Danimer Scientific Announces Second Quarter 2022 Results
Danimer Scientific, Inc. (NYSE: DNMR) reported its Q2 2022 financial results, showing revenues of $12.7 million, an 85% increase in PHA-based product sales. However, the company faced a net loss of $30.4 million, coupled with decreased gross profit of $(2.2) million. Adjusted EBITDA also worsened to $(12.9) million from $(2.7) million year-over-year. Danimer maintained a cash balance of $140.4 million and total debt of $264.3 million. Looking ahead, it reaffirms its Adjusted EBITDA outlook for 2022 between $(45) million and $(35) million.
- PHA-based product sales rose 85% year-over-year, now 61% of total revenue.
- Successful commissioning of Phase II of the Kentucky Facility, exceeding initial expectations.
- Strong interest in biodegradable solutions and potential significant customer product launches in Q4 2022 and into 2023.
- Net loss of $30.4 million for Q2 2022.
- Gross profit decreased to $(2.2) million, down from $2.0 million in Q2 2021.
- Adjusted EBITDA worsened to $(12.9) million compared to $(2.7) million in the previous year.
Second Quarter 2022 Financial Highlights
-
Revenues in the second quarter were
. PHA-based product sales were up$12.7 million 85% from the comparable period in the prior year, expanding to61% of total revenue compared to29% in the second quarter of 2021. -
Gross profit was
compared to$(2.2) million in the second quarter of 2021. Adjusted gross profit1 was$2.0 million compared to$0.2 million in the second quarter of 2021. The decrease in adjusted gross profit was primarily driven by lower R&D gross profit and lower PLA volumes at a lower year-over-year margin, partially offset by higher PHA volumes at an improved margin compared to the prior year period.$4.1 million -
Net loss of
included a$30.4 million non-cash gain related to the remeasurement of the Company’s private warrants for the second quarter of 2022.$2.0 million -
Adjusted EBITDA1 was
in the second quarter of 2022 compared to$(12.9) million in the second quarter of 2021, primarily due to the decline in gross profit as well as prior increases in headcount and salaries to support expansion plans. The second quarter of 2022 also included approximately$(2.7) million of R&D and operating expenses related to Danimer Catalytic Technologies, which the Company did not own in the comparable prior year period.$1.2 million -
Adjusted EBITDAR1, which excludes rent expense primarily associated with the Company’s Kentucky Facility and one of the Company's production facilities in
Georgia , was , compared to$(12.0) million in the prior year second quarter.$(2.6) million
(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. |
Capital Structure and Cash Balance
At
In
Outlook
Danimer remains focused on making disciplined investments in its operational platform and infrastructure that will allow it to capture the significant opportunity for its products in coming years.
For the full year 2022, the Company reaffirms its outlook for Adjusted EBITDA to be in the range of
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
About
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 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 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
Condensed Consolidated Balance Sheets (Unaudited) |
||||||||
|
|
|
|
|
|
|
||
(in thousands, except share and per share data) |
|
2022 |
|
|
2021 |
|
||
Assets: |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
140,388 |
|
|
$ |
286,487 |
|
Accounts receivable, net |
|
|
18,224 |
|
|
|
17,149 |
|
Other receivables, net |
|
|
1,408 |
|
|
|
3,836 |
|
Inventories, net |
|
|
32,729 |
|
|
|
24,573 |
|
Prepaid expenses and other current assets |
|
|
5,394 |
|
|
|
4,737 |
|
Contract assets, net |
|
|
3,900 |
|
|
|
3,576 |
|
Total current assets |
|
|
202,043 |
|
|
|
340,358 |
|
|
