Management Comment
Lynn Smull, Gevo’s Chief Financial Officer, commented, “Securing the DOE's $1.6 billion loan guarantee conditional commitment is a transformative milestone for Gevo and our Net-Zero 1 project. Reaching the DOE commitment illustrates Gevo’s pioneering ability to develop and reduce the risk of a financially attractive, large-scale, net-zero SAF production facility. Additionally, given the acquisition of the Red Trail Energy assets combined with Verity and expected near term RNG growth, we believe that we are well-positioned to achieve positive Adjusted EBITDA in 2025. The investments we’re making are strategically positioning us for long-term growth in new industries that need low-carbon products, while managing our cash and capital expenditures to execute from a position of financial strength.”
Dr. Patrick Gruber, Gevo’s Chief Executive Officer, added, “Everything we do is tied together by the concept of carbon abatement as a means to create value in the clean energy market sector, profit for the company, and value for our shareholders. The progress on Net-Zero business systems, which include NZ1 and the Red Trail Energy asset acquisition, underscores our commitment to developing our businesses to abate carbon and serving enormous, growing markets. Our advancements in areas like Verity, with our CultivateAI acquisition, reflect our commitment to creating resilient value chains that support carbon abatement from field to flight, in the case of SAF, but also for other fuels, chemicals and food chains. In the Net-Zero business system, it is all about making products that people value, and doing it profitably, just like any other business. There is more, though. It’s also about rural economic development, energy security, creation of jobs, and rewarding farmers. Overall, it’s all about carbon abatement across the whole of the supply chain, while everyone in the supply chain benefits economically.”
2024 Third Quarter Financial Results
Operating revenue. During the three months ended September 30, 2024, operating revenue decreased $2.6 million compared to the three months ended September 30, 2023, primarily due to lower sales of environmental attributes from our RNG project. This is due to a buildup of environmental attribute inventory in anticipation of receiving the final pathway approval under the LCFS Program, which we expect to result in a lower CI score. Said approval is anticipated during the first quarter of 2025. During the three months ended September 30, 2024, we sold 101,101 MMBtu of RNG from our RNG project, resulting in RNG sales of $0.2 million and environmental attribute sales of $1.8 million.
Cost of production. Cost of production remained flat during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Depreciation and amortization. Depreciation and amortization decreased $1.5 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, due to the timing of sales of environmental attribute inventory, which includes allocated depreciation and amortization.
Research and development expense. Research and development expenses decreased $0.4 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to decreased consulting expenses and professional fees.
General and administrative expense. General and administrative expense increased $1.2 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increases in personnel costs related to the hiring of highly qualified and skilled professionals, and professional consulting fees, partially offset by a decrease in stock-based compensation. On an annual basis, we assess our corporate cost allocation estimates across all segments to reflect the use of centralized administrative functions as well as the allocation of personnel costs related to our project development efforts.
Project development costs. Project development costs are primarily related to our Net-Zero Projects and Verity, which consist primarily of employee expenses, preliminary engineering costs, and technical consulting costs. Project development costs increased $1.8 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increases in personnel costs, consulting fees, and costs related to our USDA Grant, which have not yet been reimbursed.
Facility idling costs. Facility idling costs are related to the care and maintenance of our Luverne Facility. Facility idling costs decreased $0.4 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023.
Loss from operations. The Company’s loss from operations increased $3.3 million during the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to the increase in costs for our Net-Zero and Verity projects.
