Gevo(GEVO) - 2025 Q2 - Quarterly Results

Executive Summary & Q2 2025 Highlights Q2 2025 Financial Milestones Gevo achieved positive net income and adjusted EBITDA in Q2 2025, marking a significant improvement in financial performance and exceeding targets - The company achieved positive net income and positive adjusted EBITDA in Q2 2025, reaching its targets ahead of schedule[2][12] Key Financial Metrics for Q2 2025 | Metric | Amount (Million USD) | | :----------------------------------- | :---------- | | Net Income Attributable to Gevo | $2.1 | | Adjusted EBITDA | $17 | | Revenue QoQ Growth | $14 | | EPS Attributable to Gevo | $0.01 | | Net Income Attributable to Gevo YoY Growth (Six Months) | $20 | | Adjusted EBITDA YoY Growth (Six Months) | $32 | Key Growth Drivers & New Revenue Streams Performance growth is primarily driven by successful low-carbon ethanol and carbon capture operations, alongside the launch of Clean Fuel Production Credits (CFPC) and Carbon Dioxide Removal (CDR) credit sales, which significantly contribute to new revenue streams - Performance growth is driven by the successful execution of low-carbon ethanol and carbon capture acquisitions, and the initial sales of Clean Fuel Production Credits (CFPC)[5] - Carbon Dioxide Removal (CDR) credit sales have commenced, adding new co-products and revenue streams, projected to grow to $3-5 million by year-end and potentially exceeding $30 million per year in long-term sales[6] - Clean Fuel Production Credits (CFPC) sales have begun, contributing approximately $21 million combined to net income and adjusted EBITDA for the six months ended June 30, 2025[8] Strategic Initiatives & Management Outlook Management highlights this quarter as a milestone, achieving real cash flow growth and laying the groundwork for future Sustainable Aviation Fuel (SAF) production expansion, while creating value through carbon credit sales and efficient operations - CEO Dr. Patrick Gruber stated this quarter is a milestone, with the company achieving its goals and generating real cash flow, laying the foundation for SAF production growth[12] - CFO Leke Agiri commented that the company achieved positive net income and positive adjusted EBITDA, a significant financial milestone reflecting the real value created by GevoND and GevoRNG business units and CFPC monetization[15] - The company is committed to achieving rural economic growth, increased protein and feed production, and enhanced farmer profits through carbon reduction and cost-competitive renewable liquid fuels[14] Operational Review Carbon Dioxide Removal (CDR) Credits Gevo has initiated CDR credit sales, leveraging its bio-sourced CO2 removal capabilities from Carbon Capture and Sequestration (CCS) assets, opening new global revenue streams, and plans to expand its CCS sites by introducing third-party CO2 volumes - CDR credit sales have commenced, adding new co-products and revenue streams for the company[6] - CDR credit sales are projected to grow to $3-5 million by the end of 2025, with long-term sales potentially exceeding $30 million per year[6] - Over $1 million in CDR credits were sold in Q2, and growth options are being explored to expand CCS sites by introducing third-party CO2 volumes[8] Clean Fuel Production Credits (CFPC) CFPC sales, derived from low-carbon ethanol with CCS and Renewable Natural Gas (RNG) production, contributed approximately $21 million to revenue and adjusted EBITDA in H1 2025, expected to exceed $10 million quarterly, supporting GevoND optimization and SAF project development - CFPC sales contributed approximately $21 million combined to net income and adjusted EBITDA for the six months ended June 30, 2025[8] - This credit is expected to exceed $10 million per quarter through the end of 2029, unless legislation is further extended[8] - Cash proceeds from CFPC sales will be reinvested in GevoND site improvements and fund upfront construction development costs for SAF projects[8] - The company has initially sold $22 million of generated credits to a bank and expects to sell its full capacity annually, with market demand for similar investment and production tax credits estimated at approximately $30 billion[16] Low-Carbon Ethanol & Co-products Operations (GevoND) GevoND's low-carbon ethanol and co-products business significantly contributed to operating income and adjusted EBITDA in H1 2025, boasting an industry-leading carbon intensity score and producing cellulosic