DNMR - Earnings call transcript Q4 2023 | Danimer Scientific, Inc.

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Operator

Welcome to the Danimer Scientific 2023 Fourth Quarter Earnings Call. [Operator Instructions] I would now like to turn the presentation over to Mr. Blake Chamblee, the company's Investor Relations representative. Please go ahead.

Unknown Executive

Thank you, operator. thank Fourth joining Quarter and Danimer today everyone, XXXX Scientific's Earnings afternoon, you us for for Good Call. Hajost, Leading Croskrey, the Financial Mike Chairman Steve Officer. Chief and Chief call Executive Officer; today are and there that which our discussion, on website note to danimerscientific.com. available like is slide accompanies is section deck Relations Investor a the at today's that of I'd

I SEC meaning As Litigation as amended. just XXXX statements of which is language, we safe company's harbor X call, today's I'll begin, On safe Private of within Slide in referenced. call provisions filings our we the the forward-looking Securities on your the Act of presentation, of attention to discuss harbor and published Reform may the the

including levels. assumes capacity, market to implied margins, programs forward-looking and statements expressed results what statements. Actual customer The profitability, company no or regarding Forward-looking things, other operations, include, production, demand among differ our forward-looking or statements statements is events obligation materially could in to from reflect any of future update results after the taken note of required alternatives references analytical measures and non-GAAP but date have financial law. Today's should Regulation they GAAP non-GAAP to to presentation measures also within includes measures circumstances except of We results. by believe hereof, value G. as these as SEC supplementary that be meaning as performance the not

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

Stephen Croskrey

believe marks as future commercial we Despite experienced the needs. meet a the production conclusion well year understanding current delays by in and fourth and encouraged for we during of delays, you thank plastics competition the in Good Danimer afternoon, we and deep customers' biodegradable The us. these greatly challenging of quarter our of XXXX available end are capacity anticipated and our ahead to of both the launches. of remain industry the year, successes the joining

QSR, recent resin cutlery award the of the announced of up compostable carrot commercial or the examples quick-service in as the conjunction include scale large certified Farms' another QSR, our XX our Columbia start previously as draw mini brand Some successes home Bolthouse bags Packaging a for of large chain, Nodax-based restaurant launch a million-pound with with PHA under converter partner, Group. well completed

are excited environmental meet the We that our single-use will development EU about coffee in stringent Cafes with pods partnership Delta of standards.

Fishing of research and customers Additionally, we including our strides several Mars-Wrigley, with development Kemira, great have in efforts made Eagle and Pepsi.

production. We commercial to a our partner for with are engaged a commercial partner major in for using gas announced another pilot remain also We to provides material in have Rochester, of an proof in of of us demonstrate meeting designs customers' Rinnovo the oil colocation Rinnovo and capabilities allows negotiations needs our New this with also a and in unique the completion supporting applications important PHA. scale York. concept company research engage end This and PHA as our facility our plant

extrusion extrusion in progress work continues Chemical very Phillips molded molded blown commercialize manner. films, a Our and with positive Chevron polymers to using parts cast develop to renewable injection and rotational parts films,

U.S. commercialization of products and X top remains We straws, Our variety as a end-use sales the efforts quick-service QSRs primary bowls focus container wrappers, our lids. work system-wide channel. with cutlery, development including film by closely the restaurant for and in measured

large chain a Our cutlery provide resin XX-million-pound QSR to previously as global we continues progress awards announced anticipated. to annual

in delivered We quarter the XXXX, center second XXXX. least the first with of during and have the third the entered being of up cutlery distribution one stage first expect of at shipments to scale customer quarter commercial

XXXX. of full reach to We award expect this second rate quarter run the in

cutlery recently also end an and Asian and same has Nodax-based has product expand wrappers have categories, including of trials also markets, during for into for Scale same our containers. of in XXXX. and straws enter lids launch this to learned film additional expected with to is a specifically geography, including both with opportunity Japan the resin The development into success customer. We progressed large commercial straw and QSR coated led another joint with QSR these to agreement paper up

