Q3 2011 Results
November 10, 2011 5:00 p.m. ET
Kelly Lindenboom – VP, Corporate Communications
James Levine – President and CEO
Janet Roemer – COO and EVP, Specialty Enzymes Business Unit
Jeffrey Black – CFO, SVP and Chief Accounting Officer
Rob Walker - Jeffries
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Thank you for holding. Welcome to Verenium’s third quarter 2011 financial results conference call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please be advised that this call is being taped at the company’s request.
At this time, I would like to introduce your host for today’s call, Ms. Kelly Lindenboom. Please go ahead.
Thank you for joining Verenium’s third quarter 2011 conference call. I’m Kelly Lindenboom, vice president of corporate communications. With me today are Jamie Levine, our president and chief executive officer; Janet Romer, our chief operating officer, and Jeff Black, our chief financial officer.
The agenda for today’s call is as follows. First, Jamie will give an update on progress made during the third quarter and year to date. Janet will then discuss commercial opportunities including Q3 performance. Jeff will then summarize our third quarter and year to date financial results, and we will then take your questions.
Before we begin, I would like to advise you that this discussion will include certain statements that are not historical facts and are forward-looking statements that involve a high degree of risk and uncertainty. These statements relate to matters such as our strategy, future operating plans, markets for our products, partnering and collaboration activities, public policy and financing activities, technical and business outlooks.
The company’s actual results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in our filings with the SEC, including but not limited to our Form 10-K for the year ended December 31st, 2010. These forward-looking statements speak only to the date hereof.
I will now turn the call over to Jamie.
Thanks Kelly. Good afternoon everyone, and thank you for joining us on our third quarter earnings call. As you’ll hear in the call, this has been a very solid quarter for Verenium.
I’d like to start today by highlighting that we’ve just celebrated an important milestone for the company at the one-year anniversary of the transaction with BP that positioned us to build a leading industrial enzymes company.
As you’ll hear on this call, I think our team has achieved a lot over that time. As we reported today, we’ve seen strong growth over the first nine months of this year in both product revenue and product gross profit, and we’ve taken concrete steps to reduce the costs and are demonstrating clear results.
I believe we’re on track to achieve our goal of building the kind of business we set out a year ago to create, with a number of critical successes now behind us as well as several near-term levers for driving additional growth and value on the horizon. I believe Verenium is different from many of our peers in the broader clean technology space in that we have validated our platform technology through our track record of product sales.
We have been growing sales of our high-performance commercial products into competitive markets for several years now. The key to our future success comes down to execution on our business model and product commercialization plans, and we’re not dependent on new platform technology development.
I’ll now review a few areas to show how we’re making good on our plans. This quarter, for the first time in the history of the company, I’m pleased to say we’ve reported a quarterly operating profit of $2.1 million. As we’ve stated previously, we don’t anticipate continuous profitability from operations until 2013, and Jeff will provide important details on our financial results later in the call. I simply want to highlight that since the transaction with BP a year ago, we are making progress toward our mission to create and sell the highest performing industrial enzymes.
I’d now like to take a moment to talk about our strategy for partnerships. Today we are partnered with some of the largest companies in their respective businesses, such as DuPont, Bunge, and Novus International, all of whom have seen first-hand the product development capabilities of our unique technology.
As we continue to engage in further partnering discussions, we generally have one or two objectives: either taking our current enzyme products into new markets to increase near-term product sales or alternatively, derisking product development for new markets we want to target, such as enzymes used in food production.
We are currently in advanced discussions with several potential partners, focused on both of these objectives. So as we announce new partnerships, you can generally expect them to be highly targeted and commercially focused as opposed to broad-ranging technology development initiatives. For each of the current markets we have varying partnership structures, and you can expect we will tailor any future partnerships to meet our product development and sales goals.
One area where we see significant opportunities is the oil field services sector, providing enzymes to oil and gas companies. We currently sell small amounts of our product Pyrolase for use in hydraulic fracturing, or fracking as it’s commonly called.
Pyrolase performs a critical step, breaking the guar often used in fracking, and in certain applications it performs better than the harsh and potentially dangerous chemical oxidizers and acids conventionally used for this purpose. Given the heightened scrutiny this industry has come under because of environmental concerns, we see an important opportunity for our Pyrolase enzyme.