TerraVia Reports Fourth Quarter and Full Year 2016 Results

SAN FRANCISCO–(BUSINESS WIRE)–TerraVia (NASDAQ:TVIA), a next-generation food, nutrition and specialty
ingredients company and pioneer in algae innovation, announced today
results for the fourth quarter and full year ended December 31, 2016.

“2016 proved to be a defining year for TerraVia in streamlining around
food, nutrition and specialty ingredients,” said Apu Mody, CEO of
TerraVia. “The unique ability of our proprietary ingredients to address
the growing demand for healthier and more sustainable products is
gaining momentum in food, aquaculture, animal nutrition and specialty
personal care. We have sharpened our focus around commercialization of
several high-potential products that we expect will position TerraVia
and the SB Oils JV to achieve accelerated growth and profitability. The
AlgaPrime DHA expansion announced with BioMar and Bunge
today is a key step in that direction.”

Results for the fourth quarter and full year highlight early progress in
TerraVia’s refined strategic focus on food, nutrition and specialty
ingredients. Recent developments include:

  • Success of AlgaPrime DHA in Aquaculture Market Drives
    Increased Commercial Distribution
  • TerraVia and Bunge Announce Seafoodia to Bring AlgaPrime
    DHA to EU Animal Nutrition Market
  • TerraVia Appoints Food Industry Veteran Irene Chang Britt as
    Chairperson of the Board of Directors
  • Thrive® Algae Oil Recognized by Consumers and Influencers
    for Exceptional Health and Culinary Benefits
  • TerraVia’s Whole Algal Protein Gains Regulatory Approval from Health
    Canada Expanding Whole Algae Ingredients Approval Across North America
  • TerraVia Announces Third Circuit Affirms Arbitration Award in
    Proceedings with Roquette Frères, S.A.

Financial Review

Financial results for the fourth quarter and full year of 2016 reflect
progress in the Company’s transition to food, nutrition and specialty
ingredients, and include the recently completed sale of a majority
interest in the Algenist premium skin care line, which has been treated
as a discontinued operation for prior periods.

Total revenue was $4.8 million compared with $5.4 million in the fourth
quarter of 2015. GAAP net loss narrowed to $27.1 million for the fourth
quarter of 2016, from a net loss of $34.7 million in the prior year
period as the Company begins to benefit from reductions in cash
operating expenditures. On a non-GAAP basis, the net loss also declined
to $18.3 million for the fourth quarter of 2016, compared with net loss
of $24.7 million in the prior year quarter.

Total revenue was $18.5 million compared with $22.9 million in the full
year 2015. GAAP net loss narrowed to $101.6 million for 2016, from a net
loss of $141.4 million in the prior year as the Company begins to
benefit from reductions in cash operating expenditures. On a non-GAAP
basis, the net loss also declined to $80.5 million for 2016, compared
with net loss of $116.3 million in the prior year. A reconciliation of
GAAP to non-GAAP net loss is included in the financial tables appended
to this press release.

Excluding intercompany transactions, revenues from the 50.1% owned
unconsolidated SB Oils JV totaled $4.3 million for the fourth quarter
and $9.8 million for the full year versus $1.5 million in the fourth
quarter of 2015 and $3.1 million for the prior year.

“We are pleased to have met our guidance provided on the Q3 earnings
conference call. We ended the year with operational and commercial
momentum, including the highest recorded revenue out of the SB Oils JV
since its formation,” commented Tyler Painter, COO and CFO of TerraVia.
“By aggressively managing our costs, focusing our commercial efforts,
and engaging in strategic work with Rothschild, we are actively pursuing
initiatives to maximize value for all of our stakeholders.”

Conference Call

TerraVia Holdings, Inc. will hold a conference call for investors on
March 8, 2017 at 1:30 p.m. PT (4:30 p.m. ET). Investors may access the
call by dialing 973-409-9250. A live webcast of the call will be
available on the Investors section of www.terravia.com.
A recording of the call will also be available by calling 404-537-3406;
access code 73754339 beginning approximately two hours after the call,
and will be available for one week. A webcast replay from today’s call
will also be available on the Investors section of www.terravia.com
approximately two hours after the call and will be available for up to
thirty days.

About TerraVia

TerraVia is a plant-based food, nutrition and specialty ingredients
company that harnesses the power of algae, the mother of all plants and
earth’s original superfood. With a portfolio of breakthrough ingredients
and manufacturing, the Company is well positioned to help meet the
growing need of consumer packaged goods and established and emerging
food manufacturers to improve the nutritional profile of foods without
sacrificing taste, and to develop select consumer brands. The Company
also manufactures a range of specialty personal care ingredients for key
strategic partners. Headquartered in South San Francisco, the Company’s
mission is to create products that are truly better for people and
better for the planet. For additional information, please visit
TerraVia’s website at www.terravia.com.

