1Q24 Results: Share Repurchase Underway
Gevo has begun repurchasing shares under the company’s previously announced program. The company has so far repurchased 5.5 million shares for $3.7 million, leaving $21.3 million available for repurchases. Gevo revised spending on its Net-Zero 1 plant project. The expected spending required to reach financial close was reduced from $125-175 million to $90-125 million. This followed negotiations with EPC and wind/hydrogen equipment providers. Gevo expects to fund its Net-Zero 1 project with existing cash. In 1Q24, $17.1 million was spent. On Gevo’s 1Q24 conference call, management said the newly announced Sustainable Aviation Fuel (SAF) Section 40-B tax credit is a good step. This sets a good precedent and guidance for section 45-Z, which comes into play later in 2025, according to the company. Management expects this could translate to $1.50-1.75 per gallon jet fuel produced with the company’s proprietary NZ1 plant design. That would be about $90-105 million in revenue, according to the company. Gevo’s renewable natural gas (RNG) project generated standalone cash EBITDA of $1.2 million in 1Q24 versus $1.3 million in 4Q23. Gevo sold 88,967 MMBtu of RNG in 1Q24, down from 90,666 MMBtu in the previous quarter. This translates to 89% capacity utilization on an annualized basis. Gevo is expanding its customer base for its Verity subsidiary. Verity specializes in carbon accounting and services to maximize the value of environmental benefits throughout the entire business system. In 1Q24, Gevo initiated a grower program for a biofuel client and signed a letter of intent with a heavy-duty vehicle engine provider. Gevo believes ethanol-to-olefins (ETO) technology can create low-carbon chemicals, with a potential market size of $400-500 billion, while also reducing costs for future alcohol-to-jet SAF production. The ETO pilot plant was successfully launched and achieved milestones required for further development with LG Chem. In 2Q24, Gevo expects to receive $0.8 million in payments under the agreement with LG Chem.Gevo is a low-carbon fuel company focused on the development and commercialization of renewable alternatives to petroleum-based products. In addition to serving the low-carbon fuel markets, the company can also serve markets for the production of chemical intermediate products for solvents, plastics, and building block chemicals using its technologies. The company's operating segments include: Gevo segment, which is responsible for research and development activities related to the future production of isobutanol; and Gevo Development/Agri-Energy segment, which is responsible for the operation of its production facility in Luverne, MN and the production of ethanol, isobutanol and related products.
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