Solazyme Inc. (SZYM)
Morgan Stanley Technology, Media & Telecom Conference
February 26, 2013 6:15 pm ET
Executives
Tyler W. Painter – Chief Financial Officer
Presentation
Unidentified Analyst
All right. Welcome everybody to the Solazyme information session. I’m here with Tyler Painter, the CFO of Solazyme. Before we get started, I just wanted to read a quick disclosure. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanely.com/researchdisclosures. So Tyler, thank you very much for joining us at our conference today. Most of you – people knew the audience the story provide a quick overview of what Solazyme does?
Tyler W. Painter
Great. Nice to be here today, so thank you guys for hosting it and for having us. We are not a telecom communications company, so for those of you looking for that, we’re in the ballroom. Solazyme is a company that was founded 10 years ago. What we do is we actually make oils. And when we say we make oils, usually people say, what does that mean?
What we’ve developed as a technology to be able to very efficiently take any of the carbohydrates on the planet, so any plant-based material make sugars, and we can turn those sugars into oils to replace existing sources of petroleum, existing sources of triglyceride. So if you look at things like soy, palm kernel, coconut, they’re using oils across all of the applications that you see out there whether it’s, yes, the transportation fuel that you used probably to come to the conference, all the way to the soaks and the personal care products as you wake up and get ready for work in the morning.
And then even into nutritional applications when you look at things like better re-spreads and solid dressings and even into our baking products. And we have a technology that’s been developed proven out of commercial scale. It’s an interesting time for the technology and for the company as over the last decade; we spent quite a bit of time as an early stage startup in which we were a research and development company, developing its capability to produce these oils.
We have been doing this as a scale since 2008 in partnership with the U.S. Navy, the Department of Defense, and many other companies. Early on Chevron has been an investor, Unilever was an investor, and we’re working with some of the biggest users of oils in the world.
We just last year about three months ago announced operating at a large facility with a new partner to the table with ADM, Archer-Daniels-Midland at a Clinton, Iowa facility that they had built out for another partnership. That facility operates at the scale of the facility that we’re building in Moema in Brazil today with a partner in Bunge.
So the way we’re going to market is, we have again, kind of pointing back to the technology, we have the ability to very efficiently convert carbohydrate-based sugars. So today, those sugars are typically coming from things like sugarcane or corn. In the long run, we’ve also done a tremendous amount of work where, when they’re available economically, things like cellulosic material.
So as you take plant-based sugars coming from waste products out of agricultural and others, we can actually turn those into nutritional food applications or into other oils that can go into the end markets that we’re serving. And then the other piece of the value proposition that often gets missed and what we’re doing is we actually can tailor the oil composition.
What that means is, we can actually change the chain lengths, we can change the saturation levels, we can change the actual composition of the oil, which allows it to be used in things like a functional fluid in industrial applications like dielectric fluids or lubricants, and have better heat transfer properties, have better oxidative stability, and be able to again work in ways that current triglycerides, current vegetable-based oils or plant-based oils weren’t able to answer the challenges that our partners face.
We recognize that the markets we’re entering are huge markets. We’re not doing this alone, so we’re doing this with partners. We partnered both upstream in which we have three very active projects today that are being built out into commercial scale within the next 12 to 15 months.
The first is with a joint venture with a company named Roquette at France, that’s Solazyme Roquette Nutritionals; its focus in the nutritional market for applications of our products that can go into non-tailored, so natural-based strains to make these oils and make products into the nutritional market.
Roquette is funding all of the working capital. Our first phase facility came online in late 2011. The second phase of it is being built today by Roquette and will come online. It will be starting to commission in Q2, come online commercially producing products a few months after that.
Our first facility in the fuels and chemicals space will be with Bunge, our Solazyme Bunge Renewable Oils joint venture. Bunge has been an investor in the company back in 2010 they invested. They’ve been funding research after a joint development agreement and then they moved into a joint venture with us last year. We broke ground on that facility in June and its on track, on time, to come online in Q4 of this year. That again, has a 100,000 metric ton facility for those who don’t think in metric tons, we’re not going it to be confusing and it’s just that’s the way these oils are typically sold. That’s about 33 million gallons of oil coming out of that facility. So that’s in Brazil.
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