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
408,885 |
|
|
|
316,181 |
|
Intangible assets, net |
|
|
82,495 |
|
|
|
84,659 |
|
|
|
|
62,663 |
|
|
|
62,649 |
|
Right-of-use assets |
|
|
19,133 |
|
|
|
19,240 |
|
Leverage loans receivable |
|
|
13,408 |
|
|
|
13,408 |
|
Restricted cash |
|
|
449 |
|
|
|
481 |
|
Loan fees |
|
|
1,413 |
|
|
|
1,397 |
|
Other assets |
|
|
228 |
|
|
|
224 |
|
Total assets |
|
$ |
790,717 |
|
|
$ |
838,597 |
|
|
|
|
|
|
|
|
||
Liabilities and Stockholders' Equity: |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
11,748 |
|
|
$ |
20,790 |
|
Accrued liabilities |
|
|
10,994 |
|
|
|
18,777 |
|
Unearned revenue and contract liabilities |
|
|
2,290 |
|
|
|
214 |
|
Current portion of lease liability |
|
|
3,337 |
|
|
|
3,337 |
|
Current portion of long-term debt, net |
|
|
2,242 |
|
|
|
357 |
|
Total current liabilities |
|
|
30,611 |
|
|
|
43,475 |
|
|
|
|
|
|
|
|
||
Private warrants liability |
|
|
2,571 |
|
|
|
9,578 |
|
Long-term lease liability, net |
|
|
22,412 |
|
|
|
22,693 |
|
Long-term debt, net |
|
|
262,032 |
|
|
|
260,934 |
|
Deferred income taxes |
|
|
483 |
|
|
|
1,014 |
|
Other long-term liabilities |
|
|
753 |
|
|
|
638 |
|
Total liabilities |
|
$ |
318,862 |
|
|
$ |
338,332 |
|
|
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
|
||
Common stock, |
|
$ |
10 |
|
|
$ |
10 |
|
Additional paid-in capital |
|
|
647,566 |
|
|
|
619,145 |
|
Accumulated deficit |
|
|
(175,721 |
) |
|
|
(118,890 |
) |
Total stockholders’ equity |
|
|
471,855 |
|
|
|
500,265 |
|
Total liabilities and stockholders’ equity |
|
$ |
790,717 |
|
|
$ |
838,597 |
|
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
(in thousands, except share and per share data) |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Products |
|
$ |
11,575 |
|
|
$ |
11,294 |
|
|
$ |
24,791 |
|
|
$ |
22,318 |
|
Services |
|
|
1,128 |
|
|
|
3,177 |
|
|
|
2,655 |
|
|
|
5,334 |
|
Total revenue |
|
|
12,703 |
|
|
|
14,471 |
|
|
|
27,446 |
|
|
|
27,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue |
|
|
14,934 |
|
|
|
12,460 |
|
|
|
30,999 |
|
|
|
24,185 |
|
Selling, general and administrative |
|
|
20,975 |
|
|
|
19,079 |
|
|
|
43,211 |
|
|
|
29,199 |
|
Research and development |
|
|
8,913 |
|
|
|
3,975 |
|
|
|
16,044 |
|
|
|
6,594 |
|
Loss on sale of assets |
|
|
1 |
|
|
|
33 |
|
|
|
1 |
|
|
|
33 |
|
Total costs and expenses |
|
|
44,823 |
|
|
|
35,547 |
|
|
|
90,255 |
|
|
|
60,011 |
|
Loss from operations |
|
|
(32,120 |
) |
|
|
(21,076 |
) |
|
|
(62,809 |
) |
|
|
(32,359 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonoperating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) on remeasurement of private warrants |
|
|
2,012 |
|
|
|
58,740 |
|
|
|
7,007 |
|
|
|
(21,957 |
) |
Interest, net |
|
|
(652 |
) |
|
|
(203 |
) |
|
|
(1,644 |
) |
|
|
(352 |
) |
Gain on forgiveness of debt |
|
|
- |
|
|
|
1,776 |
|
|
|
- |
|
|
|
1,776 |
|
Loss on loan extinguishment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,604 |
) |
Other, net |
|
|
75 |
|
|
|
11 |
|
|
|
84 |
|
|
|
10 |
|
Total nonoperating income (expense): |
|
|
1,435 |
|
|
|
60,324 |
|
|
|
5,447 |
|
|
|
(23,127 |
) |
(Loss) income before income taxes |
|
|
(30,685 |
) |
|
|
39,248 |
|
|
|
(57,362 |
) |
|
|
(55,486 |
) |
Income taxes |
|
|
240 |
|
|
|
- |
|
|
|
531 |
|
|
|
- |
|
Net (loss) income |
|
$ |
(30,445 |
) |
|
$ |
39,248 |
|
|
$ |
(56,831 |
) |
|
$ |
(55,486 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net (loss) income per share |
|
$ |
(0.30 |
) |
|
$ |
0.44 |
|
|
$ |
(0.56 |
) |
|
$ |
(0.64 |
) |
Diluted net (loss) income per share |
|
$ |
(0.30 |
) |
|
$ |
0.39 |
|
|
$ |
(0.56 |
) |
|
$ |
(0.64 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average number of shares used to compute: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic net (loss) income per share |
|
|
101,047,650 |
|
|
|
88,806,086 |
|
|
|
100,888,185 |