TerraVia, Thrive®, AlgaPrime™, the TerraVia logo
and other trademarks or service names are the trademarks of TerraVia
Holdings, Inc.

Non-GAAP Financial Measures

This press release includes the following financial measure defined as a
“non-GAAP financial measure” by the Securities and Exchange Commission:
non-GAAP net loss. This measure may be different from non-GAAP financial
measures used by other companies. The presentation of this financial
information, which is not prepared under any comprehensive set of
accounting rules or principles, is not intended to be considered in
isolation or as a substitute for the financial information prepared and
presented in accordance with generally accepted accounting principles.
For a reconciliation of this non-GAAP financial measure to the nearest
comparable GAAP measure, see “Reconciliation of GAAP to Non-GAAP Net
Loss” included in the tables to this press release.

This non-GAAP measure is provided to enhance investors’ overall
understanding of TerraVia’s current financial performance and TerraVia’s
prospects for the future. Specifically, TerraVia believes the non-GAAP
measure provides useful information to both management and investors by
excluding certain expenses that may not be indicative of its core
operating results and business outlook.

For its internal budgeting process, TerraVia’s management uses financial
measures that do not include stock-based compensation expense,
restructuring expense, or special expenses such as non-cash gains or
losses related to derivative liabilities, amortization of debt discount
and issuance costs, and income (loss) from discontinued operations. In
addition to the corresponding GAAP measure, TerraVia’s management also
uses the foregoing non-GAAP measures in reviewing the financial results
of TerraVia. TerraVia excludes stock-based compensation expenses, debt
conversion expenses, income tax benefit, and special non-cash charges
from its non-GAAP measures primarily because they are non-cash expenses
that management does not believe are reflective of ongoing operating
results.

Forward Looking Statements

This press release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
about TerraVia, including statements that involve risks and
uncertainties concerning: its strategic, product, commercialization and
production plans and market opportunities; its transition of corporate
strategy; its ability to manage its costs; its ability to maximize value
for stakeholders; its ability to raise additional capital and/or
recapitalize its outstanding convertible senior subordinated notes; and
its ability to maintain its relationships with its partners. When used
in this press release, the words “will”, “expects”, “intends” and other
similar expressions and any other statements that are not historical
facts are intended to identify those assertions as forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Any such statement may be influenced by a variety of
factors, many of which are beyond the control of TerraVia, that could
cause actual outcomes and results to be materially different from those
projected, described, expressed or implied in this press release due to
a number of risks and uncertainties. Potential risks and uncertainties
include, among others: TerraVia’s limited operating history; its limited
history in manufacturing and commercializing products; the successful
transition to a new chief executive officer; production management
risks; implementation risk in deploying new technologies; its limited
experience in constructing, ramping up and operating commercial
manufacturing facilities; its ability to successfully develop and
commercialize products; its ability to sell its products at a profit;
delays related to ramp-up and optimization of production facilities;
availability of consistent, reliable power and steam; its ability to
manage costs; its ability to enter into and maintain strategic
collaborations; successful product trials by its customers and market
acceptance and adoption of its products by end-users; its ability to
obtain requisite regulatory approvals; its access, on favorable terms,
to any required financing; and its ability to successfully transition
its corporate strategy. Accordingly, no assurances can be given that any
of the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do so, what impact they will have
on the results of operations or financial condition of TerraVia.

In addition, please refer to the documents that TerraVia Holdings, Inc.
files with the Securities and Exchange Commission, including its Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q, as updated from
time to time, for a discussion of these and other risks. You are
cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date of this press release. TerraVia is not
under any duty to update any of the information in this press release.

       
TERRAVIA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands, except per share amounts
(UNAUDITED)
 

Three Months Ended
December 31,

Year Ended
December 31,

2016   2015 2016   2015
Revenues
Product revenues $ 617 $ 2,045 $ 3,483 $ 10,022
Research and development programs   4,219     3,348     14,999     12,831  
Total revenues 4,836 5,393 18,482 22,853
 
Costs and operating expenses
Cost of product revenues 2,218 2,788 5,256 10,563
Research and development 6,901 9,586 31,116 48,094
Sales, general and administrative 10,096 14,075 43,741 62,041
Restructuring charges   (43 )   4,581     1,412     4,953  
Total costs and operating expenses 19,172 31,030 81,525 125,651
       
