DNMR - Earnings call 3 2023 | Danimer Scientific, Inc.

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Operator

Greetings. Welcome to the Danimer Scientific 2023 Third Quarter Earnings Call.

[Operator Instructions]

Please be advised that this call is being recorded today, November 14, 2023. I would now like to turn the presentation over to Mr. Investor company's the Palczynski, Relations representative. James

James Palczynski

Steve operator. for joining you, Quarter Mike Call. today Hajost, Good Officer; Officer. Chief Scientific's afternoon you thank Earnings is call the and Chief everyone, Leading Chairman us and Third and Executive to XXXX Thank Croskrey, today Financial Danimer for

is there website Investor the Relations of our I'd that slide that on is like to accompanies available deck danimerscientific.com. at a note today's discussion, which section

harbor attention X As is language, I we safe call the filings which Slide your in on to just begin, of SEC our published company's I'll presentation referenced. and the

On provisions statements within of today's amended. Act the harbor Securities discuss Private as safe Reform Litigation the call, we the of may meaning forward-looking XXXX of

results Forward-looking and statements forward-looking from in of customer capacity, statements. demand margins, market what implied include, could programs production, profitability, is among including other differ future our Actual regarding operations, results levels. or materially expressed things, statements

reflect taken The measures company circumstances includes obligation any to meaning date supplementary and Regulation to to G. after presentation We update be assumes statements analytical value, of no believe except measures the financial GAAP required non-GAAP Today's by events references the also law. or within hereof, as alternatives but results. note to of not they should non-GAAP as measures performance that these SEC have as forward-looking

Scientific. you. our the Croskey, the Officer, Thank measures turn Danimer have and to comparable Steve GAAP it's most pleasure We presentation. measures Chief financial Chairman financial our reconciliations to for Executive over release provided in earnings now of call non-GAAP and to And my

Stephen Croskrey

restaurant Nodax for very We has recently been based large awarded. biodegradable joining cutlery and afternoon, quick notification received us. our Good that you resins now specifying for a program service thank

been this notification will awards and each in granted for of We have have that some program. converter participate Five partners our time. anticipated

they program deliver will XX million the in require of annually. supply need, with pounds approximately [indiscernible] will We to us each and them total, the

we in shipments next the the of hit first and for making to begin to the program year as of XXXX. second expect We approach half midpoint rate run full

unprecedented an replacement first completely to because to validation as This is tremendous through seamless behavior changing infinitely problematic material our is difficult problem which than is help This serves consumer reduce critical solve the PHA-based award plastic are a materials, strategy. that for businesses. pollution the truly of pollution more to

part brands differentiate, leadership to Our and for extend reputation solution. enable environmental their materials become to their of to sustainability. They enhance the immediately

and new excited exceptionally We're this program. by pleased

revenue last more. PHA-based our the expected While products year, quarter grew XX% by we had same over

currently are frequently major number we'll we further and which late commercialization of in their additional discuss previously qualification involving of final complete the anticipated. Danimer, of in final number steps moment. a and addition a testing, stages rigorous to partners We launches some in time with of brands, These including to a incorporate need I'll customers, some than

research and able appreciate Especially that our pollution end-use the itself an final several there before leverage years for programs. in into of adopting drive and invested intent to projects, And this delay we just on been asked development time retest and to were launch, as adjustments given and permanently months commercial some sometimes needed be our each able across be the particularly unqualified to our successful. testing certainly already that R&D prior long-term qualification, future away launches that are of to resins we the required of development prior We stage converting efficiency petroleum-based adding they quickly last the generally sources we cases, launch avoid understand for we to work underestimated new success where move confident board. process. In We're that to then the have novel these will should launch make applications from requalify of be commercial we plastics and more some cause. increasingly to process customers the often that are we'll with

the specifics not brands programs and to you about we're like I'd launching. currently give some

progress focus partner. that old Bacardi great we First, to materials a They on and compostable encouraging. focused to the pioneering a work model as soon most with We That the ago and single in example require and possible. of, that prototypical on years of bringing one made ambitious as continues design. our XXX% company on would not breakthrough challenging ever work with work development we Bacardi, plastic-free technically initiatives family-owned is engineered began a Both the packaging be I'll undertaken. X if a XXX-year spirits knew a by success remain an we've have focus XXXX. of goal we Bacardi advances began is home together when success

