KiOR completes first commercial facility ahead of schedule; loss widens in Q1 as scale-up accelerates

In Texas, KiOR announced a Q1 net loss of $16.8 million, or $0.16 per share, compared to a net loss of $14.9 million, or $0.15 per share, for Q4 2011.

The company announced that its first commercial facility in Columbus, Mississippi, is 100% mechanically complete – ahead of target and at or slightly under the announced $222M budget. Management expects the commissioning exercises to take 12-16 weeks, while the ramp from start-up to running at full capacity typically takes six to 12 months. Natchez groundbreaking targeted for early 2013. Front-end engineering and design (FEED) for the Natchez plant is expected to be completed by year-end. Once Columbus is up and running, KiOR anticipates closing financing on Natchez and breaking ground as early as possible in 2013 to allow for a mid-to-late 2014 startup.

Raymond James energy analyst Pavel Molchanov wrote: “KiOR is well-positioned to address the “food vs. fuel” concerns and price volatility surrounding sugarcane and corn. We also like the versatility of KiOR’s biocrude – the ultimate “drop-in” biofuel. Balancing our positive view on the company’s technology platform with scale-up and project financing risk, we reiterate our Outperform rating. Consistent with Gen2 peers, we apply a discounted cash flow approach to arrive at a DCF value of $14.01 per share (see page 2 for details). Shares are currently trading at 71% of our DCF estimate, and our target price of $14.00 is based on the DCF.”

Piper Jaffray energy analyst Mike Ritzenthaler wrote: “Maintain Overweight rating and $20 price target. KiOR posted a loss per share of $0.16 in 1Q12 – in line with PJC & consensus estimates (both at a loss of $0.16). We are lowering our estimates for FY12 to ($0.79) from ($0.69) on increased SG&A related to startup costs, and increasing our estimates for FY13 to ($0.57) from ($0.67) on lower expectations for R&D. We believe the stock will react positively to announcements around the EPA fuel registration (for both gasoline and diesel separately), the startup of Columbus, and better visibility into financing for Natchez.

Cowen & Company energy analysts Rob Stone and James Medvedeff wrote: “Outperform. We see 50% upside in KIOR relative to the market in 12 months…Natchez Poised To Follow Columbus. Discussions are in progress with multiple strategic partners. Real estate, municipal and other arrangements are being concluded. Work is underway toward completing front-end engineering and design by year end. After 60-90 days of successful Columbus operations, we believe KIOR should find strong investor interest in funding the $460MM project. Startup is expected in mid-late 2014.”