As a result of our longstanding efforts to develop and commercialize the next generation of biodegradable materials, Danimer Scientific is now at the forefront of the bioplastics industry as a premium biopolymer supplier.
As a newly public company, we recognize that we have an opportunity to provide further clarity around our business and technology.
In addition to the detail below, we are committed to addressing the topics that are important to investors, including on our upcoming earnings conference call and in ongoing investor engagement going forward.
We remain squarely focused on building our business and executing on our strategy.”Stephen E. Croskrey, Chief Executive Officer of Danimer Scientific,
“Danimer’s Board of Directors has great confidence in the Company, its strategy to drive long-term value for shareholders and customers, and its proven, talented management team.
Danimer is well-positioned for long-term growth through helping brands and consumers solve the global plastic waste crisis as a leading provider of biodegradable replacements for traditional plastics.”John Amboian, Lead Independent Director
We have been a leader in the field of bioplastic biodegradability for more than 15 years.
Danimer holds more than 150 granted patents and pending patent applications in more than 20 countries and works with some of the world’s largest consumer brands on our shared goal of addressing the global plastics waste crisis.
Statements on the biodegradability of our products are backed by rigorous research, international testing standards and third-party certifications.
Our Nodax® material is 100% bio-based and possesses six certifications from TUV AUSTRIA, a globally recognized authority: OK compost INDUSTRIAL; OK compost Home; OK biodegradable SOIL; OK biodegradable Water; OK biodegradable MARINE; and OK biobased.
Our customers, including global consumer brands and suppliers, have partnered with us because of our scientific and technical expertise and our core competence in developing unique, customized polyhydroxyalkanoate (“PHA”) applications to meet their needs.
They conduct their own independent testing and have expressed confidence that Danimer’s Nodax® provides a biodegradable, scalable, highly effective way to significantly reduce plastic pollution.
Environmental Regulation and Reporting.
We are regulated according to specific requirements in each of the states where we operate, and we take our reporting and permitting responsibilities very seriously.
Specific to environmental reporting in Kentucky, we report certain production figures of material in process in semi-annual state regulatory reports.
This material does not yet include all component ingredients that make up finished product that we sell to customers.
Those production figures are intended solely to measure the related emissions of specific processes that take place in our facility in Kentucky and vary significantly from finished product volumes.
In 2020, we made changes to the way we reported our materials in process volumes as a result of discussions with the state of Kentucky.
Average Sales Price.
We calculate our average sales price (“ASP”) based on our actual sales of both PHA and PLA finished products to our customers; as such, production figures in regulatory reports representing material in process are irrelevant to our ASP.
In addition, our pricing takes into account the formulation and process of developing finished product for our customers depending on the application and its specifications, and is often impacted by customer and product mix.
For reference, as previously disclosed, ASP for 2020 was over $2.70 per pound, which included an average price of over $2.75 per pound in Q4 2020.
For Q1 2021, our ASP increased to over $2.85 per pound.
Production and Capacity.
We have manufacturing capacity at both our Georgia and Kentucky facilities.
In Kentucky, where we produce PHA-based resins, we completed the first of a two-phase expansion, adding 20 million pounds of finished product nameplate production capacity with fermentation runs starting in January 2020 and downstream processing and extrusion starting in March 2020.
In Q1 2021, our PHA production in Kentucky was over 50% of capacity and we continue to expect to be at 100% of nameplate capacity by the end of the year.
Phase II construction commenced in December 2020 and is expected to come online in Q2 2022 to begin ramping up to an additional 45 million pounds of finished product nameplate capacity.
The completion of both phases is expected to bring our total nameplate PHA capacity up to 65 million pounds of finished product per year.
In Georgia, where our operations currently focus on the production of PLA-based resins, our total production capacity is 100 million pounds, depending on the mix and type of product.
Over time, we have leased facilities surrounding our Bainbridge headquarters to accommodate Company growth and varying production needs.
Prior to and during the ramp-up in production in Kentucky, some other processes were taking place in our PHA pilot plant in Bainbridge, but have now shifted to Kentucky as our PHA pilot plant has transitioned back to research and development.
Forecasting Our Production Capacity.
As previously disclosed, our current plans are to expand nameplate production capacity to 315 million finished pounds annually, including our future Greenfield project.
These plans have evolved over time to meet forecasted demand from our customers.
We expect our Kentucky Phase I and II capacity to be fully sold out through 2025 based on signed and pending contracts.
Looking ahead, we expect to grow our longer-term capacity, including with our Greenfield facility, in tandem with customer demand.
Market Demand and Our Customers.
Our proprietary technology is helping companies pursue their corporate sustainability strategies and position them to achieve their ESG commitments.
Our customers have expressed confidence in our ability to create innovative solutions to reduce plastic waste and enable the shift to a circular economy.
As previously disclosed, during the first quarter of 2021, we entered into a two-year partnership with Mars to develop biodegradable packaging as part of its supply chain.
In October 2020, we entered an agreement with Bacardi to make a biodegradable spirits bottle and in December 2018, we entered an agreement with Nestlé to develop biodegradable bottles.
In addition, PepsiCo remains a committed, long-term partner; we are working closely together to develop biodegradable film resins that meet the sustainable flexible-packaging requirements of this global food and beverage giant.
We are also working with partners, including WinCup, Eagle Beverages, Columbia Packaging Group and UrthPact, to provide biodegradable straws and other products to their global customers, including Dunkin’ (serviced by WinCup).
We have only scratched the surface of an immense potential opportunity and expect demand to continue to outpace production capacity and supply as more companies look to us for bio-based consumer packaging solutions.
Waste Processing and Recycling.
The infrastructure for processing waste, recycling materials and composting items on an industrial scale varies between different countries, which is why Danimer developed its PHA to reliably degrade in a variety of environments at the end of its lifecycle.
If an area does not have industrial composting facilities, PHA can also biodegrade in municipal solid waste landfills, including “wet” landfills with gas/energy (“LFGE”) projects to capture methane from decomposing food waste.
Some landfills are eventually sealed, which stops biodegradation of all materials.
In those cases, PHA is sequestered into the ground as a renewable source of carbon.
Additionally, the Ellen MacArthur Foundation estimates that 32% of the world’s plastic is finding its way into nature.
In nature, PHA will biodegrade in the presence of bacteria. Fossil fuel-based plastics, however, do not biodegrade in any environment.
Danimer’s Board and management team include experienced scientists and business leaders who have made important contributions to the Company and this industry.
We have also hired highly experienced leaders in engineering, manufacturing, technology development and finance to support our growth initiatives.
Recent attempts to discredit the backgrounds and integrity of members of our executive team are not based in fact and are completely unwarranted.
Upcoming Earnings Announcement
As previously announced, Danimer will release its first quarter 2021 financial results after the market closes on Monday, May 17, 2021.
A webcast and conference call will be held that same day at 5:00 p.m. Eastern Time to review the Company’s first quarter results, discuss the Company’s operations and business development activities, and conduct a question-and-answer session.
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