Consolidated Cash Flow Information
(Unaudited, in thousands)

Gevo, Inc.
Condensed Consolidated Cash Flow Information
(Unaudited, in thousands)

Gevo, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(Unaudited, in thousands, except share and per share amounts)

Investor and Media Contact
Heather Manuel
+1 720-418-0085
IR@gevo.com

Gevo Reports Fourth Quarter 2021 Financial Results

Research, News, and Market Data on Gevo

 

ENGLEWOOD, Colo., Feb. 24, 2022 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) today announced financial results for the fourth quarter of 2021 and summarized recent corporate highlights.

Recent Corporate Highlights

• On December 7, 2021, Kolmar Americas Inc and Gevo entered into a financeable fuel supply agreement for 45 million gallons per year of renewable, energy-dense liquid hydrocarbons.
• On November 16, 2021, Gevo signed a memorandum of understanding (MoU) with Sweetwater Energy, Inc., regarding the use of sustainably sourced agricultural residues and woody biomass as a feedstock for producing cellulosic alcohols and energy-dense renewable liquid hydrocarbons.
• On October 25, 2021, ADM, a global leader in nutrition and agricultural origination and processing, and Gevo signed a MoU to support the production of sustainable aviation fuel and other low carbon-footprint hydrocarbon fuels.
• On October 12, 2021, Gevo and Axens North America, Inc. (“Axens”) entered into an agreement that establishes a strategic alliance aimed at accelerating the commercialization of sustainable ethanol-to-jet projects in the United States.
• In December 2021, Argonne National Laboratory (“ANL”), a U.S. Department of Energy multidisciplinary science and engineering research center, reported the preliminary results of its life cycle analysis of Gevo’s planned Net-Zero plant to Gevo. ANL’s preliminary findings were consistent with Gevo’s findings that when renewable energy is used to power production processes, and the corn is produced with climate smart ag practices that drive the carbon intensity score of corn down, then the sustainable aviation fuel (“SAF”) that would be produced could achieve net-zero life-cycle emissions when measured using ANL’s GREET Model. When carbon capture sequestration technology is added as a de-carbonization tool, the life-cycle emissions should be negative according to the model. ANL is currently working through the scientific peer reviewed publication process.
• In January 2022, Gevo’s renewable natural gas (“RNG”) facilities in NW Iowa began to start-up operations. The start-up process is expected to take a few months and reach a steady state operation in the second quarter of 2022 which will allow time for Gevo to apply for credits under the federal Renewable Fuel Standard Program (“RFS”) and the Low Carbon Fuel Standard (“LCFS”) in California, including verification of carbon intensity levels and other requirements. Depending on the timing of the qualification and approval processes for obtaining credits under RFS and LCFS, Gevo expects to generate biogas revenues starting in the second quarter of 2022 and sales of credits under RFS and LCFS in the second half of 2022. Gevo expects that the RNG Project EBITDA¹ should generate approximately $16-22 million per year by 2023 depending on a variety of assumptions, including the value of credits under RFS and LCFS.   

2021 Fourth Quarter Financial Highlights

• Ended the quarter with cash, cash equivalents, restricted cash and marketable securities of $475.8 million compared to $522.4 as of the end Q3 2021
• Revenue of $0.1 million for the quarter compared to $0.5 million in Q4 2020
• Loss from operations of ($16.5) million for the quarter compared to ($7.6) million in Q4 2020
• Non-GAAP cash EBITDA loss² of ($10.9) million for the quarter compared to ($5.7) million in Q4 2020
• Net loss per share of ($0.08) for the quarter compared to ($0.15) in Q4 2020
• Non-GAAP adjusted net loss per share³ of ($0.08) for the quarter compared to ($0.07) in Q4 2020

Net-Zero 1 Update

Gevo continues to make progress on the design and engineering work related to its Net-Zero 1 Project. As a result of Gevo’s agreement and relationship with Axens, Gevo recently made the decision to utilize ethanol fermentation technology instead of isobutanol fermentation technology to produce SAF and other renewable hydrocarbon products at Net-Zero 1.

Gevo believes that there are several advantages of using ethanol fermentation technology at Net-Zero 1, including the following:

• Lower capital costs per gallon of hydrocarbon produced
• Increased production capacity of renewable hydrocarbons from 45MGPY to 60MGPY
• Process guarantees from Axens on the conversion of ethanol into SAF
• Lower technology and execution risk which are expected to make debt financing more readily available
• Leverages previous Net-Zero 1 engineering and design work from 2021
• The hydrocarbon plant design for Net-Zero 1 can be used at any ethanol plant that meets certain sustainability and carbon intensity score requirements which should enable Gevo to grow more rapidly to meet demand

Gevo currently expects to construct Net-Zero 1 in Lake Preston, South Dakota. In addition to Lake Preston, Gevo has identified several other attractive greenfield sites that are at least as attractive as Lake Preston from the standpoint of fundamental economics, access to sustainable feedstocks, deployment of renewable energy and transportation of finished product to market. Lake Preston is the furthest developed of the sites that Gevo has identified for Net-Zero 1. Gevo expects final site selection for Net-Zero 1 to occur later in 2022.

