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  "documentTitle": "Danimer Scientific (DNMR)",
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  "authorName": "Carson Block",
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  "presentationDate": "2021-09-15 00:00:00",
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  "notes": "The slide uses inventory turnover and production capacity data to challenge the company's narrative regarding production bottlenecks and partnership demand.",
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      "text": "We think that the apparent low production volume and persistently high finished goods inventory is due to weak demand for DNMR's PHA compounds.",
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      "text": "Annualized Turns: 2.9x",
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      "text": "DNMR has misled investors about the state of its partnerships. Rather than there being $200 million of buying waiting on DNMR to build capacity, its partners mostly appear to be patiently working with DNMR to develop products that one day might – or might not – come to fruition. The purported take or pay contracts reportedly (and logically) do not obligate the customers to purchase material if it does not meet customer requirements or is not produced.",
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      "text": "Nor does DNMR's “debottlenecking” in late Q2 2021 explain its seemingly low PHA production. The debottlenecking project took just two weeks followed by a short period of testing. As such, at most we think it reasonable to assume that Q2 capacity utilization would decrease only modestly (~17%-33%), leaving 3.4 million to 4.2 million pounds of capacity available in Q2. At 50% utilization, total neat PHA production for H1 2021 therefore should have been roughly 4.2 million – 4.6 million pounds. The estimated 2.8 million pounds produced is well below the available quarterly production capacity. We think that the apparent low production volume and persistently high finished goods inventory is due to weak demand for DNMR's PHA compounds.",
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      "text": "The oddity of DNMR's inventory movements supports our conclusion that demand for DNMR's products is poor. Below is a table of DNMR's inventory detail and annualized turnover. Our interpretation is that DNMR's sub-scale production of PHA compounds consistently outstrips demand, as there is a significant, persistent finished product balance and essentially no work in process. One subset of this concern is the possibility that DNMR is producing significant amounts of non-salable product.",
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      "text": "While one could do contortions to try to explain this phenomenon, we think the simplest explanation is that the demand for the PHA products DNMR can actually make is just not there. This is particularly true given that DNMR's annualized inventory turnover has generally been at or less than 3.0 times.",
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      "kind": "quote",
      "text": "“... in the latter part of the second quarter 2021, we are scheduled to temporarily take the Kentucky plant off-line to implement several debottlenecking initiatives.” — DNMR 1Q21 earnings call",
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      "kind": "source-note",
      "text": "Source: S&P Capital IQ",
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      "kind": "source-note",
      "text": "18 DNMR 1Q21 earnings call... 19 Sell-side Analyst report June 24, 2021. 20 DNMR 2Q21 earnings call...",
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      "text": "DNMR Inventory Schedule ($ mm) Q3 2020 FY 2020 Q1 2021 Q1 2022 Raw Materials 7.5 6.8 8.0 7.7 Work In Process - 0.1 0.1 - Finished Goods 5.7 6.7 8.8 10.0 Total 13.2 13.7 16.8 17.7 Annualized Turns 2.7x 3.0x 2.9x 2.9x",
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      "kind": "title",
      "text": "Investors Have Been Misled on Partnerships",
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