|
|
|
86,760,615 |
|
Effect of dilutive instruments |
|
|
- |
|
|
|
12,718,858 |
|
|
|
- |
|
|
|
- |
|
Diluted net (loss) income per share |
|
|
101,047,650 |
|
|
|
101,524,944 |
|
|
|
100,888,185 |
|
|
|
86,760,615 |
|
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||||||||
|
|
Six Months Ended |
|||||||
|
|
|
|||||||
(in thousands) |
|
2022 |
|
|
2021 |
|
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
||
Net loss |
|
$ |
(56,831 |
) |
|
$ |
(55,486 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
||
(Gain) loss on remeasurement of private warrants |
|
|
(7,007 |
) |
|
|
21,957 |
|
|
Stock-based compensation |
|
|
27,983 |
|
|
|
20,696 |
|
|
Depreciation and amortization |
|
|
8,588 |
|
|
|
4,311 |
|
|
Inventory reserves |
|
|
597 |
|
|
|
- |
|
|
Deferred income taxes |
|
|
(531 |
) |
|
|
- |
|
|
Loss on write-off of deferred loan costs |
|
|
- |
|
|
|
1,900 |
|
|
Amortization of debt issuance costs and debt discounts |
|
|
1,152 |
|
|
|
207 |
|
|
Gain on forgiveness of debt |
|
|
- |
|
|
|
(1,776 |
) |
|
Amortization of right-of-use assets and lease liability |
|
|
(173 |
) |
|
|
(806 |
) |
|
Contract asset reserve |
|
|
1,216 |
|
|
|
- |
|
|
Other |
|
|
872 |
|
|
|
66 |
|
|
Changes in operating assets and liabilities, net of effects of acquisition: |
|
|
|
|
|
|
|
||
Accounts receivable, net |
|
|
(2,166 |
) |
|
|
(3,229 |
) |
|
Other receivables |
|
|
2,692 |
|
|
|
(235 |
) |
|
Inventories, net |
|
|
(10,838 |
) |
|
|
(4,011 |
) |
|
Prepaid expenses and other current assets |
|
|
1,434 |
|
|
|
(1,520 |
) |
|
Contract assets |
|
|
(1,540 |
) |
|
|
(1,552 |
) |
|
Other assets |
|
|
(5 |
) |
|
|
40 |
|
|
Accounts payable |
|
|
(2,693 |
) |
|
|
1,967 |
|
|
Accrued and other long-term liabilities |
|
|
(2,220 |
) |
|
|
(3,537 |
) |
|
Unearned revenue and contract liabilities |
|
|
2,077 |
|
|
|
(1,633 |
) |
|
Net cash used in operating activities |
|
|
(37,393 |
) |
|
|
(22,641 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
||
Purchases of property, plant and equipment |
|
|
(108,850 |
) |
|
|
(51,906 |
) |
|
Acquisition of |
|
|
(14 |
) |
|
|
- |
|
|
Proceeds from sales of property, plant and equipment |
|
|
55 |
|
|
|
340 |
|
|
Net cash used in investing activities |
|
|
(108,809 |
) |
|
|
(51,566 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
||
Proceeds from exercise of warrants, net of issuance costs |
|
|
- |
|
|
|
138,202 |
|
|
Proceeds from long-term debt |
|
|
- |
|
|
|
169 |
|
|
Cash paid for debt issuance costs |
|
|
(279 |
) |
|
|
(1,684 |
) |
|
Proceeds from exercise of stock options |
|
|
197 |
|
|
|
2,375 |
|
|
Proceeds from employee stock purchase plan |
|
|
296 |
|
|
|
92 |
|
|
Principal payments on long-term debt |
|
|
(88 |
) |
|
|
(27,075 |
) |
|
Cost related to warrants |
|
|
(55 |
) |
|
|
- |
|
|
Proceeds from issuance of common stock, net of issuance costs |
|
|
- |
|
|
|
(890 |
) |
|
Net cash provided by financing activities |
|
|
71 |
|
|
|
111,189 |
|
|
Net (decrease) increase in cash and cash equivalents and restricted cash |
|
|
(146,131 |
) |
|
|
36,982 |
|
|
Cash and cash equivalents and restricted cash-beginning of period |
|
|
286,968 |
|
|
|
379,897 |
|
|
Cash and cash equivalents and restricted cash-end of period |
|
$ |
140,837 |
|
|
$ |
416,879 |
|
|
|
|
|
|
|
|
|
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
|
||
Cash paid for interest, net of interest capitalized |
|
$ |
481 |
|
|
$ |
242 |
|
|
Cash paid for operating leases |
|
$ |
1,771 |
|
|
$ |
1,589 |
|
|
Supplemental non-cash disclosure: |
|
|
|
|
|
|
|
||
Inventory consumed in constructing property, plant and equipment |
|
$ |
2,084 |
|
|
$ |
- |
|
|
Changes in accounts payable and accrued liabilities related to purchase of PP&E |
|
$ |
(11,797 |
) |
|
$ |
5,983 |
|
|
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; (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.
