Danimer Scientific, Inc. (NYSE: DNMR) (“Danimer” or the
“Company”), a leading next generation bioplastics company focused
on the development and production of biodegradable materials,
announced today its financial results for the second quarter ended
June 30, 2021.
Stephen E. Croskrey, Chief Executive Officer of Danimer
commented, “During the second quarter 2021, we made further inroads
in our mission to create consumer packaging and other biodegradable
products which address the global plastic waste crisis. Our team
completed the Kentucky debottlenecking initiative to improve our
production efficiency for Nodax® based resins, and we substantially
strengthened our capital resources to further propel our
growth.
“In August, we closed on the previously announced acquisition of
Novomer, Inc. We believe this transaction will accelerate our
ability to deliver our proprietary packaging products to leading
consumer product clients and is a milestone transaction for
Danimer. This transaction is expected to create important
efficiencies in our manufacturing of biodegradable polymers. As a
result, we expect to continue to build on our industry leading
capabilities in application development. Our competitive advantage
is our decade long experience blending products that enable next
generation biopolymers to perform to the standards required by
leading consumer product firms. This acquisition will not only
allow us to further strengthen this core competency, but it will
also enable us to increase the expected overall volume of finished
product we will be able to deliver, all while significantly
lowering our production costs and capital expenditure per pound
produced. We view this as a big win for Danimer, our shareholders,
and our customers. I am excited for the immense opportunities ahead
to create a broader range of industry-leading solutions to meet the
demand from our growing blue-chip customer base.”
Second Quarter 2021 Financial Highlights
- Revenues increased 22% to $14.5 million, compared to the second
quarter of 2020, primarily driven by the scale up of PHA production
for Phase 1 of the Winchester, Kentucky facility brought on line in
2020. PHA-based products expanded to 29% of total revenue compared
to 7% in the second quarter of 2020. The Company also benefitted
from a $1.8 million increase in revenue related to research and
development projects, primarily reflecting the addition of several
customers, including Mars-Wrigley, Kemira, and Bacardi.
- Gross profit was $2.0 million compared to $3.4 million in the
second quarter of 2020. Adjusted gross profit1 was $4.1 million
compared to $4.5 million in the second quarter of 2020. Adjusted
gross margin1 was 28% for the second quarter of 2021 and was 38% in
the second quarter of 2020, primarily due to elevated fixed-cost
absorption as production scales up at the Kentucky facility. The
Company expects the average cost per unit to improve as PHA
production continues to increase and efficiency measures are
implemented. Adjusted gross profit excludes stock-based
compensation, depreciation and rent expense.
- Net income of $39.2 million included a $58.7 million non-cash
gain related to the remeasurement of the Company’s private warrants
for the second quarter 2021.
- Adjusted EBITDA1 was negative $2.7 million in the current
quarter and was negative $0.4 million in the second quarter of
2020, primarily due to the decline in gross profit as well as an
increase in headcount and salaries to support future expansion
plans. The second quarter 2021 also included incremental expenses
related to being a public company of $1.0 million.
- Adjusted EBITDAR1, which excludes rent expense primarily
associated with the Company’s Kentucky facility and one of the
Company's production facilities in Georgia, was negative $2.6
million, and was positive $0.4 million in the comparable prior year
quarter.
(1)
An explanation of non-GAAP measures
disclosed in this release and a reconciliation of these non-GAAP
results to comparable GAAP measures are included in the “Non-GAAP
Financial Measures” section of the release.
Acquisition Update
In August 2021, Danimer completed the acquisition of Novomer,
Inc. (“Novomer”), a leading developer of carbon efficient
conversion catalyst and intelligent process design technology.
Novomer leverages its proprietary thermocatalytic conversion
technology, Novo22™, to produce chemical intermediates and
polymers.
Utilizing Novo22™ conversion technology provides transformable,
functional, and low net carbon inputs into the production of
PHA-based resins and other biodegradable materials. Novomer
develops high-performing, carbon-efficient, cost-effective polymers
and chemicals, including poly(3-hydroxypropionate) (“p(3HP)” or
“Rinnovo”), a type of polyhydroxyalkanoate (“PHA”), all of which
can be sourced from renewable or non-renewable feedstocks. Novomer
also has an extensive intellectual property portfolio with more
than 100 issued patents and over 140 patents pending.
The addition of Novomer is expected to meaningfully reduce
Danimer’s planned capital expenditures on a per-pound basis.
