AMRS - Earnings call transcript Q4 2017

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Operator

Welcome to the Amyris Fourth Quarter 2017 Conference Call. This call is being webcast live on the Events Page of the Investor Section of the Amyris' website at amyris.com. This call is the property of Amyris, and any recording, reproduction or transmission of this call without the expressed written consent of Amyris is strictly prohibited.

As a reminder, today's call is being recorded.

You may listen to a webcast replay of this call by going to the Investor Section of Amyris' website. to Investor call Relations like DeNardo, to now of Director and would turn over the Peter I Corporate Communications.

Peter DeNardo

investors.amyris.com. to is at furnished on the website gap] The at on as report [audio sec.gov. website Form as with well respect available our also release SEC's press on our current X-K

statements, our for These results yet results management's future Exchange including will Amyris due their beyond. the time XXXX of Amyris projections expectations, events Amyris' activities and we as current make and events and call, result filings including with from and to any risks statements annual this about financial the information contained Please reports filings including Securities XXK, detailed or XK. circumstances and occurred, and whether financial XXQ materially business on update to impacts a on on on and uncertainties. Form to based are the statements time information, risks in Form disclaims of its differ anticipated reports on and uncertainties, During of discussion Commission, future Form forward-looking quarterly and actual detailed that obligation Amyris reports and for refer to SEC otherwise. makes have in events relevant current those not operating may that forward-looking these new

a webcast over today's begin note presentation today, presentation. our call turn included is we slide now Melo. to the we will Before I'd John? to to I'll like that in John refer in that

John Melo

We was profitable technology our core and quarter series through a DSM. across completion a to of very on focused Amyris. strategic growth, leadership. also joining for of product business The transformation have transactions In fourth thank with the business excellent this completed and Good three good evolved of fourth we've our We successfully Peter. XXXX, we are an you, Thank and where today. you afternoon XXXX markets simplified and quarter. executing us

Our forward. results are good indication a us you going of fourth what from quarter can expect

I also perspective on how you our During business our our XXXX and of quarter from results you will with a then call our provide update XXXX. XXXX share core I'll today, fourth on high year our and will and we simplifying a I level full growth guidance reporting. are for through markets and view

few Eduardo us who have We around and Alvarez, call. will year Chief his progress focus financial our Kathy the today for cover manufacturing on quarter Officer our a the with and fourth also will words Operating our He results will full be regarding share agenda. XXXX.

with we Let me our simplifying markets how our reporting. start core and are

core performance health Our focused these wellness, and markets, each Clean pure ingredients, business Skin-Care, here's on is three flavor markets. what's and of common to fragrance

of around the any portfolio and are three markets. we partner these in product industry our leading core First, company

price, thirdly, there is platform years. five Secondly, need markets products competitively significant very demand. Amyris with where products for this at profitable next better sustainably-sourced And are support taking strong for and this continuing see technology times best to markets at, where significant a for have growing the least we these no-compromise GDP our two are natural growth are three means we lower and perform this share promise, to growth costs the that enabling where

use these very This as business business to reporting has our been license product results. how and model become separately from revenue have in we received our line. share model value simplifying compared disruption clear is our with we our the our addition this and for you you level blending and our expected the partners a this line, revenue $XX.X value talk and than part and this create and customers of We've how When This are million be faster and markets technology GAAP results, been will of we material mostly we the million of is good into value to share In as see now represents partners is labeling our XXXX our also the when of we in report making we you, prior indicator royalties. their royalties explaining formulations. for we to period. core $XX.X share our and our were product about enabling. License the

gained the ingredient. consider the payments received indicated sale and ship our then as product before, our the represent of product combination product final the margin we that of our of gross with value we've As margin from when the direct future we share

transaction. of the For accounting the would've annual the is XXXX. payments. for financials This classification in collaboration million the the to treatment historical we of also royalty DSM revenue, nature guidance the sale of the $XX applied a to of licenses range line and and exceed the With quarter, and million asset we our $XX of from payments to to due collaboration included $XX fourth expected million our license received payment above of

million $X On exceed we in have of expected of million the $XX component, would XXXX, guidance share have in provided which value past. we compares value to the share to about

