Danimer Scientific Announces Third Quarter 2022 Results

 

BAINBRIDGE, GA – November 8, 2022 – 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 financial results for its third quarter, ended September 30, 2022.

Stephen E. Croskrey, Chairman and Chief Executive Officer of Danimer, commented, “Our third quarter results were in-line with our expectations, with PHA-based product sales up 26% year-over-year, representing 51% of total revenue and 59% of products revenue. I am proud of our team’s commitment to executing our strategic priorities as we advance our multi-faceted growth strategy to transform the plastics market. We are deepening relationships with existing customers and engaging with a growing number of new potential customers to capture the increasingly strong interest for our biodegradable solutions. We remain focused on accelerating our growth trajectory as we prepare for several significant expected customer product launches in the months ahead. Based on expected customer demand momentum, we believe our existing operations can provide us with sufficient cash flow to run the business effectively as volumes grow. In our view, customer commitments to sustainability and regulatory tailwinds overshadow inflation and supply chain constraints and continue to support a robust outlook for Danimer and our planned capacity additions in coming years.”

Croskrey continued, “We also recorded a non-cash goodwill impairment charge in the third quarter because the book value of our equity significantly exceeded our market capitalization. Our goodwill originated from the Novomer acquisition in August 2021, but I want to note that the impairment determination considers the entire Danimer business and is a required accounting adjustment that does not reflect a change in our view of the value and future of Danimer Catalytic Technologies.”

Third Quarter 2022 Financial Highlights

Revenues in the third quarter were $10.4 million. PHA-based product sales were up 26% from the comparable period in the prior year, representing 51% of total revenue.
Gross profit was $(4.1) million compared to $(0.2) million in the third quarter of 2021. Adjusted gross profit1 was $(0.8) million compared to $2.6 million in the third quarter of 2021. The decrease in adjusted gross profit was primarily driven by a combination of reduced PLA resin sales and higher fixed costs associated with increased PHA capacity compared to the prior year period.
Net loss of $94.9 million included a $62.7 million goodwill impairment charge in the third quarter of 2022.
Adjusted EBITDA1 was $(12.9) million in the third quarter of 2022 compared to $(7.4) million in the third quarter of 2021, primarily due to the decline in gross profit as well as higher R&D expense associated with a full quarter of costs related to Danimer Catalytic Technologies, acquired in August 2021, and increases in staffing to support additional product development.

 

(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 this release.

 

 


 

Capital Structure and Cash Balance

In July 2022, Danimer was invited to submit a Part II Application for a loan guarantee under the U.S. Department of Energy (DOE) Title XVII Loan Guarantee Program. If successful, the loan guarantee from the DOE would help fund the Company’s capacity expansion, as further detailed in the Company’s press release issued on July 5, 2022.

At September 30, 2022, the Company reported total debt outstanding of $287.5 million, net of $10.4 million of unamortized debt issuance costs, which included approximately $45.7 million dollars of low-interest New Markets Tax Credit loans that the Company expects will be forgiven between 2026 and 2029. At September 30, 2022, cash and cash equivalents were $99.1 million.

Outlook

Danimer remains focused on making disciplined investments in its operational platform and infrastructure that will allow it to capture significant opportunities for its products in coming years.

Based on results through September 2022 and increased visibility through year end, the Company is narrowing its Adjusted EBITDA outlook for the full year 2022, which it now expects to be in the range of $(45) million to $(40) million, compared to $(22.6) million in 2021. The Company now expects full year capital expenditures to be in the range of $165 million to $170 million, inclusive of capitalized interest and internal labor and overhead, with a year-end cash balance to be in the range of $60 million to $65 million.

Looking beyond 2022, the Company expects its PHA-based revenues to drive a significant increase in the Company’s overall profitability. The Company remains confident in its ability to execute against its objectives with a prudent focus on profitability and cash management.

Webcast, Conference Call and 10-Q Filing

The Company will host a webcast and conference call on Tuesday, November 8, 2022, at 5:00 p.m. Eastern time to review third quarter of 2022 results, discuss recent events and conduct a question-and-answer session. The live webcast of the conference call can be accessed on the Investor Relations section of the Company’s website at https://ir.danimerscientific.com. For those unable to access the webcast, the conference call will be accessible domestically or internationally, by dialing 1-855-327-6837 or 1-631-891-4304, respectively. Upon dialing in, please request to join the Danimer Scientific Third Quarter 2022 Earnings Conference Call. The archived webcast will be available for replay on the Company's website after the call.