Danimer believes that Rinnovo is highly complementary with
Danimer’s inputs, and can be incorporated as a component in certain
Danimer resins. PHA’s are a broad family of polymers which can be
used for a multitude of applications wherein each can provide
specific benefits. By incorporating Rinnovo into its customer
solutions, Danimer expects to be able to produce its resins at a
substantially lower average cost. Danimer expects to use these
complementary technologies to meet an even broader range of
customer needs and applications.
Business Updates
- In May, Danimer’s partner, Plastic Suppliers, announced the
successful completion of the first commercial run of Nodax® based
home compostable packaging film.
- In June, Danimer helped launch the U.S. Plastics Pact's
“Roadmap to 2025,” an aggressive national strategy led by The
Recycling Partnership and World Wildlife Fund ("WWF") as part of
the Ellen MacArthur Foundation’s global Plastics Pact network.
- In June, Danimer was awarded a U.S. Patent for a renewable,
biodegradable marking wax that serves as an alternative to
petrochemical-based paraffin wax.
- In June, Danimer successfully completed the debottlenecking
initiative within its Kentucky facility to improve production
efficiency and accelerate production of Nodax® towards its
expectation of reaching 100% of the facility’s current annual run
rate capacity by the end of 2021.
- Construction of the Kentucky plant expansion continues on
schedule, and phase II is still expected to come online in the
second quarter of 2022.
- Continued planning for state-of-the-art PHA greenfield facility
located in Bainbridge, Georgia, on track for groundbreaking
expected in the first quarter of 2022 and long lead time items have
been ordered.
- Following the Novomer acquisition, the Company expects to
enhance its facility network through the construction of an initial
Rinnovo plant, expected to come on-line by the first/second quarter
of 2024.
Liquidity and Capital Resources
In April 2021, the Company entered into a new five year $20.0
million variable interest rate asset-based lending arrangement and
a $1.0 million capital expenditure line with customary terms and
conditions. The facility provides the Company with additional
flexibility to invest in growth initiatives.
In June 2021, the Company redeemed all of its outstanding
publicly-traded warrants to purchase shares of its common stock at
an exercise price of $11.50 per share. The transaction resulted in
approximately $138.4 million in gross proceeds, which simplifies
the Company’s capital structure and provides additional funding to
invest in the ongoing expansion of the business.
At June 30, 2021, the Company had total debt outstanding of
$29.9 million and cash of $416.4 million. The Company had
97,732,079 common shares outstanding as of June 30, 2021.
Business Outlook
The Company expects to continue its acceleration of investments
in headcount and technology, inclusive of Novomer, to build out the
operational platform and infrastructure needed to support its
production capacity expansion and sales growth objectives.
Additionally, with the completion of the Kentucky debottlenecking
initiative in the second quarter of 2021, the Company expects the
improved operating rates will contribute to Adjusted EBITDA and
cash flow from operations in 2021. Based on the timing of customer
product launches, the Company expects its second half 2021 results
to be weighted towards the fourth quarter. The Company expects full
year capital expenditures to be in the range of $125 million to
$150 million inclusive of post-acquisition investments in
Novomer.
Webcast and Conference Call
The Company will host a webcast and conference call on Monday,
August 16, 2021, at 5:00 p.m. Eastern time to review second quarter
2021 results, discuss recent events and conduct a
question-and-answer session. The live webcast will be available at
www.danimerscientific.com in the Investor Relations section. The
conference call will also be accessible by dialing 1-877-407-9208
(Domestic) and 1-201-493-6784 (International). A replay of the
webcast will be available on the Company’s website.
About Danimer
Danimer is a pioneer in creating more sustainable, more natural
ways to make plastic products. For more than a decade, its
renewable and sustainable biopolymers have helped create plastic
products that are biodegradable and compostable and return to
nature instead of polluting our lands and waters. Danimer’s
technology can be found in a vast array of plastic end products
that people use every day. Applications for its biopolymers include
additives, aqueous coatings, fibers, filaments, films and
injection-molded articles, among others. Danimer now holds more
than 390 granted patents and pending patent applications in more
than 20 countries for a range of manufacturing processes and
biopolymer formulations. For more information, visit
www.DanimerScientific.com.
Forward-Looking Statements
Please note that in this press release we may use words such as
“appears,” “anticipates,” “believes,” “plans,” “expects,”
“intends,” “future,” and similar expressions which constitute
forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are made based on Management’s
expectations and beliefs concerning future events impacting the
Company and therefore involve a number of risks and uncertainties.