These identified the implemental their along waste we are exciting, and powerful said, very Danimer to That sharing at opportunity. development plastic rapidly more more additional will way, chain. the elsewhere in Bacardi and also be have eliminate earliest and supply initiatives

resins. retail is one NODAX-based recall, offered producer Meola, in will vegetables resin As a last retail, with of The at development Farms, fruit. application Columbia partners. and launch One our Grocery a care large-format packaging a be stores. in talked for and about CPG, converter for Myers you of division may XXXX application Group, by of their or for XXX this product customer grocery quarter, is partnership first fill film the new Packaging number began Bolthouse we new home compostable

recognized Asia, testing, inspection use by end organic mini a Earthbound for post will badged Farm globally X-pound pill for are certification biodegradability. bags independent and first The in The certified parents. comp leader be TUV Home

certification across we're compostable CPG a and qualified. bags, for consumer meet, to difficult and and variety packaging to This intends have very develop wide market stock to not is but pleased produce a royal just film goods. of needs

value-added modest, product focused go-to-market steps a launch company's and opportunity. huge on a next this the their is strategy. believe working presents the initial they opportunity towards are While category the CPG growth is in intently

the work single-use Delta we their capsules with standards. company copy a regulations on and market Coffee, other or that turn new harm Q roasting packaging product believe completely coffee to environments, compose line Delta coffee will now of any has EU would degraded for ecosystems. to We've The in proposed with meet that micro the requiring new in sold espresso, be the ground EU plastics which capsules led I'll developed inside market full compliance first Portuguese XXXX. mill the since industrial our leading composting compostable residues natural

also pods PHA-based pods. these who Corbion, key ingredient developed will that the Energy's partnership resin the in We've PLA Total for the is a in with supply used

coffee producers is We for one of legislation. view major regardless passage disposable Our as an this ongoing. proposed us category other pot engagement with the important of

Finally, I'll return to the QSR space.

are still in NODAX-based the addition advance for planned In field trials another program, covering XX to the draws customer. engaged QSR we rollout nationwide and million-pound major by

have QSR remain menu. joint large excited for specific and materials to that executed develop to just development Our agreement focus, the development with a their are a channel we're efforts a QSR to packaging

closer [indiscernible] Additionally, for extruded resins in we're to coatings. partnership with using biodegradable commercialization cups Kemira of getting both and coatings

in especially not key for Our These coated important materials but foodservice. this used disposable partnership for only has effort. in all with cups, technologies are paper the Kemira been

next we're expect doing the We of say quarters. couple coating more to the work have over to about

leading just the source QSR for as I'll are materials that confident channel. now, alternative For we we say in are a emerging

have initial associated to these a them, range opening each across have a look I partnerships, recent these the has dramatic customers increase business even to those new opportunities importance been underlined that generated. volume engagement with new they're and The by that modest potential of of add they each opportunity. launches diversify category our As our with new boards or addressable customers market in to end-use

industries and solutions to customers seeking across plastic triggered have developments with launches recent potential waste. product long-term partners Our discussions major multiple

continue existing challenges make path While we capacity on delays, near-term to we and conviction have we expansion and filling great progress our continue strategy. work in towards Kentucky footprint right through are the on launch to plant that our

diligence and look proceeding Our as to the to of continue work office loans negotiation we Energy with due is terms complete planned the to phase. forward Department program

forward, category capacity market. a Kentucky end possible The plastics talking making believe we and in pollution to disrupt utilization toward enough about greenfield demand problem are enduring to that success. address global identifiable have and there been significant We specifically market make our more petroleum is way project now full by ensuring is than category, business customer today partnerships by that end it the by building the illustrate and customer progress

for will I Hajost, on Financial the turn on to our and our rest Mike quarter Officer, now the update of the Chief outlook the to numbers for the year. call you over

Michael Hajost

afternoon, following and start Steve, good on presentation along. for you, results X our Thank financial Slide with our I'll those of you of everyone.

