Gevo releases financial results, provides update of operations
Gevo Inc. released financial results for the second quarter of 2012 on August 7. During a call to discuss those results, the company also provided participants with an update of operations at its first commercial-scale facility, which is located in Luverne, Minn.
“We are laser-focused on our startup at Luverne," said Patrick Gruber, Gevo CEO. “With the completion of our offerings last month, we have the funding in hand to complete the next phase of our strategy. That strategy builds on our successful startup at Luverne.”
This was a big quarter for us, Gruber said, noting that the Luvurne facility is in the midst of startup operations. Startups are always difficult, he continued, as there is a lot to learn about operating a new plant, as well as mechanical and technology issues that must be dealt with.
“What’s really important is operating discipline,” Gruber said, which is the actual knowhow to run the plant. He stressed that while the Luverne facility was once an ethanol plant, it is now a chemical plant. That means there are different procedures that must be followed.
Gevo’s goal is to become a reliable supplier of isobutnaol, he continued. That means that the plant’s operators must learn to deal with possible production problems now, during startup. Once the plant is supplying isobutanol to customers on a commercial basis, that supply must be reliable at all times.
In order to ensure operational reliability, Gruber said his company has set a goal to reach a 1 million gallon per month demonstrated run rate by the end of the year. While 1 million is the goal, an acceptable range for demonstrated run rate for that time period could range from 500,000 gallons to 1.2 million gallons. The 500,000 gallon threshold is important, he continued, because that is the level of production necessary to ensure the plant is able to run continuously, without starts and stops.
Regarding financial results, Gevo reported $7 million in revenue for the quarter, or roughly half of $14.7 million in revenue reported during the same period of 2011. The lower revenue level is due to the suspension of ethanol production in May 2012.
Research and development expenses decreased to $4.7 million during the quarter. During the second quarter of 2011 Gevo reported $5.3 million in research and development expenses.
Selling, general and administrative expenses for the quarter were $9.5 million. This is an increase over the $7.2 million reported for the second quarter of 2011. Gevo attributes the increase to ongoing litigation with Butamax, increased personnel and related expenses to support initial commercialization activities, and one-time severance expenses related to the departure of an executive vice president.
The net loss for the quarter was $16.2, up from the net loss of $12.5 million reported during the same period of 2011.