D3 RIN-eligible corn fiber ethanol - Low-carbon ethanol and co-products operations contributed approximately $18 million to operating income and $7 million to adjusted EBITDA (totaling $26 million including CFPC sales) for the six months ended June 30, 2025 (excluding January)[8] - 28 million gallons of low-carbon ethanol, 93,000 tons of feed, and 8 million pounds of distiller's corn oil co-products were produced[8] - The company's on-site CCS provides an industry-leading carbon intensity score for low-carbon ethanol, giving it an advantage in the LCFS market[8] - Approximately 2 million gallons of corn fiber ethanol are produced annually, qualifying for cellulosic D3 RINs with near-zero carbon intensity[8] Renewable Natural Gas (RNG) Operations (GevoRNG) GevoRNG operations positively contributed to operating income and adjusted EBITDA in H1 2025, and subsequently released approximately $30 million in restricted cash through refinancing after Q2 - GevoRNG contributed approximately $2 million to operating income and $3 million to adjusted EBITDA (totaling $5 million including CFPC sales) for the six months ended June 30, 2025[8] - Approximately 172 thousand MMBtu of renewable natural gas were produced[8] - Post-Q2, GevoRNG's refinancing released approximately $30 million in restricted cash from the balance sheet[9] Other Recent Transactions Gevo has entered into an agreement to sell its subsidiary Agri-Energy, LLC for $7 million, with the transaction expected to close by the end of 2025 - The company has entered into a definitive agreement to sell its subsidiary Agri-Energy, LLC to A.E. Innovation, LLC for $7 million[7] - The transaction includes Agri's 18 million gallon per year ethanol production facility located in Luverne, Minnesota[7] - The transaction is expected to close by the end of 2025, subject to A.E. securing financing and other customary closing conditions[7] Renewable Jet Fuel Platform & Long-Term Strategy Market Opportunity & Plant Designs Gevo is strategically positioning itself with standardized plant designs (ATJ-30 and ATJ-60) to meet the projected demand for over 2 billion gallons of jet fuel growth in the US over the next decade, planning to deploy dozens of ATJ SAF facilities - According to the U.S. Energy Information Administration (EIA), U.S. jet fuel consumption is projected to grow by over 2 billion gallons annually over the next decade[13] - To meet growing jet fuel demand, dozens of ATJ SAF facilities will need to be deployed in the U.S. alone over the next decade, utilizing 3.5 billion gallons of ethanol to produce over 2 billion gallons of cost-competitive domestic jet fuel[13] - The company has developed standardized plant designs, including ATJ-30 and ATJ-60, for converting low-carbon ethanol into SAF[13] - GevoND is considered a potential site for ATJ-30, while the ATJ-60 facility is in communication with the Department of Energy Loan Programs Office regarding a $1.63 billion loan guarantee[13] Growth Strategy & Intellectual Property Gevo's long-term growth strategy involves developing its SAF platform and proprietary systems through various models (build-own-operate, joint ventures, or licensing), supported by an extensive intellectual property portfolio around its SAF platform, Ethanol-to-Olefins (ETO) technology, and Verity carbon tracking software - The company anticipates further growth by developing its SAF platform and proprietary systems through various models such as build-own-operate, joint ventures, or licensing[13] - Given the 180 existing brownfield ethanol production sites in the U.S. and other greenfield locations domestically and internationally, the company recognizes significant market opportunities for its plant designs, systems, and technologies[13] - The company has developed an extensive intellectual property portfolio around its SAF platform, Ethanol-to-Olefins (ETO) technology, and Verity carbon tracking software, including over 300 patents[13] Financial Performance Analysis Summary of Q2 2025 Financial Results Gevo achieved strong financial performance in Q2 2025, with positive operating income and adjusted EBITDA, primarily driven by revenue growth and improved cost efficiency Key Financial Data for Q2 2025 | Metric | Amount (Million USD) | | :----------------------------------- | :-------------- | | Cash, Cash Equivalents, and Restricted Cash (End of Period) | $126.9 | | Consolidated Operating, Interest, and Investment Income | $44.7 | | Operating Income | $5.8 | | Non-GAAP Adjusted EBITDA | $17.3 | | GevoND Operating Income | $17.1 | | GevoND Non-GAAP Adjusted EBITDA | $24.2 | | GevoRNG Operating Income | $1.5 | | GevoRNG Non-GAAP Adjusted EBITDA | $2.6 | | Net Income Per Share | $0.01 | Detailed Income Statement Analysis (QoQ Changes) In Q2 2025, the company saw a significant increase in operating income and a substantial reduction in operating loss, primarily due to the GevoND acquisition and the positive impact of 45Z tax credits on production costs Q2 2025 Operating Income Change (YoY) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | Change (Thousand USD) | Change (%) | | :------------------- | :--------------------- | :--------------------- | :-------------------- | :--------- | | Total Operating Income | $43,413 | $5,260 | $38,153 | 725.3% | | Primary Drivers: | | | | | | GevoND Revenue | $37,200 | N/A | N/A | N/A | | Isobutanol and Other Sales | $900 | N/A | N/A | N/A | Q2 2025 Production Cost Change (YoY) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | Change (Thousand USD) | | :-------------------- | :--------------------- | :--------------------- | :-------------------- | | Cost of Production | $17,265 | $3,423 | $13,842 | | Partially Offset By: | | | | | 45Z Tax Credit | ($20,800) | N/A | N/A | - Depreciation and amortization expenses increased by $2.9 million, primarily due to a $4.8 million increase from GevoND depreciation, partially offset by a $2.5 million decrease in depreciation of Luverne facility assets[19] - Research and development expenses decreased by $0.7 million, primarily due to reduced consulting fees[20] - General and administrative expenses decreased by $0.7 million, primarily due to a $1.9 million reduction in stock-based compensation, partially offset by a $1.2 million increase in insurance, professional consulting services, and computer software costs[20][21] - Project development costs decreased by $6.9 million, primarily due to a $3.3 million reduction in consulting and professional services fees, and a $3.5 million reimbursement from a USDA project received in Q2[22] - Operating income (loss) improved by $29.8 million, primarily driven by increased GevoND revenue, lower production costs due to 45Z tax credits, reduced project development expenses, and decreased general and administrative expenses[23] - Interest expense increased by $3.2 million, primarily due to debt incurred for the GevoND acquisition and higher interest rates on remarketed RNG bonds[24] - Interest and investment income decreased by $2.8 million, primarily due to a reduction in cash equivalent investment balances resulting from the GevoND acquisition and funding for capital projects and operating costs[25] Balance Sheet Highlights As of June 30, 2025, Gevo's total assets significantly increased, primarily driven by acquisition activities, while liabilities also rose due to new loans Consolidated Balance Sheet Key Data | Metric | June 30, 2025 (Thousand USD) | Dec 31, 2024 (Thousand USD) | Change (Thousand USD) | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | $702,117 | $583,941 | $118,176 | | Cash and Cash Equivalents | $57,257 | $189,389 | ($132,132) | | Restricted Cash | $69,644 | $1,489 | $68,155 | | Property, Plant, and Equipment, Net | $344,914 | $221,642 | $123,272 | | Intangible Assets, Net | $70,327 | $8,129 | $62,198 | | Goodwill | $43,558 | $3,740 | $39,818 | | Total Liabilities | $222,349 | $94,453 | $127,896 | | Loans Payable | $99,966 | $0 | $99,966 | Cash Flow Statement Highlights For the six months ended June 30, 2025, Gevo's operating and investing activities resulted in net cash outflows, primarily due to the Red Trail Energy acquisition, partially offset by significant loan proceeds from financing activities Consolidated Cash Flow Statement Key Data | Metric | Six Months Ended June 30, 2025 (Thousand USD) | Six Months Ended June 30, 2024 (Thousand USD) | | :---------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net Cash Outflow from Operating Activities | $(26,570) | $(27,520) | | Net Cash Outflow from Investing Activities | $(209,538) | $(26,708) | | Acquisition of Red Trail Energy | $(198,461) | N/A | | Net Cash Inflow (Outflow) from Financing Activities | $103,976 | $(6,049) | | Loan Proceeds | $105,000 | N/A | | Net Decrease in Cash and Cash Equivalents | $(132,132) | $(60,277) | | Cash, Cash Equivalents, and Restricted Cash (End of Period) | $126,901 | $315,320 | Non-GAAP