Danimer Scientific, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Dannemeyer Scientific Inc. Third Quarter 2022 Earnings Conference Call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Brad Gray, ICR. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today for Danimer's third quarter 2022 earnings call. Hosting the call today are Danimer's CEO, Steve Croskery, and CFO, Mike Hajos. During our discussion today, we will be referring to our earnings presentation, which is available on the investor relations section of our website at danimerscientific.com. On slide two, please note that we may discuss forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, future results of operations, capacity, production, and demand levels, that could differ in a material way from those expressed or implied in the forward-looking statements. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date hereof, except as required by law. Today's presentation also includes references to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures can be found in the earnings presentation. I will now turn the call over to Steve.

Thank you, Brad. Good afternoon, everyone. Thanks for joining. Our third quarter results were in line with our expectations as we progressed further against our multifaceted growth strategy to transform the plastics market. We produced third quarter revenues of $10.4 million, with PHA revenues up 26% year over year, now representing 51% of our revenue. With additional capacity available to us from the expansion of our Kentucky facility during the second quarter, We believe we are extremely well positioned for several significant expected customer product launches in the months ahead. We have been through a long journey that we believe puts us significantly ahead of any competitors in terms of our core competencies of application development and commercial scale production. Even as COVID, inflation, and supply chain issues have impacted the timing of R&D projects and customer launches over the past couple of years, We have been able to expand our capacity and maintain strong relationships with existing customers. We continue to see strong interest for our biodegradable solutions. It is important to reiterate that we are focusing on the factors that are in our control and our strategic priorities as shown on slide three remain unchanged. We believe our experiences in overcoming the challenges of the past several years have made us a stronger company and we are now better positioned than ever to accelerate our growth trajectory as customers are expected to launch new products and as we secure new customers to fill our capacity at Kentucky and beyond. While our Georgia Greenfield facility expansion remains a core part of our future leap forward, our operations in Kentucky are situated today to provide us with positive cash flow to run the business effectively as volumes grow. Turning to slide four, We continue to execute our growth strategy during the third quarter, with PHA revenues up 26% year over year, now representing 51% of our revenue. Following the successful expansion of our Kentucky operations in June, we have continued to ramp up our production capabilities at that facility. We still believe that we may have opportunities for both better raw material utilization and other cost savings at the Kentucky facility in the future as we increase production. Additionally, our learnings from the Kentucky facility construction now provide us with confidence that we can reduce our CapEx costs by up to one-third on future plans following the construction of our Georgia Greenfield facility. In our efforts to enhance team capabilities to support growth, we were pleased to hire Steven Martin as our new Chief Legal Officer and Corporate Secretary. His broad skill set, familiarity with numerous industries, and experience managing the legal affairs of publicly traded companies will be vital as we continue our growth journey. On the business development side, we are thrilled to announce that we recently signed a distribution agreement with formerly Avian, a leader in specialty polymer formulations and distribution across the globe. I will discuss this agreement in more detail shortly. I'm sure many of you are aware of my recent trip to the White House in September. I was honored to speak on behalf of Dannemer at the recent White House Summit on Biotechnology and Biomanufacturing for the American Bioeconomy. Dannemer was the only biopolymer company invited to the event, which was held in conjunction with President Biden's September 12th executive order launching a national biotechnology and biomanufacturing initiative to ensure that products invented in the United States can be manufactured here as well. The summit included a high-level roundtable with members of Congress, cabinet secretaries, and other industry and academic leaders, as well as a panel on biotechnology research and development to solve pressing challenges across our industry. The president also recently signed the Landmark Chips and Science Act, which makes historic investments to strengthen American manufacturing, research and development, science and technology. Overall, I left the visit highly encouraged that our federal government is really getting behind the biopolymer industry and is taking the plastic waste issue seriously. In addition to the executive orders I just discussed, Congress's