The Company cautions that forward-looking statements are not
guarantees and that actual results could differ materially from
those expressed or implied in the forward-looking statements.
Potential risks and uncertainties that could cause the actual
results of operations or financial condition of the Company to
differ materially from those expressed or implied by
forward-looking statements in this release include, but are not
limited to, the overall level of consumer demand on its products;
general economic conditions and other factors affecting consumer
confidence, preferences, and behavior; disruption and volatility in
the global currency, capital, and credit markets; the financial
strength of the Company's customers; the Company's ability to
implement its business strategy, including, but not limited to, its
ability to expand its production facilities and plants to meet
customer demand for its products and the timing thereof; risks
relating to the uncertainty of the projected financial information
with respect to the Company; the ability of the Company to execute
and integrate acquisitions; changes in governmental regulation,
legislation or public opinion relating to its products; the
Company’s exposure to product liability or product warranty claims
and other loss contingencies; disruptions and other impacts to the
Company’s business, as a result of the COVID-19 global pandemic and
government actions and restrictive measures implemented in
response; stability of the Company’s manufacturing facilities and
suppliers, as well as consumer demand for its products, in light of
disease epidemics and health-related concerns such as the COVID-19
global pandemic; the impact that global climate change trends may
have on the Company and its suppliers and customers; the Company's
ability to protect patents, trademarks and other intellectual
property rights; any breaches of, or interruptions in, its
information systems; the ability of its information technology
systems or information security systems to operate effectively,
including as a result of security breaches, viruses, hackers,
malware, natural disasters, vendor business interruptions or other
causes; its ability to properly maintain, protect, repair or
upgrade its information technology systems or information security
systems, or problems with its transitioning to upgraded or
replacement systems; the impact of adverse publicity about the
Company and/or its brands, including without limitation, through
social media or in connection with brand damaging events and/or
public perception; fluctuations in the price, availability and
quality of raw materials and contracted products as well as foreign
currency fluctuations; its ability to utilize potential net
operating loss carryforwards; and changes in tax laws and
liabilities, tariffs, legal, regulatory, political and economic
risks. More information on potential factors that could affect the
Company's financial results is included from time to time in the
Company's public reports filed with the Securities and Exchange
Commission, including the Company's Annual Report on Form 10-K/A,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
All forward-looking statements included in this press release are
based upon information available to the Company as of the date of
this press release, and speak only as of the date hereof. The
Company assumes no obligation to update any forward-looking
statements to reflect events or circumstances after the date of
this press release.
Danimer Scientific, Inc. Condensed
Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share
data)
June 30,
December 31,
2021
2020
Assets:
Current assets:
Cash and cash equivalents
$
416,355
$
377,581
Accounts receivable, net
10,069
6,605
Inventories
17,653
13,642
Prepaid expenses and other current
assets
4,611
3,089
Contract assets
3,018
1,466
Total current assets
451,706
402,383
Property, plant and equipment, net
159,983
106,795
Patents, net
1,819
1,801
Right-of-use assets
16,546
19,387
Leverage loans receivable
13,408
13,408
Restricted cash
524
2,316
Loan fees
1,548
-
Other assets
71
111
Total assets
$
645,605
$
546,201
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable
$
18,970
$
10,610
Accrued liabilities
5,901
9,220
Unearned revenue and contract
liabilities
822
2,455
Current portion of lease liability
2,947
3,000
Current portion of long-term debt, net
333
25,201
Total current liabilities
28,973
50,486
Private warrants liability
59,302
82,860
Long-term lease liability, net
20,581
24,175
Long-term debt, net
29,576
31,386
Other long-term liabilities
625
1,250
Total liabilities
$
139,057
$
190,157
Commitments and Contingencies
