Amyris Inc (AMRS) 2012 Q1 法說會逐字稿

Welcome to the Amyris first quarter 2012 conference call. This call is being webcast live on the Events and Presentations page of the Investors section of Amyris' website at www.amyris.com. This call is the property of Amyris, and any recording, reproduction or transmission of this call without the express written consent of Amyris is strictly prohibited. You may listen to a webcast replay of this call by going to the Investors section of Amyris' website. As a reminder, today's call is being recorded.

I would now like to turn the call over to Erica Mannion, Investor Relations for Amyris.

Good afternoon. Thank you for joining us to discuss highlights of Amyris' recent progress and outlook. With me today are John Melo, Chief Executive Officer; Steve Mills, Chief Financial Officer; and Jeri Hilleman, former Chief Financial Officer.

On the call today you will hear discussions of non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is contained in the press release distributed today or in the supplemental materials which are available on the Company's website at investors.amyris.com.

We will also provide certain forward-looking statements about events and circumstances that have not yet occurred, including projections of Amyris' operating activities in 2012. Actual outcomes and results may differ materially from these contained in the statements due to a number of risks and uncertainties, including those provided in the Company's recent SEC filings, available on the SEC's website at www.sec.gov. Please refer to these filings for detailed discussions of the relevant risks and uncertainties. The Company undertakes no responsibility to update this information in this conference call. The current report on Form 8-K furnished with respect to our press release is available on the Company's website in the Investors section under SEC Filings and on the SEC's website.

Now I will turn the call over to John Melo.

John?

Thanks, Erica. Good afternoon, and thank you for joining us for our quarterly update.

Let me start with the introduction of our newest team member, Steven Mills, who joined us last week as Chief Financial Officer. Steve is an experienced executive, having spent over 30 years at Archer Daniels Midland. He held numerous positions at ADM, including serving as CFO and lastly as their Senior Executive Vice President for Performance and Growth. We are delighted that Steve has joined our team, and we wish all the best to Jeri, who will be leaving us at the end of the month as part of a long-planned departure.

Over the past quarter, our technology is working well. We have maintained reliable manufacturing operations, continued to improve our process at scale at all three CMO sites and are delivering on our commercial sales plan and collaboration milestones. We are executing on the strategy shared with you earlier in the year, focusing the Company on high-value core markets where we have a distinctive competitive advantage and aligning our manufacturing production with the highest average selling price products. We have restructured our production portfolio to align with this strategy, resulting in the charges we reported in our quarterly results. In today's call we will update you with the steps taken in the past quarter to execute on this plan and also provide a roadmap for our future growth.

In addition, we have advanced construction at the Amyris Paraiso plant in Brazil, which remains on track for mechanical completion midyear. We have implemented a manufacturing transition plan that meets our most critical demand by continuing to utilize production from selected CMOs while giving Paraiso the resources and focus needed to commission the plant and startup operations.

I will now highlight some specific accomplishments as well as areas where we see room for improvement. I will detail our 2012 production strategy and end with a brief explanation of our strategic growth plan. Jeri will discuss our recent financial results, and I'll invite Steve to say a few words.

My first point is that our technology is working. Our technology continues to perform as expected. In over a year of large-scale operations we see no statistical difference between strain performance from the two-liter scale to the 200,000-liter scale. We also have confirmed that our strains are feedstock agnostic, with predictable results at scale under various conditions using the variety of feedstocks found at our manufacturing sites around the world. This included sugarcane syrup, corn dextrose, sugar beet and molasses. Robust production with diverse feedstock is important to our manufacturing strategy. It underpins our confidence that we are on the path to achieving our target economics.

Second, our facilities are reliable. All three of our CMOs have been operating reliably with reasonable stability throughout the fermentation cycle. During the quarter, we produced 919,000 liters of farnesene, with production to date of over 2 million liters. We are pleased with our plant operations, with all sites showing improved performance. We are particularly pleased with the progress at Biomin, which caught up with the most -- with most of the operational efficiencies at our other two CMOs. Technology and manufacturing improvements will continue.