This our advance to challenging but a technically cups continue resins process and very using also extrusion We successful commercialization both to close PHA are compostable area, the we coatings. of has aqueous for a outcome. in been

with packaging compostable rapidly a paper-based more option food industry be QSR builds exclusivity roaster us partner, license towards bodes applications. of for part extend and their for ground to company in began to and to transformation. Portugal, continues this are Delta with of an the to solutions, aqueous a their Delta and XXXX has we successful be Our coatings development single-use on coffee biodegradable This thrilled Q move long-standing Cafes, partnership, beverage our recently commercialize sustainable develop and a future. The barrier to which in coffee partnered Kemira exercised to on well line capsule used extension and espresso. We

industrial proposed We would shipments harm quarter any coffee to environments, no pods new microplastics sold meet EU standards. These full or are commercial other the resin compo in begun XXXX. inside compliance degrade of leaving residues have first composting this pods regulations capsules natural ecosystems. of in These new with requiring that

pods marketplace. XXX and European As million a in represent opportunity bags coffee potential the tea GBP reminder, a

We the testing biodegradable research packaging materials using have also year. this product of fully division, validation and contract with development unique a to with PHA of further relationship our Mars-Wrigley and including our snacking expanded completion their

development Our desired PHA made performance Care of showcases compostable products Mars that partnership businesses. Nutrition Food the significant Pet packaging towards also has progress the for & in and

Development soft completion by Fishing, is for the continue end-use we a which this partnered technology plastic replace be harm Eagle an the base. leader to on help innovation soft develop aquatic promising resins. midyear, focused R&D fish applications PVC has grow fishing of will with sports ecosystems. in that the project as in can exciting is PAK Nodax PAK directions us and our our industry, us is new and new Another industry. to to with This nearing odors technology new an PHA-based for underway testing full-scale plasticized market

have successfully completed in a PepsiCo We use films joint with create home-compostable development multi-air agreement food for packaging. to snack

Kentucky while to our meets have projected alternative. sustainable practical structure Our led for efforts total. combined The a profitability the the in disposable us products our R&D and expected the company line time offering packaging our demand the a reaffirm for multilayer of to development requirements product allows protecting growth that operation PHA-based for

Kentucky basis during become at stand-alone plant our a of on over EBITDA XXXX half expect We of facility just utilization positive to the XX%. second capacity

become above, further positive when XX% XX% liquidity to we will facility capacity company to total the cash customer to position expect revenue our near decided ensure the utilization growth the reaches support EBITDA Kentucky augment XXXX. To outlined runway. start We help of adequate our an

announced, increased for process. be cash one. previously lengthy than offering this been as time. recently a process fees. material of attention will aid to would presentation, From customers But initial selection a along needs. I have XX meeting market us trials have burn visual an our We this your the a to sample to customary from Kentucky million a of can members. sales we $XX.X completed to we pipeline to cash testing, initial draw a commercialization, which iterative ranging at investor to X now long after like rather establishes scale sales projections lead facility closing additional the our X currently certification and announced production our larger cycle linear reminder provides cycle in new in equity our business. We Slides forward volumes cycle rate generating our at This for decreasing recently cash work. As This we liquidity, the with our additional X long-term Board regulatory and in

XXXX, former XX, these of management in and CEO developer He as team. biopolymers. seasoned to J. XX Board company. Altice year, He will Inc., of welcome and and has Moody and and over new executives Mr. and managing specialty experience the has January industries. These our to experience former adding of of Moody, experience Officer the is David manufacturer U.S.-based our NatureWorks, President effective marketing, biopolymer manufacturing a XX on the polymer-related We Dr. over and Jadex and operational board very Directors. appointment members are chemicals honored Chief whose Altice, valuable was perspective a April material we industry and Board of and sales, of the Executive grow years Richard to Mr. be science Danimer businesses. the Dr. seek rapidly years chemical is Scientific about appointed XX of excited we who are this bring to Richard business, to

we Finally, and Program on stages now negotiations and to diligence to our call we on DOE Chief with turn the are Mike will entering over the our sheet. I look forward the outlook fourth due of Officer, XXXX. results a quarter you the financial Hajost, on final Loans our the to for work update for Financial projected term Office,

