GEVO - Earnings call transcript Q4 2018

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Operator

Welcome to Gevo, Inc. Q4 2018 Earnings Conference Call. My name is Adrianne, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. this being note Please Instructions] conference recorded. is [Operator call Geoffrey T. will now to the turn I over Williams, and Jr., Counsel Secretary of Inc. Gevo, you Williams, may Geoffrey begin.

Geoffrey Williams

release simultaneous quarter issued is by to Towne, Officer. introducing available discuss outlines and conference joining of we participants the and to to from this on that I I is are Good to be release Bradford replay you With the webcast remind A website call a press public. Gevo's like XXXX us will a Earlier plan and is Chief company. fourth Officer, today like call Gevo's would our at today's of today. A today everyone, Accounting media call. Gruber, this would topics this copy available earnings we today, Gevo's start afternoon, the to on call press Chief the we that website. conference of Patrick thank open the Gevo's our listeners for Executive that www.gevo.com. providing

posted call today and non-GAAP as measures will is with on of certain substitute accordance today the our or in of GAAP. financial presented in financial isolation information the measures. measures financial in webcast, the contained which for, Non-GAAP considered discussions should financial hear most measures a these website. you to from, non-GAAP Reconciliation directly financial not on the be is GAAP distributed comparable press and On release

and contained SEC XX-Q. statements, are or and of XX, in expectations to which as in information, Gevo, will future with filed Gevo's and activities on about significant XXXX. limited XX, for such the those December remainder for only beliefs, or XXXX the on reliance result XX-K update be of projections not will obligations occurred, XXXX, Gevo about not information cautioned begin with other yet forward-looking Form on uncertainties, including of forward-looking assumptions, the will date subsequent to, disclosed a made call, forward-looking a beyond. not and current reports We discussion the XXXX, in reports the year These March on Such today's financial ended On quarterly any of management's statements. and and have also are operating Gevo's including, certain Gevo's events statements and speak forward-looking and developments. subject including that filing statements then statements based of circumstances make Pat are Form business forward-looking these SEC about whether but quarter today's Gevo's new Gevo's for by to disclaims with events otherwise. as to review place will Brad any undue Investors fourth results risks

the call the over up open we'll to now I'll presentation, the turn Pat. Following call questions. for

Patrick Gruber

Jeff. our today. from our position you, around. company all thank turned sheet is change balance We've of Thank And The a year ago. you for a joining quite us

become to a huge as real. markets greenhouse and the low have have to fuels potential growth plan for get gas solid We profitability we

difference million terms of capitalization sheet, The on company, balance approximately have in and course, Now, the hand of of of than debt. improved million $XX.X of our makes we of today, forward. $XX as less a cash going

products. make in and and Dry isooctane, and higher even profitability, IBA, B, decarbonization Shockwave fuel see maybe Said jet the differently, commercialization possible isooctane that of fairly spite market Luverne other plan the on margins and development carrying concurrently, burn for hefty startup the XX profitable Facility IBA, operation We and our it's the A, of Frac that improve related obtaining to have decarbonize technologies, are growth. which we of next in to the significant facility make plant decarbonize jet Between going in Luverne improve the future months, result we money that Luverne facility over the of to contracts of plant. get large improvements to feed can to while profitability profitability significantly designed the becoming fuel to, products a and drive the

Luverne contract. and is of Now, because is It and fill expansion a the and isooctane fall. volume. with take-or-pay contract our to for. debt planned is we This The represents of final be. It's fuel. Recall to between call upon us, on Haltermann of with what I'm what Carless. what us A, deal with million the we the our will just Avfuel, our B, Chief expectation to get financeable money signed our demand Carless strong capacity, long-term of for business. that us contract Commercial because can we growth a out depends up Cesarek, make so the sure track likes facility products be of already fast mix $XX to Haltermann It's that process not domino from is the call to for more to the additional product financeable get have our Officer, jet attractive and, up what deal, contracts we people which set commonly rest spoken It it's that a XX% Tim on The first significant significant plant part significant worth mixtures markets. about makes lenders. isooctane specialty

development we and about announced ours. a a be No It already to Renmatix wood scope. is have with need and done cooperation feedstock as process we breadth work. as projects. Now, our a developed like both our enables for technologies all new commercial broadens Renmatix. This

receiving We lot quite of interest. a are

the to finally include expand make them will jet idea isooctane agreement relationship Praj of in it. to fuel would most finalize the likely soon. with jet to The expect use license and We straw We India. rice fuel out and be

at projects commercial We'll facility. and what when announce are overall, These of do these six focused MOUs. happens the Now, of about they're jet Luverne in all have these projects we have independent two isobutanol, discussion, ready. on we whatever isooctane, already

with Haltermann, the domino fallen. Now, first has

expansion capacity on business. the that We are Luverne of contracts Facility, can getting growth-oriented the of covering a the working the profitable, so build rest additional large for we the

we make will projects a decarbonize jet see we Initially, to score to via eventually the but Luverne too. very it renewable our These isobutanol, with with the will capture to a of will you benefit isooctane us carbon natural and at involve gas. project low ethanol wind As California, Luverne. large work Facility, our footprint and index difference carbon in expect value

the forth I announcements the is Facility. we the to of development announcements, wind for as the development beyond plans Startup with Avfuel, see there. things, the So, regarding summarizing mentioned financeable the our six deal. what Praj Queensland. to six for expansion. lots the expect Facility. projects. including gas and with more of and completion our Facility interest margins on projects Announcement to with Frac Look commercial natural look reference of and in at regarding financing our Look of for improved announcements Luverne previously. the There's more offtake development commercial projects other regarding our milestones Dry our announcement had Expect Luverne Announcement details put for This events in Luverne progress projects. additional process contracts Brisbane and XXXX, projects of of commercial renewable

