Calyxt (CLXT) Misses Q4 EPS by 4c

Calyxt (NASDAQ: CLXT) reported Q4 EPS of ($0.37), $0.04 worse than the analyst estimate of ($0.33). Revenue for the quarter came in at $3.8 million versus the consensus estimate of $3.73 million.

Fourth Quarter 2019 Financial Results

• Revenue increased to $3.8 million, entirely from increased sales volumes of HO soybean oil and soybean meal. HO soybean oil revenue represented 32 percent of total revenue in the period.
• Cost of goods sold increased to $5.4 million, reflecting the cost of product sold in the period.
• Gross margin as reported decreased $1.7 million, reflecting the higher costs we have experienced at this early stage of commercialization of our HO soybean products. Gross margin, as adjusted, a non-GAAP measure, was negative $1.6 million, or 43 percent, as compared to negative $1.7 million, or 44 percent, as reported under GAAP. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of gross margin, as adjusted, and a reconciliation to gross margin, the most comparable GAAP measure.
• R&D expenses were $3.7 million, compared to $2.5 million in the fourth quarter of 2018. The increase in R&D expenses is primarily due to $1.3 million of higher non-cash stock compensation expenses, $0.3 million of additional personnel costs, and $0.2 million of incremental lab supplies and outsourcing costs. These increases were partially offset by a $1.2 million decrease in grain costs expensed as R&D in 2018.
• Selling and supply chain (S&SC) expenses were $1.7 million, compared to $0.7 million in the fourth quarter of 2018. The increase in S&SC expenses was driven by $0.4 million of additional personnel costs, $0.3 million incremental allocated expenses for facilities and information technology expenses, and $0.2 million of higher non-cash stock compensation expenses, all the result of our commercialization and acreage expansion in 2019 and 2020.
• General and administrative (G&A) expenses were $4.7 million, compared to $5.1 million in the fourth quarter of 2018. The decrease was driven by $0.3 million of lower non-cash stock compensation expenses and $0.3 million of lower Section 16 officer transition expenses. Other increases in personnel costs and professional services expenses were partially offset by the benefit of internalizing certain services previously provided by Cellectis, our majority stockholder.
• Net cash used was $7.9 million, compared to $6.6 million in the fourth quarter of 2018, reflecting the increase in personnel year-over-year, higher non-cash stock compensation expense, and the commercialization of HO soybean products.
• Net loss was $12.2 million, or $(0.37) per basic and diluted share, compared to a net loss of $8.5 million, or $(0.27) per basic and diluted share for the fourth quarter of 2018.
• Adjusted EBITDA, a non-GAAP measure, increased to a loss of $8.7 million in the fourth quarter 2019 compared to a loss of $5.5 million in the fourth quarter of 2018 driven by increased personnel costs, as the costs of commercialization in 2019 were largely offset by reductions in grain costs expensed as R&D in 2018. See below under the heading “Use of Non-GAAP Financial Information” for a discussion of adjusted EBITDA and a reconciliation to net loss, the most comparable GAAP measure.
• Cash and cash equivalents totaled $58.6 million as of December 31, 2019.

“2019 was a transformative year for Calyxt, centered around four major achievements: first, we built the team to execute on our technology-focused business plan; second, we transformed our R&D team and its work systems; third, we established our soybean supply chain to support our growth trajectory and our future wheat product launch; and fourth, we were the first company to commercialize a gene edited food product focused on consumer health, right here in the United States,” said Jim Blome, Chief Executive Officer of Calyxt.

“The commercialization of our HO soybean products serves as proof of concept and sets the stage for future growth. We intend to introduce new products leveraging a capital-light business model while monetizing multiple collaboration projects. Collaboration revenues are expected to be highly accretive to our current gross margins. We also intend to begin optimizing our soybean gross margins in 2020. We have proven to the world that TALEN® technology, which powers our innovation platform, is capable of improving plants, enabling us to bring healthier and more sustainable products to market.”

“We have assembled an industry-leading team across all our major functions. We have energized the organization and revitalized our product pipeline, more than doubling the projects now under development compared to this time a year ago. We are focused on delivering high value projects to the market,” continued Blome.

“Our HO soybean oil has a robust sales funnel and is being tested by multiple customers. The oil orders we received in early 2020 are a validation of our HO soybean oil’s capability and performance. To meet the expected demand for our oil, we nearly tripled our contracted soybean acreage compared to 2019 planting and expect to have a 25 percent market share of all HO soybean acres planted in the United States in 2020.”

“All of this sets the stage for a breakthrough 2020, where we expect to power our R&D pipeline with new projects and tools, as well as enhanced processes, initiate consultations with regulatory authorities, and continue to make stage advancements in our development process. We expect to begin selling hemp plants we produced using traditional plant breeding techniques. This will be the launch of our second product, and our first of several expected innovations from Calyxt in hemp. What excites me most about this launch is that our scientific team was presented with a challenge in hemp and was able to develop a solution – including a strategy, tools, and work processes – in just a few short months, demonstrating the power of our team. Specific to our soybean products, we expect to expand our customer base across our prioritized market segments, realize synergies in our supply chain, and improve our gross margin profile. We also expect to develop metrics and report on our ESG accomplishments, as much of our innovation is focused in this area as we aggressively push our efforts to revolutionize agriculture.”

“I look forward to providing an update on our technology and R&D pipeline during our upcoming analyst day in the second quarter, and our CFO, Bill Koschak, will be sharing our story with institutional investors at the upcoming 32nd Annual ROTH Conference in Orange County, California on March 16th,” concluded Blome.

For earnings history and earnings-related data on Calyxt (CLXT) click here.

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