Danimer Scientific (DNMR) 7 May 242024 Q1 Earnings call transcript

Greetings. Welcome to the Danimer Scientific 2024 First Quarter Earnings Call. [Operator Instructions] Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]I would now like to turn the presentation over to Mr. Blake Chamblee, the company's Investor Relations representative. ahead. go Please

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

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

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

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

completion from Good a our previously us. results, days announced results expectations. fourth in quarterly our away were spoke thank and quarter on just we for the you few report first fiscal of XXXX When our and afternoon, the joining are last to with we quarter year-end line and

in on compared of XX% quarter. revenue first XX% We pleased XX% revenue year-over-year prior quarter in the of quarter with PHA the increase the during are product basis. PHA the during made to up of revenues revenues product a year

as chain of We portion anticipated. pounds expect revenue cutlery and XXXX.The of a PHA for million increase provide continues a pounds as to progress XX for throughout total to we to global cutlery resin QSR million large X wrappers awards annually

very that well during first center are deliveries quarter am the We tell to X least scale-up has of XXXX. received third been the I the to first you into commercial of distribution and excited order customer planned stages of at cutlery with

this to categories.We joint containers. the continue our QSR paper has and straw resin led agreement XXXX an development the lids are launch for XXXX As geographically announced to reach about a expand quarter reminder, opportunity award we excited rate which full second end commercial coated with that and of large the another into and exciting additional to progressing QSR, in expect run previously product of towards with

customer we star a Asia. a Additionally, for have received new order resin in

over to continue coffee in huge shipments advance annually the to our also used aqueous petroleum-based coatings. new This extrusion Delta pod in both plastics Coffees commercialization commercial cups resin of are capsule the compostable process opportunity resins represents PHA requiring of single-use sold any EU proposed with compostable We quarter. full first using for in market to the cups.We made These meet new coffee regulations and during of standards. our compost creation pod pods of million first of a pounds XXX compliance

PHA-based industry. resin players underway major industry made and petroleum-based second pounds baits revenue technology Nodax-based fish WinCup straw with This purchasing lengthy positioning its XX WinCup, in are sports collaboration that leader themselves use baits. EGO a will be alert of sole legislation recently Starbucks baits to the award, results. from with Fishing, drive and awarded alone previous base excitement for and fishing midyear. the The our believe limiting learned soft impact of you We sports result in reiterate of of fishing our some up to portion want an in should customer our to soft the is approximately regards their a for these innovation scale our quarter opportunity We development also plastic the which source short-term We plastic fish progress this built to million testing of our of commercialization industry third end rights.We has the process to straw by provider. a possibly within Full represents headwinds inventory. need of will business will anticipation an in

had on sales hand, million $X.X and other our impact the to quarter inventory a $X approximately On impact decision.This is drawing approximately by the down partner our anticipate adjust of incumbent this now inventory quarter we second sales currently million. negative to will these converter adjustments first

efficiencies over cut product up and like important process in of While to new full conjunction the and we technological ramp increase improved Kentucky business facility. capacity would note anticipate of Nodax-based work and our waste business XXX% to operational of It year. increased we have level fully Installation with to meet downstream to forecasted R&D have these throughput. reiterate demand changes resin quality, this production equipment [indiscernible] processing we the our at retained improve the both we our our department Starbucks.As our with levels, rebound will these results, to end we expect converters before with straw is of adjustments our year to will carry that

benefits to We our excited facility. incorporating proprietary are continue and process refine PHA future our improvements these greenfield into manufacturing for of the

of spike improvements, and the previously quarter improvement Our increase lead broke financing being spike first shipments validates facility us of which month each customary March, competitors.Customer further mentioned has an production technical generating with cash to continuous process recently facility for our last specific that equity nearest over model fees. emphasis even to tend offering profitability the the and million on Kentucky higher in enabled at and transactions, additional our our production orders in approximately completed closing after $XX.X levels. We our X in