our see direct keep So, to and XXX% products the Think fully of revenue product will share. clean revenue going value goods the will of breakeven those the gross royalty. a our reported think cost near margin share from gross loaded products royalties of of for include as when having or and as value and cost margin, will forward product as value This goods and what products. royalties this we share licenses, payments. is see where not summarize, you report we Product

of We cover over about key revenue representing and XXXX XXXX delivered fourth million of quarter of million for wellness, results. our performance, with and health from headlines $XXX strong $XX now and me Let core XXXX CAGR cumulative continued to XXX% market expect our revenue. this rate This through from has market. a XXXX or XXXX core annual we growth growth from delivered

this independent care the in in brands at market, XXX% so In strongest We our America. XXXX. XXX% over retail consumer in Clean North our retail in XXXX far and growth growth. running we bioscience delivered in become of has growth are second brand core sales Our skin Skin-Care fastest-growing over sales consumer consumer delivered one business

Our and gross our at rate or growing a sales of times is from of XXXX run at revenue is annual revenue the XXX% total expanding rate XXXX. margin annual our cumulative three through end

We core are of and underpinned XXXX well through agreements in growth markets. expecting strong continued this each and how by beyond our customer

We XXXX are expecting product a of mix of the result our strategic continued into our full gross expansion margin DSM. and as partnership with of impact strong

We and milestones. performance we the best production all manufacturing from partnership with best the all resulted lower a delivered the with of starting exceeded quarter. of date profit of XX.X% our full be very delivered margin about XX% quarter with to year the $XX We structure technical adjusted gross DSM around and gross of for adjusted fourth XXXX. quarter revenue We the that well performance strong over of and margin first deliver double and to very date our goods. will of over with operating of strategic in transaction off an quarter operations XXXX. This or in income XXXX the revenue $XX at and operating we around gross history delivered sale a the largest to for long-term of million of was date. Our Brotas million cost expect is We the our execution. best quarter Farnesene met

year. start are to also successful first sweetener selling and production our expect at very second run we our facility. that This industrial have a pleased commercially the our the We we production of sweetener in this completed of Brotas product half was

desire really skincare is in in connection the are brands product have process very become market. Skin-Care that consumers in no in requested the consumers reputation early efficacy most as sales five, by Clean strong and one Brazilian for compromise April. indication by and starting Brazil. market have Brazil highlight has has a Sephora the is of great a for their the and we in our introducing We now the driven consumer a bioscience of indicated This strong top This exciting

very results Brazil wanted pre-marketing We highlight. we just and excited in of are are about we These are the this in Brazil. a few for outlook the just at sales to time

our we where much promises. hope about more Investor core Conference Day around making with many our progress detail technology conference, better to you in our actually calling it and good the There will our the I in help more you think attend so room Bio-revolution much We of to progress we're I we are the is having. markets Disrupt our cover. on are share customers understand Bio impact

you on our and provide turn leading Officer Let Operating financial supply scale Eduardo? our When I'll performance. Eduardo now production Chief to outlook execution. turn to up Eduardo our Kathy to update me then and is done, I'll Alvarez, chain XXXX our who's

Eduardo Alvarez

Thanks John.

Let and details our production on results plans. me some share future

in records both production and set we October November. XXXX, For

record. was the fourth fact, In on our production quarter best quarter

molecules two DSM to us new CMO momentum. Brotas without or loss brought also our transitioned We our and three we January, successfully capacity Spain any products. production, remaining produce Antibioticos facility to scaled In the of in leveraged focus with since we that

plan I ahead, our production Looking on am XXXX confident for and beyond.

to produce Brazil of Farnesene for continue emollient plan months and Farnesene, week we last at two rest agreement months reviewed and sweetener specifically leverage projects Brotas. our three partnership to from use cosmetic will markets to with We produce our We XXXX, lubricant for DSM remaining in for Antibioticos leverage vitamin, additional specialty to returned products. products plan and plants. supply our the to to We and just use supply nine the the and the

respectively. to track XXXX We facilities are XXXX on online and by bring these

little cost of plan. Finally, bit a let goods time our me sold spend about of

the call am of managed underpin owners. For goods our costs each in XXXX. be confident six and controls would and with cost plan of our centers XXXX, clear XX% that on I through margins volume,

