Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
week cellulosic ethanol producer Kior,
reported its strongest quarter production and financial results since the
company first started commercial operations at its Columbus, Mississippi
facility.Kior turned out 323,841
gallons of ethanol fuel in the three months ending September 2013, bringing
total production for the year to 508,975 gallons.Along with the third quarter report,
management did a bit of boasting over record production of 167,087 gallons in
the month of October.That represents a
2.0 million gallon per year run rate, but management is guiding for a more
modest 1.0 million gallons.
that good news was not enough to cover up a record net loss for the quarter of
$43.1 million.Cash production costs are
still higher than revenue.Granted some
costs in the most recently reported quarter might be one-time in nature as the
company settles into what they call ‘steady state’ production.Still management has a big job ahead to ramp
production level that will generate even breakeven results.
Kior's Columbus Facility
has made a point of the scalability of its production technology-fluid catalytic cracking.Granted
it is a proven process perfected in the oil refining industry.Management has also made a point of its wood
chip feedstock-Southern Yellow Pine.We have to concede the Southern Yellow Pine
is available in abundance and it is priced accordingly.Management is so confident in its production
technology the company is planning a second production facility near Columbus.
with the $100 million Kior is getting from long-time fan Vinod Khosla and a few
close friends, there is much for KIOR shareholders to worry about before
production scales to breakeven in both its plants.The company has been using about $25 million
in cash per quarter to support operations in just one facility.
Kior went public in June 20111, the share price has been on a long-term grind
downward.There have been many more opportunities
to collect shares at low levels than there have been chances to sell at peak
prices.The stock has recovered from a
dramatic sell off and record low in September, but it still may be too early to
jump into KIOR.
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Cap Strategist web log, Crystal Equity
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