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 quarter ended March
31, 2021.
“Danimer Scientific remains at the forefront of the bioplastics
industry as the premier supplier of PHA biopolymers to blue-chip
multinational corporations that are committed to reducing
single-use plastic waste,” commented Stephen E. Croskrey, Chief
Executive Officer of Danimer. “In the first quarter 2021, we
continued to make progress on our facility expansions, customer
application developments and other investments in our operational
infrastructure in order to serve the current and long-term demand
for our next generation Nodax® technology. We are excited to have
announced a multi-year partnership with Mars Wrigley to develop
innovative compostable packaging. Looking ahead, we continue to
expect that our expansion of production capacity, contracted
revenue streams and future efficiencies will collectively fuel the
path forward to fulfilling our goal of profitably transforming the
bioplastics industry on a global scale.”
First Quarter 2021 Financial Highlights
- Revenues increased 24% to $13.2 million, compared to the first
quarter of 2020, driven by stronger demand and additional PHA
production at the Company’s Winchester, Kentucky Phase 1 facility
brought on line in 2020. PHA-based products represented 29% of
total revenue compared to 2% in the first quarter of 2020.
- Gross profit of $1.5 million, compared to $3.2 million in the
first quarter of 2020. Adjusted gross profit1 was $3.9 million,
compared to $4.1 million in the first quarter of 2020. Adjusted
gross margin was 29.2%, compared to 38.6% in the first quarter of
2020, primarily attributable to product mix. In both periods, the
average cost per pound of PHA-based products sold was significantly
higher than PLA-based products sold and we had only limited PHA
manufacturing activities in early 2020 at the Kentucky facility.
The average cost per unit sold is expected to improve as PHA
production continues to increase and efficiency measures are
implemented. Adjusted gross profit excludes stock-based
compensation, depreciation and amortization, as well as rent
expense.
- Net loss of $94.7 million included an $80.7 million loss
related to the revaluation of the Company’s private warrants.
- Adjusted EBITDA1 loss of $2.3 million, compared to break even
in the first quarter of 2020, primarily due to higher operating
expenses attributable to an increase in headcount and salaries to
support R&D efforts and future expansion plans. The first
quarter 2021 also included public company expenses of approximately
$1.0 million.
- Adjusted EBITDAR1, which additionally excludes rent expense
primarily associated with the Company’s Kentucky facility and
Georgia production operations, was a loss of $1.6 million, compared
to income of $0.7 million in the prior year.
(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.
Facility Network Expansion
Market demand remains robust for Danimer’s signature polymer,
Nodax® PHA (polyhydroxyalkanoate), a 100% biodegradable, renewable,
and sustainable plastic produced using plant-based oils as a
primary feedstock. Expanding commitments from blue chip
multinational consumer packaging customers support Danimer’s
announced nameplate capacity additions to produce and deliver up to
an estimated 315 million pounds of finished PHA product per
year.
- The Winchester, Kentucky facility is currently producing and
shipping PHA at a commercial scale. In the first quarter 2021, neat
PHA production volume at the facility was at approximately 50% of
capacity. As previously disclosed, during the second quarter of
2021, the Company is scheduled to temporarily take the facility
offline to implement several debottlenecking initiatives, with the
objective to accelerate the facility’s scaling up of production to
100% of existing capacity by the end of 2021.
- Phase II of the Kentucky plant expansion is in process to
increase total capacity to 65 million finished pounds annually.
Construction is underway with the physical foundations built for
the fermentation chiller, downstream processing and extrusion
facilities that form the integrated production process for
PHA-based resins. The Company continues to expect its Phase II
expansion to come online in the second quarter of 2022.
- In March 2021, the Company together with the State of Georgia
announced the Company’s new state-of-the-art greenfield facility
will be located in Bainbridge, GA. With anticipated capacity of 250
million finished pounds of PHA products annually to keep up with
robust PHA demand, the facility is in the pre-construction
engineering stage and is on track for an expected groundbreaking to
take place in the first quarter of 2022. The greenfield capacity
will come on line in two phases, with an initial three fermenters
expected to be operational in mid-2023 and the second set of three
fermenters anticipated to come on line in early 2024. Based on the
current demand pipeline, the Company forecasts that capacity at the
greenfield facility will be sold out.
Liquidity and Capital Resources
At March 31, 2021, the Company had total debt outstanding of
$31.7 million and cash of $312.9 million, including transaction net
proceeds resulting from the merger between Danimer and Live Oak
completed in December 2020. In January 2021, the Company
voluntarily paid off and terminated its 2019 Term Loan with a
principal amount of $27 million, further delevering its balance
sheet and providing additional flexibility to pursue more
competitively priced financing in the future.
In April 2021, the Company entered into a new 5-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 additional flexibility to invest
in initiatives as the Company grows.