As a result of our technology performance and our recent experience in operations we know it takes longer to commission and reach production targets, and this competency on implementation of our technology at scale has become core to Amyris today. These learnings have been applied to the design and are now a part of our commissioning and startup plans for Paraiso, which brings me to my third point.

The Amyris Paraiso plant is on track. Amyris' first purpose-designed industrial-scale farnesene plant at Paraiso remains on budget and on track for mechanical completion midyear. As we have previously communicated, it will take several months to commission Paraiso. We would expect to commence commercial production in early 2013. Paraiso is designed to achieve 50 million liters annual production at target efficiency. We will phase the Paraiso capacity in stages over the course of two to three years.

With these volumes, aided by our CMOs in 2013, we will continue to support squalane and diesel sales, expect to commence polymer additive sales, expand cosmetic offerings to a new set of emollients, and provide volumes for key product certification programs such as our renewable jet fuel. Having available backup volume from our CMOs will take the pressure off having to rush the startup at Paraiso. As Paraiso scales up to full capacity, we intended to use selected CMO volume to meet any customer demand that exceeds our Paraiso capacity. After achieving stability of Paraiso, we will complete the Sao Martinho plant in the future.

My fourth point is about our near-term production strategy. Let me make three points about the strategy.

First, consistent with our strategy, outlined earlier this year, we are aligning our CMO output to ensure we meet customer demand while reducing costs, managing working capital and respecting our obligations to our CMO partners.

Second, we have produced sufficient farnesene to support squalane sales for the remainder of 2012. We will produce additional farnesene at our CMOs to meet current highest average selling price demand for diesel, polymers and for certain farnesene-derived products. We expect to produce at a lower rate during the second half of this year, continuing our focus on achieving production cost targets versus volume.

Third, we are also transferring the bulk of our operational focus from Biomin to Paraiso, transitioning our experienced staff to Paraiso to prepare for its commissioning and startup. We are in discussion with our other two CMOs to achieve the appropriate production levels that meet our farnesene needs for the remainder of the year. We are adjusting our operations at our CMOs at Tate & Lyle in Illinois and at Antibioticos in Spain to match our near-term production plan and expect to wind down operations at one of these facilities soon. Related to the strategy, as Jeri will discuss in more detail, we have taken one-time charges in our P&L that will improve our production cost profile going forward.

My final point is that we are on track with our customer and partner commitments. Let me provide you some highlights about customer sales, feedback and outlook.

Let me start with our first product, squalane. Our commercial strategy is on track, and we are now expanding to new opportunities in the emollient space. Recall that in February of 2011 we received a first order of squalane. A year later we have agreements and are supplying the leading buyers of squalane in the world's three largest squalane markets, Japan, Europe and the United States.

In the world's largest market, Japan, Nikko continues to see strong interest from clients for Amyris' Neossance squalane due to its reliable, sustainable, sugar-based production and consistent quality. Nikko remains excited about our new cosmetic product opportunities from the farnesene platform. We are now a leading player in the squalane market and are showing our customers that we are and will continue to be a reliable supplier of renewable, high-quality squalane, reducing both price volatility and environmental impact.

Building on our success in Japan and Europe, I'm pleased to say that we have now signed a multiyear supply agreement for Amyris Neossance squalane with [Centerchem, Inc.] for distribution in the US and Canadian market. With this track record of customer demand and product acceptance we are launching a new line of emollients derived from farnesene under our brand Neossance. We received very positive early market feedback for this new product line.

Second, the feedback from the use of our renewable diesel in niche Brazilian markets remains quite positive. The data back from 200 buses operating with our fuel in the streets of Sao Paolo and Rio de Janeiro confirms the superior performance we expected from our initial trials. These real-world results show no impact on fuel consumption and fleet maintenance costs, while significantly reducing emissions. Mercedes-Benz confirmed not only the expected 6% reduction in particulate matter, as a welcome surprise, up to a 14% reduction in NOx levels. We are demonstrating that the Amyris renewable diesel is a viable, no-compromise renewable option to replace petroleum diesel in the fast-growing metropolitan areas of Brazil.