Gevo is targeting Net-Zero 1 to be mechanically complete in late 2024 and operational in 2025. Based on current assumptions, including those around future commodity pricing and future environmental benefit credit values, and preliminary engineering work, Gevo estimates Net-Zero 1 will have a fully installed and non-recourse project financed capital cost of approximately $900 million, to generate approximately $150-200 million of Net-Zero 1 Project EBITDA⁴ per year. Because Gevo can leverage a substantial amount of the work already done for Net-Zero 1, Gevo expects to order long lead equipment and begin site preparation in late 2022 with full construction commencing in 2023.

Commenting on the fourth quarter of 2021 and recent corporate developments, Dr. Patrick R. Gruber, Gevo’s Chief Executive Officer, said “It’s an exciting time to work for Gevo with plans moving forward on our first of its kind, fully-decarbonized alcohol-to-SAF plant that will produce commercial volumes of SAF. Our relationship with Axens is bearing fruit. Knowing how to convert ethanol into net-zero SAF and other hydrocarbons is key to our growth strategy, especially with the potential commercial relationships with ADM and other partners.”

Dr. Gruber continued, “Over the last twelve months, we’ve hired the leaders for our Net-Zero 1 Project. We are focused on engineering Net-Zero 1 so that we can get it built and operating.”

Fourth Quarter 2021 Financial Results

Revenue for the three months ended December 31, 2021 was $0.1 million compared with $0.5 million in the same period in 2020.

During the three months ended December 31, 2021, hydrocarbon revenue was nil compared to $0.4 million during the three months ended December 31, 2020. Gevo’s hydrocarbon revenue is comprised of sales of SAF and renewable premium gasoline.

During the three months ended December 31, 2021 and 2020, no significant revenue was derived at Gevo’s production facility in Luverne, Minnesota (the “Luverne Facility”) related to ethanol sales and related products.

As a result of COVID-19 and in response to an unfavorable commodity environment, Gevo terminated its production of ethanol and distiller grains in March 2020. As previously announced, the Luverne Facility is currently producing isobutanol that will be used as a feedstock for us to produce SAF and renewable premium gasoline to fulfill existing sales contracts. We also expect to utilize some of the isobutanol produced to develop certain isobutanol specialty markets. These renewable hydrocarbons will be produced at Gevo’s demonstration plant at the South Hampton Resources, Inc. facility in Silsbee, Texas (the “South Hampton Facility”).

Cost of goods sold was $2.8 million for the three months ended December 31, 2021, compared with $0.9 million in the same period in 2020. We began producing isobutanol during the third quarter 2021 resulting in higher production costs. The cost of goods sold was significantly higher for isobutanol without the coproduction of ethanol as operated in previous years as we worked to improve and refine our production processes. Cost of goods sold included costs associated with the production of isobutanol, SAF and isooctane as well as maintenance of the Luverne Facility and the South Hampton Facility.

Depreciation and amortization for the three months ended December 31, 2021 totaled approximately $1.1 million related to production costs. Depreciation and amortization for the three months ended December 31, 2021 totaled approximately $0.5 million related to research and development expense and sales, general and administrative expense.

Gross loss was ($3.8) million for the three months ended December 31, 2021, compared with a ($1.4) million gross loss in the same period in 2020.

Research and development expense increased by approximately $1.1 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020, due primarily to an increase in personnel and recruiting costs related to increased headcount and stock-based compensation as we work to improve our process for growing and fermenting yeast strains.

Selling, general and administrative expense increased by approximately $4.5 million during the three months ended December 31, 2021, compared with the three months ended December 31, 2020, due primarily to increases in personnel costs and recruiting related to increased headcount and stock-based compensation, increased professional fees, higher costs for insurance and increased consulting fees related to documenting our compliance with Section 404(b) of the Sarbanes-Oxley Act.

Preliminary stage project costs related to our RNG and Net-Zero projects were approximately $2.1 million during the three months ended December 31, 2021 compared to $1.0 million for the three months ended December 31, 2020. During the three months ended December 31, 2021, the preliminary stage project costs were primarily related to consulting for preliminary engineering costs and for personnel expenses to support the growth in business activity at our Net-Zero projects. During the three months ended December 31, 2020, the preliminary stage project costs were primarily related to consulting for preliminary engineering costs and for personnel expenses to support the growth in business activity at our RNG project. During the three months ended December 31, 2021, we began capitalizing our Net-Zero 1 project costs after completing certain front-end engineering studies and determining it was probable that we would build the Net-Zero 1 project.