In May 2021, the Company commenced the process to redeem 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 is expected to be completed in June 2021, simplifying
the Company’s capital structure and providing additional funding to
invest in the ongoing expansion of the business.
Financial Statement Update on Non-Cash Impact Related to
Warrants
On May 7, 2021, the Company filed a Current Report on Form 8-K
and issued a press release in response to the public statement
released by the staff of the Securities and Exchange Commission on
April 12, 2021 regarding accounting and reporting considerations
that are broadly applicable to warrants issued by special purpose
acquisition companies ("SPACs"). Similar to other SPACs, the
Company had previously classified its private warrants, which were
originally issued by the SPAC that the Company merged with in 2020,
as equity. However, after evaluating the SEC statement and
consulting with its advisors, the Company concluded that certain of
its warrants should be classified as liabilities in the Company's
consolidated financial statements. The Company has restated its
audited consolidated financial statements for the year ended
December 31, 2020 to classify the Company’s private warrants as a
liability instead of as equity and to reflect the change in the
fair value of such liability in each period as a non-cash charge or
gain in the consolidated statements of operations.
This restatement had no impact on Danimer’s current or
historical reported cash or cash equivalents, revenues, loss from
operations, or cash flows from operating, investing, or financing
activities. This change will not affect GAAP revenues, loss from
operations, long-term debt or cash flows from operating, investing,
or financing activities, or the non-GAAP measures Adjusted EBITDA,
Free Cash Flow or Adjusted Free Cash Flow, or its ongoing
operations or future growth plans. The restatement resulted in the
Company recording a liability of $82.9 million as of December 31,
2020, and an unrealized non-operating gain of $3.7 million
reflecting the change in the fair value of the private warrant
liability between the closing of the SPAC merger transaction on
December 29th and the end of the fiscal year on December 31, 2020.
During the first quarter of 2021, the liability related to private
warrants increased to $149.6 million, resulting in a loss on
private warrants revaluation of $80.7 million for the three-month
period. Since the private warrants are being accounted for as
liabilities, the change in the fair value of such liability is
recognized as a non-cash charge or gain in the consolidated
statements of operations. The Company does not expect the change to
have any significant impact on operational performance or debt
covenant compliance in future periods. Additional information on
the restatement can be found in the Company’s 10-K/A.
Business Outlook
The Company reiterates its expectation for increased PHA output
after debottlenecking initiatives scheduled to be implemented
during the second quarter of 2021, providing for increased product
availability upon completion. The Company continues to expect
Adjusted EBITDA and cash flow from operations to benefit in 2021
from these improvements with a partial offset from accelerated
investments in headcount and technology to build out the
operational platform and infrastructure needed to support our
transformational capacity expansion and sales growth. The Company
now expects full year capital expenditures to be in the range of
$120 million to $145 million, with the increase from the prior
range mainly attributable to higher costs for construction
materials while the Company continues to evaluate value engineering
opportunities.
Webcast and Conference Call
The Company will host a webcast and conference call on Monday,
May 17, 2021, at 5:00 p.m. Eastern time to review first 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 1-855-327-6837
(Domestic) and 1-631-891-4304 (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 150 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)
March 31,
December 31,
2021
2020
Assets Current assets Cash and cash equivalents
$
312,910
$
377,581
Accounts receivable, net
10,114
6,605
Inventories
16,846
13,642
Prepaid expenses and other current assets
4,565
3,089
Contract assets
1,397
1,466
Total current assets
345,832
402,383
Property, plant and equipment, net
129,577
106,795
Patents, net
1,764
1,801
Right-of-use assets
19,329
19,387
Leverage loans receivable
13,408
13,408
Restricted cash
2,320
2,316
Other assets
73
111
Total assets
$
512,303
$
546,201
Liabilities and Stockholders' Equity Current
liabilities Accounts payable
$
10,797
$
10,610
Accrued liabilities
7,652
9,220
Unearned revenue and contract liabilities
2,336
2,455
Current portion of lease liability
3,058
3,000
Current portion of long-term debt, net
345
25,201
Total current liabilities
24,188
50,486
Private warrants liability
149,635
82,860
Long-term lease liability, net
23,952
24,175
Long-term debt, net
31,316
31,386
Other long-term liabilities
938
1,250
Total liabilities
230,029
190,157
Commitments and Contingencies Stockholders' equity
Common stock, $0.0001 par value; 200,000,000 shares authorized:
85,339,145 and 84,535,640 shares issued and outstanding at March
31, 2021 and December 31, 2020, respectively
9
8
Additional paid-in-capital
435,782
414,819
Accumulated deficit
(153,517
)
(58,783
)
Total stockholders’ equity
282,274
356,044
Total liabilities and stockholders’ equity
$
512,303
$
546,201
Danimer Scientific,
Inc.