Financial Measures (Adjusted EBITDA) Gevo achieved positive consolidated adjusted EBITDA in Q2 2025 and for the six months ended June 30, 2025, a significant improvement from the prior year, with GevoND being the primary contributor Consolidated Adjusted EBITDA (Non-GAAP) | Metric | Q2 2025 (Thousand USD) | Q2 2024 (Thousand USD) | Six Months Ended June 30, 2025 (Thousand USD) | Six Months Ended June 30, 2024 (Thousand USD) | | :-------------------------------- | :--------------------- | :--------------------- | :--------------------------- | :--------------------------- | | Non-GAAP Adjusted EBITDA (Loss) | $17,333 | $(15,286) | $1,982 | $(29,743) | Q2 2025 Adjusted EBITDA by Segment | Segment | Adjusted EBITDA (Thousand USD) | | :-------- | :----------------------------- | | GevoND | $24,224 | | GevoRNG | $2,583 | | Gevo | $(9,098) | | GevoFuels | $(376) | Adjusted EBITDA by Segment for Six Months Ended June 30, 2025 | Segment | Adjusted EBITDA (Thousand USD) | | :-------- | :----------------------------- | | GevoND | $26,064 | | GevoRNG | $5,306 | | Gevo | $(28,288) | | GevoFuels | $(1,100) | Company Overview & Additional Information About Gevo Gevo is a next-generation diversified energy company dedicated to providing cost-effective renewable fuels and chemicals to ensure U.S. energy security, reduce carbon emissions, and foster economic growth in rural communities - Gevo is a next-generation diversified energy company committed to providing cost-effective, alternative fuels to promote energy security, reduce carbon emissions, and strengthen rural community economic growth[29] - The company's innovative technologies can be used to produce SAF, automotive fuels, chemicals, and other U.S.-made solutions[29] - Gevo owns and operates one of the largest dairy RNG facilities in the U.S., an ethanol plant with an adjacent CCS facility, and the world's first specialty ATJ fuel and chemical production facility[29] - Through its Verity subsidiary, Gevo provides transparency, accountability, and efficiency in attribute tracking, measurement, and verification across the entire supply chain[29] Forward-Looking Statements This press release contains forward-looking statements regarding future CDR sales, CFPC generation, jet fuel market growth, ATJ-60 project financing, and timing, which are based on management's current beliefs and expectations but are subject to significant risks and uncertainties, with actual results potentially differing materially - Forward-looking statements cover future CDR sales and growth, the CDR market, CCS capacity, future CFPC credit generation and sales, jet fuel market growth, ATJ-60 project financing, and timing[31] - These statements are based on management's current beliefs, expectations, and assumptions, and are subject to significant risks and uncertainties[31] - Investors should not place undue reliance on any such forward-looking statements, and Gevo undertakes no obligation to update or revise these statements[31] Non-GAAP Financial Information Disclosure This press release includes non-GAAP adjusted EBITDA, calculated by adding back depreciation and amortization, allocated intercompany expenses, non-cash stock-based compensation, and changes in fair value of derivatives to GAAP operating loss, which management believes aids internal planning and comparison and provides greater transparency to investors - Non-GAAP adjusted EBITDA is calculated by adding back depreciation and amortization, allocated intercompany expenses, non-cash stock-based compensation, and changes in fair value of derivatives to GAAP operating loss[32] - Management believes this metric aids internal operations, budgeting, and financial planning, and facilitates comparisons with historical performance and other companies[32] - Non-GAAP information should be read in conjunction with U.S. GAAP financial information for a complete understanding of Gevo's operating performance[32] Webcast & Contact Information Gevo provides details for its Q2 2025 financial results webcast and conference call, along with media and investor contact information - A conference call to discuss financial results and provide company updates will be held on August 11, 2025, at 4:30 PM ET[26] - A webcast replay will be available in the investor relations section of Gevo's website within two hours following the call[28] - Email addresses for media contact Heather Manuel and investor contact Dr. Eric Frey are provided[40]