Solazyme highlights algal oil plant, UPS contract in Q2 results

By Katie Fletcher | August 03, 2015

Solazyme Inc. recently released its financial results for the second quarter of 2015, highlighting consistent power and steam supply coming from its cogeneration Moema facility and expanded relationship with UPS for supply of renewable diesel fuel.

The company reported that during the second quarter ended June 30, key power and steam redundancy projects were successfully complete, which, along with other ongoing work at the facility, has led to significant improvements in power and steam reliability, allowing Solazyme to integrate operations on a more consistent basis at its Brazil Bunge Oils Moema manufacturing facility. According to the financial release, Solazyme is currently focused on optimizing and enhancing fully integrated operations from fermentation to oil production and improving overall performance.

“I am pleased to report that we've been running with consistent power and steam for most of the last three months, which included the first real-time use of the key electrical grid and redundant boiler backup systems in mid-July where both backup power and steam instantaneously took over to provide uninterrupted operations, an important proof point in the work we have done,” said Jonathan Wolfson, company CEO, on the earnings call. “The Solazyme-Bunge Renewable Oils Bunge and Solazyme teams have made significant contributions at Moema and we are extremely pleased with the improvements we are seeing at the facility.”

These two improvement projects were discussed during the company’s first quarter earnings, where Wolfson said the projects were expected to provide significant, though not complete, redundancy of power and steam to the facility.

Wolfson said the company is currently supplying Unilever and a limited number of other customers from Moema, but they have work to do. The company plans to focus the second half of the year on optimizing downstream productivity including oil extraction, and to produce, distribute and increase supply of consistent, in-spec products.

The company’s other facilities were briefly mentioned on the call. “The Clinton/Galva facility delivered a modest increase in second-quarter production from the first quarter and continued to have very modest production activity as our primary manufacturing and engineering focus has remained on Moema,” Wolfson said.

He added that Peoria remains a key strategic piloting and launch facility and has assisted in optimization and process improvement projects in support of Moema along with continued production of food ingredients, specifically the company’s AlgaVia ingredients. Solazyme reported that it added new customers for AlgaVia and AlgaWise food ingredients. Another recent development was the partnership with BASF to launch a microalgae-derived surfactant. “Sold under BASF's Dehyton trade name, this algae-based betaine is a highly sustainable surfactant based on Solazyme's AlgaPur renewable microalgae oil,” Wolfson said.

On the industrial side, Solazyme experienced headwinds and slower than anticipated adoption rates with its Encapso line of business, resulting from lower oil prices and a dramatically reduced U.S. rig count. “That said, we continue to see strong product performance in new wells and remain very confident in the future of the production line,” Wolfson said.

The company continues to expand Encapso work with Flotek in South America, including multiple wells in Colombia. In the renewable fuels business, Solazyme announced it was named one of three suppliers of blended fuel to UPS in support of its renewable fuels program and also completed a two-year renewable diesel evaluation with Volkswagen of America.

In regards to the company’s financial results, total revenue for the second quarter ended June 30, was below the company’s expectations at $11.7 million compared with $15.9 million in the second quarter of 2014. The decline in revenue was attributed to expected decreases in funded program revenue as well as in product revenue due to the timing of certain Algenist sales activities and slower than anticipated adoption rates for Encapso. Product revenue for the quarter was $8.3 million, down from $9 million in the prior year period. Revenue attributed to research and development programs was $3.4 million for quarter two 2015 compared with $6.9 million in the second quarter of 2014.

GAAP net loss was $37.2 million for the second quarter of 2015, compared to net loss of $42.9 million in the comparable period in the prior year. On a non-GAAP basis, the net loss was $31.7 million for the quarter, compared with net loss of $32.9 million in the prior year second quarter period. Solazyme reported a cash balance of $147 million at the quarter end.

“We are maintaining financial discipline in our operations and focusing our sales efforts on strategic revenue streams,” said Tyler Painter, chief operating officer and chief financial officer of Solazyme. “On the commercial side, our product portfolio is well aligned with trends across our targeted end markets, and we are seeing a growing number of projects and customers today.”