by offset as million compared $XX.X revenue. Third in quarter was service total to reduction revenue product growth revenue mostly million $XX.X in was a

to prior Third XX% year $X.X compared with was to the million, associated grew resin ongoing million. growth Ukraine were up $XX.X entirely XX% million sales resin XX.X% the level issues $X.X due compared year. of quarter prior PLA-based attributable versus down sales, PHA-based to or This which year last revenue product to was the conflict.

as primarily of funded approximately was prior was to gross an and third This to expected loss gross mix. loss commercialization. which year-over-year is customers about increase recent We amortization The is expenses raw for product R&D million, reflects XXXX revenue lower year's of related well costs as depreciation last service material trends than a the higher to as increase third compared and This $XXX,XXX. quarter Third the was higher with quarter move quarter's $X.X consistent year's $XXX,XXX quarter. projects reported million. $X.X our certain

excluding loss production XXXX, and million loss third million adjusted categories expenses third depreciation compensation quarter in the fixed for to adjusting the depreciation, the both as R&D $X.X for and due of relative costs. a expenses and other of stock-based of to primarily of compared After compensation, totaled million improvement we quarter nonrecurring an significant last the gross of year. an SG&A reported increased $XX.X in million $X.X items, quarter, adjusted third stock-based to $X.X gross amortization, in certain

business also for many quarter million Lower third development continues to in the XXXX. projects. The drive this certain compared through $X.X adjusted to third the to areas quarter improved reflect of conclusion expenses the $XX.X improvement. control million EBITDA the efficiency across improved of cost loss initiatives loss broad-based of Adjusted of EBITDA R&D an

at the income cash to $XX.X million was stock-based agreement. Restricted including for million EBITDA third of $XX.X the the our excludes reconciled Adjusted $XX.X recent expected end pursuant as the of million, cash payments loan and quarter in and compared equivalents end was million other interest appendix. at compensation, Cash XXXX. to add-backs $XX.X other as

the been $X.X $XX.X were million million. in Capital third quarter year-to-date expenditures and have

third be favorable end more of CapEx the prior total quarter starting credit million million $XXX.X We with we range between tightened our loan of expect mainly balance towards debt $XX million of full market the to of which our We have be $XX will the the year a forgiven spend expected $XX and closed senior of quarter million. in our senior ended and $XX to secured term our first notes, we convertible tax million, comprised during range XXXX. new loans,

magnitude ramp short-term our of timing that We demand the our our to continue largest utilization the for and view operations customer serve the resins increased as PHA-based in and financial Kentucky results. to for factors variability for

next discussed, the As previously we quarter launches. not shipments both customer of have initial expected has than and moved the expected of the benefit new And further quarter as Steve expected. a had timing programs consequence, from out certain this do

and of XXXX guidance million full for between now Our the range EBITDA negative $XX $XX year is in negative adjusted million.

to hand closing his now back for call remarks. I'll the Steve

Stephen Croskrey

Thank The capture door are cutlery the a other seal watershed for in afternoon. program your QSR awards Danimer we've categories. and attention of to channel a additional ways. many today announced approval open this for volume the in constitute They us for you event and

their this program ways critical the of our a financial for major gives also positive business. incentive and our carry performance. In converter grow These to of awards future on Nodax-based mass addition, revenues impact look partners X to

One of into aspects most capture. how program the powerful every built when is we longevity is of business our

solutions only the seeking so the to problem permanent solutions problem are matter, plastic customers that large a and we Our of have. permanent damaging solutions pollution,

spoken customers our enduring because We for once is stable with capacity large consumables, expect that businesses is for demand capacity essentially absorbed. our that are permanently

that opportunity and ours tremendous alone. We is a ours believe have we

we're for you. And Thank questions. operator, now ready

Operator

[Operator Instructions]

with Your from Securities. Tanwanteng Jon first question comes CGS

Jonathan Tanwanteng

full out. one? the to two, expected, utilization number what wondering you What scale relatively them next programs the pushed that of does of Kentucky was delay by year. was And end number getting that you of the I

Stephen Croskrey

programs would to year. is the be expected announced pushed able thought it This Well, this, probably months color we utilization be. out rates the Steve. next we'll currently you being QX and is further this those depend initially It we are with into rate. far fast or end will roughly we'll And that some discussed other programs that example, will not how this as as the now that behind the that of year. we've the And shipments where we that and on just next originally of program program that's things to We we whether hit in hit X an been utilization but launched, get as it give by scale, on quarter.