Third, as indicated previously, we are focusing our growth in core high-value products. We are beginning to see the results of this strategy. As an example, our realized average selling price for the first quarter was $7.70 per liter, and our renewable product sales are over 300% higher than the prior quarter. The high-volume commodity products will be handled through our partnerships with Total and Cosan.

We are continuing to deliver on our product development collaboration milestones with our key customers. For competitive reasons I am not able to provide detail but can say that our near-term opportunities -- can assert that product development continues to proceed well, with customer milestones being met.

Over the next 12 months we expect to launch commercial production of our fragrance oil (inaudible), and, as I previously noted, expand our emollient products beyond squalane.

On liquid polymers, Kuraray publicly indicated that Amyris farnesene would play a key role in its business plan. Kuraray Research is using farnesene for liquid rubber that has led to a tire additive that can improve fuel efficiency when compared to current polymer additives, and, based on these findings, Kuraray is accelerating the development of tire applications, expanding global production scale and creating new liquid rubber (inaudible). We will launch some of these products through 2013.

Another product that I can speak about today is our renewable jet fuel, which, as you know, is part of Total's original collaboration with Amyris. The various tests of our jet fuel by Embraer and its engine manufacturer, GE, as well as the US Air Force and others, have been consistently positive. In the very near future we expect Azul Brazilian Airlines will fly an Embraer E190 jet in Brazil, completing the successful demonstration of the Amyris renewable jet fuel. Commercial use of our jet fuel will follow through the usual and lengthy ASTM certification process.

Our relationship with Total continues to strengthen. We are executing on the collaboration elements of our relationship. Total continues to be a supporter of the Company, as evidenced by their participation in the recent funding. We expect our product commercialization agreement to be completed in the near future.

Before I turn the call over to Jeri, let me pause to summarize what we have accomplished year to date.

We are executing on our strategy to focus on high-value, lower volume products. We have aligned our production portfolio with this strategy, resulting in the adjustment to our financials reported in the quarterly results. We have achieved reliable operations and expect to continue improvements in cost. Our technology is meeting our internal targets at scale. And, last, we have delivered on our customer milestones and have a clear product pipeline for near-term growth. Squalane and niche diesel today, new emollient, first fragrance to market and liquid polymer for Kuraray in 2013, and we expect one to two new products a year for the flavor and fragrance and cosmetics markets beyond 2013.

Our technology continues to progress. Our people continue to deliver. And our hard-learned understanding of what it takes to commission full-scale, real plant operations is a true competitive advantage.

I will conclude this call with some remarks about our longer term outlook as well as some organizational realignment. But let me first turn the call over to Jeri and then Steve for a brief overview of our financial results.

Jeri?

Thank you, John, and good afternoon.

Our reported financials continue to reflect our transition from technology development to commercial operations. As we gain experience, modify production and continue to tighten spending, we are beginning to improve our production costs as well as our R&D and SG&A expenses. This path should enable Amyris to begin to report more mature financials as the year progresses, reflecting lower production costs and lower expenses.

Regarding revenue, product revenue from the sale of ethanol and reformulated gasoline by Amyris Fuels, or AFL, decreased by $12.3 million, to $23.9 million, as we wind down operations toward a midyear cessation of this subsidiary. Our revenue from the sale of Amyris renewable squalane and diesel increased from $700,000 last quarter to $2.4 million this quarter. As John indicated, these sales were limited by our holding inventory to be able to finish these products more economically at higher volume.

Our cost of products sold for our AFL products decreased commensurate with revenue. Our production volume of Amyris renewable products increased during the quarter by 29% without a material increase of cost of products sold. In addition to these expenses, we booked a period expense of $36.7 million related to the change in manufacturing strategy that John addressed earlier. Approximately half of this charge was caused by our decision to defer base oil production at Albemarle into the 2013 to 2014 time frame, and the balance resulted from our decision to modify the farnesene production plant at the remaining CMO. First quarter accrual will benefit future production costs through the early realization of expense associated with certain purchase commitments and assets.

