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Gevo(GEVO) - 2025 Q2 - Quarterly Report
GevoGevo(US:GEVO)2025-08-11 20:36

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, management's analysis of financial condition and operations, market risk disclosures, and internal controls and procedures Item 1. Financial Statements The financial statements reflect a significant transformation from the Red Trail Energy acquisition, impacting assets, liabilities, and shifting Q2 2025 to net income Condensed Consolidated Balance Sheets Total assets increased to $702.1 million by June 30, 2025, primarily due to the Red Trail Energy acquisition, while cash decreased by $132.1 million and total liabilities rose to $222.3 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $57,257 | $189,389 | | Total current assets | $170,441 | $203,711 | | Property, plant and equipment, net | $344,914 | $221,642 | | Intangible assets, net | $70,327 | $8,129 | | Goodwill | $43,558 | $3,740 | | Total assets | $702,117 | $583,941 | | Liabilities & Equity | | | | Total current liabilities | $73,233 | $24,361 | | Loans payable | $99,966 | $0 | | Total liabilities | $222,349 | $94,453 | | Total stockholders' equity | $474,104 | $489,488 | Condensed Consolidated Statements of Operations The company reported a $2.7 million net income in Q2 2025, a significant improvement from a $21.0 million net loss in Q2 2024, driven by a surge in operating revenues to $43.4 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $43,413 | $5,260 | $72,522 | $9,250 | | Income (loss) from operations | $5,796 | $(24,029) | $(14,343) | $(47,170) | | Net income (loss) | $2,729 | $(21,002) | $(19,044) | $(39,877) | | Net income (loss) per share - diluted | $0.01 | $(0.09) | $(0.08) | $(0.17) | Condensed Consolidated Statements of Cash Flows Net cash used in investing activities totaled $209.5 million for the six months ended June 30, 2025, primarily for the Red Trail Energy acquisition, resulting in a $132.1 million net decrease in cash Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,570) | $(27,520) | | Net cash used in investing activities | $(209,538) | $(26,708) | | Net cash provided by (used in) financing activities | $103,976 | $(6,049) | | Net decrease in cash and cash equivalents | $(132,132) | $(60,277) | Notes to Condensed Consolidated Financial Statements The notes detail the $210.3 million Red Trail Energy acquisition, the recognition of $21.5 million in Section 45Z tax credits, the establishment of four reportable segments, and new $105 million debt facilities - On January 31, 2025, Gevo completed the acquisition of Red Trail Energy for a purchase price of $210.3 million, funded by cash, a $105 million term loan, and $5 million in equity from OIC356264 - The company recognized $21.5 million in Section 45Z federal tax credits for the first six months of 2025, recorded as a reduction to Cost of Goods Sold (COGS)76 - The company now has four reportable segments: Gevo, GevoFuels, GevoRNG, and GevoND, with the new GevoND segment generating $59.9 million in revenue for the first six months of 2025179188 - A new $105 million senior secured term loan was obtained in January 2025 to partially fund the Red Trail Energy acquisition, with an initial interest rate of 11.50% per annum124 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the strategic impact of the Red Trail Energy acquisition on revenue growth, operational improvements, and liquidity, emphasizing carbon abatement and SAF initiatives Company Overview Gevo is a carbon abatement company focused on producing renewable hydrocarbon fuels, particularly Sustainable Aviation Fuel (SAF), with the Red Trail Energy acquisition strengthening its operational and carbon capture capabilities - Gevo's primary market focus is on carbon-abated hydrocarbon fuels, particularly Sustainable Aviation Fuel (SAF), produced via a carbohydrate-to-alcohol process199 - The acquisition of Red Trail Energy (now GevoND) on January 31, 2025, for $210 million added an operational ethanol plant and carbon capture and sequestration (CCS) assets, strengthening Gevo's growth and SAF strategy206207 - The company is developing modular Alcohol-to-Jet (ATJ) projects, including ATJ-60 in Lake Preston, SD, which has received a conditional commitment for a ~$1.6 billion DOE loan guarantee, and an ATJ-30 project planned for the GevoND site205209212 - The Verity subsidiary is developing a platform for carbon accounting and monetization, and has signed agreements with five external ethanol producers218225 Results of Operations Q2 2025 saw a 725% increase in total operating revenues to $43.4 million and a shift to $5.8 million operating income, primarily driven by $37.2 million from GevoND operations and Section 45Z tax credits Comparison of Three Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $43,413 | $5,260 | $38,153 | 725% | | Cost of production | $17,265 | $3,423 | $13,842 | 404% | | Income (loss) from operations | $5,796 | $(24,029) | $29,825 | (124)% | | Net income (loss) attributable to Gevo, Inc. | $2,144 | $(21,002) | $23,146 | (110)% | Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $72,522 | $9,250 | $63,272 | 684% | | Loss from operations | $(14,343) | $(47,170) | $32,827 | (70)% | | Net loss attributable to Gevo, Inc. | $(19,584) | $(39,877) | $20,293 | (51)% | - The increase in revenue was primarily due to $37.2 million from the GevoND operations in Q2 2025244 - Cost of production in Q2 2025 was partially offset by a $20.8 million benefit from the 45Z tax credit245 Liquidity and Capital Resources As of June 30, 2025, the company held $126.9 million in cash and restricted cash, with $198.5 million used for the Red Trail Energy acquisition, partially offset by $105 million in new loan proceeds - As of June 30, 2025, the company had cash and cash equivalents of $57.3 million and current restricted cash of $69.6 million, totaling $126.9 million269 Cash Flow Summary for Six Months Ended June 30 (in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(26,570) | $(27,520) | | Net cash used in investing activities | $(209,538) | $(26,708) | | Net cash provided by (used in) financing activities | $103,976 | $(6,049) | - The company did not repurchase any shares in H1 2025, with approximately $20.3 million remaining available under the stock repurchase program284 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Gevo is not required to provide detailed market risk disclosures, noting no material changes to its primary risks including environmental attribute and commodity pricing, interest rates, and credit risk - The company is a smaller reporting company and is not required to provide detailed information for this item285 - Key market risks include environmental attribute pricing, commodity pricing, interest rates, and credit risk, with no material changes reported since the 2024 Annual Report285 Controls and Procedures Management identified material weaknesses in internal control over financial reporting, including insufficient technical accounting expertise and inadequate controls at the newly acquired GevoND operations, with remediation efforts ongoing through 2025 - A material weakness was identified due to an insufficient complement of personnel with the necessary technical accounting expertise for complex transactions287 - Post-acquisition, additional material weaknesses were discovered at GevoND related to a failure to design effective segregation of duties and inadequate user access controls288 - Remediation efforts are underway, including hiring additional personnel, providing training, and improving system access controls, with completion expected through 2025290294 PART II. OTHER INFORMATION This section provides disclosures on legal proceedings, risk factors, equity security sales, and a list of exhibits filed with the report Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or operations - The company is not presently a party to any litigation that it believes could have a material adverse effect on its business142296 Risk Factors No material changes have occurred in the company's risk factors since the filing of its 2024 Annual Report - No material changes have occurred in the company's risk factors since the filing of its 2024 Annual Report297 Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities during the period Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and interactive data files (XBRL)