Dyadic Q1 results show revenue growth, improved gross profits

By Katie Fletcher | May 15, 2015

Dyadic International Inc. recently released its financial results for quarter one of 2015, reporting an established market position with its licensee Abengoa and more recent collaborator Compagnie Industrielle de Matiere Vegetale for its products.

In regards to the recent collaboration with CIMV, the company announced this month Dyadic's subsidiary Dyadic Netherlands B.V. will work in collaboration with CIMV and five other industry partners on 2G BIOPIC, a new advanced biofuels project funded by the European Commission's Horizon 2020 program. The agreement provides that the company will be paid a total of approximately €1 million ($1.14 million) over the three-year term of the project. The purpose of the 2G BIOPIC project is to demonstrate the performance, reliability and sustainability of the production processes for bioethanol extracted from agricultural residues and wood. Project partners will develop, construct and operate a large demonstration-scale facility that produces ethanol from biomass.

Dyadic reported in its quarter one results that it anticipates supplying enzymes to CIMV’s planned 2016 demonstration plant and licensing its C1 technology for on-site production of enzymes at CIMV’s future commercial-scale plants. The company’s C1 enzyme technology is being developed for use in the conversion of biomass into fermentable sugars, which are subsequently fermented into ethanol or other biobased products. The company is also developing its CMAX enzymes product line. However, the company says with the first commercial-scale facility using the C1 technology expected to come online this year, the company’s focus is there, and it does not have significant direct sales to report on its CMAX products. Even so, Dyadic said the market position is established.

As for Abengoa, the company began operations at its 25-million-gallon advanced biofuels plant in Hugoton, Kansas, in the fourth quarter of last year. Dyadic reported in its earnings that the facility generated a $500,000 milestone payment and Dyadic expects to begin earning initial royalties as the Hugoton plant starts up sometime mid-year 2015.

Also reported was news that subsequent to the end of the quarter, the company received $800,000 for achieving two additional research and development (R&D) milestones in its funded research program from the C1 technology licensee BASF. Dyadic recognizes $200,000 of the revenue for achievement of milestone two in March of this year and recognized $600,000 in April for the achievement of milestone three of the contract.

“I am extremely pleased that our patented and proprietary C1 technology platform continues to achieve higher levels of enzyme purity, productivity and performance,” said Mark Emalfarb, president and CEO of Dyadic. “This has been validated by our ability to achieve two milestones sooner than anticipated with BASF, resulting in the payment of $800,000 in April 2015.”

Regarding the company’s financial results for the quarter ended March 31, Dyadic reported having cash and cash equivalents of approximately $3.7 million, compared to $2.5 million at Dec. 31 of the prior year. The company reported its total revenue increased year-over-year by 35 percent to approximately $4 million, compared to $3 million for the same period in 2014. Net product-related revenue for the three months ended March 31, increased 41 percent to $3.5 million, compared to $2.5 million for quarter one of the prior year. This increase for the period was driven by growth in animal nutrition, biogas and food markets. Additionally, license fee revenue for the quarter increased to $200,000 due to the second research milestone with BASF.

Gross profit was also up, increasing by 70 percent to around $1.6 million, in comparison to $900,000 for the same period in the prior year. Dyadic attributes the increase in gross profit to product-related revenue growth of approximately $300,000, cost improvements in manufacturing, fermentation and down-stream processing of $400,000 and the BASF research milestone of $200,000, partially offset by lower R&D margins due to mix and timing of commercial and government programs of $200,000.

Net loss for quarter one was $400,000, or 1 cent per basic and diluted share, compared to a net loss of $1.6 million, or 5 cents per share, for the comparable period in 2014.

“Our enzyme business experienced strong revenue growth, improved gross profit and margins during the quarter,” Emalfarb said. “Additionally, we are making further progress in executing our business plan, which includes, among other things, plans to profitably grow our business and control costs. As a result, we believe that the company is on track to meet our objective of attaining profitability in 2016.”

Dyadic released its full-year 2014 financial results in March.