Jonathan Tanwanteng

you operating Mike, up was expect do expenses Do I any meaningful either wondering or from change where down? go here?

Michael Hajost

in our repeat. and we're reduction are that expense operating we were we're There did some reducing AR look, that we proud think, A a year, influence ago, such that had on I year-over-year won't certainly costs year-over-year, cut our as that actually year very things of things This increasing reserve. reserve. how reserve. operating there's some positive

So that's to budget right the you going opportunities. now do together we that additional X for directions year-over-year a there opportunities little look our because of as exaggerated get kind of kind there. savings cost believe putting effect are of in are different bit We

are there where think that terms expectation going other we there's in year. But some this they're to be So be headwinds our be to is from are had things, some flat benefits down net-net, last overcoming either that year. will the we of going then do versus they year we of this though, to

Jonathan Tanwanteng

And you loan Help DOE process? in you expect do you you? of is the what that out? And the are then DOE us to understand -- when where play kind see to do saying where

Michael Hajost

working both overall, I parties Sure. Yes, think there's a between still enthusiasm tremendous together.

a again, a than teams, there's we their scouring and bring for into financial, on The of previously the we're They lot partners. the taking technical, they're expected. with thick been had side meetings with this due experts still a now know, now, we're longer again, collaboration little working you and through. of project announced the As is, enthusiasm our And we phase, diligence right of going going which third on in through of manufacturing, site. timing probably lot in what

that, and early it's As come year. now the kind of think we be learn more so of of concerns I that everyone probably expected next they a wouldn't any there's program through that not frame with is feeling about until we're longer. And a bit just process on funding time do, -- to about to good that's expecting our we going the maybe QX little part it's have what And the than had far. again, there. very But

Stephen Croskrey

that that, And this with of our just accomplished, would I have to that were significantly whatever improved chances getting award. cutlery add now

Operator

Cowen. next Thomas Your with from question TD comes Boyes

Thomas Boyes

periods kind maybe longer really taking launches, with common delayed their related speaking validation theme it macroeconomic there that Is When customers around through? to is -- have is they're around a get it of just Or down? slowing backdrop? the to

Stephen Croskrey

but that of focused I technical on product range the challenges are a wide reasons, of them say there finalized. of most is getting the would

end-of-life -- the trials, As can an R&D to was work something that The and for trial-and-error. is we when the of start the to tests a the the you cutlery the get material. case confidence you start doing lot to example, going certification got sometimes converter, that's as with work optimize this end-of-life production you've performance qualify And program.

a the the pass What testing timely started happened of to we in product this not apparent case going it became that was manner. with is that course the during in

had frame. the formulation to appropriate time pass and to allow the readjust kind we so to And in refine of it

pretty and happened. that's thing a has of that the cause a delay So type of that in that specific typical case, was

Thomas Boyes

there it. sense Got hasn't obviously, been any cancellations. my And is,

of So just to point kind put finer a it. on

are pushouts, of correct? really just All launched these

Stephen Croskrey

Yes, that's correct.

Thomas Boyes

the business. of the acrylic hop acids there? then relates your would business And and Chevron relationship Great. and opportunities announced some the drill And to love on We had that I'll things long-term about Danimer as my maybe talk last discuss Chemicals for the that. efforts down just Catalytic you queue. of you it one, with like Phil Could in to the

Stephen Croskrey

those teams you Unfortunately, Yes. that great can't us opportunity talk potentially chemical But I tremendous the of it's the about of because are a a in partner a both specifics programs tell like too major very get to excited company for much confidentiality. close we and can that, could who to be future.

