Gevo, Inc. (NASDAQ: GEVO)
Early this morning, I had the opportunity to speak with Pat Gruber, CEO at Gevo. Not only was it enjoyable to have a personal discussion with such a talented person, but I also got a ton of questions answered. Before we get to the answers, I want to give a big thank you to Pat, Anna, and Shawn at Gevo, as well as my StockTwits followers, for helping me compile the questions to ask. With that being said, here’s how the interview went…
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CNA Finance Exclusive Interview With Dr. Patrick Gruber, CEO at GEVO
I’ve been incredibly interested in what I perceived to be test flights with Alaska Airlines. So naturally, the first question I asked surrounded these flights. Flights which I found out were not test flights at all. After asking Mr. Gruber about what I thought were test flights using Gevo jet fuel, he offered me the following answer:
“Well, a couple things. One of them, they weren’t test flights. I saw it referred to as that in some of the articles, but all of the testing is done. It took six years to get it done, and it’s a fully approved, qualified jet fuel. So what Alaska was doing was commercial flights where they have purchased fuel, put it on a plane, told customers that they’re flying a biofuel-powered plane, etc. So it was significant in that they were the first ones to go ahead, buy fuel, put it in a plane and be public about it.
What’s interesting about it is that we did a press conference at the airport there. People in the waiting area clapped when they heard about bio-based jet fuel, and the people on the plane clapped when they heard about it. We were on the plane and people came up to talk to us about it. They were very interested in it because they get that greenhouse gasses are an important issue. Jet fuel is one of the big contributors and this is something that can help to mitigate that.”
After learning that the Alaska Airlines flights using the jet fuel from GEVO were not tests, I had to ask if any future flights were coming up. Here’s how Pat answered the question:
“Yeah, they can fly any time, and they said they would.”
I love that answer my friends! Anyway, the chat went on to isobutanol. I know we all had a ton of questions there. The first one I asked was whether or not Musket would be distributing isobutanol-related products to only Love’s or outside of the Love’s network. While there wasn’t a direct answer given, Pat did peak my interest by saying:
“Musket, I think, distributes outside of their Love’s network. So, if you’re parsing it as Love’s is the retail side and Musket is the distributor side, I’m pretty sure Musket does more than just Love’s. [Jokingly] So, without answering, I answered.”
I went on to ask a question that I was previously asked and one that I found interesting. I asked if GEVO has reached, or is working to reach, agreements with any R&D companies to aid in the production of isobutanol. The answer Pat offered was spot on!
“WE DON’T NEED IT! So one of the interesting things is that our product works pretty well. We have, probably, the world’s most capable development group. We’re the only ones to commercialize a yeast that’s been genetically adhered, modified to produce isobutanol on a scale like ours, in a plant like ours. No one else as done that. So, we don’t buy into all this synthetic biology crap that people talk about. We’ve been doing it for years and we’re pretty good at it. So, that’s not been a problem for us.”
So, I wanted to frame the question in a different way. I wanted to see if there were any underlying concerns with regard to production and Gevo’s ability to meet demand. Here’s what Pat had to say:
“No, I’m not [concerned about production]. I worry about… my issues always are around capital, capital formation, that sort of thing. That’s where my issues lie. It always takes money to build plants.”
Another question that I was asked by a StockTwits follower was whether or not funding requirements for production expansion were met through the recent offering. Here’s what Gruber had to offer:
“These are more to bolster our balance sheet. You know, we’re in the classic situation where our converts become due within a year and we have to pay attention to that and make sure that we are maximizing all value for all. So, it’s much more of, we use some of those proceeds for the plant to help, it’s about business development in general. Growing the business.”
I went on to ask if there were any known EPA actions or lobbyists pushing for EPA actions surrounding bio fuels. Here’s what Pat had to say:
“Broadly speaking, no. Everybody’s on hold it seems because… I’m talking about it in a broad general sense… The policy, it’s been on hold for several years with the Obama administration and I don’t know why. It just is. Whenever there’s an election, this stuff does start to get discussed again, because with a change of regime comes a change in the political plays, and everyone wants to do something new. And I think that, no matter who gets in next, renewables will have a place. There’s no one so conservative on the republican side, if the republicans were to win that… Trump is a middle of the road kind of guy and Hillary is going to be supporting of resource-based stuff, too. Either way, I think it’s good for the renewable resource [industry].”
At the end, I circled around to delisting. I wanted to know if there was a plan to avoid the delisting of GEVO from the NASDAQ. I asked if there were any plans for reverse stock splits or other actions. Here’s what Pat had to say:
“You know, I couldn’t talk about any specific plans, but we’d bee kind of dumb to let ourselves get delisted wouldn’t we?”
I went on to ask Dr. Gruber if there was any news with regard to the 180 day extension. Here’s what he had to say:
“No, nothing new. Anything we see, we’ll say publicly.”
Finally, I ended with the big M&A Question. Is GEVO putting itself up for sale. Here’s what Pat had to say:
“Well, we have retained Cowen as our banker to explore all strategic options. We’re not putting ourselves up for sale, per se, but if the right deal were to come along, we’d be open-minded to it. So, when we say all strategic options, we mean it!”
At the end of the questions I had prepared, I asked Pat if there was anything else he would like to let the CNA Finance audience know. Here’s what he had to say:
“We appear to be, I think, at the right place at the right time, with the right technology in that there’s now a focused concern on products like jet fuel. They have to do something, they recognize it. Low carbon fuels are going to be important. It also cuts the cost in the gasoline, that’s going to be important. We have an Exxon [representative] step up and say we have to do something about carbon emissions. Everybody should recognize that that’s a big deal. That’s the biggest energy company in the world saying, ‘hey we really need to do something, we should do something.’ Our technology, we believe, is the lowest cost technology to do these standard hydrocarbons for gasoline and jet fuel. And, so, our task at hand is to get people in line, get the customers, get the tanks, form the capital, build the plant, and get on with it. But I think in terms of technology, we’re in good shape. In terms of timing, I think we’re in good shape.”
Before my discussion with Pat, my opinion on GEVO was a bullish one. After today’s discussion, I have to say that I’m taking an even more bullish approach. It seems as though all items are pointing toward continued growth. Also, I don’t see delisting as a concern anymore, something will be done. All in all, things went great and I maintain my bullish opinion on the stock.
Also, I will be doing interviews with more CEOs regularly from here on out. Before each interview, I will be announcing plans on StockTwits and asking for questions to ask. To make sure that your questions are answered, follow me on StockTwits or TalkTRENDZ.
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What Do You Think?
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[Image Courtesy of Wikimedia]