Michael Hajost

steady the is the revenue depreciation, to growth, adjusted XXXX loss ongoing well primarily gross last quarter in the and fourth we The XXXX good million along. the to year. prior million sales of reported the gross PLA-based $XX.X quarter the revenue loss resin primarily but as and of quarter $X.X resin of $X.X adjusting or PLA XX% led adjusted I'll year XX% higher the nonrecurring to in to conflict. We sales an as primarily our to you by lower year as depreciation presentation amortization, reported as fourth excluding million million XXXX, sales stock-based expenses, million compared totaled was PHA-based $X.X expenses. experience of those million. quarter's everyone. issues start overall with compensation a compensation, million the loss And SG&A gross Thank an and we to compared on After year. compared following for level. quarter product grew certain in associated year-over-year compared last to and million $X.X last prior our by bid of in to to due total results financial afternoon, compared you, fell to Steve, of Ukraine due year, for fourth continue Fourth quarter Slide compared decline XX% profit million $XX.X of quarter stock due sales. R&D of $X with X $XX.X $X.X lower a items, compared PLA the of depreciation of gross to increase fourth

XXXX million cost million quarter $XX.X fourth many areas quarter at the million of the $X.X improvement. year-over-year EBITDA in $X.X continued was fourth the business of Our in Adjusted created this XXXX. control loss of initiatives and loss across was of

latest which loss nonrecurring to our guidance $XX.X million at excludes For of $XX.X were mainly with which the quarter $XX.X of starting full is range EBITDA of improvement the represents notes, $XXX.X credit to $XX of cash in new a $X EBITDA our term $XX.X XXXX. year, full will depreciation, be convertible in basis, million. and forgiven under On the $XX fourth stock-based EBITDA secured minus secured $XX of compared over and expect the end $XX end reconciled interest we we prior a million million as XXXX. had which million quarter $XX term Adjusted our range million quarter held million. adjusted with $XX year's payments year-over-year loss million the balance loan. guidance year loan at in an items in and line interest with minus comprised senior our and fourth in for compensation, million adjusted total expenditures as equivalents senior other our the was $X for future was million million, amortization, latest the loans, was to this a fourth mainly of appendix. Cash tax market Capital Restricted was of ended which the senior million debt the line million. of We

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

million our earlier, customer from range are improve adjusted will expectations set in to described capital on that project range be flow With our total million. company to Kentucky will the required million. XXXX, believe minus to $X expecting release be to little full EBITDA in spend $XX With the the in our operations, $XX the of our guidance. We minus million year we cash we're greenfield expenditures $XX for the XXXX of very

capital. The known on year range We proxy $XX cash net also XXXX for interest as current range, the driven range is end million cash EBITDA an the and from equity received structure, significant in range a cash based to for led $XX recent flow, million. expect ending the by does cash to issuance liquidity opportunities with not available our artificially levels improve working now our balance improvements completed and reduce capital from debt of The adjusted working improvements cash receivables remarks. CapEx by other cash in the unrestricted include XXXX balance call cash the overall for financing current Steve to our collections that will transactions high our us. I'll balance collections closing range our This or from ending to to be include to ability hand contracts. potential the inventory back his R&D to are from

Stephen Croskrey

ahead we for long-term to our for to path we and have a today, immense as In conclusion, our With of growing blue-chip towards any look developmental base, progress. and and we footprint plastics forward on time the you believe deliver Mike. expertise, and look updating customer competition beyond. Thank XXXX, Thanks, goals you remain are our on clear the transform a market. and we on your capacity we well opportunity focused XXXX to

line now will We the for questions. open

Operator

is Instructions] Jon from Your first from Tanwanteng Securities. CJS question [Operator

Jonathan Tanwanteng

ramp bit My like the the have getting breakdown through contracts little by may and expectations timing a It the one up -- year? seen, and could you is, does color more but better that sounds little related first quarter? you more of talk you're to some about detailed wondering visibility other if [indiscernible] more a your I'm ramp as you any just bit have for a