During the quarter we continued to take steps to lower our operating expenses. Excluding stock-based expenses, one-time accruals and restructuring charges associated with headcount reduction, our combined R&D and SG&A expenses decreased by approximately 7% over last quarter.

Regarding cash, we raised significant funding during the quarter from an equity raise and a convertible debenture. These funds were critical to supporting our capital projects, including keeping Paraiso on track and resolving open Sao Martinho commitments to be able to pause that project. During the quarter, approximately $22 million of our cash was applied toward capital purchases and $62 million in net cash used in operating activities.

Our quarterly payment from Total arrived a day too late to be counted in the quarter, as we would normally expect. Had that payment been received as usual, the net cash used in operating activities would have been closer to $45 million and our cash balance commensurately higher.

In addition to our cash on hand, we expect additional inflows from ongoing and new collaborations, and we continue to expect receipt of project funding from the Brazilian Development Bank, or BNDS, for Paraiso. To further support our growth, we will continue to look for additional funding for the Company. While we are considering a broad range of financing sources, our current focus is on adding new collaborations, where we have advanced discussions underway, and on other forms of funding from our strategic partners.

Now I'd like to turn the call over to Steve.

Thank you, Jeri, and good afternoon.

I've been at Amyris for just about a week now but can say that my fundamental belief in Amyris technology, both its current state as well as its potential, remains just as strong as when I agreed to join this team. As you can appreciate, I'm doing a great deal of listening and learning. While I'm still reviewing in detail Amyris' financials, its technology and its market opportunities, I expect to be able to leverage my experience in production and execution to help take Amyris to the next stages in its evolution. We have much work ahead of us, but I'm impressed with the strong foundation Amyris has built, from R&D to manufacturing and commercialization.

I look forward to meeting many of you in the coming weeks, as time permits.

John?

Thank you, Jeri, and thank you, Steve.

Before we take your questions, I'd like to make two comments.

While we face headwinds, our commitment remains the same -- to deliver on profitable, predictable production; deliver on our technology targets to reduce the production costs of farnesene; and deliver on core product market leadership, initially with squalane in cosmetics, niche fuel opportunities, fragrance oils in flavors and fragrances and farnesene for liquid polymers and oxygen scavengers.

Continued success in these markets will pave our way to larger markets and more significant impact in diesel, jet fuel and base oils. Amyris is committed to a business model of partnerships to capitalize on these significant but longer term value opportunities in these large-volume commodity markets.

With this focus, we have production in place, a clear product pipeline and customers to support our planned growth through 2016. Our priority is to execute on this plan, starting with Paraiso and then Sao Martinho to underpin our volume needs.

My second comment is about people. We have grown significant depth in the talent of Amyris. In any growing organization there is a need for constant adjustments. I have undertaken a reorganization of Amyris' senior leadership team as we focus on high-value products and executing on our current production strategy. Amyris has been fortunate in not just attracting top talent but also to build a remarkable team from within, which is where I drew most of our senior leadership team today.

I am also honored to announce that for the next year Art Levinson has agreed to become Chairman of the Board. Art's experience in building Genentech is very relevant to helping guide Amyris. I sincerely appreciate his increased role.

I am also pleased to announce that Dr. Geoff Duyk has agreed to take on the Board seat vacated by Samir Kaul. Geoff, of TPG, has a successful track record in building high-growth companies and was an early investor in Amyris.

[Corinna], would you please open the line for questions?

Thank you.

(Operator Instructions)

And first we'll go to Vishal Shah, with Deutsche Bank.

Yes, hi, thanks for taking my question. John, I wanted to just understand your cost structure. I know you gave the ASP number for the quarter. I was just trying to understand what your cost, production costs were currently.

Yes, we're not actually making that public, mainly for competitive reasons as well as our customer relationships. What we can tell you is since the start of our industrial production our costs today are 43% of when we started, and they are continuously declining based on process improvements, and we have a clear path to what our targets for cost look like by the end of this year.