Stockholders' equity:
Common stock, $0.0001 par value;
200,000,000 shares authorized: 97,732,079 and 84,535,640 shares
issued and outstanding at June 30, 2021 and December 31, 2020,
respectively
$
9
$
8
Additional paid-in capital
620,808
414,819
Accumulated deficit
(114,269
)
(58,783
)
Total stockholders’ equity
506,548
356,044
Total liabilities and stockholders’
equity
$
645,605
$
546,201
Danimer Scientific, Inc. Condensed
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenue:
Products
$
11,294
$
10,576
$
22,318
$
19,755
Services
3,177
1,297
5,334
2,716
Total revenue
14,471
11,873
27,652
22,471
Costs and expenses:
Cost of revenue
12,460
8,441
24,185
15,870
Selling, general and administrative
19,079
2,828
29,199
5,808
Research and development
3,975
2,128
6,594
3,375
(Gain) loss on sale of assets
33
(9
)
33
(9
)
Total costs and expenses
35,547
13,388
60,011
25,044
Loss from operations
(21,076
)
(1,515
)
(32,359
)
(2,573
)
Nonoperating income (expense):
Gain (loss) on remeasurement of private
warrants
58,740
-
(21,957
)
-
Interest expense, net
(222
)
(384
)
(422
)
(1,097
)
Gain on forgiveness of debt
1,776
-
1,776
-
Loss on loan extinguishment
-
-
(2,604
)
-
Other income (expense), net
30
99
80
189
Total nonoperating income (expense)
60,324
(285
)
(23,127
)
(908
)
Income (loss) before income taxes
39,248
(1,800
)
(55,486
)
(3,481
)
Income tax expense
-
-
-
-
Net income (loss)
$
39,248
$
(1,800
)
$
(55,486
)
$
(3,481
)
Net income (loss) per share:
Basic net income (loss) per share
$
0.44
$
(0.06
)
$
(0.64
)
$
(0.12
)
Diluted net income (loss) per share
$
0.39
$
(0.06
)
$
(0.64
)
$
(0.12
)
Weighted average number of shares used to
compute: (1)
Basic net income (loss) per share
88,806,086
29,005,309
86,760,615
28,386,948
Dilutive effect of warrants and stock
options
12,718,858
-
-
-
Diluted net income (loss) per share
101,524,944
29,005,309
86,760,615
28,386,948
(1) 2020 Amounts retroactively restated
for Business Combination
Danimer Scientific, Inc. Condensed
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
(in thousands)
2021
2020
Cash flows from operating activities:
Net loss
$
(55,486
)
$
(3,481
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Loss on remeasurement of private
warrants
21,957
-
Stock-based compensation
20,696
302
Depreciation and amortization
4,311
1,809
Loss on write-off of deferred loan
costs
1,900
-
Amortization of debt issuance costs and
debt discounts
207
852
Single lease cost (benefit)
(806
)
194
Gain on forgiveness of debt
(1,776
)
-
Other
66
381
Changes in operating assets and
liabilities:
Accounts payable
1,967
(592
)
Contract assets
(1,552
)
-
Unearned revenue and contract
liabilities
(1,633
)
(907
)
Prepaid expenses and other current
assets
(1,520
)
(1,879
)
Accounts receivable, net
(3,464
)
(1,152
)
Accrued and other long-term
liabilities
(3,537
)
346
Inventories
(4,011
)
(5,780
)
Other assets
40
(482
)
Net cash used in operating activities
(22,641
)
(10,389
)
Cash flows from investing activities:
Purchases of property, plant and
equipment
(51,906
)
(19,079
)
Proceeds from sales of property, plant and
equipment
340
9
Net cash used in investing activities
(51,566
)
(19,070
)
Cash flows from financing activities:
Proceeds from exercise of warrants, net of
issuance costs
138,202
-
Proceeds from exercise of stock
options
2,375
-
Proceeds from long-term debt
169
4,015
Proceeds from employee stock purchase
plan
92
-
Proceeds from issuance of common stock,
net of issuance costs
(890
)
25,007
Cash paid for debt issuance costs
(1,684
)
(18
)
Principal payments on long-term debt
(27,075
)
(811
)
Net cash provided by financing
activities
111,189
28,193
Net increase (decrease) in cash and cash
equivalents and restricted cash
36,982
(1,266
)
Cash and cash equivalents and restricted
cash-beginning of period
379,897
9,278
Cash and cash equivalents and restricted
cash-end of period
$
416,879
$
8,012
Supplemental cash flow information
Cash paid for interest, net of interest
capitalized
$
242
$
-
Cash paid for operating leases
$
1,589
$
1,270
Supplemental non-cash disclosure
Changes in accounts payable and accrued
liabilities related to purchase of property, plant and
equipment
$
5,983
$
(5,831
)
Non-GAAP Financial Measures
This press release includes the non-GAAP financial measures
“Adjusted EBITDA,” “Adjusted EBITDAR,” “Adjusted Gross Profit” and
"Adjusted Gross Margin". Danimer management views these metrics as
a useful way to look at the performance of its operations between
periods and to exclude decisions on capital investment and
financing that might otherwise impact the review of profitability
of the business based on present market conditions.
