Biofuel Maker Posts Loss, No Operating Revenue (GEVO, DD, BP)

Gevo Inc. (NASDAQ: GEVO) reported third quarter 2012 results this afternoon. For the quarter, the biofuel maker posted an adjusted diluted earnings per share (EPS) loss of $0.31 on a mere $562,000 revenues. In the same period a year ago, the company reported an EPS loss of $0.48 on revenues of $17.32 million. Third-quarter results compare to the Thomson Reuters consensus estimates for an EPS loss of $0.43 and $1.7 million in revenues.

The Colorado company is in the midst of converting its plant in Luverne, Minnesota, from ethanol production to isobutanol production. The company produced no operating revenue in the third quarter, but did receive grants worth $562,000.

The company’s CEO said:

Our goal now is to resume isobutanol production in 2013 when Luverne can generate a positive contribution margin producing isobutanol and we can become a consistent supplier to our customers. Our process technology team is currently focused on increasing isobutanol production rates and is doing work on the process technology and equipment at the plant to further enhance isobutanol production rates.

Isobutanol production has stopped and that the Luverne plant is now being switched back to ethanol production temporarily both as a demonstration of the plant’s flexibility and to generate some cash flow. The company does report $92 million in cash and equivalents at the end of the third quarter.

Gevo is locked in a patent fight with Butamax Advanced Biofuels LLC, a joint venture between E.I. du Pont de Nemours & Co. (NYSE: DD) and BP plc (NYSE: BP), and in June won a court ruling against Butamax that allows Gevo to sell its isobutanol fuel.At that time the share price rose to nearly $9.00 a share, before commencing a steady slide to a new annual low.

Gevo’s problem, of course, is demand. Right now the U.S. Air Force is the company’s biggest customer, with an order of 45,000 gallons in 2013.

The company’s shares closed at $2.07 last Friday, in a 52-week range of $1.77 to $11.29. Equity markets are closed in the U.S. again today due to the effects of Hurricane Sandy. The consensus target price for the shares was around $6.90 before today’s report.

Paul Ausick