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Danimer Scientific, Inc. (DNMR)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 revenue was $8.63M, down 21% YoY, with PHA at $6.6M and PLA at $1.3M; GAAP diluted EPS was $(0.18) and Adjusted EBITDA was $(8.9)M, modestly improved YoY .
  • Starbucks’ reapportionment of Nodax-based straw volumes between converter partners disrupted order patterns in Q3; management emphasized the issue is behind them and that Danimer retained 100% of the Starbucks straw resin business .
  • Execution against the 20-million-pound annual cutlery award progressed (250,000+ pounds of resin orders to date) and a soft launch of 100% compostable Skittles packaging with Nodax PHA was completed (40,000+ bags at an NFL game), supporting 2025 growth visibility .
  • FY24 Adjusted EBITDA is now expected at $(34.4)M–$(34.9)M (within the prior $(30)M–$(35)M range), Q4 Adjusted EBITDA at $(7.0)M–$(7.5)M, and FY24 capex at $8–$9M; no year-end liquidity outlook due to ongoing capital-structure actions .
  • Potential catalysts: accelerating QSR cutlery ramp toward mid-2025 run-rate, Starbucks normalization, and further balance-sheet/liquidity actions; key risk remains leverage/liquidity (total debt $387.9M; unrestricted cash $22.2M at 9/30) .

What Went Well and What Went Wrong

  • What Went Well

    • Cutlery award execution: orders received across converter partners, molds funded by end-customer, with the program targeting a 20M lb annual run-rate by mid-2025; >250,000 lbs of cutlery and film resin orders to date .
    • New packaging milestone: soft launch of 100% compostable Skittles® bag using Nodax PHA (40,000+ bags at a Seahawks NFL game), evidencing brand-owner momentum .
    • Mix and non-GAAP improvement: PHA comprised ~83% of product sales; Adjusted gross loss and Adjusted EBITDA both improved YoY (Adj. EBITDA $(8.9)M vs $(9.3)M in Q3’23) .

  • What Went Wrong

    • Temporary channel disruption: Starbucks straw resin reapportionment between converters caused significant order-pattern disruption, driving YoY declines in PHA and overall revenue in Q3 .
    • PLA demand softness: PLA revenue decreased YoY amid lower demand, continuing a multi-quarter headwind .
    • Capital structure and liquidity constraints: Leverage remains substantial (total debt $387.9M) and management is not providing a year-end liquidity outlook while it evaluates debt reduction and liquidity options .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$10.224 $7.628 $8.630
GAAP Diluted EPS ($)$(0.26) $(0.19) $(0.18)
Adjusted EBITDA ($USD Millions)$(8.661) $(9.867) $(8.881)
Adjusted Gross Profit ($USD Millions)$(1.161) $(1.795) $(2.263)
Adjusted Gross Margin (%)(11.4%) (23.5%) (26.2%)

Notes:

  • YoY: Q3 revenue $8.6M vs $10.9M in Q3’23; net loss improved to $(21.8)M vs $(40.2)M in Q3’23; Adj. EBITDA $(8.9)M vs $(9.3)M in Q3’23 .
  • Cross-reference: press release cites PHA revenue of $6.6M; CFO prepared remarks reference $6.7M due to rounding .

Revenue composition

Revenue ComponentQ1 2024Q2 2024Q3 2024
Products ($USD Millions)$9.955 $7.246 $7.972
Services ($USD Millions)$0.269 $0.382 $0.658
Total Revenue ($USD Millions)$10.224 $7.628 $8.630

PHA/PLA detail (where disclosed)

Product MixQ2 2024Q3 2024
PHA Revenue ($USD Millions)$5.9 $6.6
PLA Revenue ($USD Millions)$1.4 $1.3

KPIs and Balance Sheet

KPI / Balance Sheet ItemQ1 2024Q2 2024Q3 2024
PHA % of Product Sales82% 81% 83%
Cutlery Resin Orders to Date (lbs)——>250,000
Total Debt ($USD Millions)$385.0 $393.9 $387.9
Unrestricted Cash & Equivalents ($USD Millions)$57.341 $40.254 $22.187
Restricted Cash ($USD Millions)$14.239 $14.167 $14.116

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($M)FY 2024$(30) to $(35) (as of Q2) $(34.4) to $(34.9) Narrowed/inferior midpoint but within prior range
Adjusted EBITDA ($M)Q4 2024—$(7.0) to $(7.5) New detail
Capital Expenditures ($M)FY 2024$8 to $10 (Q1/Q2) $8 to $9 Tightened lower
Year-end LiquidityFY 2024$25 to $30 (Q1) ; $15 to $20 (Q2) Not provided Withdrawn due to liquidity actions

