Solazyme, Inc. (SZYM)
Q4 2012 Earnings Conference Call
February 20, 2013 16:30 ET
Executives
Jeff Majtyka - Investor Relations
Jonathan Wolfson - Chief Executive Officer
Tyler Painter - Chief Financial Officer
Analysts
Sanjay Shrestha - Lazard Capital Markets
Mahavir Sanghavi - UBS
Brian Lee - Goldman Sachs
Chris Kovacs - Baird
Rob Stone - Cowen and Company
Patrick Jobin - Credit Suisse
Michael Klein - Sidoti & Company
Stacey Hudson - Raymond James
Laurence Alexander - Jefferies & Company
Presentation
Operator
Good day, ladies and gentlemen and thank you for joining the Solazyme Incorporated Fourth Quarter and Full Year 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference may be recorded.
I would now like to turn the call over to your host from Investor Relations, Mr. Jeff Majtyka. Sir, you may begin.
Jeff Majtyka
Thanks, operator. Good afternoon and thank you all for joining us on today’s conference call to discuss Solazyme’s fourth quarter and full year 2012 results. With me on today’s call are Jonathan Wolfson, Solazyme’s Chief Executive Officer, and Tyler Painter, Chief Financial Officer.
This call is being broadcast live over the web and we have prepared a PowerPoint presentation to accompany this call. The release and presentation can be accessed at the Investor Relations portion of our website at solazyme.com.
I’d like to direct you now to slide 2. It says among other things that some of the comments constitute forward-looking statements that reflect management’s current views and estimates of future events and economic circumstances, industry conditions, company performance, and financial results. Statements are based on many assumptions and factors including availability and prices of raw materials and equipment, market conditions, operating efficiencies, access to capital, and actions of government. Any changes in such assumptions or factors can produce significantly different results.
To the extent permitted under applicable law, the company assumes no obligation to update any forward-looking statements as a result of new information or future events. Solazyme has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation and encourages you to review these factors. Also, please note that certain financial measures we use on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in today’s release.
With that, I’ll now turn the call over to Jonathan.
Jonathan Wolfson
Thanks Jeff. Good afternoon everyone and thanks for joining us today. I’d also like to welcome newer investors to the company who participated in our recent offering. We had a great fourth quarter that concluded a great 2012 for the company. We put a strong foundation in place last year that we believe positions us for the drive to full commercial production beginning late this year. Executing against that objective will be our biggest area of focus this year.
Each of our production capacity projects in Brazil, France, and the U.S. continues to move forward well, and by early 2014 we expect to be producing our products on three continents. As we focused on delivering these manufacturing capacity projects, we have also begun the year with some very significant developments. Our most recent joint development agreement with Mitsui is a multi-year, multi-product development agreement that we believe sets us up for great opportunities in the oleochemical space. You may remember our introduction of high-myristic oil last year. This oil was now included in our joint development agreement with Mitsui. This further underscores the importance of continuing to deliver new innovations from our disruptive technology platform, more on Mitsui later in my remarks.
We also announced two separate financing events that we believe should reduce any near-term capital concerns by strengthening our balance sheet and reducing our capital commitment at Moema. In January, we announced that BNDES, the Brazilian Development Bank approved funding for up to $120 million of project debt. The partners who committed to funding the plant 50-50 will each reduce their capital commitment to the project by up to $60 million. That’s a greater reduction than we expected. We are very pleased that BNDES is supporting the project.
We also completed a convertible notes offering in January raising $125 million. We think the success of the offering is a big vote of confidence in our strategy and our prospects. We have a number of exciting opportunities in front of us and well we did not this financing to fund existing projects, the additional growth capital provides added flexibility.
And finally, we had tremendous success growing Algenist. In the fourth quarter alone we more than tripled revenue over the prior year period. I’ll put some more perspective around what Algenist has accomplished in a moment. 2012 was a tremendous year. We signed important new capacity partnerships, validated our technology on multiple levels, introduced valuable new oils and in the meantime executed on every single joint development agreement target that we had in front of us. I would like to take a moment to go through our accomplishments.
Entering into our JV with Bunge was a major step forward for Solazyme and we continued to deepen our partnership with Bunge throughout the year. We announced the finalization of the joint venture in April and broke ground on the top 100,000 metric ton tailored oil facility in June. In November we announced the JV expansion framework agreement targeting 300,000 metric tons of capacity as well as a joint market development commitment in tailored oils for nutrition.
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