Solazyme, Inc. (SZYM)

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Solazyme, Inc. (SZYM)

Q3 2012 Earnings Conference Call

November 14, 2012, 16:30 PM ET


Jonathan Wolfson -- CEO

Tyler Painter -- CFO

Mike Smargiassi -- IR


Sanjay Shrestha -- Lazard Capital Markets

Brian Lee -- Goldman Sachs

Ben Kallo -- Robert W. Baird

Laurence Alexander -- Jefferies

Smitti Srethapramote -- Morgan Stanley

Weston Twigg -- Pacific Crest

Chip Moore -- Canaccord Genuity

Patrick Jobin -- Credit Suisse

Mahavir Sanghavi -- UBS

Rob Stone -- Cowen and Company



Good day, ladies and gentlemen and thank you for your patience. You have joined the Solazyme Incorporated Fiscal Q3 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, this conference may be recorded.

I would now like to turn the call over to your host, from Investor Relations, Mr. Mike Smargiassi. Sir, you may begin.

Mike Smargiassi

Thank you, Latif. Good afternoon and thank you for joining us on today's conference call to discuss Solazyme's fiscal third quarter 2012 results. With me on today's call are Jonathan Wolfson, Solazyme's Chief Executive Officer; and Tyler Painter, Chief Financial Officer.

This call is being broadcast live over the web and we have prepared a PowerPoint presentation to accompany this call. The release and presentation can be accessed at the Investor Relations portion of our website,

I'd like to direct you to slide 2. It says among other things that some of the comments constitute forward-looking statements that reflect management's current views and estimates of future events and economic circumstances, industry conditions, company performance and financial results.

Statements are based on many assumptions and factors including availability and prices of raw materials and equipment, market conditions, operating efficiencies, access to capital and actions of government. Any changes in such assumptions or factors can produce significantly different results.

To the extent permitted under applicable law, the company assumes no obligation to update any forward-looking statements as a result of new information or future events. Solazyme has provided additional information in its reports on file with the SEC concerning factors that could cause actual results to differ materially from those contained in this presentation and encourages you to review these factors.

Also, please note that certain financial measures we use on this call are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in today's release.

With that, I'll now turn the call over to Jonathan.

Jonathan Wolfson

Thanks, Mike, and thanks to everyone for participating in today's call. Solazyme continues to execute against all of our key initiatives and I have some strong progress to share. I'll focus my comments today in two areas; our capacity build-out and the value we're creating with our technology platform.

On the capacity side, we remain on track and on schedule in Brazil, in France and in Peoria. Beyond this, we've also announced today two major agreements with the largest marketers of vegetable oils in the world that put us on a clear path towards securing 400,000 metric tons of manufacturing capacity.

First is our new partnership with ADM, which will significantly enhance our manufacturing profile. This is a tremendous collaboration for us that makes capital efficient use of vital manufacturing capacity, further establishes our commercial footprint in the US and greatly complements our existing capacity build-outs in Latin America and Europe.

We've also signed a market development agreement with ADM as part of this partnership that brings with it ADM's broad market reach. The other major agreement is a joint venture expansion framework agreement with Bunge. This agreement sets forth our combined intent to increase the production capacity of the Solazyme Bunge Renewable Oils joint venture three-fold to 300,000 metric tons of annual production capacity by 2016.

In addition, this agreement provides for the expansion of oils and fields into the JV plan to include tailored food oils for sale in Brazil. This is important because Bunge is the number one marketer of edible oils in Brazil's rapidly growing market. The progress we're making on our current capacity build-outs combined with these two new agreements brings us that much closer to achieving broad commercial scale.

In addition to our progress on the capacity and market development fronts, I'm also going to update you on the continued development of unique and valuable tailored oil profiles. On our last two calls, I described our advances in high stability oleics and our new myristic oil profile. Today, I'm announcing another breakthrough in oil profiles of a cocoa butter replacement for food and personal care applications.

Turning now to the business update, starting with Solazyme Bunge Oils. We are on schedule with our plan build-out in Moema. Slide 4 includes photos of recent activity. Since breaking ground in June, we've concluded earthworks activity and are in advanced stages of foundations and pilings.

We've placed orders for all of the key long lead time equipment items including fermenters and critical downstream equipment. Our engineering teams are on site and fully staffed. We remain on schedule and we're pleased with the progress we're making at the work site.

As I mentioned earlier, we announced a joint venture expansion framework agreement with Bunge. This agreement lays out a path to expand the oil production capacity at Solazyme Bunge Oils from the current 100,000 metric tons under construction in Brazil to 300,000 metric tons under the next two years.

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