turn the to over call let Now me John. back

John Melo

treat one By the that with platform sustainably Skin-Care world that vitamins molecule access throughout vitamins, the alternatively Eduardo. Clean for products nutrition great can it world, nutritional that growth shareholders. the outside have healthier healthier Thanks from significant can for while produced returns leading than for the our are the materials and and to a our we Weather be that We world Skin-Care, to products at a human at the healthy delivering inside is planet. believe this in out healthier time. the is Clean sourced the in and sweeteners, high-performance biotechnology or and microbiome we promise products, lower with believe products do are should make applying positive them consumers cost

is for is business. we the goal An or the world an What's world's to XX% expect? use outcome all consumers sustainable XXXX. Our This consumption. acceleration that for ingredient good transition good by will of Amyris the and in product

outlook review XXXX. our me let Now for

ability have We our proven to grow.

beyond. and We our business growth would have profitable the strong XXXX gross now margin in very transitioned performance

We pattern revenue expect XXXX consistent prior with be quarter of to largely years. our reach to

quarter. the the first remaining half we of collaborations a sales third establish before sequentially in the more XXXX fourth of start well several of the ingredients half and in of to that third be ingredient, the loaded one coming batch be back first in space, and is new with anticipated quarter the our close our fourth with the To it of as the flavor product versus will expect sale XXXX granularity, growth thirds give result, our production in the revenue will new two roughly the you sweetener As quarter off lower quarter. as second expected and as more fragrance and the half delivered

second million. products. approximately of to and then four anticipated Gross our planned across with of this revenue year $XXX expected million launching above half with anticipate first we margin some several to XX%, $XXX average on half is basis moderation all in a to marks high the XXXX, quarters due new the blended associated expenses in For of

We or $XX XXXX positive expect in net EBITDA to XXXX. better be in income of positive million and

growth to expect rate around XXXX. through annual We XX% average of deliver an

our to transition compromise XXXX. sustainable the world. about Xx-to-Xx to June debt-to-equity run around that expect no accelerate the basis We products on We believe throughout consumption rate ratio will of delivering be make by a We good.

Clean for for pure healthy nutrition, good, leading products harmed the this Consumers are demand, pure with that flavor meeting should not performance, be transition and make our and markets. in planet and Skin-Care fragrance consumers. all ingredients and demand. health We We

markets. each very be that and with we are for planet the do better all lucky in pleased and deserves belief We our the leaders feel a We share core to better all. can common market of partnered

Kathy to review the turn Let of me quarter. now detailed financial Kathy? for a fourth

Kathy Valiasek

John and you, everyone. good Thank afternoon,

that I I we earnings look only achieved to calls, beginning XXXX set statements I to am met As CFO back our on and the as the our of we goals made joined happy when We all very positive see to XX%. we successfully the our Amyris' $XXX $XX in two not of by and forth. We debt $XXX sold exceeded quarter. new over commercially products. the million, down it We by over flow of guidance achieved fourth our million, we brought million revenue improved goods cost manufactured cash of

are in with our with We XXXX and having the pleased growth year executed having for position plans the solid completed revenue to more beyond. profitable company and on

review results. let and fourth XXXX our quarter me Now

revenues million no As product GAAP reclassified John QX fourth royalty collaboration driven of and DSM was to the primarily have provide to our presentation more for that value quarter the revenue quarter of year royalty presentation. This sales of over in $XX.X to that them $XX.X VSAM, are transparency separate health XXXX. higher by Licenses $XX.X included mentioned, which Collaboration will product Firmenich. fourth and Product million was fourth benefited million as We $XX.X grouped and XXXX the same item be year XXXX our project sales compared income up for were XXXX. from the licenses Givaudan conform DARPA, within feel of grows. due reflects million of business up with $XX.X million $XX.X a Prior $XXX,XXX with revenue period longer business. growth in related we compared our quarter of for model quarter nutrition share increase for and for contributed with as activity million and the transaction ago. were a been and and part with from this will revenues, $X.X were reporting the revenues. revenue revenue, our line better amounts

create collaboration exceeded our Our classification. kept $XX previous not the royalty revenue have licenses and would million did classification and if full for XXXX, we revenue year

that of revenues, an realized from recognized in first XXXX a addition is profit operating income QX In to we million which our the we QX quarter XXXX, strong in operations $XX of while. have

