Earnings Season: An Advanced Bioecononomy’s Health and Wellness Check-Up
by Jim Lane (Biofuels Digest) In today’s Digest, let’s look at trends driving the industry’s results at scale — and while money is not the measure of all progress, it is the ultimate yardstick and especially for companies that have reached industrial scale. So, let’s look at Q2 earnings statements now just coming out from four of the sector’s signature companies in fuels, enzymes, crop development & protection, and nutrition and wellness. Namely, Aemetis, Novozymes, Evogene and Amyris.
In this sector, there’s the bleeding edge, the leading edge and the volume business.
At the bleeding edge, we generally see high losses, high promise, high-value products — emphasis is on strategic collaborations and financing increasingly from strategics. Evogene is there, Amyris has been there and is now exiting. Overall, the encouraging sign is the deep engagement by strategics — who have generally replaced the venture capitalists, as the VCs themselves had hoped. Capital for commercial-scale biorefineries is still exceedingly tough to find, so companies like Evogene developing traits rather than products and fitting into someone else’s production — well, that’s a smoother road for investors.
At the leading edge, we see lead products getting traction in the marketplace with some volume orders for products based on advanced technologies. The companies here struggle with debt to the extent that they had trouble with a volume business downturn or too much time in the bleeding edge sector developing the technology. Breakout is generally imminent, and this is where the blockbusters are found. Amyris is here, Aemetis has some aspects of its business (cellulosic, biodiesel) here. Here, the story is going to be about rate — rate of transition to volume orders, margin rate and rate of production so that (as we saw with Amyris), building of additional capacity is avoided until the orders and margins are screaming for it.
In the volume business, the companies have solid products, established customers, shiny brands, good R&D pipelines, but tend to rise the commodity price rollercoaster with their customers — they get exposed on price where they are selling finished commodity products, or exposed on volumes if they are selling to biorefiners. Novozymes is here, and Aemetis in its conventional corn ethanol business. As we can see with Novozymes, its a smoother road for the supplier companies than the producers — as was discovered 160 years ago in the California Gold Rush by companies like Levi Strauss, you can mine the miners more reliably than the miners mine the gold. READ MORE
Aemetis discusses cellulosic ethanol plans during investor call (Ethanol Producer Magazine)