Of accessing good a of XXXX equity. it's debt should year and now be us. new different course, a terms game for us in for

better financial house We in have our order.

importantly, solid grow. issues and, obtain and in news global a politics favor are with the and macroeconomic have minds. gases warming and too. mainstream The political profitability We to working in plan in and our environments Greenhouse to are consumers'

these warming. We to fuel year to aren't work. will become trends looking Gevo. XXXX a technologies expect that to carbon low And we our They too be partners customers Gevo. for even to it, after get address and time. There and to Yet, one. for good proven these trends have It important over should many our as cause do business forward continue breakout works. to something global have I'm more been

financials. turn us through will Now, Bradford who take will I over call Bradford? the the to

Bradford Towne

increase and of and and million million declining quarter the feedstock our for with revenues fourth million in XXXX with in with in expenses is million $X.X XXXX of the investments in $X.X in in fourth The the in of for approximately the was facilities to due million you, our to XXXX the the same $X.X related products by quarter consulting sold the of compensation. period by during production in in located compared quarter versus of in Gevo XXXX Resources general expense facility of production revenue quarter a of development hydrocarbons. was million non-cash approximately $X.X expenses to $X.X a in and period the facility increased related goods Gevo's to South same at million the of million Pat. quarter fourth production primarily the ended we employee of to Thank quarter million revenue with XXXX, primarily Cost of Selling, million $X.X approximately Luverne, associated XXXX storage $X.X loss at lease elimination increase Hampton combined XXXX. of Gross decline period increased reported operating the Research for versus compared Minnesota Within XXXX Cost fourth the ethanol, production fourth in expansion of $X.X expense. of goods XXXX. effective expenses same stock-based administrative of for quarter in XXXX reported $ included result depreciation due fourth quarter as the total the the and January XXXX fourth expenses. volumes, sold coproduct due the X.X $X.X isobutanol XXXX. million primarily period fourth same during of facility XXXX. compared decrease $X.X during

important $X.X during It's to of and held hand improve to the approximately notes. obligations in balance progress compared XXXX debt notes a million of sheet. as during million of of the of year. cash $XX.X XXXX due million principal XXXX fourth loss for million, of non-cash of non-GAAP from and $X.X the from the GAAP for $X.X XXXX. loss same by compensation which back expense reported of $X.X XXXX, For compared Interest XXXX. $X.X a to was in loss, under of XXXX the on a Gevo XXXX cash adding conversion our to the in remember the This $X.X primarily principal XXXX. and million we our fourth depreciation with convertible EBITDA to At we fourth same same of decrease owed the our in fiscal the balance approximately calculated in decrease million XXXX, lower beginning quarter period XXXX was $XX.X significant quarter compared the due quarter million of a to a operations, XXXX, stock-based was In million $X.X on is result quarter million measure operations made as period outstanding

had only As company December cash $XX.X on of outstanding million XX, debt of hand XXXX, the with million $XX.X of remaining.

holds As of on XXXX, million $XX.X Gevo XX, today, hand. cash approximately March of

adjusted fourth loss a our net their quarter growing of loss net quarter for adjusted a in like the the share forward, in fourth $X.XX recognized of In non-cash balance of important non-GAAP compares a a quarter Having back per due all the a of net and million gain net $X.X quarter in non-cash $X.X these in in continued average of and of of loss fourth business of XXXX thank loss $X.XX. stronger or per to value to of Gevo on adjusted our This a XXXX share. share X,XXX,XXX non-GAAP reported of or XXXX, compares fourth Adding $X.X a a fourth warrants of net of loss or sheet $X.X resulted to derivatives. business. outstanding adjusted that, of of the non-GAAP or our instruments, of loss million a our per non-GAAP net loss such to million a a fair I gains support share For interest we of loss per and to our Gevo. the This financial as changes $X.X moving weighted of With based $X.XX. business quarter shares. is developing certain would XXXX in XXXX, $X.XX shareholders million million embedded the shares totaling

Let's open for Operator? up the call questions.