About Danimer Scientific

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 holds more than 430 granted patents and pending patent applications in more than 20 countries for a range of manufacturing processes and biopolymer formulations. For more information, visit https://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 include, without limitation, statements regarding our expectations for full year 2022 capital expenditures, Adjusted EBITDA and cash balances. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting the Company and therefore involve a

 


 

number of risks and uncertainties. We caution 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 our 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 our 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 our products, in light of disease epidemics and health-related concerns such as the COVID-19 global pandemic; the impact on our business, operations and financial results from the ongoing conflict in Ukraine; 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, our information systems; the ability of our 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; our ability to properly maintain, protect, repair or upgrade our information technology systems or information security systems, or problems with our 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; our 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, 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. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.

Contacts:

Investors

ir@danimer.com

Phone: 229-220-1103

Media

Anthony Priwer

apriwer@daltonagency.com

Phone: 615-515-4892


 

 

 

 


 

Danimer Scientific, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

 

 

 

September 30,

 

 

December 31,

 

(in thousands, except share and per share data)

 

2022

 

 

2021

 

Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

99,127

 

 

$

286,487

 

Accounts receivable, net

 

 

17,426

 

 

 

17,149

 

Other receivables, net

 

 

1,377

 

 

 

3,836

 

Inventories, net

 

 

35,201

 

 

 

24,573

 

Prepaid expenses and other current assets

 

 

5,080

 

 

 

4,737

 

Contract assets, net

 

 

4,379

 

 

 

3,576

 

Total current assets

 

 

162,590

 

 

 

340,358

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

436,875

 

 

 

316,181

 

Intangible assets, net

 

 

81,491

 

 

 

84,659

 

Goodwill

 

 

-

 

 

 

62,649

 

Right-of-use assets

 

 

19,083

 

 

 

19,240

 

Leverage loans receivable

 

 

31,446

 

 

 

13,408

 

Restricted cash

 

 

1,663

 

 

 

481

 

Loan fees

 

 

-

 

 

 

1,397

 

Other assets

 

 

227

 

 

 

224

 

Total assets

 

$

733,375

 

 

$

838,597

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,324

 

 

$

20,790

 

Accrued liabilities

 

 

20,407

 

 

 

18,777

 

Unearned revenue and contract liabilities

 

 

2,000

 

 

 

214

 

Current portion of lease liability

 

 

3,337

 

 

 

3,337

 

Current portion of long-term debt, net

 

 

1,501

 

 

 

357

 

Total current liabilities

 

 

31,569

 

 

 

43,475

 

 

 

 

 

 

 

 

Private warrants liability

 

 

964

 

 

 

9,578

 

Long-term lease liability, net

 

 

22,265

 

 

 

22,693

 

Long-term debt, net

 

 

285,969

 

 

 

260,934

 

Deferred income taxes

 

 

246

 

 

 

1,014

 

Other long-term liabilities

 

 

641

 

 

 

638

 

Total liabilities

 

$

341,654

 

 

$

338,332

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized: 101,388,673 and 100,687,820 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

$

10

 

 

$

10

 

Additional paid-in capital

 

 

662,308

 

 

 

619,145

 

Accumulated deficit

 

 

(270,597

)

 

 

(118,890

)

Total stockholders’ equity

 

 

391,721

 

 

 

500,265

 

Total liabilities and stockholders’ equity

 

$

733,375

 

 

$

838,597

 

 

 


 

Danimer Scientific, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

9,099

 

 

$

12,397

 

 

$

33,890

 

 

$

34,715

 

Services

 

 

1,349

 

 

 

972

 

 

 

4,004

 

 

 

6,306

 

Total revenue

 

 

10,448

 

 

 

13,369

 

 

 

37,894

 

 

 

41,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

14,503

 

 

 

13,601

 

 

 

45,606

 

 

 

37,786

 

Selling, general and administrative

 

 

19,413

 

 

 

26,592

 

 

 

62,042

 

 

 

55,791

 

Research and development

 

 

7,947

 

 

 

5,010

 

 

 

