Gevo(US:GEVO)2019-11-13 00:42Financial Data and Key Metrics Changes - Gevo reported revenue of $6.1 million in Q3 2019, down from $8.6 million in Q3 2018 [39] - Cost of goods sold was $9.9 million in Q3 2019, compared to $10.6 million in the same period in 2018 [39] - Gross loss increased to $3.8 million in Q3 2019 from $2.1 million in Q3 2018 [40] - Net loss for Q3 2019 was $8.6 million, or $0.66 per share, compared to a loss of $6.5 million, or $0.85 per share in Q3 2018 [45][47] Business Line Data and Key Metrics Changes - Research and development expenses decreased by $0.1 million in Q3 2019 compared to Q3 2018, primarily due to reduced costs associated with the South Hampton facility [41] - Selling, general and administrative expenses increased by $0.2 million in Q3 2019 compared to Q3 2018, mainly due to higher personnel and consulting costs [42] - Cash EBITDA loss was $5.8 million in Q3 2019, compared to $4.2 million in Q3 2018 [44] Market Data and Key Metrics Changes - The company is focusing on low-carbon ethanol and renewable natural gas projects to improve cash flow and reduce carbon footprint [12][15] - The renewable natural gas projects are expected to qualify for California's low-carbon fuel standard by the end of 2020 or early 2021 [15] Company Strategy and Development Direction - Gevo aims to achieve profitability or near profitability by the end of 2021 through low-carbon ethanol sales and a one million gallon per year hydrocarbon plant [12] - The company plans to expand its operations beyond low-carbon ethanol to include renewable hydrocarbons like jet fuel and gasoline [25][33] - Gevo is pursuing project financing for the expansion of its Luverne facility, with potential revenues from the build-out estimated between $100 million to $200 million [30] Management's Comments on Operating Environment and Future Outlook - Management expressed frustration with current ethanol margins but emphasized the importance of focusing on long-term growth and market development [35][36] - The company is optimistic about the potential for low-carbon ethanol and renewable hydrocarbons to drive future profitability [12][23] Other Important Information - Gevo is working on a blockchain initiative to track the sustainability of its products, which may eventually be licensed to other companies [76][80] - The company has secured agreements for anaerobic digesters at dairy farms to support its renewable natural gas projects [16][17] Q&A Session Summary Question: Hydrocarbon side of the story - Management clarified that projections for significant revenue from hydrocarbon projects are expected in 2021, not 2020 [50] Question: Timeline for securing agreements - Management indicated that they expect to finalize contracts for the hydrocarbon plant in the current quarter or early next year [59] Question: Duration of off-take agreements - Off-take agreements are typically long-term, lasting around seven years after the startup of the plant [65] Question: Impact of profitability on construction decisions - Management stated that pricing must ensure returns that cover cash costs, depreciation, and capital returns, with a minimum expected return of 15% [69] Question: Timeline for low-carbon ethanol shipping - Management expects wind towers to be operational by mid-2020, with low-carbon ethanol benefits anticipated by the end of the year [74] Question: Investment in blockchain initiative - The investment in the blockchain initiative is relatively small, aimed at tracking sustainability from farm to market, with potential for future licensing [78][80]