ENGLEWOOD, Colo. - Gevo , Inc. (NASDAQ: NASDAQ:GEVO), a renewable energy company, has monetized approximately $20 million in Investment Tax Credits, stemming from its renewable natural gas (RNG) production facility operations. The undisclosed corporate buyer's acquisition provides Gevo with net cash proceeds of around $17 million after transaction fees.
The company's RNG asset, operated by Gevo NW Iowa RNG, LLC, is designed to produce about 400,000 MMBtus of RNG annually. Gevo anticipates an increase in production over time, with potential additional value from Section 45Z Clean Fuel Production Credits under the Inflation Reduction Act (IRA), pending rule definition.
RNG is generated by collecting dairy farm manure and processing it in anaerobic digesters to capture biogas, which is then refined and sold as a transportation fuel in California. This process aligns with the California Air Resources Board Low Carbon Fuel Standard, expecting to reduce greenhouse gas emissions by approximately 175,000 metric tons of carbon dioxide equivalent each year.
Dr. Pat Gruber, CEO of Gevo, highlighted the transaction's alignment with the company's mission to optimize renewable energy and create shareholder value. The sale improves Gevo's liquidity, cash flow, and ability to fund projects like sustainable aviation fuels (SAF).
The IRA has reformed the monetization of federal clean energy tax credits, allowing companies to buy and sell credits for cash. This change has provided a new market opportunity for tax savings without the need for a long-term investment commitment.
Gevo emphasizes its commitment to sustainability, operating one of the largest dairy-based RNG facilities in the U.S. and the first facility for specialty alcohol-to-jet (ATJ) fuels and chemicals. The company also tracks and verifies its carbon footprint through its Verity subsidiary.
The information in this article is based on a press release statement from Gevo, Inc.
In other recent news, Gevo, Inc., a renewable chemicals and advanced biofuels company, has been granted a U.S. patent for its ethanol-to-olefins (ETO) process and has also acquired the ethanol production plant and carbon capture and sequestration (CCS) assets of Red Trail Energy for $210 million. The company has received an additional 180-day compliance period from Nasdaq to meet the exchange's minimum bid price requirement. Gevo has also entered into an agreement with Shell (LON:SHEL) Global Solutions Deutschland GmbH to supply a sustainable fuel blendstock for motorsport use. H.C. Wainwright has maintained its Buy rating for Gevo, Inc. following these recent developments. The company's CEO, Dr. Patrick Gruber, and President and COO Christopher Ryan have also revised their employment agreements, with base salaries of $650,000 and $431,600 respectively. These are the highlights of the recent developments at Gevo.
InvestingPro Insights
As Gevo, Inc. (NASDAQ: GEVO) leverages new market opportunities through the monetization of Investment Tax Credits, investors may be curious about the company's financial health and market performance. According to recent data from InvestingPro, Gevo's market capitalization stands at approximately $349.48 million, reflecting the company's current valuation in the market. Despite a significant return over the last week, with a 63.04% price total return, the company's gross profit margin is notably negative at -105.98% for the last twelve months as of Q2 2024, indicating that the cost of goods sold exceeds the revenue generated.
InvestingPro Tips suggest that while Gevo holds more cash than debt on its balance sheet, the company is rapidly depleting its cash reserves. This situation is particularly relevant in the context of the company's recent transaction, as maintaining a strong liquidity position is crucial for funding ongoing projects and operations. Additionally, it's notable that analysts do not anticipate Gevo will be profitable this year, which could be a point of concern for potential investors evaluating the company's long-term prospects.
For those looking at the broader investment landscape, Gevo's stock price movements have been quite volatile, which may appeal to certain investors, but also represents a higher level of risk. Interested readers can find a total of 16 InvestingPro Tips for a more comprehensive analysis of Gevo, Inc. at https://www.investing.com/pro/GEVO, which may provide further insights into the company's performance and potential investment opportunities.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.