gross role lower XX% Our XXXX. from in significantly QX, quarter for fourth of profitability $XX.X double non-GAAP $X.X in revenues our increased profit continue in sold for margin was that improving XXXX operating QX was and XXXX key revenue which and higher our the approximately more of negative than royalties, with cost gross profit expenses operating play million margin future important the than in to positive compared was million of QX and The very compared quarter. the about QX posted certainly QX $X.X when million QX $X.X products Non-GAAP better that of which was impacted will John resulted noted, XXXX. though anticipate we million, Even impact QX. quarter through the of of positively gross to lower will was $XX.X driver and impact XX%. each effect by as margins average XXXX transaction by margin DSM a

to and million the compared of to related XXXX, for Biossance For million expenses R&D reflecting costs of expenses with allocation $XX.X support the incurred fourth increased lower of XXXX. due to the the XOX headcount, of marketing $XX.X $XX were administrative ASC were fourth $XX.X quarter and XXXX, down transaction. Brazil the costs primarily selling, million overhead compared quarter quarter million from charges with in and general fourth of sales Amyris fourth growth, expenses implementation XXXX, quarter

our is expenses, depreciation is manufacturing the productivity processes of $XX.X with impact of cost mentioned cost is amortization quarter our $XX.X representing increased and XXXX making compared expenses increase tax was provision to net fourth to goods quarter the goods with our made headcount most million for GAAP a This and due the margin. million operating $XX.X Eduardo million in primarily share of XXXX. reduction diluted due per support report our to million net the the of derivative and of $X.XX the comp, SG&A for and relatively of during in improving Eduardo $X quarter with debt fourth non-GAAP down Non-GAAP This XXXX, attributable to is million. warrants. structure to happy very growth. at stock-based gross compared of John XXXX $XX.X and and loss loss now at loss of of for of I'm subsidiary. addition, and basic a or Brazil In This the increase to R&D fourth our combined or a additional reducing excluding our sold. SG&A through sold quarter per $XX.X quarter diluted fourth of highlight improvements release remarkable significant and small This our was losses our basic were million to XXXX and stockholders from of related expenses share. would common to compared given the impact XXXX. fourth GAAP $X.XX increase debt like convertible I accounting the outstanding

first year, presenting decrease have the our total weeks through we continued $XX few million We December some XX, past equity at with our debt debt debt years. by XXXX, to debt of debt during to of our XX, debtholders. discount alleviate have restructuring to In reduction have our of accomplished been December million structure incurred have This burden that current of and our XXXX. $XXX and/or has parties million this debt converting interest reduced net debt the further certain with as terms several to other of the restructure during to and compared XXXX the to few review solutions holders we diligently $XXX expense

XX, December restricted million short more investments XX, $XX.X Cash, $XX.X on XXXX. equivalents, million was XXXX and compared as December that time. We will term of share appropriate with at cash at cash the

manufacturing, product reducing of debt. endeavors have building help and for in anyone revenue should These The have improving excellent our our are our I and multiple to for portfolio questions profitability and growth, might include well well now path executed on to very fronts. like Amyris' the open We an XXXX. leverage and pleased year us for results rationalizing these completed call to Tiffany, XXXX to position would have.

Operator

B. Driscoll our Okay. Instruction] comes Carter And from Riley [Operator from first question FBR.

Your line is open. now

Carter Driscoll

Well, congratulations guys. really This very was guidance. and strong astonishing quarter

to So, right wanted the off bat. that say

for Can market you are about of maybe commercial customers ramp just the and in there you sounds half the First that how John through level disproportionate it some going second Then process? the follow And qualification advantages the opportunity producing you the sweetener. going today couple maybe impact the could you it's high of see of the total XQ? have on have talk quantities a question, about the sweetner like out hands many ups. you. sweetener the about a of year, about talk to Thank more maybe just talk I