Stephen Croskrey

Yes, of color is in some this than opportunities. don't other larger by it be the you can ramp can which going we I driven to here. award, Jon, is give that I the know but a by detailed of color to quarter, Most significantly try

next and of be tools new getting been have project will in distribution by the now, for QX of to the we that right is centers ordered expect be built process are about business As mentioned year. converter be with worth already, million by April. the in full of rate $X the we at QX to One run that of program. converters equipment delivered specifically aware has that in this Where

we're it's the our next don't full more of GBP just XX the million, specific underway. run QX this the our customer and double things are that will exciting that requirements cutlery we is also be the point wrap out, than PHA one that that to will by sales. support goals So of significantly of I'll year. going production that's plastic award. a doing add going the and well yet. But at to We to now that's have point know what also And the And be for rate

Jonathan Tanwanteng

That's helpful. it. Got

or program. you if update any there, there's an wondering give DOE And the was changes I expectations? any movement Second, could us loan on to if

Stephen Croskrey

Okay.

diligence, a be in negotiating and commitment conditional terms of looking are is due for its and We conditional where DOE expect sometime by completion offer we the are the QX. now point at the nearing to

Jonathan Tanwanteng

be in that Got it. think the QX about funds available Is it? time would that line. fair And around to

Stephen Croskrey

Yes, Well, will that's possible, what conditional is. that's possible, depend but actual also Jon, Jon. on commitment the it

depending for, requirements exactly but we've So might we we're on know what asked really We don't what know be. getting. there what

until hard so and of how it we're on of But see But predict exactly. it's be be can could by sheet it So much that the monies we depends term actually in terms how hopeful done just to to there have we raised that really get potentially still take. that could kind QX. long

Jonathan Tanwanteng

depending movement are up as greenfield line time think to for, the anchor it an you financing may may get indicate -- Understood. which the go who and they to indications, seeing what you -- customers and volume about you customer could commit might are in And or lastly, any greenfield? on need the then either take willing

Stephen Croskrey

able handle included are the that expectation we're our of just going to forward that greenfield because I that are tell Kentucky. customers you requirements ramp won't the their current know Yes. with out some be done this to deal would of we that entire they moving get in

obviously. development pipeline as many of we've these think in more even multiples as greenfield. So And favorable expect, there's line said, some the continue than thing, projects what we that, a our to we other the across we times, demand that's finish we handle can get with

going -- support get that the create are and So we'll one the would require and cups, that's as drinking finish cups, to I tremendous line, to point of that. greenfield which amount we specific need, a compostable to over demand

Operator

Cowen. Your from TD Boyes next from question is Thomas

Thomas Boyes

on of the get how in XQ you it X that bit that and a so Bainbridge. forth. Is the level, and lag then showing that a on just would be XQ at timing high so conditional a assuming CapEx kind you 'XX XX% that how already And improvement kind fair of -- follow-on, you and on to assume loan works? in just XQ you've on there's quarter then a X of one Would in $XXX up spent of that spent of the DOE on one works? Is and that More the the that for 'XX, the Maybe think kind maybe million loan. process that comes all time?

Stephen Croskrey

Thanks for question, the Thomas.

try Let question. and to answer sure I'm me the make sure I'll I -- it answering right make

to LTV term going as value. get an loan we're the part to of sheet, So

away, again the equity. to if against project draw $XXX gap, If it and already equity. will million-ish the there's a that be have get towards loan a we'll got count right we've just not proceeds. we'll So gap, our immediate additional -- And get the raise there's credit for into roughly started will we'll whenever

It will loan step be month be that. a won't the anything closes, available. will it -- or like when be each thing all like there So

Thomas Boyes

helpful. the that my Okay. speed containers. that know just up progress the you've That's you could second I you the process about a then internally And lids the coated and in bit joint more could made outlined development talk And sales theory, paper one, for deck? significant have for agreement on little lids. already in

Stephen Croskrey

Yes. I It's are for lids for that but specifically it's major very are Thomas, for these these can't to similar to QSR other lids. really cups offer too containers. lids more, much food but than

we every can things, we a learn different. time projects, we that into one of But little it's and other things we So areas. these do learn translate

it's all good. So

Thomas Boyes

sneak And in. one it. I Got if more could

What locked feedstock update be market? Just would the you're seeing any pricing? on in helpful? What you've in,

