Press Release Spruce Point Capital Management Announces Investment Opinion: Spruce Point Capital Management Releases New Findings on Danimer Scientific, Inc. (NYSE: DNMR)

Spruce Point Capital Management Announces Investment Opinion: Spruce Point Capital Management Releases New Findings on Danimer Scientific, Inc. (NYSE: DNMR)

NOTE TO EDITORS: The Following is An Investment Opinion Issued by Spruce Point Capital Management

Publishes Recently Released Freedom Of Information Act Request From The Kentucky Department Of Environmental Protection, Which Provides Smoking Gun Evidence That Danimer Lacks Proper Controls On Its Own Production Figures

Evidence Shows Danimer’s PHA Average Selling Price Is Actually Up To 42% Below Management’s Claims

Certified PHA Production Figures Show That Danimer Is Operating Significantly Below Current Capacity Despite Recently Claiming It Is “Fully Sold-Out”

Warns Investors That 12 Million Warrants Become Exercisable at $11.50 After This Friday, May 7, 2021

Notes That Danimer Has Failed To Issue A Public Response To Any Of Our Claims Since The Publication Of Our Initial Report On April 22, 2021

Urges Investors To Visit www.SprucePointCap.com to Review New Evidence And Follow @SprucePointCap On Twitter For The Latest On $DNMR

May 04, 2021 10:30 AM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--Spruce Point Capital Management, LLC (“Spruce Point” or “we” or “us”), a New York-based investment management firm that focuses on forensic research and short-selling, today released new evidence in a supplemental report entitled "When The Tide Goes Out, What Will Wash Ashore?” that explains why Danimer Scientific, Inc.’s (NYSE: DNMR) ("Danimer" or the "Company") production figures, its pricing, and rosy financial projections simply do not add up. We reiterate 65% intermediate and 100% long-term downside risk to Danimer’s share price. Download or view the report by visiting www.SprucePointCap.com and follow us on Twitter @SprucePointCap for additional information and exclusive updates.

Ben Axler, Spruce Point’s Founder and Chief Investment Officer, commented:

“Evidence uncovered since the release of our initial report only reaffirms our belief that Danimer has been peddling an inconsistent, ever-changing story to investors that will likely fail to deliver on its promises. Danimer’s certified production figures and other evidence recently released by the Kentucky Department of Environmental Protection indicate that the Company has been overstating PHA average selling prices by up to 42% and illuminate that the Company’s monthly biopolymer production and natural gas usage for its Kentucky facility have been materially misreported. Evidence released from the FOIA also shows that Danimer received violation notices in Kentucky, raising serious concerns regarding the Company’s environmental regulation claims. Ironically, Danimer positions itself as an environmentally friendly biodegradable product solution, but fails to disclose that its own production process omits Volatile Organic Compounds that must be stringently regulated by the Environmental Protection Agency.

We believe these latest findings only further invalidate sell-side analysts’ inflated share price targets for Danimer, which rely on average selling prices that the Company’s own certified data show are overstated by up to 42%. We encourage investors to review new evidence Spruce Point has made available and to seriously question why Danimer is telling investors it needs hundreds of millions of dollars in capacity expansion when recently reported production figures are so far below their actual capacity.”

Spruce Point urges investors to review new findings in its report, including:

• Danimer has failed to provide clear and transparent disclosures on its revenue drivers, including its product inventory by location, total volumes sold of PHA/PLA, and average sales price of PHA/PLA.

• Newly released information from Spruce Point’s FOIA request to the Kentucky Department of Environmental Protection show that Danimer’s monthly biopolymer production and natural gas usage for its Kentucky facility have been materially misreported and are riddled with errors such as overstating Kentucky’s figure by including Georgia’s production.
  • Additionally, based on the facility biopolymer production data for April and June 2020, implied Georgia facility production was negative – a mathematically impossible result.

• Spruce Point estimates that management has overstated PHA Average Selling Prices (“ASP”) by as much as 42%, based on an analysis of Danimer’s certified actual production numbers.

• The results from the FOIA request show that Danimer’s manufacturing base is operating significantly below capacity, raising concerns as to why the Company is telling investors it needs to build additional facilities. Danimer claims it was “Fully Sold-Out,” yet its Q4 2020 product revenue declined by 13.8%, and year-end inventories spike to 16.4% of product sales from 3-4% historically. This only calls into question Danimer’s claims for even more production capacity through a $700 million greenfield investment in Georgia.

• The results from the Kentucky FOIA also raise serious concerns about Danimer’s environmental regulation claims, highlighting that Danimer received violation notices in Kentucky and that the Company’s production processes produce harmful chemicals like Volatile Organic Compounds and methanol despite Danimer’s claim that its products are environmentally friendly through biodegradability.

• Spruce Point found that no audit has been completed of Danimer’s internal controls, leaving investors to place undue trust on reported results without independent verification.

• We reiterate that Danimer’s share price remains grossly overvalued on PHA average selling prices that appear to be up to 42% lower than management’s claims. We continue to believe Danimer’s share price faces up to 65% downside risk in the intermediate term, with up to 100% long-term downside risk.

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The research note can be found at www.sprucepointcap.com and updates will be posted on twitter @sprucepointcap.

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