24,469

 

 

 

11,604

 

Loss on sale of assets

 

 

-

 

 

 

-

 

 

 

1

 

 

 

33

 

Impairment of long-lived assets

 

 

63,491

 

 

 

-

 

 

 

63,491

 

 

 

-

 

Total costs and expenses

 

 

105,354

 

 

 

45,203

 

 

 

195,609

 

 

 

105,214

 

Loss from operations

 

 

(94,906

)

 

 

(31,834

)

 

 

(157,715

)

 

 

(64,193

)

Nonoperating (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Gain on remeasurement of private warrants

 

 

1,607

 

 

 

28,392

 

 

 

8,614

 

 

 

6,435

 

Interest, net

 

 

(553

)

 

 

(164

)

 

 

(2,197

)

 

 

(516

)

Gain on forgiveness of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,776

 

Loss on loan extinguishment

 

 

(1,500

)

 

 

-

 

 

 

(1,500

)

 

 

(2,604

)

Other, net

 

 

240

 

 

 

8

 

 

 

324

 

 

 

18

 

Total nonoperating (expense) income:

 

 

(206

)

 

 

28,236

 

 

 

5,241

 

 

 

5,109

 

Loss before income taxes

 

 

(95,112

)

 

 

(3,598

)

 

 

(152,474

)

 

 

(59,084

)

Income taxes

 

 

236

 

 

 

11,423

 

 

 

767

 

 

 

11,423

 

Net (loss) income

 

$

(94,876

)

 

$

7,825

 

 

$

(151,707

)

 

$

(47,661

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share

 

$

(0.94

)

 

$

0.08

 

 

$

(1.50

)

 

$

(0.53

)

Diluted net (loss) income per share

 

$

(0.94

)

 

$

0.08

 

 

$

(1.50

)

 

$

(0.53

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used to compute:

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share

 

 

101,199,195

 

 

 

98,160,626

 

 

 

100,993,068

 

 

 

90,614,910

 

 Effect of dilutive instruments

 

 

-

 

 

 

5,360,126

 

 

 

-

 

 

 

-

 

Diluted net (loss) income per share

 

 

101,199,195

 

 

 

103,520,752

 

 

 

100,993,068

 

 

 

90,614,910

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Danimer Scientific, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

 

 

Nine Months Ended

 

 

September 30,

(in thousands)

 

2022

 

 

2021

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(151,707

)

 

$

(47,661

)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Gain on remeasurement of private warrants

 

 

(8,614

)

 

 

(6,435

)

 

Stock-based compensation

 

 

42,398

 

 

 

35,093

 

 

Depreciation and amortization

 

 

13,172

 

 

 

7,489

 

 

Inventory reserves

 

 

609

 

 

 

-

 

 

Deferred income taxes

 

 

(767

)

 

 

(11,423

)

 

Amortization of debt issuance costs and debt discounts

 

 

1,601

 

 

 

337

 

 

Gain on forgiveness of debt

 

 

-

 

 

 

(1,776

)

 

Amortization of right-of-use assets and lease liability

 

 

(270

)

 

 

(942

)

 

Contract asset reserve

 

 

1,216

 

 

 

-

 

 

Loss on extinguishment of debt

 

 

1,500

 

 

 

1,900

 

 

Impairment of long-lived assets

 

 

63,491

 

 

 

-

 

 

Other

 

 

1,249

 

 

 

186

 

 

Changes in operating assets and liabilities, net of effects of acquisition:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(1,747

)

 

 

(6,331

)

 

Other receivables

 

 

2,724

 

 

 

(3

)

 

Inventories, net

 

 

(14,271

)

 

 

(9,471

)

 

Prepaid expenses and other current assets

 

 

1,749

 

 

 

(1,194

)

 

Contract assets

 

 

(2,019

)

 

 

(1,578

)

 

Other assets

 

 

(5

)

 

 

40

 

 

Accounts payable

 

 

(4,642

)

 

 

887

 

 

Accrued and other long-term liabilities

 

 

(5,035

)

 

 

(4,338

)

 

Unearned revenue and contract liabilities

 

 

1,786

 

 

 

(2,221

)

 

Net cash used in operating activities

 

 

(57,582

)

 

 

(47,441

)

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(133,632

)

 

 

(96,798

)

 