Stephen Croskrey

to Yes. Mike, want you do one? take that

Michael Hajost

somewhere Yes, sure, QX, our seeing overall, the right here can rest look those forward type as averaged QX. in really of Thomas. -- about -- the of through kind year, Yes, prices year to I the we're of And to think same $X.XX to $X.XX about canola a projecting mid-$X.XX the in pound end the price here move around mid-year. also we down in by where It's expecting range. we're prices and we

the So we're we're lock to some starting prices seeing in. nice of decrease those and in a

Operator

is Your Jefferies. next from question from Alexander Laurence

Laurence Alexander

customers, can would of the potential to the sense of start you process XX did kind Or that all change to with ramp talked if want does demand the you demand represent? the that how give plants about many those customers filtration that some compared previously? pool of what of Just up, materially you've for you that potential aggregate mentioned, have

Stephen Croskrey

that more at just round just change. added. Yes. the better XX to projects Xx big least understand for be available And without process see investors conservative than would a That's help in customers to those obviously, we've of things to represent to throwing in we're the capacity is -- try a of of the -- necessarily number demonstrate looking It's on. just to Laurence, kind Kentucky a kind specific and way that And numbers, the and represent working clear, where been I doesn't everything greenfield. like that's are. kind say

future something to to we're refine, -- going of track but we'll And that and continue information. so we'll the kind this in is continue this present to

do might on helpful. So feedback and better any we that looks would we how it be get how

Laurence Alexander

want. all You'll probably get too many metrics, we

a Speaking which, the ramping of earlier of or much either up you've are who kind give who for terms take changed? how just needs the one in their that customers sense helpful had, the products be is won that dropping of didn't you churn are they customers who versus you us specs volumes would you've been because and with, customers hit out increasing their could

Stephen Croskrey

Sure, Laurence.

those say where for in they customers But It that, didn't of a have If on -- the them and run was probably we would Slide launched And at the All maybe you things these rate. been -- has out had other customers that launched, lost not a and we kind once company, a years a specifications. customer. of smaller full might us. are their them. right, then ago, X look all after past didn't growing. We and we have customers and this they found at with customer we look never we they growing understand on work the I fact customer lost had had one are the that, happy and own number than

Laurence Alexander

ramp current erosion or scale? expect a ASPs? Okay. they of volumes expectation then of what's mix a your significant just greenfield, as you customer Or or them Great. you kind thinking flat as about in we market modest economies drop to when around to And get messaging expectation in do use the be

Stephen Croskrey

sure. understand your question. Yes, I

like some expectations We like a that. over we've have the of customers, talked specifically lower with them we kind we and what pricing or offered XX-year possible. that had have But as anybody what's look shown some like never once comes of any specific greenfield of can online scale the discussions period larger

Laurence Alexander

can market for lastly, the the film the into particularly just kind Novomer you aqueous update prospects then technology, of And Great. applications?

Stephen Croskrey

Sure.

able demand validating of completed volume that by the scale-up these material. you -- So pilot will allow we've plant, then customers to of we that new and us enough just the know, the create as sample be to some be will to are able

And for chemical call we at have you we have with it, agreement middle we oil on support company point of talk verbal another I an in but of company and the customer to so. kind -- seeing colocation was, side, than venture. We just material we're have And to is, also things film adding Laurence, is -- than traction bought a of, were negotiations you better a as that but anything biopolymers, barrier with a commercial itself, we're we're can't working fuel-based what the waiting products. because are projects major much Chevron the remember, of with if when aqueous that we a with can't of those is development the side properties major We other well. And we're agreement for seeing couple on on that. Phillips -- better fossil now, know, another what agreement this as significantly now gas the one it's the that, on that

or the side on because the that snack to able competitors the going be here. commercialized can that it combine the barrier a none to to would people have telling get to other trying market we that When keep app killer are Nodax, in I today ones compete are the of biopolymer of that with get the market be and food able we're into we with So applications properties. even create

Laurence Alexander

Or agreements, any part? side then be requirements your then capital And out, if they sorry, did a on queue. do in and capital-light? of one, I'll one those is significant the the the those -- hop represent all mostly back pan to business of Is just goal that on last would there