Adjusted EBITDA is defined as net income or loss plus net
interest expense, income taxes, depreciation and amortization, as
adjusted to add back certain charges or gains that Danimer may
record each period such as remeasurement of private warrants,
stock-compensation expense, as well as non-recurring charges such
as (i) asset disposal gains or losses as well as other significant
gains or losses such as debt extinguishments; (ii) legal
settlements; or (iii) other discrete non-recurring items. Danimer
believes these items are not considered an indicator of ongoing
performance. Adjusted EBITDA is not a measure of performance
defined in accordance with GAAP. The measure is used as a
supplement to GAAP results in evaluating certain aspects of
Danimer’s business, as described below.
Adjusted EBITDAR is defined as Adjusted EBITDA plus rent
expense.
Adjusted Gross Profit is defined as Gross Profit plus
depreciation, stock-based compensation and rent expense.
Adjusted Gross Margin is defined as Adjusted Gross Profit
divided by total revenue.
Danimer believes that each of Adjusted EBITDA, Adjusted EBITDAR
and Adjusted Gross Profit is useful to investors in evaluating the
Company’s performance because each measure considers the
performance of the Company’s operations, excluding decisions made
with respect to capital investment, financing and other
non-recurring charges as outlined in the preceding paragraph.
Danimer believes these non-GAAP metrics offers additional financial
information that, when coupled with the GAAP results and the
reconciliation to GAAP results, provides a more complete
understanding of its results of operations and the factors and
trends affecting its business.
Adjusted EBITDA, Adjusted EBITDAR and Adjusted Gross Profit
should not be considered as an alternative to net income or loss as
an indicator of its performance or as alternatives to any other
measure prescribed by GAAP as there are limitations to using such
non-GAAP measures. Although Danimer believes that Adjusted EBITDA,
Adjusted EBITDAR and Adjusted Gross Profit may enhance an
evaluation of its operating performance based on recent revenue
generation and product/overhead cost control because it excludes
the impact of prior decisions made about capital investment,
financing and other expenses, (i) other companies in Danimer’s
industry may define Adjusted EBITDA, Adjusted EBITDAR and Adjusted
Gross Profit differently than Danimer does and, as a result, they
may not be comparable to similarly titled measures used by other
companies in its industry, and (ii) Adjusted EBITDA, Adjusted
EBITDAR and Adjusted Gross Profit exclude certain financial
information that some may consider important in evaluating
Danimer’s performance.
Danimer compensates for these limitations by providing
disclosure of the differences between Adjusted EBITDA, Adjusted
EBITDAR and Adjusted Gross Profit and GAAP results, including
providing a reconciliation to GAAP results, to enable investors to
perform their own analysis of Danimer’s operating results.
Danimer Scientific, Inc.
Reconciliation of Adjusted EBITDAR and Adjusted EBITDA to Net
Income (Loss) (Unaudited)
(in thousands)
Three Months Ended June
30,
2021
2020
Net income (loss)
$
39,248
$
(1,800
)
Interest expense, net
222
384
Depreciation and amortization
2,211
939
Gain on remeasurment of private
warrants
(58,740
)
-
Stock-based compensation
14,031
155
Litigation and other legal related
950
-
Transaction related
724
-
Public company transition cost
397
-
Loss (gain) on sale of assets
33
(9
)
Gain on forgiveness of debt
(1,776
)
-
Other income, net
(30
)
(99
)
Adjusted EBITDA
$
(2,730
)
$
(430
)
Rent
136
870
Adjusted EBITDAR
$
(2,594
)
$
440
Reconciliation of Adjusted Gross Profit to
Gross Profit (Unaudited)
(in thousands)
Three Months Ended June
30,
2021
2020
Total revenue
$
14,471
$
11,873
Cost of revenue
12,460
8,441
Gross profit
2,011
3,432
Depreciation
1,951
753
Rent
83
244
Stock-based compensation
28
31
Adjusted gross profit(1)
$
4,072
$
4,460
Adjusted gross margin
28
%
38
%
(1) May not foot due to rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210816005616/en/
Investors ir@danimer.com Phone: 229-220-1103
Media Anthony Popiel apopiel@daltonagency.com Phone:
310-787-4807
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