Reconciliation of Adjusted EBITDAR and Adjusted EBITDA to Net (Loss) Income (Unaudited) |
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Net (loss) income |
|
$ |
(30,445 |
) |
|
$ |
39,248 |
|
Income taxes |
|
|
(240 |
) |
|
|
- |
|
Interest expense, net |
|
|
652 |
|
|
|
203 |
|
Depreciation and amortization |
|
|
4,328 |
|
|
|
2,211 |
|
PLA additive inventory reserve |
|
|
(520 |
) |
|
|
- |
|
Gain on remeasurement of private warrants |
|
|
(2,012 |
) |
|
|
(58,740 |
) |
Stock-based compensation |
|
|
14,546 |
|
|
|
14,031 |
|
Litigation and other legal related |
|
|
801 |
|
|
|
950 |
|
Transaction related |
|
|
- |
|
|
|
724 |
|
Public company transition costs |
|
|
96 |
|
|
|
397 |
|
Loss on sale of assets |
|
|
1 |
|
|
|
33 |
|
Gain on forgiveness of debt |
|
|
- |
|
|
|
(1,776 |
) |
Other, net |
|
|
(75 |
) |
|
|
(11 |
) |
Adjusted EBITDA (1) |
|
$ |
(12,868 |
) |
|
$ |
(2,730 |
) |
Rent |
|
|
873 |
|
|
|
136 |
|
Adjusted EBITDAR (1) |
|
$ |
(11,995 |
) |
|
$ |
(2,594 |
) |
|
|
|
|
|
|
|
||
(1) May not foot due to rounding. |
|
|
|
|
|
|
||
Reconciliation of Adjusted Gross Profit to Gross Profit (Unaudited) |
||||||||
|
|
Three Months Ended |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Total revenue |
|
$ |
12,703 |
|
|
$ |
14,471 |
|
Cost of revenue |
|
|
14,934 |
|
|
|
12,460 |
|
Gross Profit |
|
|
(2,231 |
) |
|
|
2,011 |
|
PLA additive inventory reserve |
|
|
(520 |
) |
|
|
- |
|
Depreciation |
|
|
2,289 |
|
|
|
1,951 |
|
Rent |
|
|
626 |
|
|
|
83 |
|
Stock-based compensation |
|
|
10 |
|
|
|
28 |
|
Adjusted Gross Profit (1) |
|
$ |
174 |
|
|
$ |
4,073 |
|
|
|
|
|
|
|
|
||
Adjusted Gross Margin |
|
|
1.4 |
% |
|
|
28.1 |
% |
|
|
|
|
|
|
|
||
(1) May not foot due to rounding. |
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20220809005940/en/
Investors
ir@danimer.com
Phone: 229-220-1103
Media
jhoughton@daltonagency.com
Phone: 615-515-4892
Source:
FAQ
What were Danimer Scientific's revenues in Q2 2022?
How did PHA-based product sales perform in Q2 2022 for DNMR?
What was the net loss for Danimer Scientific in Q2 2022?
What is Danimer Scientific's adjusted EBITDA outlook for 2022?