Danimer Scientific (DNMR) 19 Nov 242024 Q3 Earnings call transcript

Thank you, operator. Good morning, everyone, and thank you for joining us today on Danimer Scientific's 2024 Third Quarter Earnings Call. On today's call, Interim Chief Executive Officer, Rich Altice; and Chief Financial Officer, Mike Hajost will provide information about our third quarter performance and expectations for the remainder of the year.

We will not be hosting a question-and-answer session during today's call. I'd like to note the slide deck that accompanies today's discussion, which is available on the Investor Relations section of our website at danimerscientific.com.

As we begin, I'll call your attention to the company's safe harbor language, which is published in our SEC filings and on Slide 2 of the presentation I just referenced. amended. may harbor statements Securities provisions Act XXXX we of the Litigation call, of safe the of as today's discuss within forward-looking meaning Reform On the Private

regarding statements company Forward-looking or our future forward-looking profitability, statements update implied reflect production, and could in Actual programs assumes forward-looking or to circumstances demand customer other any what differ include, things, materially capacity, results operations, from no including events among obligation of to the as margins, levels. results The hereof, date market statements. required statements is expressed law. by after except

they presentation of be measures supplementary performance to SEC Today's non-GAAP taken non-GAAP and meaning We of alternative to not G. within that believe these the value references GAAP should includes Regulation analytical results. measures as financial also have as measures note but

provided We GAAP our measures in reconciliations financial most the non-GAAP and comparable have measures financial presentation. release for earnings to our

it's to Officer of my And Executive Thank pleasure Scientific. Chief call turn over Rich Interim Danimer you. now to Altice, the

and joining morning, thank us. you for Good

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or our mid-October, technology our address spent across in these is and of challenges. I I have in directly from also personally their has as have Danimer away key of with Since assess wanted to to that talent, position they customers is deal great even and from the about to what them our spoken hear come commitment time meeting and commitments. succeed. products sessions interim teammates most CEO Scientific these locations. all how to and convinced met to joining with more I've those Danimer's Danimer I've our unique needed Danimer capabilities. a sustainability achieve learned a value

growth. on technology We offering. the unmatched extraordinary our I'm position have that talented to plan, and long-term bolster on team, and build execute a product committed our and innovation excited foundation as an commercial for company we

CEO an for focused basis, leaving which on While and its committee search, internal nationally on search search process. I remain to executive a recognized our support executive a interim has the Danimer firm we and significant have includes retained candidates, on permanent continues. made external The progress

starting share to some updates. an like exciting third our I'd Now commercial quarter, with on update

across petroleum-based Our QSR chain biodegradable the well to phase progress restaurants the end of of completely and by for of significant out is to This a plan. plans cutlery favor with its from cutlery award plastic line all customers continues ramp large end plastic and global single-use bio-based in in XXXX. QSR U.S.-based

We very critical to part are of that be initiative. proud a

molds have partners our currently sets initiative cutlery converter of this with molds production. received initial for of All selected additional in

have of cutlery centers. resin million resin distribution for and resin already the commitment their supply these PHA funded molds orders on and cutlery by resins end film over to cutlery Now annually. delivered for for cutlery received X of Nodax-based reflecting customer, to molds as this At program. converters run rate, million pounds converters date, we run being pounds cutlery existing pounds XX a To reminder, are these wrappers to of have we and XXX,XXX their full enable and will equipment, customer

expect to award full continue rate reach this mid-XXXX. in run to We

Additionally, state-of-the-art to was opened PHA This and begun Beverage molding innovative their quite I impressed forks, spoons. market single-use recently facility while facility. to the our manufacture thrilled readiness of for already and touring Beverage Nodax-based immediate meet using customers with our resin injection Eagle knives products Eagle partner, shipping is has converter cutlery. was demonstrating these dedicated PHA-based to to

regulations partnership in our pod coffee coffee pods requiring Delta continues shipment compostability sold full to meet pod Cafes new Our and new completed compliance These standards. commercial compostable we recently with with resin. are single-use to have progress, capsule proposed second of EU any

phade you WinCup the cups Our also include just familiar brand cup grow straws partnership and with but to not continues their with, cutlery lids. that to are blue to expand continue they as also

resulted are Seattle Seahawks compostable football we game has also partnership with our during Wrigley bag, XXX% Nodax launch resin. soft bags appearance in These Mars our of excited skittle compostable October made Finally, XX,XXX a bags. to skittles PHA-based featured made a an over that which with announce in

quarter results term near third our to developments. turn to like and I'd Now

our with reapportionment to The opportunities important from to on a commercial consistent these Starbucks continue partners expectations Nodax-based Our our we've business also are impact Nodax-PHA-based the considering business Starbucks. with in We XXXX results that in the behind their patterns, order our led expectations, and third the were retain and This of third partners. disruptions straw headwinds and negative reiterate progress our quarter. of converting to grow And ahead of converters the the quarter temporary reapportionment with now beyond. made we to closely in underscore impact our us. believe PHA both significant it XXX% demonstrates business straw between results is had partner significant which

