2Q21 Results: Substantial Progress on RNG and Net-Zero 1 Projects; Management Increases Net-Zero 1 Guidance and Outlook



KEY POINTS
  • On August 12, 2021, Gevo announced 2Q21 earnings results. The company made substantial progress on its renewable natural gas (RNG) project in Iowa, advanced engineering work related to Net-Zero 1, and increased its Net-Zero 1 plant guidance and outlook. Management also noted that its Net-Zero 1 hydrocarbon capacity is oversubscribed based on its take-or-pay contracts.
  • During the quarter, Gevo’s RNG project in Iowa signed binding, definitive agreements with BP for the sale of RNG. The project is on schedule and on budget with an anticipated startup in early 2022. Management expects the project to generate cash distributions to Gevo of $9-16 million per year beginning in late 2022. Gevo also closed a $68.2 million bond offering to finance the construction of the project.
  • Gevo also published a new investor deck on its website outlining the revised economics and assumptions associated with its Net-Zero 1 plant. To summarize, plant revenues are now estimated at $340-350 million per year with EBITDA of $150-160 million per year. Previously, EBITDA was estimated around ~$100 million per year. Management also projects $80-90 million of annual cash distributions to Gevo. Construction is expected to begin in 1H22 and planned start-up is 1H24. Additional details can be found on slides 28 and 29 of Gevo’s investor deck.
  • The company also made important progress on the engineering and design work for Net-Zero 1 and expects the next phase to be completed in December 2021 and is targeting 1H22 for the debt financing.
  • Gevo generated marginal revenue in the quarter. The Luverne Facility is currently producing isobutanol and Gevo expects to send finished isobutanol from the Luverne Facility to the South Hampton Facility so that renewable premium gasoline or jet fuel can be produced in 2H21. Gevo ended the quarter with total cash of $567.2 million and debt of $93.1 million.
  • Our prior content on GEVO can be accessed HERE.

EARNINGS SNAPSHOT

On August 12, 2021, Gevo announced 2Q21 earnings results. The company made substantial progress on its renewable natural gas (RNG) project in Iowa, advanced engineering work related to Net-Zero 1, and increased its Net-Zero 1 plant guidance and outlook. Management also noted that its Net-Zero 1 hydrocarbon capacity is oversubscribed based on its take-or-pay contracts.

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