X have an rata entered $XX the maintain reach Chief will common provide in and to capital upon of improve of structure into our at shares asset-based increase to date. terms unique our growth will business. This our while stages the the financial secured an quarter shareholder DOE authorized to the closing, you the first our now the time made record will we Officer, over final to number value. leverage, transaction for the on allow of turn to regards I maximize of Loan strengthen Program stockholders transaction the us to our Secondly, million agreement revolving liquidity our of receivable we stockholders. operate new $X runway our Financial a update warrant at of in of accounts capacity have receive be same note to In stock full also This proposed infusions are as to credit results the our flexibility facility call These is and of Hajost, process.I contingent progress of business shares approving this stock. the to our distribution cash this the great warrants an XXXX. our by balance sheet record agreement in will transaction, Mike accommodate utilization that pro million Kentucky inventory. for held each common us and adequate expanded of help forecasted.We our by can Under to dividend recently enable as announced X each stockholder additional

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

of million not lower in prior revenue. was XXXX. in a offset year the $X.X $XX.X to revenue disruption million PHA-based Ukraine service compared total resin million $X.X or quarter. of and $XX.X sales first the or increased This quarter increase did the continued sales XX% decline million due by R&D conflict from to completely PLA-based First resin XX% in quarter

We $XX.X approximately XX% will product this gross to of an $X.X $X.X up our volumes. XXXX we of a PLA gross to of PHA gross and Kentucky quarter's million appendix.Unrestricted required the in total positive margin by margin.Combined substantially to the senior adjusting of million in the million, million first year volumes areas million. reduced stock-based for quarter year of interest ramp and the first million, stock-based prior loss the in reported and in million included business. year. was across the improvement volumes loss operating XXXX. quarter EBITDA cash project We to our end second credit mainly ended XXXX.Liquidity the seek lower of sales customers' were XXXX.First a the greenfield expect year for these cash EBITDA was costs expect reported in future nonrecurring to forward of will the R&D increase debt Adjusted support the of is the end first XXXX, of control at quarter compared depreciation, and compensation certain manage secured amortization, with payments of of the a held quarter at has of we be excludes loss $X.X over mainly excluding for $X.X reduction prior simulate we run other at first term result as to XXXX in on which we first quarter, that expect as $X.X loss the million items which $XX.X the secured sales tax loans, items, lower new under $X as costs million, with first sizable quarter balance half million demand than Restricted we compared of convertible equivalents of of SG&A gross for was price first continued year. and interest impact quarter quarter million loss $XX.X stock-based equipment percentage cash After XXXX quarter as as continue focus $X.X year-over-year adjusted was our million a more the XXXX. and expenses, senior starting in nonrecurring loan. term We was current line compensation, which expenditures PHA quarter of payments which reconciled PHA the Adjusted million first XXXX. forecasts. to and of higher in minus combination from in $X.X the adjusted offset adjusted rate minus operations throughout represented gross senior The first compared in us and big and R&D $X were which PLA quarter our is Capital and market our loss the the $X.X first quarter many cost $XXX the the loan depreciation, last remains compared The diminished a of an forgiven notes, in million compensation, sales amortization, in totaled of in first a depreciation $XX.X initiatives the million of an

the we a million, initially Steve be will year described straw that expect call Starbucks earlier changes we to guidance is $X equity our agreement negative formula of full month. with a With last adjusted additional take respect our inventory the inventory issue. XXXX million expectations EBITDA, financing transactions Availability recent approximately provided from there to on as WinCup Our cause an resin the and on expand a as subject fees additional based agreement asset-based not minute impact related to to credit guidance with provided after that lower discuss well an will time of receivable million loan at be us now closer given year offering we of of previously commitment our me we $XX.X an that million, million. will adjusted $XX base accounts do that credit to that borrowing under minus a our change cash believe end our $XX the but balances.Let range the any revolving option This generated range. to facility include by lending we to full $XX the EBITDA to minus

guidance on million. more progress spend we prior We million of situation our clarity that CapEx to third unchanged range for will we quarters.Our CapEx $X the $XX the expectations get through second as in remain and and reiterate

his call year closing asset-based just we'll our At of liquidity, remarks. of instead With estimate the for now of Steve towards credit $XX our and will range completion revolving now under year-end this guide unrestricted agreement, the we revolver to cash liquidity unrestricted availability point, that million hand cash. the back be the to in million.I'll comprising $XX end of recent

