Danimer Scientific (DNMR) shares information to clarify misconceptions raised in Muddy Waters' recent short-seller report

September 17, 2021 8:02 AM EDT

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Danimer Scientific, Inc. (NYSE: DNMR) (“Danimer” or the “Company”), a leading next generation bioplastics company focused on the development and production of biodegradable materials, today shared consolidated information for investors to clarify misconceptions raised in Muddy Waters’ recent short-seller report.

Danimer Chief Executive Officer Stephen E. Croskrey said, “This short-seller ‘research’ is an unfortunate effort to mislead Danimer investors and generate short-term profit by raising doubt and confusion through incorrect and unsupported allegations. Having read the report, it’s clear that Muddy Waters doesn’t understand our business.

“As detailed in numerous publicly available materials, Danimer is continuing to strategically enhance its business with both capacity and cost improvements that are expected to help drive top- and bottom-line growth. We are committed to updating investors when we make modifications to our plans and will continue to do so.

“By applying our formidable intellectual property and technical know-how to build products that solve important environmental packaging problems for global brands, we are continuing to strengthen our business. We are confident in the future of Danimer and will not be distracted from our mission of serving our customers as we collectively seek to reduce the global impacts of plastic waste.”

Manufacturing Capacity

Danimer’s core competency is developing formulations of biodegradable resins for its customers. The Company discusses production volumes in terms of finished pounds, rather than neat PHA (a.k.a. “Nodax®”), because finished product is what is sold to customers.

Prior to considering the integration of Rinnovo™ in its formulations, Danimer has stated that finished capacity at its Kentucky Phase I facility is 20 million finished pounds per year, which means that the Kentucky Phase I facility’s capacity is 10 million pounds of Nodax®. The Company has previously noted that, on average, Nodax® comprises approximately 50% of the formulation for finished product. Through repetition and continuous improvement, Danimer is scaling its production capacity and will continue to manufacture as much Nodax® as possible. Because the Muddy Waters analysis conflates these figures, below are the correct figures for Danimer’s Kentucky Phase I facility:

  • In Q1 2021, Danimer produced approximately 1.4 million pounds of Nodax®, which equates to approximately 55% capacity utilization for the three-month period.
  • In Q2 2021, during which time Danimer completed the debottlenecking of its facility, the Company produced approximately 1.2 million pounds of Nodax®, which equates to approximately 47% capacity utilization for the three-month period.
  • In July 2021, Danimer produced approximately 0.6 million pounds of Nodax®, which equates to approximately 69% capacity utilization for the one-month period.

As previously detailed and prior to considering the integration of Rinnovo™ in the Company’s formulations, Phase II construction in Kentucky is underway with production expected to commence in Q2 2022, adding an expected 45 million pounds of finished product (or approximately 22.5 million pounds of Nodax®) to annual nameplate PHA capacity.

Since acquiring the Kentucky facility in 2018, the Company’s Georgia operations have transitioned to research and development processes for PHA, while production capacity of PLA-based resins remains at 100 million finished pounds for this facility.

Growth Plans

As detailed in Danimer’s Q2 earnings presentation, current plans are to construct a standalone greenfield facility in Georgia that is networked with a proposed p(3HP) facility utilizing the technology acquired in the Novomer acquisition.

The following is a breakdown of future expected capacity following the Novomer acquisition:

  • Kentucky facility: approximately 32.5 million pounds of Nodax® (following completion of Phase II construction)
  • Greenfield facility: approximately 62.5 million pounds of Nodax® (following completion of construction)
  • Proposed p(3HP) facility: approximately 168.0 million pounds of neat Rinnovo™ (p(3HP)) (following completion of construction)

When completed, the Danimer network is expected to have production capacity of approximately 330 million pounds of finished product resins when blended with other inputs. Danimer also expects to have approximately 60 million pounds of Rinnovo™ remaining to sell on a standalone basis or in formulations that don’t include Nodax®. Muddy Waters’ analysis of projected capacity conflates neat and finished product pounds, along with omitting the full projected volume of p(3HP) production.

Novomer Acquisition

Danimer’s expansion plans have been publicly communicated, and the most recent updates are available in the Company’s Q2 earnings presentation on the Danimer website. The Company remains committed to its strategy of working with blue-chip customers to deliver products that help solve the global plastic waste crisis while maximizing shareholder value.

As part of this strategy, the Company regularly evaluates opportunities to expand production or lower capital expenditures. Such an opportunity arose with the recent acquisition of Novomer, which was announced after many months of extensive due diligence, including independent third-party review, and a competitive bidding process. Blending Novomer’s Rinnovo™ material and thermocatalytic conversion process with Danimer’s current operations is expected to provide increased manufacturing efficiency and greater flexibility to meet customer needs. This acquisition was a strategic opportunity that fully aligns with Danimer’s expansion strategy. Full details on the acquisition are available in the Company’s press release announcing the transaction, in the Company’s press release noting the close of the transaction and in the Q2 earnings materials.

Product Demand and Customer Partnerships

Global consumer brands are actively seeking compostable and biodegradable alternatives to their traditional plastic products, and this demand is evident in the numerous partnerships Danimer has established. Partners including PepsiCo, Mars Wrigley, Bacardi, Nestlé, WinCup, Eagle Beverages, Columbia Packaging Group and UrthPact are currently working with Danimer to produce biodegradable and compostable alternatives to plastic products.

Danimer’s customers remain enthusiastic about incorporating the Company’s materials into its products. Most recently, PepsiCo announced the launch of its pep+ (PepsiCo Positive) initiative, which is focused on sustainability in its business operations. This initiative includes an industrial compostable bag made with Danimer’s PLA-based resins. This same bag received an industry award for innovation from the PLASTICS Association in 2018. The bag will also be featured with “Off The Eaten Path” snacks at Whole Foods stores in the U.S. this month. PepsiCo also stated it is willing to license this technology at no cost to other companies, which should help Danimer further scale its business.

Additionally, in the first quarter of 2021, Mars Wrigley and Danimer jointly announced a partnership to develop home compostable packaging. According to Mars Wrigley, the first on-the-shelf offerings of this packaging are tentatively targeted for late 2021 or early 2022 featuring the SKITTLES® brand in the U.S.

Consumers can also find drinking straws made with Danimer materials in stores and restaurants now. WinCup collaborated with Danimer to produce its phade® line of biodegradable drinking straws, which are available at a growing number of restaurants nationwide including select Dunkin’ locations. The straws are also sold under a private label at CVS and Walmart stores.

Danimer remains committed to its mission of reducing the environmental impacts of plastic waste and will continue to regularly communicate updates on its operations to shareholders and the public. For more information on the Company, visit www.DanimerScientific.com.



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