Danimer Scientific(US:DNMR)2023-05-11 01:37Financial Data and Key Metrics Changes - First quarter revenues were $11.9 million, down from $14.7 million in the same quarter of 2022, reflecting a modest decline in both product and service revenue [46] - The company reported a first quarter gross loss of $6.3 million compared to a gross loss of $1.3 million in the first quarter of 2022, with an adjusted gross loss of $1 million compared to an adjusted gross profit of $2 million in the prior year [12][28] - Adjusted EBITDA loss improved to $8.9 million from a loss of $10.6 million in the first quarter of 2022, indicating better control over operating costs [29] - Capital expenditures in the first quarter were $16.4 million, with full year CapEx guidance in the range of $26 million to $31 million [13] Business Line Data and Key Metrics Changes - First quarter product revenue was $2.1 million lower year-over-year, primarily due to a timing shift in PHA-based shipments to a large customer [28] - The PLA business showed normalized comparisons after disruptions from the war in Ukraine impacted both this year's and last year's quarters [28] Market Data and Key Metrics Changes - The company is experiencing strong demand for its biodegradable cutlery resin and has begun shipping to Zespri for a snack line [7] - The PHA-based biodegradable coating materials are gaining traction, with WinCup launching a new paper cup product using these materials [25] Company Strategy and Development Direction - The company is focused on accelerating growth through R&D and capturing near-term commercial opportunities, particularly in the quick service restaurant channel [5][6] - The strategic position is solid, with expectations to finish 2023 on a strong pace, leveraging unique material capabilities and ready capacity [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand ramp-up for PHA-based resins and increased utilization from the Kentucky operations [48] - The company anticipates that the Kentucky manufacturing plant will operate at high levels, with consistent performance above requested throughput targets [26] Other Important Information - The company ended the first quarter with a total debt balance of $380 million, including $46 million of new market tax credit loans expected to be forgiven starting in 2026 [13] - Effective liquidity at the end of the first quarter was $114 million, compared to $62.8 million at the end of 2022 [29] Q&A Session Summary Question: What is the implied run rate of demand if all brand launches scale as expected? - Management indicated that if all forecasted launches hit at scale, it could fill up the Kentucky facility and potentially the greenfield as well [51] Question: What is the market share for a particular application in the U.S.? - Management acknowledged the lack of immediate data on market share but committed to finding that information [35] Question: How is the formulation for the adhesive partnership progressing? - The pilot plant for Danimer Catalytic Technologies is being built out, with ongoing negotiations for co-location and offtake agreements [53] Question: What percentage of revenue was attributable to PHA for the quarter? - PHA accounted for approximately 42% of revenue in the current quarter, down from 52% in the prior quarter [91] Question: What are the trends in average selling prices (ASPs) across different applications? - ASPs have stabilized, with no significant upward or downward trends observed in current products [83] Question: How might a recession impact customer launches? - Management does not expect significant impacts on forecasts even in the event of a mild recession [85]