Amyris Inc.'s second-quarter total revenue fell to $9.3 million from $10.8 million a year ago, although the company continues to expect renewable product sales to be over $32 million, doubling its 2013 renewable product sales.
Highlights:
• End of quarter cash, cash equivalents and short-term investments balance of $90.2 million.
• Strong manufacturing performance at Brotas delivers lowest farnesene production costs to date and successful start of fragrance molecule production.
• Addition of Braskem as a new collaboration partner for renewable isoprene and Natura for cosmetics sector.
• Reiterates expectation for doubling renewable product sales year-on-year and achieving cash flow positive from operations in second half of 2014.
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Amyris, Inc. (Nasdaq:AMRS), the industrial bioscience company, today announced financial results for the second quarter ended June 30, 2014 and reiterated guidance for 2014.
"With two new collaboration partners, continued progress on renewable product sales, and our best operational performance to date, we're well positioned to double our renewable product sales this year over 2013 and deliver positive operational cash flow in the second half of this year. In May, we completed a $75 million convertible note financing and, since quarter-end, increased our cash balance sheet with payments from our ongoing collaborations as well as additional inflows from new collaborations,"said John Melo, Amyris President & CEO. "We rounded out our developing product portfolio for the tire industry when Braskem joined our collaboration to develop and produce renewable isoprene, and our expanded collaboration with Kuraray for liquid rubber. With TOTAL, we obtained industry certification for sales of our renewable jet fuel and have begun sales of jet fuel. We continue to experience strong demand for sustainable products that perform better than the alternative and are cost competitive, while solving the supply challenges our customers face in growing their business," concluded Melo.
BUSINESS HIGHLIGHTS
Key operating and development highlights since the end of the first quarter include the following: Renewable Production Achieved our lowest-cost production of farnesene at Brotas biorefinery thanks to continued operational efficiency. Commenced Brotas production of our first fragrance oil molecule as planned with initial commercial shipments underway. Produced and shipped jet grade farnesane, which is now in use in commercial flights at 10% blends with Jet A/A1. Sales & Collaboration Realized total revenues during the second quarter of $9.3 million on a GAAP basis. Combined inflows from product sales and collaborations were $8.2 million on a non-GAAP basis during same period. Renewable product sales revenue were $4.4 million, a 5.4% increase over the second quarter of 2013. Recognized grants and collaborations revenues were $4.9 million on a GAAP basis.
During the second quarter, cash inflows from collaborations were $3.8 million, non-GAAP. The difference between revenues and collaboration cash inflows is timing of revenue recognition. Expanded isoprene collaboration with addition of a new partner, Braskem, and added first cosmetic product collaboration with Natura. Financial Performance Total revenues of $9.3 million during the second quarter on a GAAP basis. Combined inflows from product sales and collaborations of $8.2 million on a non‐GAAP basis. Continued progress in reducing operating expenses, down by 9% against second quarter of 2013. Capital expenses for the first half were $2.1 million. Non-GAAP EBITDA of -$18.0 million, or -$0.23 per share; on a GAAP basis, net loss of $35.5 million, or $0.45 per share on a basic basis. Quarter-end cash, cash equivalents and short-term investments balance of $90.2 million.
FORWARD-LOOKING GUIDANCE AND OUTLOOK
In light of our progress during the first half of 2014, we are providing guidance for 2014 and beyond. Inflows. We continue to expect renewable product sales to be over $32 million, doubling our 2013 renewable product sales, and to achieve positive cash margin from products. In addition, we continue to expect collaboration inflows, a non-GAAP measure, in the range of $60 million to $70 million by the end of the year. Expenses. We continue to expect cash operating expenses for R&D and SG&A in the range of $80 million to $85 million and capital expenditures less than $10 million in 2014. Earnings. We continue to expect to achieve positive cash flow from operations during the second half of the year and to achieve positive EBITDA in 2015. Payback. We expect cash payback for our Brotas biorefinery in the next two years (following 2013 start-up year), based on plant cash contributions of $10 million to $15 million in 2014 and $40 million to $50 million in 2015.
FINANCIAL RESULTS
The Company's quarterly results includes both GAAP and non-GAAP financial information, because the Company considers non-GAAP information to be a helpful measure to assess its operational performance and for financial and operational decision-making. The Company's non-GAAP financial information excludes stock-based compensation, loss on purchase commitments and write off of production assets, depreciation and amortization, gains and losses from changes in fair value of derivatives and debt extinguishment, but adds back accounts receivable, deferred revenue and funding associated with collaborations. EBITDA, a non-GAAP measure, is calculated using non-GAAP product sales and collaboration inflows, cost of products sold and expenses. Non-GAAP net income (loss) attributable to Amyris, Inc. common stockholders is calculated using GAAP net income (loss) attributable to Amyris, Inc. common stockholders and excluding the non-GAAP financial information described above.