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 and Q2)Current Period (Q3)Trend
Starbucks straw businessInventory adjustment at converters impacting Q2 and likely Q3; retained 100% of Starbucks business Disruptions impacted Q3; issues “behind us” and 100% business retained Stabilizing
QSR cutlery rampFirst commercial orders; targeting 20M lbs resin + 3M lbs wrappers; molds/equipment progress; full run-rate by mid-2025 Orders >250k lbs to date; molds funded by end-customer; on track for mid-2025 full run-rate Advancing
New product/customer winsDelta Coffees compostable pods; new straw customer in Asia; multiple QSRs in trials Soft launch of compostable Skittles bag (Nodax PHA) with Mars Wrigley; WinCup phade brand expanding Broadening adoption
Liquidity/deleveragingEquity raise and $20M ABL; pro-rata warrant dividend to incentivize note exchanges; initial $6.1M notes retired Continued focus on debt reduction/liquidity; evaluating transactions; no year-end liquidity outlook Ongoing priority
DOE loan program“Final stages” of process, aiming to complete by year-end (as of Q1/Q2) Not updated in Q3 prepared remarksNo update
Cost actions/OpExRun-rate savings >$20M since 2022; paused Catalytic Tech ops; additional $7M annual savings (Q2) Cost controls ongoing; inventory reductions/AR focus; capital project optimization Continuing discipline

Management Commentary

  • Interim CEO on positioning and Q3 dynamics: “We completed the third quarter in line with our expectations considering the temporary impact of Starbucks’ reapportionment... We believe these headwinds are behind us... We remain on track to continue to grow our PHA business into fiscal 2025.” .
  • On cutlery award: “At full run rate, we will supply 20 million pounds of resin for cutlery and 3 million pounds of resin for cutlery wrappers annually… we have received orders for over 250,000 pounds of cutlery and film resin… testing is proceeding well.” .
  • On brand momentum: “Soft launch of 100% compostable Skittles packaging made with our Nodax PHA resin… featured at a Seattle Seahawks NFL game in October 2024.” .
  • CFO on liquidity and cost controls: “We have implemented run rate cost savings in excess of $20 million since early 2022… heightened focus on collections… initiative to reduce on-hand inventory… analyze transactions… to reduce debt and provide sources of incremental liquidity.” .
  • CEO on outlook: “We are set to grow in 2025 and beyond… while we take steps to improve our financial position.” .

Q&A Highlights

  • The provided Q3 transcript included prepared remarks; key clarifications were delivered therein, notably: retention of 100% of Starbucks straw business despite Q3 disruption , execution milestones on the QSR cutlery ramp , and the ongoing focus on liquidity and debt reduction actions .
  • For context from prior-quarter Q&A: management attributed reduced FY24 EBITDA guidance to Starbucks-related inventory adjustments at converters and quantified savings from pausing Catalytic Technologies (~$1.5M annually) .

Estimates Context

  • Wall Street consensus estimates via S&P Global could not be retrieved for DNMR due to a missing Capital IQ mapping in our data connection. As a result, we cannot present standardized “vs. consensus” comparisons for revenue or EPS this quarter. We will update when S&P Global consensus becomes available.

Key Takeaways for Investors

  • Channel normalization and mix: Starbucks-related disruptions weighed on Q3, but management states the issue is behind them and that the business was retained 100%—a constructive setup for Q4/2025 volumes .
  • Execution toward material 2025 ramp: The QSR cutlery program is progressing with funded molds and >250k lbs of resin orders; mid-2025 20M-lb run-rate remains the anchor volume catalyst .
  • Brand-owner validation: The compostable Skittles soft launch and ongoing Wins with WinCup/Delta provide tangible proof points for Nodax PHA adoption across foodservice and packaging .
  • Non-GAAP trajectory improving, but margins remain negative: Adjusted gross margin and Adjusted EBITDA improved YoY but stayed negative; scaling volumes are needed to drive fixed-cost absorption .
  • Liquidity and leverage are the gating factors near term: Total debt of $387.9M vs $22.2M cash underlines the need for capital structure actions; no year-end liquidity outlook signals active evaluation of transactions .
  • Watch for estimate resets and catalysts: Absent S&P Global consensus, buyside should refresh internal models for a Q4 Adj. EBITDA of $(7.0)M–$(7.5)M and FY24 $(34.4)M–$(34.9)M, and focus on cutlery ramp milestones and any debt/liquidity developments as primary stock drivers .

Appendix: Non-GAAP Disclosure

  • Adjusted EBITDA and Adjusted Gross Profit/Margin exclude interest, taxes, depreciation/amortization, stock-based comp, warrant remeasurement, discrete/nonrecurring items, and certain legal/transactional items; reconciliations are provided in the press releases .

Prior Quarter References (for Trend Analysis)

  • Q2 2024: Revenue $7.63M; GAAP diluted EPS $(0.19); Adj. EBITDA $(9.87)M; PHA $5.9M; PLA $1.4M; FY24 Adj. EBITDA guidance $(30)M–$(35)M; YE liquidity $15–$20M .
  • Q1 2024: Revenue $10.22M; GAAP diluted EPS $(0.26); Adj. EBITDA $(8.66)M; FY24 Adj. EBITDA guidance bias to lower end of $(22)M–$(32)M; YE liquidity $25–$30M .

Other Press Releases

  • No additional Q3 2024 press releases were found in the filings corpus beyond the 8-K furnished press release and investor presentation .