Gevo Inc., a renewable fuel and chemical company that operates its main production plant in Luverne, Minn., said Tuesday it cut 41 percent of its headquarters workers to save money.
The company, which has seen its stock drop from $25 per share in 2011 to less than $1 today, said it cut 23 employees, mostly technical staffers, at its Englewood, Colo., headquarters, reducing the head count there to 33. None of the approximately 30 workers in Luverne was affected, the company said.
The company's technology to turn corn into a higher-value alcohol has faced a rocky, longer-than-expected road from laboratory to marketplace. Gevo said that fewer technical employees are needed now because of the advanced stage of the technology.
"We are very far along in development, and it is a normal course of events to cut back," Gevo CEO Pat Gruber said in an interview.
Gruber also agreed to take 25 percent of his $500,000 base salary in company stock.
Both moves are aimed at cutting losses. The company has never made a profit, and at the end of September had $14 million in cash, and was burning through more than $1 million per month. The company has not stated its year-end cash position.
Gevo acquired and then converted the Luverne ethanol plant in 2012 to produce an alcohol called isobutanol that has a range of uses from jet fuel to renewable chemicals. Despite some promising sales deals, the ramp-up to commercial-scale production faced technical challenges. Gevo also has waged an expensive patent battle with a competitor.
Using genetically engineered yeast and other technologies to ferment corn into isobutanol, Luverne's production hit 50,000 gallons per month at year end, and is approaching 75,000 to 100,000 gallons per month, the company said. But that's far short of the 1 million gallons per month of production that the company projected in 2012.
Amid the layoff news, Gevo also said Tuesday that its scientists have developed and filed patents on "potentially disruptive new technologies" to convert ethanol using chemical catalysts into isobutylene, propylene, hydrogen and acetone. The work, being done in a pilot plant in Texas, offers opportunities to sell more chemicals as feedstocks for making plastics and other products, and Gevo said it seeks potential strategic partners to build that business.
Caleb Dorfman, an analyst with Simmons & Co. in Houston, called the ethanol technology announcement "a bit of an interesting twist," but he said in a note that a prime focus of investors is whether Gevo intends to raise more capital, a topic the company didn't address on Tuesday.
Gruber said the company hopes to put together licensing deals for its isobutanol production technology this year — its strategy from the beginning. "We have people who want to license isobutanol," he said. The company also has announced buyers for its products, including racing teams that use it as a high-performance fuel blend.
Gevo resumed ethanol production in part of the Luverne plant in 2013, but even that effort to raise revenue is faltering amid slim profit margins in the ethanol industry. Gruber said ethanol returns currently are "still positive but barely."
Two weeks ago, Gevo announced that its stock was shifting from Nasdaq's mid-cap marketplace to its smaller-cap market, with the condition that stock price reach the required $1 per share minimum by July or face delisting. Shares have been below $1 since last May. The stock also trades over the counter.
Gevo shares closed Tuesday at 30 cents per share, down less than 1 percent.
David Shaffer • 612-673-7090 Twitter: @ShafferStrib
