Release Date: November 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Danimer Scientific Inc (NYSE:DNMR) is progressing well with a significant cutlery award from a large global QSR chain, aiming to phase out petroleum-based plastics by 2025.
• The company has received orders for over 250,000 pounds of cutlery and film resin, with converters already delivering to customer distribution centers.
• Partnerships with companies like Delta Cafes and Wincup are expanding, with successful shipments of compostable coffee pod capsule resin and the expansion of the Fade brand.
• A collaboration with Mars Wrigley has led to the soft launch of 100% compostable Skittles bags, showcasing the company's innovative capabilities.
• Cost-saving initiatives have been implemented, resulting in over $20 million in run-rate savings since early 2022, helping manage liquidity and operational costs.

Negative Points

• Total revenue for the third quarter was $8.6 million, down from $10.9 million in the prior year quarter, indicating a decline in sales.
• PHA-based resin sales decreased by 22% due to Starbucks' reallocation of its straw resin business, impacting order patterns and financial results.
• The company reported a gross loss of $7.3 million for the third quarter, consistent with the previous year's loss, highlighting ongoing financial challenges.
• Liquidity remains a significant concern, with a total debt balance of $387.9 million and ongoing efforts to manage cash and reduce debt.
• The company is not providing a year-end 2024 liquidity outlook, reflecting uncertainty in financial stability and future cash flow.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with DNMR.

Q: Can you provide an update on the significant cutlery award from the large global QSR chain? A: Interim CEO Rich Altice explained that the cutlery award is progressing well and aligns with the end customer's plan to phase out petroleum-based plastics by the end of 2025. Danimer will supply 20 million pounds of resin for cutlery and 3 million pounds for wrappers annually. Initial orders have been received, and full run rate is expected by mid-2025.

Q: How did the Starbucks reallocation impact the third quarter results? A: CFO Mike Caos noted that the reallocation of Starbucks' straw resin business led to disruptions in order patterns, negatively impacting third-quarter results. However, these headwinds are believed to be behind them, and Danimer retains 100% of the Starbucks straw business.

Q: What measures are being taken to manage liquidity and indebtedness? A: CFO Mike Caos highlighted that Danimer has implemented cost-saving measures exceeding $20 million since early 2022. These include reducing discretionary spending, labor costs, and optimizing capital projects. The company is also exploring transactions to reduce debt and increase liquidity.

Q: Can you discuss the progress with other commercial partnerships? A: Interim CEO Rich Altice mentioned partnerships with Eagle Beverage, Delta Cafes, Wincup, and Mars Wrigley. Eagle Beverage has begun shipping products using Danimer's resin, Delta Cafes has completed a second shipment of compostable coffee pod resin, and Mars Wrigley launched compostable Skittles bags.

Q: What are the expectations for the fourth quarter and full-year 2024 financials? A: CFO Mike Caos stated that the fourth-quarter adjusted EBITDA is expected to be between minus $7 million and minus $7.5 million, leading to a full-year total of minus $34.4 million to minus $34.9 million. Capital expenditures are projected to be between $8 million and $9 million.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.