Okay, great. And then as you look at your production volumes you said you had a nice increase in farnesene production in the quarter, how's your monthly run rate looking right now compared to the beginning of the year, and what should we assume your volumes will look like as you exit the year?

Our efficiency and volumes have continued to improve. I mean, it's almost week-on-week improvements. And we have good visibility. We know what projects, what activities we are doing and need to do to continue that. But I want to caution. Like I mentioned during the call, we expect lower production volumes in the second half of the year, not because of efficiency but really because of concentrating on the highest ASP markets and really putting all of our resource and effort into the commissioning of Paraiso. We will have a successful plant in Paraiso, and we want our best skill and talent, who's gained tremendous experience in what it takes to commission and scale up, really focused on the Paraiso project. So, as a result, again, we're focusing down the footprint in manufacturing and really prioritizing highest ASP and then resources to get Paraiso up successfully.

Okay, great. Thank you.

Next we will go to Rob Stone, with Cowen & Company.

Hi. I'm also going to follow up on the cost question. It sounds like if we read into the lower production volume that one of the issues is that you're shipping product at a loss and you probably are going to be doing that all year. Is that the right assumption?

What I would say, Rob, and, by the way, good afternoon, Rob, what I would say is we expect to see costs continue to come down through the year, and we expect that most of our applications, or at least some of our applications, should become profitable as we approach the end of the year.

So a positive growth margin in some applications by year end.

Correct.

Okay. On the CMO situation, it wasn't quite clear. You're going to shut down one of three, or if you could just elaborate on that in terms of what you're cutting back.

Yes, no, Rob, I'm happy to do that. We are going to shut down one of the two international ones, two international meaning -- I think of international as outside of Brazil. So, it's one of the two outside of Brazil. We will be staging down to a close. And then the Brazilian site, Biomin, we will continue to use, to have limited use and really focus on process development and other activities at that site that we take a majority of the resource from that site and put it into commissioning of Paraiso.

Okay. And you talk about the technology is working and costs are improving. What is it that contributes mostly to the excess of cost over selling price now? Is it the fact that you're producing at such low volume, or are you getting less yield? Are you getting less effective separation? Any more color you would provide on what's holding you back would be helpful.

Yes, no, good question, Rob, and I'll try to break it down into the three, right? One is just the fact that we're moving less volume over the fixed costs we have at some of these sites, and that's actually driving us to concentrate so that we maximize volume through one site rather than divide across three.

The second one is it's taken us a lot of learning to be able to really get the strains to perform as well as we know they can, as well as they have in our environment, and most of that's been process. How do you get the process right to get the strains to perform best? So there's a piece of it that's about strain performance. But, again, that has improved dramatically since we started production, and we continue to see visibility in those continued improvements through year end.

And the third is exactly your point. It's the separation. The separation is probably the one that has taken the longest for us to be able to achieve our target, what I'll call target recovery yield, and we're now seeing that reached or about to be reached across our sites. So that's why we feel very good about the production stability. It actually has been issues across all three of those -- the strain performance, which is not necessarily the strain but the fermentation process that we're putting the strain in; recovery yields, which is all about process improvement; and then utilization, that's really been a fixed-cost overhang across our volume.

On the second of the three, the strain performance, I thought you said in your prepared remarks that the technology was performing the same way at scale as it had in the various stages of scaleup that you've executed to now. So, what is it that surprised you vis-a-vis the performance when you tried to run it at higher volume?

Getting the perfect process at the tanks. I mean, the way I would describe it is matching feedstock, fermentation conditions, everything from the aeration, temperature, all the elements that you -- kind of knobs that you turn to get the process right, and then kind of the recovery process. Getting that whole system tuned at a site is kind of what we've learned is the most critical part to commissioning and starting up a site.

We've been able to replicate. We've been able to take learnings and actually apply them in the lab and then replicate the strain performance in the lab and at scale, and most of the time has been spent in tuning that process getting the maximum performance out of the strain. Once the process is tuned, then it's repeatable, which is exactly what that startup time is all about, and, really, the time is to consistency. Can you get the performance repeated? Yes. Can you get it to be consistent? That's about turning the knobs and tuning. And then once you get it consistent, then it works very well, which is exactly what we've discovered over the last six to nine months.