Condensed Consolidated
Statements of Operations (Unaudited)
(in thousands, except share and per share data)
Three Months Ended March
31,
2021
2020
Revenue: Products
$
11,024
$
9,179
Services
2,157
1,419
Total revenue
13,181
10,598
Costs and expenses: Cost of revenue
11,725
7,429
Selling, general and administrative
10,120
2,980
Research and development
2,619
1,247
Total costs and expenses
24,464
11,656
Loss from operations
(11,283
)
(1,058
)
Nonoperating income (expense): Loss on remeasurement of
private warrants
(80,697
)
-
Interest expense, net
(200
)
(713
)
Loss on debt extinguishment
(2,604
)
-
Other income, net
50
90
Total nonoperating expenses
(83,451
)
(623
)
Loss before income taxes
(94,734
)
(1,681
)
Income tax expense
-
-
Net loss
$
(94,734
)
$
(1,681
)
Net loss per share: Basic and diluted net loss per share
$
(1.12
)
$
(0.06
)
Weighted average number of shares used to compute basic and
diluted net loss per share (March 31, 2020 balance as retroactively
restated for Business Combination):
84,708,137
27,761,717
Danimer Scientific,
Inc.
Condensed Consolidated
Statements of Cash Flows (Unaudited)
Three Months Ended
(in thousands)
March 31,
2021
2020
Cash flows from operating activities Net loss
$
(94,734
)
$
(1,681
)
Adjustments to reconcile net loss to net cash used in operating
activities: Loss on remeasurement of private warrants
80,697
-
Stock-based compensation
6,665
148
Depreciation and amortization
2,100
870
Loss on writeoff of deferred loan costs
1,900
-
Amortization of debt issuance costs and debt discounts
82
233
Amortization of right-of-use assets and lease liability
41
128
Other
38
89
Changes in operating assets and liabilities Accounts receivable,
net
(3,509
)
(1,736
)
Inventories
(3,204
)
(3,133
)
Prepaid expenses and other current assets
(1,498
)
(42
)
Other assets
125
(191
)
Accounts payable
(669
)
268
Accrued and other long-term liabilities
(2,123
)
(156
)
Unearned revenue and contract liabilities
(119
)
(412
)
Net cash used in operating activities
(14,208
)
(5,615
)
Cash flows from investing activities Purchases of property,
plant and equipment
(23,893
)
(15,340
)
Net cash used in investing activities
(23,893
)
(15,340
)
Cash flows from financing activities Principal
payments on long-term debt
(27,037
)
(404
)
Proceeds from exercise of stock options
1,191
-
Capital issuance costs Proceeds from long-term debt
120
2,435
Payments for debt issuance costs
(25
)
(27
)
Proceeds from NMTC financing
-
91
Proceeds from issuance of common stock, net of issuance costs
(815
)
24,916
Net cash (used in) provided by financing activities
(26,566
)
27,011
Net (decrease) increase in cash and cash equivalents and restricted
cash
(64,667
)
6,056
Cash and cash equivalents and restricted cash-beginning of period
379,897
6,261
Cash and cash equivalents and restricted cash-end of period
$
315,230
$
12,317
Supplemental cash flow information Cash paid for
interest, net of interest capitalized
$
130
$
413
Cash paid for income taxes
$
-
$
-
Cash paid for operating leases
$
798
$
631
Supplemental non-cash disclosure Noncash capital
expenditures
$
951
$
(2,777
)
Non-GAAP Financial Measures
This press release includes the non-GAAP financial measures
“Adjusted EBITDA”, “Adjusted EBITDAR” and “Adjusted Gross Profit”.
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.
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 Loss (Unaudited)
Three Months Ended March
31,
2021
2020
Net Loss
$
(94,734
)
$
(1,681
)
Interest expense, net
200
713
Income tax expense
-
-
Deprecation and amortization
2,100
870
Loss on remeasurement of private warrants
80,697
-
Stock-based compensation
6,665
148
Loss on debt extinguishment
2,604
-
Public company transition costs
207
-
Other income, net
(50
)
(90
)
Adjusted EBITDA
$
(2,311
)
$
(40
)
Rent
725
786
Adjusted EBITDAR
$
(1,585
)
$
746
Reconciliation of Adjusted
Gross Profit to Gross Profit (Unaudited)
Three Months Ended March
31,
2021
2020
Total Revenue
$
13,181
$
10,598
Cost of Revenue
11,725
7,429
Gross Profit
1,456
3,169
Depreciation
1,839
683
Rent
530
216
Stock-based compensation
26
25
Adjusted Gross Profit
$
3,851
$
4,094
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version on businesswire.com: https://www.businesswire.com/news/home/20210517005872/en/
Investors ir@danimer.com Phone: 229-220-1103
Media Anthony Popiel apopiel@daltonagency.com Phone:
310-787-4807
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