John Melo

Carter, the being call. thank thank you. you way to for It's by And our great of Sure. part you on analysts. have following as the

on board. been being So, activity. actually really Couple thank of through bit mean there, partner sampling for thoughts our the this for you for first we've a is, and I now

and both interesting the most future. relationships. channel our expect have direct. not several is in one offer channel, Probably to one distant the the and the is consumer is, partner that in second couple to we customer market a reformulated got is and large market direct ones bulk too we've in the of access then interesting So, to And -- a a market

and say term. the people that good the so sampling near I who than building support in volumes very been is, forecasting XX especially it's we the way of could have are more we're results kind see positive for So, out best the it far

what And market we would of really in two I opportunity that second opportunity. think do of parts. really see market think is the I as the piece the

the of size healthy, having billion part sweeteners ourselves think high We First sourced see best positioned of intensity as around market total sweetener market. some high as and we probably intensity a somewhere is and well $XX replacing naturally taste profile. by

that it. focused near-term has the And using. the we that, be the to been what on production reduction two think billion currently and market reduction simple customers an is their what formulae of has tell so about high sources can It blend supply we calorie really size of opportunity total feel solution. what I delivering I exactly see market current aligned And focused competitive us, exactly on. we're in is what the will they currently a think for $XX about the about to it with so it scale very It to equal and they're I I has cost corn confident that market. tell similar syrup beyond the of with taste brands or profile, a us? and massive large calorie as sum to sugar have think they're And multiple switching target/opportunity. really way and which, or looking likes fructose think it Customers to that's that's on consumer profile the we've of call

an I that kind today hope Carter are about from -- opportunity, what the helps and are thinking a target So, where objective we is in just of sampling and feedback? we how and our product perspective

Carter Driscoll

its excellent, So, helpful. very

as you question you towards if talked responsibility and I of expectations Eduardo, of that so you is having you different ask a little you next maybe about elaborate of your centers. levels for about cost kind guess can out Brotas terms for build each what of managing those how bit responsible Could are allocating, we're in So X?

Eduardo Alvarez

factory looked as facilities Leland for we through with gladly. CMO partnership team as a plan In have and our in with Carter, our clear our cost production we goods well both I with Brazil these our at Yes costs Carolina more in to manage sold mentioned and us call plan execute of rest Antibioticos. our DSM in as XXXX, pipeline When really and and six relationship North with working remap manage we're the are manufacturing are that each into we one our Emeryville, clear team and plan baseline campaigns centers we of our have to a able think surprises and our the to help to excellence. of with going

feel we XXXX And to have lucky for some chance working to this it, been few time. for on So connect and very present. had to I a just on build team from is a our dots our have at that plan

Carter Driscoll

DSM talk the about over now best that some the things of and/or period in running could maybe John, been a maybe over either you're have only I X running short of had? the Brotas transition but impact Brotas has you you facility? apply terms Could of time, to if know the learning it's of impact quantify, the what short been practices to to the taking time X the them in the of may from

John Melo

Sure Carter.

the are working and the the both and has first the think none very side I impact has been to well thing flawless. together. thank DSM process side actually with is the the customer is objective. and I Teams has the been want acknowledge and because our meeting to really transition and Amyris been the delivery The teams on interface us minimal because integration same

all and in the So, good integration. transition

Board Secondly, operating a had and the helped amount and I thinking come go of a from in of we significant further we about Eduardo lessons on has how to them. processes step really the think learnt and some standardize plant already

with with They their think got coming other our good that I couldn't already job nothing doing forward built collection design aha general going impacting were So, him into where a that's really tell we're good big on of I there's new and the new we've pretty a than you out come and are new plant. a smooth lessons that's in operators. learnt there's

no aha far, well and so really on good big sides. both So, executing all

Carter Driscoll

would what hoping hit clarification was in you Kathy what due by that mid-XXXX, and some you're ratio, is I'm timeframe. bullets clarification Maybe assuming that pieces Maybe that just that to either the target a of debt-to-equity would in just terms moving coming of Okay. base refi the assuming of include? a

Kathy Valiasek

your Carter; finish I me? can sentence you again for sorry am

Carter Driscoll

parts Yeah, mid-XXXX. you I I to times or X range recall what was achieve gave debt-to-equity you if correctly, times guidance I on towards level it heard say, If by was either it X.X X going you back correctly level I to a and of to to of what had then proxy hoped as understanding to into moving as going just kind sure wanted can to the timeframe by was profitability I debt a that obviously to well? actual try you be that for make use is and

Kathy Valiasek

question thanks the Sure, for Carter.

and So, we of we've last said one of over for and positive would been allows us the we've in and I significantly into optionality think 'XX are be are in But cash and five the yes, past. planning on that doing flow since XXXX income to well, things X 'XX than that we we I net picture appropriate folks to many range. just a and a lot also more that feel the I John make and when we and been have comfortable but is that months with of lot the as for speaking it have had said, changes the will X with 'XX saying four as we beginning announcements