Okay. One final housekeeping question for Jeri. You expect to have Amyris Fuels revenue in the second quarter, and then it's done for the year, or how should we think about it?

We do. We will have revenue in the second quarter and will be winding it down right around the end of the year -- middle of the year, sorry.

Great. Thank you.

And next we'll go to Pavel Molchanov, with Raymond James.

Hey, guys. Thanks for taking my question. Can you share with us the Company's total headcount and how it changed since the beginning of the year?

We've dropped -- over the last quarter we've dropped headcount by about 40 employees, going -- I think we're around 450, but let me just quick check. We ended the quarter with 453. At the end of December we were at 493.

Okay. That's helpful. And then, as you're looking at Sao Martinho being kind of a possible future project, when would you anticipate making a decision on that, and what do you need to see operationally before you can pull the trigger on it?

Pavel, two simple criteria. I mean, the first is just a reference point. Sao Martinho is over 40% complete as we speak. So it's not a, "Let's start the project." It's well underway. We have paused it, in agreement with our partner, and our partner and us are actually quite committed to a very simple standard, which is we'd like to see about six months of consistent production coming out of Paraiso before we restart.

Six months from Paraiso before you restart Sao Martinho's expansion.

Correct.

Okay. And any sense of when the anticipated startup of Sao Martinho might be, or presumably, well, clearly not this year, but 2013 or 2014?

Pavel, the way I would look at it is, end of 2014, beginning of 2015 production would be perfect in our profile. And I think it's important to highlight based on our core market focus and our ASPs, we actually look at the total volume from Sao Martinho and Paraiso underpinning our growth between now and 2016. So our focus here is get Paraiso up, do it really well, ensure we have great success in the production and costs, use the CMOs to fill volume, any volume gap between what Paraiso makes and meeting the demand from our customers on these high-ASP markets, and then bring in Sao Martinho at the end of that cycle, which, again, we expect to be second half, late 2014, beginning 2015.

Okay. Appreciate it, guys.

Moving on to Mike Ritzenthaler, with Piper Jaffray.

Good afternoon, guys. With the recent management restructuring, do you feel that you now have the team in place and have filled any gaps that have surfaced over the previous six to 12 months?

What I would say is we have the team in place in critical roles, and we're continuing to focus on functions at the operating level that are critical to execute, again, really on the production side. But I'd say in general we have the team in place.

Okay, but were there any gaps that you identified that are now filled that maybe weren't before?

I'd say the main gaps are really about a very clear operational and execution focus versus a bias towards more general R&D and commercial development, and that's really just to simply say, as we look at what we need to do over the coming three or four years, we don't need a lot of new deals. We need great execution on our current footprint, both on the production side and on the product roadmap to market. So that's kind of what we did some of the realignment is really put in a strong focus on execution and operations.

Okay. And then if you could just go through one more time on the jet fuel application. How far away is the field testing? You had said that there's some ASTM certification that has to happen beforehand. Can you just outline that for us one more time?

I would say the flight that we described in the call is during this year, and then the certification is in the next one to two years.

Okay. And then a balance sheet question. Jeri had kind of alluded in her comments about other potential sources of funding. I guess the $100 million that's on the balance sheet right now, is that (inaudible) that that's going to be enough to get you to cash flow break-even. Is there any sort of a sense for what some new infusion of capital might look like?

Good question, Mike. I'll take this, and maybe Jeri can jump in. I think as Jeri mentioned we are in very active discussions with collaborations and strategic partners, and we expect that to be the main source of funding to cash break-even. And then anything else that's needed we'll find some alternative sources to be able to fill that. But the main source we see coming from partnership and collaborations.

Okay. Thanks.

Next we'll go to Ben Kallo, with Robert W. Baird.

Hi, John. Hi, Jeri. Welcome, Steve.

Thank you.

I just first wanted to ask about you mentioned some costs associated with Albemarle, and could you just elaborate on that a little bit?

