Get the Clean Energy Sector Digest delivered free everyday to your inbox. Just drop your email address in the box and hit go!
By leapfrogging Africa to an interconnected and well-balanced continent both social and environmental innovations will flourish.
Read more: South Africa, Third Industrial Revolution, Ethiopia, Kenya, Africa, Morocco, Leapfrog, G…
The Green News Report is also available via…
IN TODAY’S RADIO REPORT: Hundreds arrested at White House — again — protesting Keystone XL pip…
Read more: Green Jobs, Epa, Renewable Energy, Regulation, Clean Energy, Gr…
Battery technology is changing. The new plant needs to be prepared.
Solazyme steps up to slay the scale-up dragon.
Will the company stay on its scale-up schedule, at the
final step where Amyris, Gevo and KiOR ran into crushing delays?
In California, Solazyme (SZYM)
announced results for the fourth quarter and full year ended
December 31, 2013.
Q4 Revenue (vs Q4 2012): $11.3M (+34%)
Q4 Net (vs Q4 2012): -$33.3M (+35%)
2013 Revenue (vs 2012): $39.8M (-10%)
2013 Net (vs 2012): -$116.4M (+40%)
So — widening losses, falling annual revenue. So, why the
excitement amongst most of the analysts?
Scale-up: Completed construction at 20,000 MT
Archer-Daniels-Midland Company (ADM)
facility in Clinton, IA; downstream companion facility operated by
American Natural Products in Galva, IA; neared completion of
100,000 MT SB Oils facility in Brazil.
R&D Partnerships: Partnership inked with Mitsui & Co.,
new JDA with AkzoNobel, and extension of JDA agreements with Bunge
Limited and Unilever.
Offtake: 10,000 MT supply agreement inked with Unilever; also,
agreements with Goulston Technologies and Koda Distribution Group.
New platforms: Development announced with myristic, oleic,
erucic, capric and caprylic Tailored oils.
Algenist Sales Growth: Algenist revenues totaled $19.9 million in
2013, a 21% increase versus 2012. The Algenist brand also won the
2014 Marie Claire Prix d’Excellence de la Beauté in France.
Algenist was unanimously selected by the judging panel.
Pavel Molchanov, Raymond James
Price target: $12.50. The versatility of Solazyme’s
algae-produced oils opens the door to wide-ranging opportunities
across the fuel, chemical, personal care, and nutrition markets.
While fully recognizing the inherent execution risks in
early-stage industrial biotech, we are bullish on the roadmap to
commercialization, with two major proof points during 1H14. The
balance sheet is also in great shape, with the largest cash
balance in the peer group, virtually eliminating equity dilution
risk over the next 12 months. We reiterate our Outperform rating.
Ben Kallo, Tyler Frank, Baird
Price target: $18. We reiterate our Outperform rating and are
increasing our price target to $18 following SZYM’s Q4 earnings.
SZYM made critical strides during Q4 and the first part of 2014 in
commercializing its Clinton, IA factory and began commissioning
its factory in Brazil. Although scale-up risk remains, early runs
show that SZYM can produce and sell several types of oils at
commercial scale. We will continue to follow its production ramp
and would be buyers of the stock at current levels.
Rob Stone, James Medvedeff, Cowen & Co
Price target: $17.00. The Q4:13 loss per share of 49c was wider
than St. (38c), but essentially in-line with our (48c) estimate on
higher expenses, mainly Clinton startup costs. Clinton is in
production. Moema has begun fermentation at 125K liter scale; full
production is expected in March/April. We cut estimates to a more
conservative ramp/ASP/GM profile, but raise our PT to $17 (vs.
$14) as startup risks are easing.
Price target: $4.00. We maintain our Underweight rating and $4
price target on shares of SZYM following a 4Q print that included
a GAAP EPS loss of ($0.40) on revenues of $11.3 million versus PJC
estimates of ($0.28) on $11.8 million. Looking past the shortfall
in sales relative to our estimate and the company’s guidance, our
main takeaways from the results and the call last evening are that
product prices will not likely be above $2k per MT this year, that
Solazyme likely lacks sufficient liquidity to ramp both Clinton
and Moema to full rates, and that the Moema startup is likely a 2Q
event (versus management’s previous target of 1Q).
