Solazyme Q2 results: Increased production, customers and revenue
Solazyme Inc. announced optimistic results for second quarter 2014 with total revenue at $15.9 million compared with $11.2 million in the second quarter of 2013, an increase of 43 percent. Ramping production volumes and shipment at the Clinton, Iowa, and Galva, Iowa, operations and Solazyme Bunge Renewable Oils plant in Brazil, as well as building commercial momentum, highlighted by the expanded agreement with AkzoNobel and the launch of the AlgaVia brand are among the factors contributing to the optimism.
Second quarter GAAP net loss was $42.9 million, compared with net loss of $25.8 million in the prior year period. On a non-GAAP basis, the net loss was $32.9 million for the second quarter of 2014, compared with net loss of $17.4 million in the prior year quarter.
Amongst the first achievements Jonathan Wolfson, CEO of Solazyme, highlighted in the earnings call was the commencement of production at the new 100,000 tons Moema facility. “This is a huge accomplishment for a young company and I’m proud of our team and grateful to our partners for their contributions to achieving this milestone,” Wolfson said.
In late May 2014, Solazyme's joint venture with Bunge Global Innovation LLC successfully produced its first commercially saleable products at the Solazyme Bunge Renewable Oils plant in Brazil and has subsequently begun shipping. “The operating of the plant has been a strong catalyst for a number of companies interested in our oils,” Wolfson said.
The earlier utility issues at the facility have been resolved and the outlook is positive. “This was a critical milestone for us particularly after the unexpected utility supply issues we faced in the spring,” Wolfson said. “I’m pleased to say that the JV team and partners, Solazyme and Bunge worked diligently and quickly to address these issues and put backup systems in place to reduce the likelihood and potential impacts of future disruptions.”
Both oil and encapsulated lubricant, Encapso, products have been manufactured using full-scale production lines that include the 625,000 liter fermentation tanks. Solazyme continues to trial Encapso in basis and wells, including new testing in the Willingston, Endarko Permian basis. “We also will be testing in two new wells soon in the Permian with a major North American operator and we recently shipped quantities to a leading multinational oil and gas company for use in a new and important region for Encapso,” Wolfson said. “These expanding set of trials and their positive outcomes are proving out the Encapso value propositions across multiple drilling environments and creating buzz in the oilfield services community.”
As well as increasing production, increasing commercial relationships has been highlighted by the expanded multi-year agreement with AkzoNobel. “It’s a great example of how our strategic joint development partnerships can be extended into commercial relationships,” Wolfson said of the AkzoNobel agreement.
Partnerships are an important component in Solazyme’s commercialization model. The AzkoNobel agreement includes a 10,000 metric tons annual targeted supply with pricing tied to the cost of manufacturing and the joint development agreement. The five year supply agreement will focus on development of an oil for use in a new and propriety surfactant, according to Wolfson in a statement.
Solazyme also continues to serve a number of new and continuing industrial customers and distributors in the market including Unilever, Goldstein, Blouser and others. “Metal working applications in particular have been a strong source of customer activity in the early going including the newly signed oleochemical agreement,” Wolfson said.
The agreement with a leading North American oleochemcials company is for the commercialization of kosher certified high oleic algal oils for the oleic fatty acid market.
Another commodity gaining commercialization hype is Solazyme’s AlgaVia brand, which includes both powdered food ingredients and food oils. Solazyme recently signed an important customer for the AlgaVia Whole Algal Flour product, and has signed two new agreements with distributors to meet the demand of the product. “We’re now distributed across the U.S. by ET Horn and Univar and in Mexico by FX Moraelis,” Wolfson said.
After the brand launched, Solazyme’s High Stability Oleic oil won a 2014 International Food and Technology Innovation Award, one of the food industry’s premiere awards.
A few other highlights include Clinton and Galva, Iowa increasing total output by 40 percent from the first quarter to the second. The output is reflected commercially in the increasing customer base for products shipping from Clinton and Galva. “We’ve also increased our customer base by 50 percent having now shipped commercial products to 15 customers, up from 10 customers we had shipped to as of our last earnings call,” Wolfson said.