Loss from continuing operations before other income (expense) (14,336 ) (25,637 ) (63,043 ) (102,798 )
 
Other income (expense)
Interest and other income (expense), net (2,544 ) (3,288 ) (11,797 ) (13,196 )
Debt conversion expense (4,743 ) (9,770 )
Loss from equity method investments (5,783 ) (4,098 ) (22,391 ) (22,389 )
Gain (loss) from change in fair value of derivative liabilities       (26 )   82     1  
Total other income (expense), net   (13,070 )   (7,412 )   (43,876 )   (35,584 )
Loss from continuing operations before income taxes (27,406 ) (33,049 ) (106,919 ) (138,382 )
Income tax benefit   (223 )       (2,062 )    
Loss from continuing operations (27,183 ) (33,049 ) (104,857 ) (138,382 )
Income (loss) from discontinued operations   71     (1,644 )   3,301     (3,065 )
Net loss $ (27,112 ) $ (34,693 ) $ (101,556 ) $ (141,447 )
Net loss per share, basic and diluted
Continuing operations $ (0.30 ) $ (0.41 ) $ (1.22 ) $ (1.73 )
Discontinued operations   0.00     (0.02 )   0.04     (0.03 )
Net loss per share, basic and diluted $ (0.30 ) $ (0.43 ) $ (1.18 ) $ (1.76 )
 
Weighted average number of common shares used in net loss per
share computation – basic and diluted
91,582 80,600 85,952 80,165
 
       
TERRAVIA HOLDINGS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET LOSS AND NET LOSS PER SHARE
In thousands, except per share amounts
(UNAUDITED)
 

Three Months Ended
December 31,

Year Ended
December 31,

2016 2015 2016 2015
GAAP Net loss $ (27,112 ) $ (34,693 ) $ (101,556 ) $ (141,447 )
Encapso assets write off included in cost of product revenues 1,348 1,348
Operating expenses includes costs as follows:
Research and development 640 967 2,623 4,562
Sales, general and administrative   1,849     2,114     8,827     10,052  
Total stock-based compensation expense 2,489 3,081 11,450 14,614
Restructuring charges (43 ) 4,581 1,412 4,953
Other income (expense) includes costs as follows:
Amortization of debt discount and issuance costs 591 654 2,560 2,554
Debt conversion expense 4,743 9,770
(Gain) loss from change in fair value of derivative liabilities 26 (82 ) (1 )
Income tax benefit (223 ) (2,062 )
(Income) loss from discontinued operations   (71 )   1,644     (3,301 )   3,065  
Non-GAAP Net loss $ (18,278 ) $ (24,707 ) $ (80,461 ) $ (116,262 )
 
GAAP Net loss per share – basic and diluted $ (0.30 ) $ (0.43 ) $ (1.18 ) $ (1.76 )
Encapso assets write off included in cost of product revenues 0.01 0.02
Stock-based compensation expense 0.03 0.04 0.13 0.18
Restructuring charges 0.05 0.02 0.06
Amortization of debt discount and issuance costs 0.01 0.01 0.03 0.03
Debt conversion expense 0.05 0.11
Income tax benefit (0.03 )
(Income) loss from discontinued operations       0.02     (0.04 )   0.04  
Non-GAAP Net loss per share – basic and diluted $ (0.20 ) $ (0.31 ) $ (0.94 ) $ (1.45 )
 
   
TERRAVIA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands
(UNAUDITED)
 
December 31, December 31,
2016 2015

Assets

 

Current assets

Cash, cash equivalents and marketable securities $ 64,031 $ 97,975
Other current assets 3,968 7,580
Current assets of discontinued operations       13,389  
Total current assets 67,999 118,944
Property, plant and equipment – net 22,674 25,996
Equity method investments 43,856 35,910
Other assets   1,180     1,122  
Total assets $ 135,709   $ 181,972  
 

Liabilities, convertible preferred stock
and stockholders’ deficit

 
Total current liabilities $ 16,287 $ 25,330
Other liabilities 1,395 1,102
Long-term debt   174,620     202,015  
Total liabilities   192,302     228,447  
Convertible preferred stock 25,653
Total stockholders’ deficit   (82,246 )   (46,475 )
Total liabilities, convertible preferred stock and stockholders’
deficit
$ 135,709   $ 181,972  

Contacts

TerraVia Holdings, Inc.
Corporate Communications:
Katie Ringer
press@terravia.com
or
JM
Strategic Communications Group
Jeff Majtyka, 646-776-0886
jeff@jmscgroup.com
Taylor
Krafchik, 646-776-0886
taylor@jmscgroup.com