Investment in leverage loans receivable related to NMTC financing

 

 

(18,037

)

 

 

-

 

 

Acquisition of Novomer, net of cash acquired

 

 

(14

)

 

 

(151,179

)

 

Proceeds from sales of property, plant and equipment

 

 

55

 

 

 

340

 

 

Net cash used in investing activities

 

 

(151,628

)

 

 

(247,637

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from exercise of warrants, net of issuance costs

 

 

-

 

 

 

138,196

 

 

Proceeds from long-term debt

 

 

24,700

 

 

 

169

 

 

Cash paid for debt issuance costs

 

 

(1,547

)

 

 

(1,691

)

 

Proceeds from exercise of stock options

 

 

215

 

 

 

2,676

 

 

Proceeds from employee stock purchase plan

 

 

526

 

 

 

106

 

 

Principal payments on long-term debt

 

 

(886

)

 

 

(27,086

)

 

Cost related to warrants

 

 

(55

)

 

 

-

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

79

 

 

 

(892

)

 

Net cash provided by financing activities

 

 

23,032

 

 

 

111,478

 

 

Net decrease in cash and cash equivalents and restricted cash

 

 

(186,178

)

 

 

(183,600

)

 

Cash and cash equivalents and restricted cash-beginning of period

 

 

286,968

 

 

 

379,897

 

 

Cash and cash equivalents and restricted cash-end of period

 

$

100,790

 

 

$

196,297

 

 

 

 

 


 

 

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-based 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 and impairment of goodwill; (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, PLA additive inventory reserve, 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, Adjusted gross profit and Adjusted gross margin 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 offer 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, Adjusted gross profit and Adjusted gross margin 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, Adjusted gross profit and Adjusted gross margin 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, Adjusted gross profit and Adjusted gross margin 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, Adjusted gross profit and Adjusted gross margin 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, Adjusted gross profit and Adjusted gross margin and GAAP results, including providing a reconciliation to GAAP results, to enable investors to perform their own analysis of Danimer’s operating results. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, reconciliations to GAAP financial measures are not provided for forward-looking non-GAAP measures. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

 

 


 

 

Danimer Scientific, Inc.

Reconciliation of Adjusted EBITDAR and Adjusted EBITDA to Net (Loss) Income (Unaudited)

 

 

 

Three Months Ended September 30,

 

 

 

2022

 

 

2021

 

(in thousands)

 

 

 

 

 

 

Net (loss) income

 

$

(94,876

)

 

$

7,825

 

Income taxes

 

 

(236

)

 

 

(11,423

)

Interest expense, net

 

 

553

 

 

 

164

 

Depreciation and amortization

 

 

4,585

 

 

 

3,179

 

Gain on remeasurement of private warrants

 

 

(1,607

)

 

 

(28,392

)

Stock-based compensation

 

 

14,305

 

 

 

15,157

 

Impairment of goodwill

 

 

62,663

 

 

 

-

 

Litigation and other legal related

 

 

375

 

 

 

235

 

Transaction related

 

 

-

 

 

 

3,051

 

Public company transition costs

 

 

35

 

 

 

2,859

 

Loss on loan extinguishment

 

 

1,500

 

 

 

-

 

Other, net

 

 

(240

)

 

 

(8

)

Adjusted EBITDA

 

$

(12,943

)

 

$

(7,353

)

Rent

 

 

875

 

 

 

781

 

Adjusted EBITDAR

 

$

(12,068

)

 

$

(6,572

)

 

 

 

Reconciliation of Adjusted Gross Profit to Gross Profit (Unaudited)

 

 

 

Three Months Ended September 30,

 

 

 

2022

 

 

2021

 

(in thousands)

 

 

 

 

 

 

Total revenue

 

$

10,448

 

 

$

13,369

 

Cost of revenue

 

 

14,503

 

 

 

13,601

 

Gross profit

 

 

(4,055

)

 

 

(232

)

Depreciation

 

 

2,571

 

 

 

2,110

 

Rent

 

 

626

 

 

 

723

 

Stock-based compensation

 

 

22

 

 

 

28

 

Adjusted gross profit

 

$

(836

)

 

$

2,629

 

 

 

 

 

 

 

 

Adjusted gross margin

 

 

-8.0

%

 

 

19.7

%