Loss from operations in the three months ended December 31, 2021 was ($16.5) million, compared with a ($7.6) million loss from operations in the same period in 2020.

Non-GAAP cash EBITDA loss⁵ in the three months ended December 31, 2021 was ($10.9) million, compared with a ($5.7) million non-GAAP cash EBITDA loss in the same period in 2020.

Interest expense decreased by $0.4 million in the three months ended December 31, 2021 as compared to the same period in 2020, due to the conversion of all Gevo’s 12% convertible senior secured notes due 2020/2021 to common stock during 2020.

Interest and dividend income during the three months ended December 31, 2021 increased $0.2 million compared to the three months ended December 31, 2020, primarily due to income received on marketable securities and restricted cash.

Gevo incurred a net loss for the three months ended December 31, 2021 of ($16.5) million, compared with a net loss of ($18.1) million during the same period in 2020. Non-GAAP adjusted net loss⁶ for the three months ended December 31, 2021 was ($16.5) million, compared with a non-GAAP adjusted net loss of ($8.1) million during the same period in 2020.

Cash, cash equivalents, restricted cash and marketable securities at December 31, 2021 totaled $475.8 million compared to $522.4 as of the end Q3 2021.

Webcast and Conference Call Information

Hosting today’s conference call at 4:30 p.m. EDT (2:30 p.m. MDT) will be Dr. Patrick R. Gruber, Chief Executive Officer, L. Lynn Smull, Chief Financial Officer, Heather Manuel, Vice President – Investor Relations & Communications and John Richardson, Investor Relations Manager. They will review Gevo’s financial results and provide an update on recent corporate highlights.

To participate in the conference call, please dial 1 (833) 729-4776 (inside the U.S.) or 1 (830) 213-7701 (outside the U.S.) and reference the access code 3465026# or through the event weblink https://edge.media-server.com/mmc/p/38zwqbqa.

A replay of the call and webcast will be available two hours after the conference call ends on February 24, 2022. To access the replay, please visit https://edge.media-server.com/mmc/p/38zwqbqa. The archived webcast will be available in the Investor Relations section of Gevo’s website at www.gevo.com.

About Gevo

Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel, and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full lifecycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their lifecycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented, technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low carbon products such as gasoline components, jet fuel, and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that Argonne National Laboratory GREET model is the best available standard of scientific based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

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, Gevo’s business development activities, Gevo’s agreement with Kolmar Americas Inc., Gevo’s Net-Zero Projects, Gevo’s RNG project, fermentation technologies, the status of the engineering and design work for the Net-Zero 1 Project, the timing of Net-Zero 1, projections concerning Net-Zero 1, including projected capital costs, projected internal rates of return and projected EBITDA, Gevo’s ability to the commercialize its projects, Gevo’s offtake agreements, Gevo’s plans to develop its business, Gevo’s ability to successfully construct and finance its operations and growth projects, Gevo’s ability to achieve cash flow from its planned projects, the ability of Gevo’s products to contribute to lower greenhouse gas emissions and other statements that are not purely statements of historical fact. These forward-looking statements are made based on the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2021 and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

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, non-GAAP adjusted net loss and non-GAAP adjusted net loss per share. Non-GAAP cash EBITDA loss excludes depreciation and amortization and non-cash stock-based compensation. Non-GAAP adjusted net loss and 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 supplement 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, Gevo believes these non-GAAP financial measures are useful to investors because they allow for greater transparency into the indicators used by management as a basis for its financial and operational decision making. Non-GAAP information is not prepared under a comprehensive set of accounting rules and therefore, should only be read in conjunction with financial information reported under GAAP when understanding Gevo’s operating performance. A reconciliation between GAAP and non-GAAP financial information is provided in the financial statement tables below.

¹ RNG Project EBITDA is a non-GAAP financial measure that we define as total operating revenues less total operating expenses for the project.
² Cash EBITDA loss is a non-GAAP measure calculated by adding back depreciation and amortization 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 Adjusted net loss per share is a non-GAAP measure 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, to GAAP net loss per share. A reconciliation of adjusted net loss per share to GAAP net loss per share is provided in the financial statement tables following this release.
⁴ Net-Zero 1 Project EBITDA is a non-GAAP financial measure that we define as total operating revenues less total operating expenses for the project.
⁵ Cash EBITDA loss is a non-GAAP measure calculated by adding back depreciation and amortization 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.
⁶ Adjusted net loss is a non-GAAP measure 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, to GAAP net loss. A reconciliation of adjusted net loss to GAAP net loss is provided in the financial statement tables following this release.

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Investor and Media Contact
Heather Manuel
+1 720-418-0085
IR@gevo.com