Operator

Thank our And you. first Dayal Amit [Operator comes question from from Instructions]. H.C. Wainwright.

is line open. Your

Amit Dayal

everyone. afternoon, Good you. Thank

Pat, reason balance financing the move some maybe, want capacity isooctane sort can this So, And clarify X buildout. external external of Is financing on you the why million sort relatively strong. are to buildout? some there looks waiting buildout, you support this particular of to of any sheet say, gallon forward sort you why

Patrick Gruber

that do can I financing soon. to we will to it contract it, make Yeah. don't think is It's that because to help good with contract this sure a have and money and take-or-pay get debt I anytime raise that

So…

Amit Dayal

this on other get working agreement to financing sort of you coming dependent like or through? is to trying be going HCS for this on Are already any

Patrick Gruber

debt We have the agreements on enough to already. work

Amit Dayal

Understood.

Patrick Gruber

March refinance And, buy agreement redo we to or or have plus, the or white that something. of box in XXXX

don't And reason to got sort money it the is so, I out in get stay make sure But, stuff. want to we on want later. spent we of to some we've rather – than I that yeah, engineering. well sooner front

the Our expense went fourth up in quarter.

So, the we We're And it's skid. call It did going on gallon this long the some market thought to we for as buildout was it, its what stuff of fact, money shouldn't in what very we making for especially some development we take skid, there's sure in engineering that. But coming. a sure out. will, build we these to enough plant timeline. is spend finish it specialty million and quantities development, do and Haltermann serving market the We about doesn't for markets, high-end the of want stuff. full get It Carless make product to impact. all it's enhance that

Amit Dayal

how like $XX about, million. below talking So, to get financing this do Like, you are need going? $X much we below how of sort much million,

Patrick Gruber

disclosed haven't We it yet.

a huge It's will. not We though. number,

Amit Dayal

Okay, understood. with Or your require certain you certain volumes HCS in deliver by along this? there's those is flexibility lines, And just – does around XXXX? this to following dates agreement

Patrick Gruber

build have We sell the it. big quantities around with new our need because them work I we can't recognize for They what and that don't real with I We them. regard. are that in flexibility we to of doing they we example, out – plant, its when is work – There's flexible have still the and plant, closely. more so

Amit Dayal

or moving think the ethanol And in XXXX, you things, of you're Understood. in ship how just of? do planning XX the the million – to to ethanol gallons will of comprise much shipping low-carbon side

Patrick Gruber

benefit not XXX% probably in carbon the see and That next of expect year, sure. I'm is think that wind I natural wind be I the we gas, probably the sure a to by low And implemented XXXX, our year a end renewable And but good from question. start – gas natural that's although it projects, would could then, that renewable XXXX. yet, early would for in the

add each right? It's recall how CI So, worth big quite those projects lot I of they score, And value. CI think CI a And we're unit the difference. well-funded do lower you about right a is works, a The for. California. that now $X.XXX in

that's so, a up straight margin And add.

XX financeable. each that And to or up here then the because about while projects own a so, it talking spend great. the we're thing be of do drop, possible, we're when least and leverage as of amount XX debt themselves CI would about our thinking money of and That's those score are we try kind

Amit Dayal

of low-carbon XX%, what ethanol ethanol to level low-carbon So, you're even sort be if of Like, a won't XXXX sales mix, will you like lot assume of – be XXXX? in able in deliver XX%? XXXX, there the will

Patrick Gruber

yet. for probably. that I have the – my quarter question have I'll probably it That's the I sheet year. first now, on the equity if of time a we're better in half balance a line I the don't I because could to want next drive know the to – spend

I And and because whole a have subprojects for are it money little equity we little much longer, us take to wiser makes it. I much otherwise bit I'd go more a that's raise it's about sense. It's to a less eventually. to going is a and how but bunch of think dilutive our bit subco-projects, or on debt decision use think of thinking

of we're out taking that's the advantage in trying So, money the can. way make really to dilutive least there sure we that we're

Amit Dayal

Understood.

Just in one for hydrocarbon me. last one to? sales they XXXX, The XQ who are

Patrick Gruber

It was but people, mixture of Haltermann. a

Amit Dayal

understood. Okay,

Patrick Gruber

year. I The gallons to the didn't other successfully a did thing I press have. it in we did, XXX,XXX we plant – We should Silsbee talked about in expand the put release, down

Amit Dayal

I release. Actually, Yes. it the read press in

Patrick Gruber

good. Oh,

Amit Dayal

Yeah, so with Thank other you offline. yeah, much. yeah. questions I'll follow-up my

Patrick Gruber

Yeah, sure.

Operator

I'll concludes for back our session. turn that the And over question-and-answer remarks. call final

Patrick Gruber

Cesarek pleased I to year as it'll with And home with contracts. first isooctane more I'm quite we breakout jet very a this think and contract. happens the to too expect It fall. – domino Tim be this Carless Haltermann year. interesting see us to is is be contracts do what – bring I

be it So, you us. I should a good think. year, Thank Bye. very for joining much

Operator

Thank Thank you, concludes This ladies participating. for and gentlemen. call. our conference you

now may disconnect. You

Geoffrey Williams, Jr.	General Counsel and Secretary
Patrick Gruber	Chief Executive Officer
Bradford Towne	Chief Accounting Officer
Amit Dayal	H.C. Wainwright & Co., LLC

Gevo (GEVO) 27 Mar 192018 Q4 Earnings call transcript