Gevo gives corporate update for 2018; to cut staff, salaries

Gevo reaffirms its focus on the commercial development of renewable jet fuel, renewable isooctane, isobutanol and related products. The goal is to aggregate enough confirmed commercial off-take to support the capital expense of expanding Gevo’s production facility based in Luverne (Luverne facility). Gevo plans to expand its business development capabilities in 2018 to achieve this goal. Gevo is undertaking several initiatives to improve the cash flow profile of its business in 2018 compared to 2017. This improvement is expected to be achieved by increasing sales of isobutanol into the ethanol-free marketplace, increasing sales of its alcohol-to-jet fuel (ATJ) and isooctane produced out of Gevo’s hydrocarbon demonstration plant based in Silsbee, Texas, improving the cash flow profile at the Luverne facility and reducing overall corporate expenses. Gevo expects to sign its first commercial license in India, through its partnership with Praj Industries.

In 2018, Gevo expects to improve the cash flow out of the Luverne facility by optimizing the plant’s ethanol production processes, developing value-added products for ethanol and animal feed produced at the plant and further reducing the cost of the plant’s carbohydrate feedstock.

These initiatives are also expected to benefit the cost of producing Gevo’s isobutanol, once isobutanol production resumes at the Luverne facility at its current scale or when the isobutanol capacity is expanded at the plant.

The reduction in corporate expense is expected to be driven by a series of measures:

Mike Willis, Gevo’s chief financial officer, has entered into a mutual separation agreement and is expected to leave the company in early January 2018. Gevo does not currently plan on replacing the CFO at this time. Certain executive officers who are remaining with the company have volunteered to take a reduction in compensation, including Dr Patrick Gruber, Gevo’s CEO, who has agreed, at his discretion, to a salary reduction of 30 percent in 2018. Gevo will reduce its overall headcount in Englewood, by approximately 40 percent, as compared to the peak employee level in 2017. Gevo’s employees will forego their 2017 annual cash bonus. A systematic review of all non-employee expenses across the company has been undertaken, and reductions have or will be made wherever possible.

“In 2018 the goal is to obtain off-take agreements for our products that will support financing the Luverne facility expansion. Concurrently, we are looking extensively into ways to extend our cash runway as far as possible to give us the time to land and negotiate these contracts properly,” said Dr Patrick Gruber.

“We also see significant opportunity to improve the performance of the Luverne facility in the near term, which is expected to benefit the company regardless of whether we are producing ethanol, isobutanol, or both. Luverne is an excellent plant site given the low cost and low environmental footprint of its corn supply,” added Dr Gruber.