Sure. As we worked with Albemarle to build a base oil manufacturing facility we put in place some capital investments and some other commitments. Because we have chosen to defer that, that triggers accounting rules that require us to take a charge. So about half of the charge that we took this quarter related to the $36.7 million, about half of it came from the change of timeline with Albemarle.

This is, I mean, just to build on Jeri's point, this is all in line with the statements we made earlier in the year that it's going to take us longer to get to good economics on the base oil business, and, as a result, we're going to be much slower in ramping up the base oil business, first point. Secondly, we're going to do the ramp-up of the base oil business with our partner Cosan in the Novvi joint venture. So, the result of this is we now have capacity in place. We have validated the core process to make the product, but we're not going to be -- we're not using that capacity for the next couple of years, which is why putting the charge-out now, and then, as Jeri mentioned, we should be able to benefit from that later, when we can use that capacity.

Great. And then, John, could you just update us on the Total relationship and the potential JV there?

Yes, we're continuing to work through the details of the JV. We both agree to extend the timing to complete that agreement, and, again, we should be complete in the foreseeable future, and we'll keep you updated as the timing of that becomes clearer.

Now, do you still expect a capital contribution by Total when that's completed?

Yes. There's actually a couple of pieces of capital contribution, one that was part of the JV and another that was part of collaborations. And we're working towards getting both of those as part of our continued funding into the Company from Total.

Now, do they need to check the box with Paraiso being online, or are they comfortable enough to close the JV beforehand?

We expect to be able to complete our agreement, whatever the end structure is, well before Paraiso is complete.

Okay. And then, Jeri, what's the CapEx left on, or maybe you give it for the year, what your CapEx requirements are, or just for Paraiso, either way, however you want to do it?

We're not really giving guidance for the year. What I can tell you is that during the quarter we spent about $22 million on CapEx. A lot of that went toward Paraiso. We are in the second quarter nearing the end of our -- most of our capital spending on that project, and we'll also be receiving [debt]. What we previously disclosed was that we are in the final stages of [accrual] (technical difficulty) BNDS that we do expect to fund in the near future, and part of that we've already received as an advance, but there will still be some additional net funding as a result of that.

Okay. And my last question, as you wind down Amyris Fuels, should we be looking for any one-time charges related to that?

No, not at all.

Okay.

That's -- everything there is on a pretty month-to-month basis at this point.

Great. Thank you very much, guys.

Moving on to Colin Rusch, with ThinkEquity.

Hi, folks. It's Noah in for Colin. First question, what kind of target capacity does it make sense to think about to be able to call in from CMOs going forward?

Say that again, Noah.

What kind of target capacity levels should we be thinking about that make sense for you for the CMOs going forward? You mentioned they'd be supporting Paraiso. So what kind of capacity do you want to be able to drawn on?

Yes, I mean, our view, and this is not a perfect number, but just directionally, think of it as we're not looking for the CMOs to be 100% replacement volume for Paraiso, but we want it to be a bridge in volume at least in the foreseeable 12 to 18 months. So our target is to have available in a very efficient process and with a very efficient CMO where we have a good cost structure somewhere around 10 million liters of production.

Okay.

Now, I want to be clear. It's not that we would have that production. It is capacity, as Jeri just clarified. So it's 10 million liters of capacity, swing capacity, that we can turn on at any level as we need to meet customer demand.

And what kind of, let's say, lead time do you need to be able to turn on that capacity?

Well, what I'm really indicating is in the way we're realigning our footprint we're going to end up with that swing capacity available for us to turn on at any time.

Great. Great. And you had said, I think, in the last quarter you were about 50% utilization at your sites. Can you say what it was for Q1?

Yes, we're not reporting. What I can say is --

Sure.

-- through the quarter it improved very significantly, and we ended up in a much better place at the end of the quarter on all of our key metrics for site performance.

Yes, and last question, that 7% decline net of one-time items in OpEx, [does] that make sense as sort of continuing trajectory for the rest of the year, or should we be thinking something different?