Operator

comes Your from next question Piper with Neivert Sandler. Charles

Charles Neivert

having production you ramp-up building inventory of of quick on do some A product. anticipate that when start cutlery, or for like the thing the anything that to delivery for

year, have in that go quarter to set to going in production and next up when ramping get ramping third third quarter, guys up start off to do it's if delivery? of So you -- to start for

Stephen Croskrey

start this in Yes. in expect we building anticipating QX orders at that some point this at QX, We'll inventory point. probably early

Charles Neivert

it. Got

of it Is like year sounds then the Okay. will And slow -- so building said they speed? to that is full How product? you about. I it It talking bore about million to look Or go $XX it? were sort X mean are even? from you numbers. to expect go chunk full you take the of How said a round the distributing out? that ramp a should when does we

Stephen Croskrey

know at the like quickly of would close kind next middle and Yes. expectation be million be rate. run by then a of tell full sometime above is now X will of what end I of there you will that QX middle can be 'XX our to run year, early from of it at pounds we rate to to we

Michael Hajost

XX%.

Stephen Croskrey

sorry, am full XX%, be run I to rate. at

Charles Neivert

then last now. for question And Right.

it an on have that? is it Is we'll end -- and years, it Is for -- year by is there it? a see it of goes sort Or to length how play contract? years? it anything is from there. just Or X Just it X does there this

Stephen Croskrey

Yes, this is just the will that not is companies they the anybody's difficult and something that to move before doing, to we're out of be it go to another or do ever these unless they of in just change on segment things direction. to lot part a that. ongoing so like done it than other on focus one decides priorities that have And would else there's the motivation of we've -- business again. material customer process beauties But would to through a change

were just certainly we somehow unless expect face, So fall would have happened. to something that's we our not to in

Charles Neivert

any is for end of goes sort the again, that grow that possibility, particular million, assuming there point, deal Is Or deal. $XX of -- that specific well from the can this thing? is even that to that all

Stephen Croskrey

Well, the this North grow it customer. obviously, only But for will with is America.

with other QSR but other the other of with applications So in in parts there are opportunities also -- space. the world,

Operator

Instructions] [Operator

comes question next with Jefferies. Laurence Your from Alexander

Kevin Estok

This is on for actually Kevin Laurence. Estok

resin So single-use wanted for touch just my I back pods. first question, Nodax-based coffee on to

So years? just any the vein, maybe was there you Portuguese some And obviously same want other to some maybe if touched that just I regulatory next company. are the guess I the you for of get provide in several with any I that trials. tailwind in wondering on guess, update initial markets could And operate I sort then customers there. other updates

Stephen Croskrey

the as or this. producers question go, the with that Because legislation as major far hot to ask I'll part they're second coffee of to Europe. Kevin, the answer first all little of companies we in It coffee for of solve bit are to out working pods, and me. pod there, a you But on repeat blurted expected part. the I'll the

announcement of accelerate going for in And and ahead repeat go a So your question, to why second important us the this Kevin? part is Europe. you that's just adoption it's could as very

Kevin Estok

sort medium pipeline there I other in were operate? any provide if Yes. in the the were, that term you wondering was near regulatory you Sure. markets that of, updates could a tailwind expect in just the that

Stephen Croskrey

back discussed that head, my I the think come have of get that. if past. can't anything of on to But in top the in something, not Off Kevin, I we up we'll you with particular

Kevin Estok

coatings progress any Okay. for up in if And sure what yet, but been not has you've brought on I'm seen Great. cups? the this acres

Stephen Croskrey

It's very Yes. well. going

cups push actually is that We that for have are in QX a expecting by There's expectation if good QX. stores for but sooner, to I trials. trials to think see done can a be

Operator

the go turn now will Stephen call Please ahead. to Croskrey. over I

Stephen Croskrey

Thank you, operator.

will that's change tangible point to shareholders. end we Before the decades to pollution. where the our look to work like are of like powerful our and engineered time stress call. again a able of ours a customer market. awarded. tipping who importance talk this been we a business. not next to solutions our message major world deliver approaching This We're quarterly now about the with investment When you this send call, attention, also benefits and just the again I'd forward The program Thanks. is address the problem for in QSR plastic and to about of we cutlery desperately are growing needs to for speaking material on your and is, Thanks

Operator

ask and you participating that lines. your disconnect Ladies your and today. please gentlemen, for call concludes this you We for conference thank

Danimer Scientific (DNMR) 14 Nov 232023 Q3 Earnings call transcript