While mindful up and we opportunities, significant our constraints on levels executing enter of we near-term commercial over commercial we liquidity indebtedness on are XX next ramp our as months. these managing the remain focused

the operating we our we analyze share will position, light costs Mike leverage have to the Officer, call to variety our over financial XXXX. and taken for to and Hajost, of now As debt our results quarter transactions Chief in in will mechanisms the reduce of third on turn of further designed update to substantial and liquidity. I continue reduce detail, you provide a Mike additional to actions

guidance Slide resin prior with for and along. $X.X prior driven is mentioned. $XX.X Rich was of million I'll those quarter, a prior the revenue $X.X million financial million in rate. Rich, the PHA-based in that X third from start quarter. the decreased PHA-based in reallocation quarter run and XX% just the which Total following compared previous on presentation which million our resin go-forward results Thank good by our PHA down sales with was $X.X line business was of you of million or year sales $X.X our everyone. morning, by the year third compared year, in XXXX of of resin you, primarily straw to to of Starbucks around decreased our

last sales prior compared line certain quarter million $X.X an expenses, million loss million line of represented is the $X.X quarter. this million. After We for XXXX adjusted year was product to PHA and in quarter gross with excluding XXXX sales. quarter adjusting of a approximately with R&D totaled of and in gross and of items stock-based gross an quarter's loss compensation of third $X.X in the year. SG&A reported amortization, XXXX adjusted the we gross nonrecurring third XX% quarter third in of depreciation, quarter Third which million, loss the year prior which $X.X of depreciation loss $X.X reported compensation, stock-based

quarter million interest stock-based for is savings business. cost and other of million availability million reconciled depreciation, EBITDA ended future third of term of cash pursue nonrecurring prior and third the on a amortization, loss and $XXX.X interest compensation, loans, to continue in million million had our held the under mainly the forgiven be starting were in notes, third was agreement loss cash of were will senior new Adjusted at quarter. debt excludes current year XXXX, in XXXX, improvement across our of $X.X quarter as million and in initiatives $X.X million many $XX.X in third Adjusted senior payments the over loan. third the $XX.X revolving of we was EBITDA excess secured lending the $X.X which credit of million XXXX. our as credit our the tax the term appendix. Unrestricted items market the third balance of at the loan, million, of $XX in quarter XXXX. with our equivalents senior areas an cash in asset-based September the a expect of revolving Restricted agreement We We credit $X.X mainly quarter. a Capital total expenditures comprised $X.X end secured XX, convertible asset-based end and third quarter quarter. We

their XXXX full order rate to until noted, to we we reduced As manage labor remains Danimer implemented Technologies This of the and Rich cash have across as us spending, significant early areas preserve sales. at up sales cash focus all for cost expected reached costs these employee our business. a In operations seek while headcount of includes we ramp run $XX savings rationalization potential, temporary in suspension liquidity through our excess million of Catalytic discretionary reductions the since in business.

collections focus on We levels capital and spending to have an on and projects. optimize accounts also heightened launched initiative reduce our inventory receivable, on-hand

other designed on analyze conditions, to a sources transactions liquidity various to requirements, and and contractual of Such variety our reduce incremental consents liquidity. restrictions, depend transactions and of continue market mechanisms debt Additionally, prevailing will provide required factors.

our will continue to be all These liquidity. actions successful, measures address not we evaluate may to and available

now an to guidance update provide expectations. me Let XXXX year full our

year-to-date million. EBITDA quarter Our is third minus adjusted through $XX.X the

full EBITDA of a million. to range million, minus range $X.X previous minus $XX a in $X fourth total to $XX.X million within guidance expect year which million, minus is be million $XX to adjusted quarter of million resulting adjusted EBITDA We the minus and between minus our minus of $XX.X

now capital expect guidance to $X previously carefully year We expenditures the million. to $X will very have $XX between range million managed million within of be $X and million disclosed CapEx our full

other existing will range facility, support expenditures capital Bainbridge the projects. to maintenance greenfield and This commitments related

year-end designed remarks. this ongoing back now a company variety call a mechanisms of outlook additional is to the liquidity his analyze transactions and hand not providing at to for Rich Given the efforts provide time. I'll to XXXX liquidity, closing

hard to we Thanks commercial considerable grow of Mike. to are and our beyond. our made set the and have in team, progress on plan Thanks, work XXXX

be have and play position. able We part confident steps financial the that in our and we commitments our to shareholders, while I'm teammates opportunities challenges. commercial we'll exciting environmental our some addressing communities world's meet pressing take to improve most as we momentum for our maintain many customers, our of ahead

your Thank to your call you continued for listening and today's support. to attention everyone

That call. concludes for Thank you today's conference joining.