Danimer Scientific, a Next Generation Bioplastics Company, Announces First Quarter 2021 Results

Rhea-AI Summary

Danimer Scientific (NYSE: DNMR) announced its Q1 2021 financial results, showcasing a 24% revenue growth to $13.2 million, primarily driven by increased production of PHA biopolymers. Gross profit declined to $1.5 million, and the company reported a significant net loss of $94.7 million, mainly due to the revaluation of private warrants. Danimer is expanding its production capacity with new facilities and partnerships, including a multi-year deal with Mars Wrigley for compostable packaging. Despite robust market demand, operational costs are impacting profitability.

Positive

• Revenue increased 24% to $13.2 million, driven by stronger demand.
• Partnership with Mars Wrigley to develop innovative compostable packaging.
• Ongoing expansion efforts to boost production capacity for PHA biopolymers.

Negative

• Net loss of $94.7 million due to an $80.7 million loss from revaluing private warrants.
• Gross profit declined to $1.5 million from $3.2 million year-over-year.
• Adjusted EBITDA loss of $2.3 million primarily due to higher operating expenses.

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 operat

FAQ

What were Danimer Scientific's Q1 2021 revenues?

Danimer Scientific reported revenues of $13.2 million for Q1 2021, a 24% increase from Q1 2020.

What was Danimer Scientific's net loss in Q1 2021?

The company recorded a net loss of $94.7 million in Q1 2021.

What partnerships did Danimer Scientific announce recently?

Danimer announced a multi-year partnership with Mars Wrigley to develop innovative compostable packaging.

What is the production capacity expansion plan for Danimer Scientific?

Danimer is expanding its production capacity to produce up to an estimated 315 million pounds of PHA annually.

How much cash did Danimer Scientific have as of March 31, 2021?

As of March 31, 2021, Danimer Scientific had $312.9 million in cash.