Stephen Croskrey

because like will natural gas so which infrastructure how we that's reduce that will the do we work. going just to things to be things worst that's CapEx the -- Well, these need, materials raw companies, suppliers, that if that, will to and off but oil going electricity and capital-light, have big they piggyback If the the we goal chillers a is it's we're for case, their way done it, be requirement we co-location, utilities, and do just like and do that of it that. the because those

we our requirement So co-location a way. to capital and we process we that get this think we We're the on And would the partner participate reduce through basis can that if of participate. our will of this beauty the CapEx like also find cost X/X want more. But the and partner pound side per a that of hopeful think the we'll cost that, we can Nodax commercial is that requirement to on product reduce CapEx plant. even is a

if do And project to able we have the to a be so bill, fit financing even on we it basis. expect to

Operator

and CJS from instructions] Jon Tanwanteng Securities. question from next your is [operator

Jonathan Tanwanteng

pilot up kind the commercial starting -- in last I think PHA. just you on now, wanted when earliest to the up? be, that deals the follow given of would the Just one with that the you is that see and was you're the wondering catalytic I product? could volumes on working partners the

Stephen Croskrey

that I'd think partner the customer of more the the it to with, but build ready partners or mean, material customer kind got And plant. a safe X in just think have be couple actually we assume customers I Yes. we Look, can fair build that plant. But of to We've negotiate. got got a we're years quickly. -- with to to don't they've just we're negotiating to since their to done validate to going you've first. it be years call here, I a be analysis

you So probably I any to a given X that add year time. got think to -- years at add

earliest of X is terms So fair an in years think out I date.

Jonathan Tanwanteng

in any you remain year growth could, to be if helpful. guidance? OpEx just this any thoughts there's budget on the Mike, if -- relatively going that's and That's great. if Okay, plan stable? Or

Michael Hajost

down. driving I cost been pleased mean I think we're OpEx how Yes. really we've with

We've at capabilities gotten another 'XX versus costs range whole of operating staff gone so. look think of own do in and you some year-over-year reduce year we're utilizing the through or lot drove 'XX, $XX.X the a and If we insurance million the better about in to lot again for expecting We've XXXX We've a down rates. and We're services XXXX outside $X headcount. million things. of to quarter, those down fourth of consultants. versus our we're $X those rationalizing million, gotten I year-over-year rid

So where which are couple everywhere. we the getting looking change a for and costs of year-over-year those a number up, we of boards. things across now to really ended That's all nice kind because We're a it's years of down. just been pleased

Jonathan Tanwanteng

Got helpful last good before it. go. hear. And to I That's just and

in volumes we're quarter the Just pretty on close any anyways. thoughts on QX? Just

Stephen Croskrey

can probably approximately year-over-year press the this release in XX% be for Yes. at point. our exceed XX%, that PHA we with -- will We mentioned and it quarter will think our growth I

Michael Hajost

Jon, also OpEx? on if I can the add

Stephen Croskrey

sorry, Jon. I'm

Jonathan Tanwanteng

sorry. QX I'm year? NPL Was in there last

Stephen Croskrey

Yes. not haven't provided we any guidance But on that. -- we're

Michael Hajost

I want one to add And thing. just Jon,

I think know. good it everybody for be would to

terms of year, I something $X running large lot a XXXX. of close stock-based that models, year your a XXXX. all to think, that's grants for million expecting In are in those full We're And off. it's falling about million $XX been closer comp to

So I in models. to a good have know think kind your of noise piece everyone thing of for that's just to not large that

Operator

call further I hand the Steve back Croskrey for now questions will are There closing to this no time. remarks. at

Stephen Croskrey

our and customer be your Thank opportunities recent talking just forward you with pleased and you. to in time, soon and earnings, in interest additional again we first progress everybody, presented that Thank your the have will present several quarter been we weeks up our to you when us, for to now. We're Danimer coming look which Scientific.

Operator

joining. Thank conference you. and Thank all now for has gentlemen, the you ended. Ladies

all disconnect. may You

Danimer Scientific (DNMR) 28 Mar 242023 Q4 Earnings call transcript