I know that Jeri rightly will point to we're not providing any guidance going forward. And what I can tell you is as a result of continuously focusing our business where we have the highest value creation in these three segments over the coming years we will continue to work our cost base and improve it. So I would expect continued improvement, and we're not providing guidance as to what that looks like, exactly.

Okay. Thanks so much.

(Operator Instructions)

Next we'll go to Jeff Zekauskas, with JPMorgan.

Hi. Good afternoon. What was the cash burn in the -- or cash from operations in the first quarter?

Well, let me find it. $65 million, I think, but let me find it, Jeff. $61.8 million.

$61.8 million. And of that charge, the $37 million charge, how much will end up being a cash charge this year, and how much of that piece did you take in the first quarter?

What I can tell you is the short-term liabilities are at $11.2 million, $10 million was removed from other assets, and then the balance are long term and (inaudible).

Okay. And do you have to pay back that $29 million in current debt this year?

Current debt, some of it is repayable, yes.

Right, or you're doing that with -- you're repaying that with the financing from the Brazilian piece? Is that right?

Right. There was an advance on the BNDS debt.

Okay. And how much more Brazilian debt did you get, I'm sorry, after the close of the quarter that you said you didn't record on the balance sheet?

That was Total, Jeff.

Oh, that was Total. I'm sorry.

Total payment for collaboration. It wasn't debt. With the debt we're continuing to expect to have funding in the near term.

Okay. And, John, you said that the -- you were pleased with your production and that you were -- the efficiency of your production and that you were producing 200,000 liters what you were producing at two liters. So I think in the old days you aspired to something like 50 million liters of farnesene for a million tons of crush. So, is that the level, or is it half that, or a quarter that, or three-quarters of that? What's the general yield level you guys have now?

Yes, it is not that level, Jeff.

Yes.

And we're not actually providing guidance as to what that number is. And my indication was more related to as part of learning what it takes to make it operate at scale and then having the process replicated at two liter that's running at 200,000 liter we can now have perfect replication. So we know how to make the technology work at two and 200,000 liter consistently, and we still have quite a bit of improvement to go in getting the strains to be at the maximum or the target efficiency, which is the number you're quoting, Jeff.

Okay. And what you said, if I got the number straight, is you produced a little bit more than 900,000 liters in Q1, and I think that you said in the second half you thought that you would produce less than you produced in the first half, so order of magnitude you'll produce 2 million liters in the first half and you'll produce a little bit less in the second half? Is that the general idea?

That was a quarter number.

Yes.

And really the indication I was giving is don't assume it's going to be that 900,000 liters a quarter for the rest of the year.

Right. Okay. And so what you'll basically sell this year will be squalane. That will be the largest product by far.

No.

Okay, no? All right.

No, no, no. By far, niche diesel in Brazil will be our largest volume.

Okay.

Then second it would be squalane. And then third we have applications that are in the process of either scaling or being developed where there are sample volumes required to complete the development or the scale-up of those applications.

Okay. And then, lastly, one of the other callers asked about CapEx. I'm a little puzzled as to why you don't want to forecast your CapEx this year.

We've given the range for the plant of being around $50 million to $60 million. Paraiso right now is our only active large project, and we did in addition to what we're spending on Paraiso have some expenditures at Sao Martinho. But we really are not at the point of giving piece-by-piece guidance on some things. So I think that's really why we're not giving you a direct answer to your question.

Okay. Great. Thanks very much.

Thanks, Jeff.

And those are all the questions we have. I'll now turn the call back over to John Melo for any additional or closing remarks.

Great. Thank you, [Corinna].

In closing, we are executing on the strategy shared with you earlier in the year, focusing the Company in core high-value markets, aligning our own manufacturing with the highest ASP to support our focused strategy going forward as we transition from a business solely reliant on contract manufacturing to commissioning our wholly owned industrial-scale renewable farnesene plant in Brazil, Paraiso. And I look forward to updating you next quarter on our results for the second quarter in volume, ASPs and executing on our strategy for both Paraiso scaleup as well as new products to market. Thank you.

This does conclude today's conference. We do thank you all for joining us.