Second Quarter 2014 Revenues are based on the two pillars of the Company's business model - collaboration inflows and product sales. Total revenues for the second quarter of 2014 were $9.3 million, compared to $10.8 million for the second quarter of 2013. During the second quarter of 2014, the Company's cost of products sold, before loss on purchase commitments and write-off of production assets, was $7.5 million, compared with $8.9 million for the second quarter of 2013. The lower cost of products sold for second quarter of 2014 was driven by higher production volumes and overall manufacturing cost reduction efforts.
Combined research & development expenses and sales, general & administrative expenses for the second quarter of 2014 were $26.1 million, compared with $28.7 million for the second quarter of 2013. The 9% decrease in operating expenses was a result of reductions in personnel-related costs and overall lower spending in comparison to the prior year. Net loss attributable to Amyris common stockholders for the second quarter was $35.5 million, or $0.45 per share on a basic and diluted basis, which includes a non-cash loss related to change in fair value of derivatives and debt extinguishment of $4.3 million, or $0.05 per share on a basic basis.
In the second quarter of 2013, the GAAP net loss attributable to Amyris common stockholders was $38.9 million, or $0.51 per share on a basic and diluted basis. On a non-GAAP basis, net loss attributable to Amyris common stockholders for the second quarter of 2014 was $23.7 million, or $0.30 per share (basic and diluted), compared to a net loss of $21.1 million, or $0.28 per share (basic and diluted), for the same period of 2013. The difference between GAAP and non-GAAP income/loss is primarily related to a non-cash benefit that was triggered by features of outstanding convertible notes related to change in control protection and price-based anti-dilution adjustment provisions.
The valuation of these derivative liabilities decreased in the second quarter primarily as a result of a decrease in the remaining term of the convertible notes due to the passage of time as all of the other significant assumptions remained relatively constant as of June 30, 2014, compared to March 31, 2014. As of June 30, 2014, the Company had derivative liabilities, primarily related to outstanding convertible notes, with a fair value of $147.8 million. The Company estimates the fair value of these derivatives using several valuation models. Changes in the inputs for these valuation models may have a significant impact in the estimated fair value of the derivative liabilities. For example, a decrease in the Company's stock price results in a decrease in the estimated fair value of the derivative liabilities.
Six Months Ended June 30, 2014 Aggregate revenues for the six months ended June 30, 2014 were $15.3 million, compared to $18.7 million for the six months ended June 30, 2013. During the six months ended June 30, 2014, the Company's cost of products sold, before loss on purchase commitments and write-off of production assets, was $13.7 million, compared with $17.8 million for the six months ended June 30, 2013. The lower cost of products sold for the first half of 2014 was driven by higher production volumes and overall manufacturing cost reduction efforts. Combined research & development expenses and sales, general & administrative expenses for the six months ended June 30, 2014 were $52.5 million, compared with $59.3 million for the six months ended June 30, 2013. The 11% decrease in operating expenses was a result of reductions in personnel-related costs and overall lower spending in comparison to the prior year.
Net loss attributable to Amyris common stockholders for the six months ended June 30, 2014 was $19.1 million, or $0.25 per share on a basic basis and $0.66 per share on a diluted basis, which includes a non-cash gain related to change in fair value of derivatives and debt extinguishment of $43.6 million, or $0.56 per share on a basic basis. During the six months ended June 30, 2013, the GAAP net loss attributable to Amyris common stockholders was $71.5 million, or $0.96 per share on a basic and diluted basis. On a non-GAAP basis, net loss attributable to Amyris common stockholders for the six months ended June 30, 2014 was $47.8 million, or $0.62 per share (basic and diluted), compared to a net loss of $46.2 million, or $0.62 per share (basic and diluted), for the same period of 2013. The difference between GAAP and non-GAAP income/loss is primarily related to a non-cash benefit that was triggered by features of outstanding convertible notes related to change in control protection and price-based anti-dilution adjustment provisions. The valuation of these derivative liabilities decreased primarily as a result of a decrease in the Company's stock price at June 30, 2014 compared to the stock price at December 31, 2013.