recent introduction of the Inflation Reduction Act also provides an additional $40 billion of loan authority for the U.S. Department of Energy Title 17 Loan Guarantee Program. As a reminder, Danmar is currently in the Part 2 application process for a loan guarantee under this program, and we continue to work closely with the DOE to secure this funding. In regards to other important updates on the regulatory side, a new amendment was recently passed as part of California's previously announced ban on single-use plastic bags provided at the point of sale. This amendment calls for the ban of petroleum-based grocery store pre-checkout plastic bags by the year 2025. These pre-checkout bags are often seen near the fruits and vegetables section in grocery stores. California will be the first state to discontinue this common grocery store item, which can be replaced with Dannemer's biodegradable solutions. Moving to slide five, I'll speak in more detail to some of our recent customer and business development updates. As a reminder, our customers are primarily major blue chip multinational brands that have all made long-term commitments to make their plastic packaging recyclable reusable, or biodegradable in the years ahead. Our multinational partner, Mars Wrigley, is still on track to launch a Nodax-based bag for their Skittles brand, which we believe to be the world's first home compostable candy packaging, and we expect to provide more details on their progress in the coming months. Separately, our partner, PepsiCo, has been successful with their compostable chip bags for their off-the-eaten path brand of chips, which are currently sold in Whole Foods stores across North America. As I mentioned earlier, we recently signed a distribution agreement with Formera, formerly Avian, a leader in specialty polymer formulations and distribution across the globe. Formera offers highly specialized technical processing design and regulatory support for critical in-market applications in the healthcare, consumer, industrial, and mobility markets. They support leading blue chip customers and suppliers with a value combination of commercial and technical expertise global market knowledge, and industry-leading logistics and service capabilities. With their extensive customer base and knowledge, we are excited for the future of Danvers Nodax to reach a broader array of customers and applications. In regards to Nodax-based products that are currently sold through our converter partners, our partner Windcup's Fade Straw brand, made from Nodax, is now in approximately 315 distribution centers in 238 cities across the U.S., Baked straws are now WinCup's fastest growing product. Separately, we're also happy to report that all Costco store food courts in the US now offer Dannemer's Nodax-based straws. These straws are produced and distributed by our partner, Eagle Beverage. Additionally, our Nodax-based straws are performing well at Starbucks locations, and we are pleased with the growth of this business. As it relates to our progress with quick service restaurants, Dannemer is still in discussions with and providing sample products to five of the top 10 largest QSRs in the world, many of which have 2025 goals to replace their current materials with recycled, compostable, or biodegradable materials. We expect these prospective customers to represent significant business for Dannemere in the coming years as we continue to help our customers meet their sustainability goals. The timing of customer launches is the most variable factor as it relates to the shipment of our products. As I discussed with you last quarter, interest in our solutions is increasingly strong, while on the other hand, many existing and potential customers are still dealing with supply chain bottlenecks, inflation, and overall economic concerns that impact the timing of orders and deliveries. While these factors may continue to impact specific customer timelines in the near term, we have a diverse lineup of several significant customer product launches starting as early as this year. That said, we expect the bulk of these launches to occur in the first half of 2023. These new products will consist of a wide array of applications ranging from quick service restaurant materials, CPG's food packaging, protective packaging, films, and industrial applications. We project that these specific product launches over the next several months will eventually require an amount of PHA-based volume that is well in excess of our Kentucky capacity. To be more precise, once fully commercialized, we expect the combined volume, and again, just from these specific product launches, to require over 100 million pounds of PHA-based finished volume annually by 2026. Now, it is important to remember that we expect these launches to benefit our results gradually and step with the cadence typical of our large global customers that launch new products in stages. While we have a strong line of sight on demand, that scale-up is not linear. We expect to see an initial benefit to our volume in the first 12 months of the launch, followed by a more pronounced step up in shipments as we move beyond the first 12 months. These planned launches support our expectation to dramatically increase volumes through 2026 based on our current customer schedules. Now I'd like to turn the call over to Mike to discuss our financial results and outlook.