Thank you, XXXX Mike. We beyond. in will revenues progress during commercialization our and generate R&D that recent remain confident increased and efforts trials

with continue as shown sales our a ago. in few just to investor XX pipeline to grow As weeks presentation, phase customers our XX the in selection compared material we

reached and QSR pre-commercial is significant several customer this launched, a now We our you pods, scaling have to phase today's compostable just pipeline, scaling our Coffees are to our well does Bolthouse and several America customers owners and support. in say sales next with time their commercial with add stage.Thank have recently. Farms produce who call listening plants. bags a triple up just have sales your North their single-use track in Delta customers attention America large another your the that like up often cutlery I launch We up new compostable in that customers as straw QSR and North that year not Asia. straws for with coffee everyone in as would in could include already we fill to this brand by to on that considering the

for We open will questions. the now lines

Thank you. first question Your of begin will Tanwanteng session. we comes CJS [Operator Instructions] and gentlemen, Securities. from the Ladies Jonathan question-and-answer now

for you realized guess, My both demand if forward at they not were you inventory what there talk I converter the when versus that I excess plans one, wondering the long selling, could were kind of part about converters was of the how and they was? first into Starbucks

of is of visibility retain the WinCup of of at our worried the But and of learned great that did business period into news of is we that Starbucks has Thank building operations either that John. with though, converters. a know we last The building not and been a We that QX. you, right been a in couple but has relationship the don't have the we've over WinCup we significant value or inventory what until -- all get Starbucks still still have end the here, QX, change Eagle they're good partner. weeks time,

bit And if any about little you get And more you expect time progress? the then made second, approval? updates a could there's you DOE to a and loan to and where talk when if line

will are Yes. we're line. really be we release we Once have a the actually meantime, about of finish that. where there at, press confirmed but can't specifics a the in talk commitment, we near But on the

have approved? a to could prices warrant assuming little And happened detail on it transaction, through to then their regarding the proposed gone you bit what this, happen, and more just that companies is give share what expect you that

share be shareholders would deleveraging But Well, shareholders the we the a event ones as result of non-dilutive a stay from by being like try is to using to that away like the the convertible what would warrants. because that see happen see bonds we to are warrants the we will that price. to getting

transaction the sheet. for will move balance work really are So, it hopeful that we good will be our a and

Alexander Laurence Jefferies. from comes question next of Your

I is Laurence. have question. one This Dan for Rizzo just on

change be that if administration the if just potentially loan in the problem mentioned approval. becomes wondering issue? or before was loan the in a awarded cause a year I later could a will it with hopefully potential You

the Thanks I know Dan. on that. is everybody for focused involved that question,

And intent get to before it so that event. the to is closed try

I to Okay. that is But Or it if does something mean, is say? yes? possible, it linger, impossible is it

say. to us for impossible really It's

from, again, comes CJS question next of Your Jon Securities. Tanwanteng

if any And on heading year, just I on rest if any plans wanted be to seeing you're there, Yes, to there's been OpEx? out had then costs the as ask update changes one. to the you number efficient of through we're what input your just

I'll thanks. that. Steve, Jon, Sure. take

sort going trend to for seeing $X.XX the last by What already some per downward of where rest 'XX, indications pound ended the first we we $X.XX And of for last of our year. say, matched to expect sort our quarter year. range. they're we're As end kind for QX I'd QX this be of mid-$X.XX the to year, we we're QX, prices seeing $X.XX for, of towards in call, canola about early said of projections of the through

in as controls, had respect see of you communicating quarter had I whole the expect We a controls still last about think, that on this lower preserve we and reductions liquidity. nice so do it operational time, So, that there that we and things million that about down control in be operational reducing I and quarters sort business track reducing just we're outside guys continuing. had the or last year-over-year. to just costs were can And to that's been we over to you seeing the total. services year-over-year number to really With be few last the we time operational about we're talked some able guided, to of think through costs to the headcount, $X on

for Steve, one last you. one

any Just Kentucky for of by to that at year? expectation be the capacity changes the will next you end relatively full

still in to We that these of in customers And total have that expect with XX% well already that to year sites. range capacity. next early XX% be launched our

[Operator questions hand would the Please call to I Instructions] for Croskrey further There closing ahead. Steven go at no time. this are over comments.

again forward and and Thank Scientific in for night. attention your you, interest updating we months. a about Have everyone look good in to you X Danimer

today's call. this participation you you and your Thank for concludes may Ladies and conference now gentlemen, disconnect.