Molchanov notes: “Clinton producing, Moema is
next. On December 23, we noted that Solazyme is on the cusp of two
major milestones along its commercialization roadmap. The first of
these materialized on January 30, as commercial-scale production
began at the Clinton, Iowa plant, a project built in collaboration
with Archer Daniels Midland.
“Consistent with past commentary, production at the Clinton
facility will ramp over 12 to 18 months – along a back-end-loaded
“S curve” – until reaching nameplate capacity of 20,000 metric
tons per year. (Year-to-date, 500 metric tons among three distinct
products have been produced, with selling prices averaging
$2,600/ton and the high end at $3,700/ton.) Over time, there is
room to expand capacity to 100,000 metric tons per year.
“This also happens to be the capacity of the Moema plant in
Brazil (a joint venture with Bunge), which is currently being
commissioned, with fermentation set to start in March and product
recovery in April. At that point, Solazyme will be the first
player in the algae bioindustrial arena to have achieved
commercial-scale production in both North and South America.”
Ritzenthaler cautions: “Notables from the call
include pricing pressure and further delays at Moema. Management
stated on the call that they do not expect initial ASPs to be
above $2k per MT – a harbinger, in our opinion, of the effects of
building capacity ahead of demand. We do not share management’s
confidence in their long-term margin targets, with
straight-forward production economics combining with what we
believe to be a lower level of pricing power to paint a very
different picture. With the Recovery area still under
construction, and four weeks to the end of 1Q14, the startup of
Moema on an integrated basis will almost certainly be a 2Q event.
Positive cash flow
Molchanov says: “Positive cash flow on tap for
2015. While the ramp-up of production will certainly not be linear
– as is always the case in industrial biotech – we anticipate
utilization rising to 50% in 4Q14. This translates to a nearly
four-fold increase in total revenue from 4Q13 to 4Q14. To be
clear, Solazyme can get to positive cash flow at the corporate
level (in 2015) even before full utilization at either Clinton or
Kallo & Frank add: “Two commercial factories
ramping in 2014. Clinton is currently producing ~500 MT per month
and Moema is on track to begin commercial production by Q2:14.
Importantly, SZYM scaled three different oil-based products at
Clinton and has a fourth underway. Management believes the ramp of
both (Clinton and Moema) facilities will take 12-18 months and
expects to be cash flow positive by 2015.
$12.87. Feb 28 closing price: $12.27.
“2013 was a year of great progress for Solazyme as we readied our
first major capacity projects, signed new commercial supply
agreements, added important joint development partners, and
further expanded our portfolio of Tailored oils,” said Jonathan
Wolfson, CEO of Solazyme. “In the first half of 2014, we are
focused on successfully executing Solazyme’s entry into broad
commercial operations. We have begun shipping multiple products
from the Clinton/Galva, Iowa facilities and are deep into
commissioning in Brazil as we complete the first-of-its-kind
100,000 MT Solazyme Bunge Renewable Oils (SB Oils) facility at
Moema. In these early days we are focused on generating consistent
and reliable production for our partners, ahead of accelerating
our production ramp later this year.”
“Solazyme’s 2013 results included 21% growth in our most
commercially mature business, as our Algenist skin care line
expanded its product offerings and geographic footprint. We also
delivered on all of our joint development milestones for our
partners,” said Tyler Painter, CFO of Solazyme. “We anticipate
continued growth in these revenue streams in 2014 and look forward
to growing product revenues from commercial supply of our products
later this year as we ramp commercial production. In the meantime,
Solazyme remains in a healthy financial position as we complete
our first plants and prepare to broadly scale operations.”
2014 is Solazyme’s take-off year. After more than a decade as a
development-stage company, now begins the real-scale up of
operations and revenues.
We’ll know about scale-up by year-end — by then, SZYM will be
past the Hillary Step where AMRS,
not. We also should know if the product demand is there at prices
that meet the market’s anticipations.
Incremental steps along the way. Mechanical completion on all
aspects in Q2. And look for any warnings on the commissioning
process in Q3, plus news on the customer front.
was originally published.
