Gevo, Inc. annual report, FY2023

Gevo, Inc. — FY2023 Form 10-K

Reporting period: Fiscal year ended December 31, 2023; filed March 7, 2024. This is an annual report, not a standalone fourth-quarter report. Gevo develops renewable fuels and chemicals, with sustainable aviation fuel (SAF) as its primary growth focus. Current revenue is mainly from its Iowa renewable natural gas (RNG) facility and associated environmental attributes.

Financial results and liquidity

Metric	FY2023	FY2022
Operating revenue	$17.2 million	$1.2 million
Operating loss	$81.8 million	$102.7 million
Net loss	$66.2 million	$98.0 million
Net loss per share	$0.28	$0.44
Cash used in operating activities	$53.7 million	$44.3 million
Cash and cash equivalents at year-end	$298.3 million	$237.1 million

• Revenue increased $16.0 million, primarily as RNG operations ramped up and Gevo sold more RIN and LCFS environmental attributes. FY2023 revenue included $14.8 million of environmental attributes, $0.7 million of RNG commodity sales, $1.3 million of licensing and development revenue, and $0.4 million of other hydrocarbon revenue.
• Operating expenses were $99.0 million, including $19.0 million of depreciation and amortization, $42.6 million of general and administrative expense, and $14.7 million of project development costs. The filing does not present a conventional gross margin measure.
• The smaller net loss reflected higher revenue, $19.1 million of interest and investment income, and the absence of the $24.7 million impairment recorded in 2022. Interest income benefited from higher rates; it is not evidence of operating profitability.
• Operating cash use increased year over year. Investing activities provided $114.1 million, mainly from maturities of marketable securities, partly offset by $54.5 million of capital investment, including $28.2 million in NZ1.
• Year-end current assets were $386.4 million and current liabilities $91.4 million; reported net working capital was $295.0 million. The $77.2 million of current restricted cash is not freely available for general operations. Management stated it expected to meet obligations for the 12 months after the filing date.
• Total debt was $68.1 million, principally the $68.0 million net balance of RNG project bonds. Although the bonds mature in 2042, they were classified as current because of a mandatory tender date of April 1, 2024. A $71.2 million letter of credit, collateralized by restricted cash, supports the bonds. Gevo anticipated a bond remarketing and higher interest rates; it estimated a $2.0 million annual interest-expense impact from the anticipated rate increase.

Material changes and business developments

• RNG production reached 314,000 MMBtu in 2023, surpassing the 310,000 MMBtu annual target; design capacity was expanded to 400,000 MMBtu. Gevo sold all 4,639 generated RINs and 76 generated LCFS credits during the year.
• NZ1, planned for Lake Preston, South Dakota, is designed for about 65 million gallons per year of hydrocarbons, including 60 million gallons of SAF. Engineering and value engineering were substantially completed; detailed engineering, cost refinement, and work toward a fixed-price EPC agreement continued.
• Gevo was invited into DOE loan-guarantee due diligence and term-sheet negotiations in August 2023. It targeted completing the application process in 2024, while also pursuing alternative debt financing and third-party equity. Construction financing had not closed; the expected startup is 24–30 months after financing close, whose timing is uncertain.
• Gevo estimated it would contribute cumulative cash equity of $236–$286 million to NZ1 by financial close. The company also continued evaluating additional greenfield and existing-ethanol-plant projects.
• Verity Tracking launched with participating farmers, and Gevo signed framework or development agreements with three ethanol producers. A USDA grant provides for up to $30 million for the Climate-Smart Farm-to-Flight Program, subject to its terms.
• Gevo’s Luverne facility remained in care and maintenance. The 2022 impairment associated with suspending production there was not repeated in 2023.

Outlook, risks, and unusual items

• Gevo expects continued losses and negative operating cash flows for the foreseeable future and does not expect near-term profitability. No specific consolidated financial guidance for 2024 is provided in the filing.
• The strategy depends on substantial external financing, project execution, permits, cost control, commercial-scale production, and customers’ ability and willingness to proceed under offtake agreements. SAF supply agreements, including take-or-pay arrangements, are subject to conditions such as facility completion and financing; expected contract revenue is not assured.
• Results are exposed to changes in RIN and LCFS credit values, government incentives and regulations, corn and other feedstock costs, petroleum prices, interest rates, and customer concentration. One customer represented 90% of 2023 revenue and 100% of year-end trade receivables.
• Management disclosed an immaterial prior-period adjustment related to variable-interest-entity accounting. It identified a material weakness in controls over VIE identification and accounting in 2023, and stated that remediation was completed by year-end. The auditor’s critical audit matter also concerned consolidation and deconsolidation of project entities. The financial statement audit opinion was unqualified; the auditor was not engaged to audit internal control effectiveness.
• On February 29, 2024, Nasdaq notified Gevo that its share price had been below the $1 minimum bid for 30 consecutive business days. The company had until August 27, 2024 to regain compliance, subject to potential additional time; failure could lead to delisting.
• Gevo reported no material pending litigation. A South Dakota sales and use tax audit was pending; management did not expect its outcome to have a material adverse effect based on information then available.

Most important facts for investors to verify

• Progress and final terms for NZ1 financing, DOE support, third-party equity, EPC pricing, permits, and carbon-capture access.
• Whether the RNG bond tender or remarketing was completed, how restricted cash and the letter of credit were affected, and the resulting interest cost.
• Actual RNG output and realized RIN/LCFS prices, including any changes to eligibility, pathways, or incentive rules.
• Whether customer offtake agreements’ conditions precedent are satisfied and whether planned facilities can meet contracted volumes and specifications.
• Cash runway and future capital needs, including potential dilution from equity issuance; confirm progress on Nasdaq minimum-bid compliance.