Carter Driscoll

before me in queue. get I for Last back question

molecules introduce the XQ, I'm had in core the latter year. that of not? it two wasn’t clear morning talked three the about are assuming put additional to part in you in if You hoping your or buckets you that's

John Melo

that's just engineering producing and not wellness, and and ingredient the the forward in are buckets anything those in that I pure of be Yeah, going one we will side. core health molecules three and/or other not be designing performance F&F health the and emphasize will wellness will in

Carter Driscoll

Got it.

your back all rest Okay. the answering. offline, and the appreciate queue take I'll in get

John Melo

Thank you, Carter.

Operator

instructions] comes you. our with Amit Wainwright. H.C. from Dayal And Thank [Operator next question

Your line is now open.

Amit Dayal

your statements well. that Congratulations you margins as you Thank Kathy, good is in XX% of the are prepared Really and mention around really did looking everyone. strong you. gross guidance quarter expecting again in XXXX.

right. Just have this double if wanted I to number check

Kathy Valiasek

correct. that's Yes,

Amit Dayal

supported mostly if is royalty Perfect and licenses believe. by and this revenues you

Kathy Valiasek

that question primarily would answer to the So, -- what I yes. is

John Melo

that share. value using I because royalties, I I of that change we're think was now in past and the do it licenses the to want know just and language emphasize right. to

predominately lot can in drives margin think share and that piece/value a of So, will royalty and it's and of value performance. 'XX that you licenses what's margin, but affecting as gross it gross reported that share royalties as happening the be categorized

Amit Dayal

large sized where pretty grants, some I those efforts? Got be see how you applied the are early Could soon to about talk you year. might received little in some going it. And those bit towards from and contribution you a guess,

John Melo

A happy that of big will Amit, Portugal. that. do Yeah to portion be in

You'll part challenging. become is like more and seeing have great can AI, artificial And half of second locally year everything imagine through we as about cost of the and become talent do. has intelligence more you really in and and core a bioinformatics access start all some the to that come of that

way So, others. able by only of people we have have so to developing great found discover Government our the We're focus AI on some software and we actually a have from ones found and an and Google Portugal. of hire support Portuguese has amazing and we pool. to not pool pool the in people of be the great to that and But

priorities from our You can for as about three Portugal waste think applications streams. of the developing all first

Secondly, disrupt core delivery AI more passing our a and our our that the science really scientific to position time challenges in spend them thirdly, path core can not deepening Emeryville. of and taking team some and with in informatics here and to

Amit Dayal

to customer revenue questions you opportunity, it. in coming that terms provided And Interesting. revenues I customers are the from Got is one on or hope of sweetener the previously, XXXX? from but some just multiple this you answered initial know color the in generate

John Melo

multiple. are There

Amit Dayal

XXXX into or you for will you happen the commission on put that in to question XXXX? expect this X later plant. maybe last and Thank that. Brotas early production one just And Do it

John Melo

certainly I operational so hope we fourth quarter Amit year. by said, to the the by I think be the as of end of XXXX Yes,

Amit Dayal

my you That's other Okay. Thank I all and have again. much Got guys. I so take congratulations it. will offline. questions

John Melo

Appreciate the Thanks call. on being you Amit.

Operator

no John I Okay. further any further the questions I'd to to like remarks. over call showing back instructions] Melo turn [Operator you. for in Thank am queue.

John Melo

Conference help your Thanks Stephanie Amyris for to appreciate weeks, XX, XX everybody XX. Rodman Conference April note the the your and Riley will I'd mission. through May on call and like the for in making support May Oppenheimer the Global our Annual thanks in Growth company Life that FBR & Sciences and coming continued participating of Conference the the be B X on Renshaw on and Emerging

Annual appreciate Investor second a May rest our one and Annual XX. Disrupt the Again, Conference, Day, continued Disrupt Bio day. Amyris really joining Conference Bio the hosting of thanks have and be also on I for support your Meeting good will into We

Operator

you for today's participation the Ladies this in thank and conference. gentlemen, your program. concludes

day. a great disconnect. may Everyone, now You have

Amyris (AMRSQ) 15 Mar 182017 Q4 Earnings call transcript