Biofuels Digest is the most widely read Biofuels daily read
by 14,000+ organizations. Subscribe
Action by action, we are building what Dr. King called “the beloved community.” Future generations will honor these young climate justice leaders who sacrificed their freedom to demand an end to these immoral assaults on our collective futur…
The Austin, Texas, City Council approved a wind power contract Feb. 27 that enables Austin Energy to achieve its goal of delivering 35 percent of all of its electricity from renewable sources four years ahead of its goal, the utility said in a news rel…
Suntech. faces final sunset.
Opportunities for me to write about former solar pioneer Suntech
are growing fewer with each passing day, as its life as an
independent company nears an end with the imminent finalization of
its bankruptcy liquidation. That said, a company announcement
saying that a new Suntech has emerged after the yearlong
bankruptcy storm seems like a good opportunity to write about this
company one last time before it and its stock permanently
disappear. The announcement features a photo of Suntech’s youthful
looking new CEO, Eric Luo, and says the company is preparing a new
push into Europe, starting with Britain. (company announcement)
Before we go any further, I should point out this new
announcement is coming from Wuxi Suntech, owner of the main
production assets of the original Suntech Power Holdings, which
was formally forced into bankruptcy about a year ago after
defaulting on more than $500 million in debt. Wuxi Suntech was
auctioned off as part of the bankruptcy liquidation process, and
was purchased by Hong Kong-listed Shunfeng Photovolatic
In its latest announcement, Wuxi Suntech says its sale to
Shunfeng will close imminently, which means the parent Suntech’s
bankruptcy liquidation plan is also close to finalization and will
likely be approved by its creditors. I would expect all of that to
happen sometime this month, at which time the original Suntech
will formally be disbanded and become a chapter in future history
books on solar energy.
To this day, stock buyers don’t seem to have a strong idea of how
much their holdings in the original Suntech are worth, as
reflected by the stock’s wild swings even as the final liquidation
approaches. In the latest session alone, the stock rose 30
percent, recouping some of the losses from a 40 percent slide over
the previous month. I expect we’ll see one or two more major
swings before the final plan is approved, at which time investors
will finally lose this popular betting vehicle.
The latest announcement says that Wuxi Suntech will remain as an
independent entity after its sale to Shunfeng is complete, which
means the brand will stay intact. The statement also implies that
Suntech may become the flagship brand of the new Shunfeng, which
isn’t a huge surprise due to Suntech’s status as one of the
industry’s most recognized names. Luo says the new Suntech will
also make some strategic acquisitions, and that it expects to ship
a record 2.5 gigawatts worth of panels for this year, 20 percent
higher than its previous peak in 2011.
While Suntech’s shares have swung wildly over the last year,
Shunfeng’s have been on a more positive trend, rising from their
previous level of about HK$1 as recently as last June to around
HK$7 at present. I’ve previously said
that Shunfeng could be a company to watch going forward, and
do expect it should benefit strongly from Suntech’s strong brand,
as well as its technology and sales networks. I wouldn’t be
surprised if Shunfeng ultimately takes the Suntech name as its
primary brand, though it will probably want to wait at least a
year until the bankruptcy is well in the past.
I should close out this post with a final memorial to Suntech,
whose biggest fault was probably hubris. Founder and former chief
executive Shi Zhengrong will be remembered as a visionary for his
early entry to the market, becoming the first solar panel maker to
list in New York in 2005. But too much praise for his firm and his
own self confidence led Shi to take unnecessary risks that
ultimately led to Suntech’s downfall, ending a brief but turbulent
life for this colorful but ill-fated sector pioneer.
Bottom line: Shunfeng could position Suntech as
its leading brand after finalizing its purchase of the company’s
main assets, and could use Suntech as a platform for future
Doug Young has lived and worked in China for 15 years, much of
that as a journalist for Reuters writing about Chinese companies.
He currently lives in Shanghai where he teaches financial
journalism at Fudan University. He writes daily on his blog, Young´s
China Business Blog, commenting on the latest
developments at Chinese companies listed in the US, China and Hong
Kong. He is also author of a new book about the media in China, The
Line: How The Media Dictates Public Opinion in Modern China.