Solazyme's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Solazyme, Inc. (SZYM)

Q2 2012 Earnings Call

August 7, 2012 4:30 PM ET

Executives

James Barber – IR

Jonathan Wolfson – CEO

Tyler Painter – CFO

Analysts

Brian Lee – Goldman Sachs

Ben Kallo – Robert W. Baird & Co., Inc.

Ed Westlake – Credit Suisse

Jim Fung – Jefferies & Co.

Smitti Srethapramote – Morgan Stanley

Noah Kaye – ThinkEquity

Mahavir Sanghavi – UBS

Sanjay Shrestha – Lazard Capital

John Quealy – Canaccord Genuity

Weston Twigg – Pacific Crest

Pavel Molchanov – Raymond James

Michael Klein – Sidoti & Company

Presentation

Operator

Good day, ladies and gentlemen and welcome to the Solazyme Incorporated fiscal quarter two 2012 earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct the question-and-answer session with instructions to follow at that time.

Should anyone require operator assistance on today’s conference, you may press star and then zero on your touchtone telephone. As a reminder this conference call is being recorded. I would now like to turn the call over to your host for today, Mr. James Barber [ph], Investor Relations.

James Barber

Good afternoon and thank you for joining us on today’s conference call to discuss Solazyme’s fiscal second quarter 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 in presentation can be accessed at the Investor Relations portion of our website, solazyme.com.

I’d like to direct you to slide 2. It says among other things that some of the comments constitute forward-looking statements that reflect the 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 assumption for 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, James and thanks everybody for participating on today’s call. The second quarter of 2012 was another very strong quarter for Solazyme. We hit key milestones toward building out our commercial manufacturing capacity including breaking ground at the Solazyme Bunge oils facility in Brazil and successfully commissioning our integrated bio refinery in Peoria Illinois both on schedule.

And within our Solazyme Roquette Nutritionals JV, construction on the Phase II 5,000 metric ton facility is progressing and we continue to expect the plant to be operational in the second quarter of 2013.

We’re actively advancing our downstream commercialization in each of our target markets. In our first to market opportunity, skin and personal care, sales of our Algenist brand in the first half of 2012 surpassed full year sales for 2011.

In nutrition our Solazyme Roquette Nutritionals JV had a big win when we received an FDA no questions notification corresponding to the generally recognized as safe filing with the FDA for use of an algal oil and foods [ph].

Outside the JV, we’re sampling new tailored oils to some of the food companies in the world. In chemicals, we’re producing new and breakthrough tailored oil profiles that will disrupt existing markets and define new ones.

In fuels, the US Navy demonstrated the Green Strike Group at RIMPAC 2012 and the EPA granted registration for our SoladieselRD fuel. Diving a bit deeper, our Solazyme Bunge renewable oils JV is opt to a great start.

In June, we broke ground on our first 100,000 metric ton commercial facility located at Bunge’s flagship sugar cane mill in Moema, Brazil. We recently commenced civil works at the site and we remain unscheduled for operations in the fourth quarter of 2013.

We also announced the formation of the JV management team including the employment of Hildo Henz as the general manager. Hildo is a seasoned executive who brings proven experience. He served as a CEO of a major refining joint venture between Petrobras and Repsol where he was responsible for over $1.3 billion on capital expansion projects and while at Branko, a major sugar and ethanol producer in Brazil, he managed green field projects in excess of $500 million.

Here in the US, we’re pleased with the progress at our manufacturing facility in Peoria, Illinois where we commenced operations for an integrated bio refinery with the DOE on schedule during the quarter.

This facility now enables us to produce substantial quantities of algal oil for market development at a single sight, providing for sampling and market seeding for a multitude of partners and potential customers in an integrated commercial scale facility.

During the quarter, we expanded the oil produced in our large fermentation tanks in Peoria by scaling up production of one of our important high oleic oils enabling our commercial team to supply large scale samples to several key target customers. And we’ve seen an increasing volume of incoming customer interest for our oils in a variety of markets.

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