Gevo(GEVO) - 2019 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Presents unaudited consolidated financial statements for Q3 2019, reflecting a net loss of $21.8 million and reliance on external financing Consolidated Balance Sheets Total assets decreased to $95.5 million by Q3 2019, driven by reduced cash, while equity also declined Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 (unaudited) | Dec 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $20,944 | $33,734 | | Total current assets | $25,842 | $38,710 | | Total assets | $95,468 | $107,035 | | Liabilities & Equity | | | | Total current liabilities | $18,098 | $5,290 | | Total liabilities | $18,548 | $18,248 | | Total stockholders' equity | $76,920 | $88,787 | | Total liabilities and stockholders' equity | $95,468 | $107,035 | Consolidated Statements of Operations Q3 2019 revenues decreased to $6.1 million, resulting in a gross loss of $3.8 million and a widened net loss of $8.6 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,110 | $8,575 | $17,599 | $26,238 | | Gross Loss | $(3,783) | $(2,053) | $(9,707) | $(5,666) | | Loss from Operations | $(8,003) | $(6,108) | $(20,124) | $(15,486) | | Net Loss | $(8,619) | $(6,880) | $(21,845) | $(20,874) | | Net Loss Per Share | $(0.66) | $(0.85) | $(1.87) | $(5.75) | Consolidated Statements of Cash Flows Net cash used in operations increased to $14.8 million, with investing activities using $7.3 million, leading to a $12.8 million cash decrease Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,798) | $(10,154) | | Net cash used in investing activities | $(7,260) | $(933) | | Net cash provided by financing activities | $9,268 | $37,850 | | Net (decrease) increase in cash | $(12,790) | $26,763 | Notes to Consolidated Financial Statements Details accounting policies, ongoing net losses, $451.2 million accumulated deficit, and dependence on capital, with 2020 Notes maturing soon - Gevo is a low-carbon fuel company focused on commercializing renewable biofuel alternatives like jet fuel and gasoline, converting renewable isobutanol into various hydrocarbon products[27][28] - The company incurred a net loss of $21.8 million for the nine months ended September 30, 2019, and had an accumulated deficit of $451.2 million, with continued operations dependent on raising additional capital[30] - The company's 12% convertible senior secured notes (2020 Notes), with an outstanding principal of $13.9 million, mature on March 15, 2020, and the company is actively working on refinancing this debt[30][91][92] - The company operates through two segments: the Gevo segment (R&D, bio jet fuel sales) and the Gevo Development/Agri-Energy segment (Luverne Facility for ethanol and isobutanol production)[128][129][131] Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses significant revenue decrease due to reduced ethanol production, a $21.8 million net loss, and critical need for additional capital Results of Operations Total revenues fell by $8.6 million to $17.6 million for nine months, primarily from reduced ethanol sales, leading to a higher gross loss Comparison of Three Months Ended September 30 (in thousands) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $6,110 | $8,575 | $(2,465) | | Gross Loss | $(3,783) | $(2,053) | $(1,730) | | Loss from Operations | $(8,003) | $(6,108) | $(1,895) | | Net Loss | $(8,619) | $(6,880) | $(1,739) | - The decrease in Q3 revenue was primarily due to reduced production of ethanol and distiller grains (3.4 million gallons sold vs. 5.1 million in Q3 2018) due to an unfavorable commodity environment[147] Comparison of Nine Months Ended September 30 (in thousands) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $17,599 | $26,238 | $(8,639) | | Gross Loss | $(9,707) | $(5,666) | $(4,041) | | Loss from Operations | $(20,124) | $(15,486) | $(4,638) | | Net Loss | $(21,845) | $(20,874) | $(971) | - For the nine-month period, ethanol sales decreased as the company sold 10.2 million gallons compared to 14.9 million gallons in the prior-year period, due to unfavorable commodity conditions[154] Liquidity and Capital Resources Company had $20.9 million cash and $451.2 million accumulated deficit, requiring additional capital to fund operations and repay 2020 Notes - The company's operations are dependent on raising additional capital, having incurred losses since inception and expecting continued losses through at least 2020[170][171] - The company's 2020 Notes, with an outstanding principal of $13.9 million, mature on March 15, 2020, creating a near-term liquidity need[172][182][183] - During the nine months ended September 30, 2019, the company raised approximately $9.3 million from financing activities, primarily through its "at-the-market" offering program, issuing 3,244,941 shares for gross proceeds of $9.9 million[179][180] - Investing activities included a $1.5 million investment in Juhl Clean Energy Assets, Inc. for a wind energy project near the Luverne Facility and $5.8 million in capital expenditures[178] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, disclosure under this item is not required - Disclosure under this item is not required[188] Controls and Procedures Disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[190] - No material changes to the company's internal control over financial reporting were identified during the quarter ended September 30, 2019[191] PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any material litigation or aware of any pending or threatened litigation - The company is not presently a party to any litigation that it believes to be material[194] Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K have occurred - There have been no material changes in the company's risk factors from those disclosed in the Annual Report on Form 10-K[195] Unregistered Sales of Equity Securities and Use of Proceeds Discloses repurchase of 79,790 shares in August 2019 at $2.46 per share to cover employee tax obligations from restricted stock vesting Issuer Purchases of Equity Securities (Q3 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2019 | — | $— | | August 2019 | 79,790 | $2.46 | | September 2019 | — | $— | | Total | 79,790 | $2.46 | - The share purchases were part of a "withhold to cover" program to settle employee tax obligations from the vesting of restricted stock awards[197] Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None[198] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[199] Other Information The company did not report any other information under this item - None[200] Exhibits Lists all exhibits filed with the 10-Q report, including corporate governance documents, material contracts, and officer certifications - A list of exhibits filed with the report is provided, including corporate governance documents, material contracts, and officer certifications[201][202][204]