Report

Origin Materials reports operating and financial results for first quarter 2024

2024-05-15 4:52 min Management

Origin Materials, Inc. West Sacramento, California, United States

Reaffirms Pathway to Profitability Led by Caps & Closures, No Additional Equity Capital Required
Accelerates the Procurement of Multiple Additional High-Throughput Caps and Closures Production Lines
Completes Successful Capping Trial on Commercial Bottle Line Applying Origin Recycled PET Caps to Thousands of Filled Containers
Maintains 2024 Revenue and Net Cash Burn Guidance

Origin Materials, Inc. announced financial results for its first quarter ended March 31, 2024.

“Over the quarter, we have seen strong progress on our pathway to profitability, led by our groundbreaking PET caps and closures business,” said Rich Riley, Co-Chief Executive Officer of Origin. “We announced a few of our caps and closures manufacturing partners including PackSys Global and IMDvista, and we continued to make excellent progress with prospective and as yet unannounced customers who are excited about our revolutionary caps offering and the benefits it brings for recycling circularity and performance. In addition, today we are announcing that we have accelerated the procurement of multiple additional high-throughput commercial production lines to complement the first line, which we already ordered. We aim to bring our first manufacturing system online during the fourth quarter 2024. At full capacity, our initial systems are expected to generate between $45 million and $65 million in annual revenue. The caps and closures opportunity is massive – an over $65 billion market – with currently engaged prospective customers alone consuming tens of billions of caps per year. We look forward to rapidly standing up additional lines addressing multiple product types, including tethered beverage caps and caps for non-beverage home goods applications. We are also pleased to announce another technical milestone passed with the completion of a successful capping trial on a commercial bottle line applying Origin PET caps – made with recycled PET – to thousands of filled beverage containers.”

“Apart from our caps and closures business,” Riley continued, “we continue to grow the long-term value of the Origin platform by engaging potential strategic partners around the scale-up of our biomass conversion technology, including exploring high value application development initiatives that could generate near term revenue. Last, but certainly not least, this quarter we were pleased to convert sustainable wood residues at Origin 1 into our versatile intermediates. This milestone in the scale-up of our biomass conversion technology generates valuable information to support future technology scale-up and provides an important demonstration for our customers of our technology’s performance. All of this is exciting progress for our customers and team as we continue to execute in our mission to drive the once in a planet transition to sustainable materials.”

Company First Quarter and Recent Business Highlights

Origin Materials reported quarterly revenue of $6.8 million generated by the Company’s supply chain activation program and joint development agreements. The Company also made significant progress in commercializing its caps and closures business. Origin announced its PET caps and closures business in August 2023 after quietly developing it for several years. This is a natural outgrowth of Origin's mission and its polymer expertise and platform development capability, positioning Origin to be first to market with a commercially scalable PET cap. We anticipate our solution to be transformative for packaging by designing for recycling circularity and improving packaging performance. Recent progress includes:

Partnership with PackSys Global, the leading packaging machine producer for plastic closure slitting machines, to produce the world’s first PET cap and closure manufacturing system. PackSys Global is a respected leader in packaging machines for the cosmetics, beverage, pharmaceutical, and packaging industries with facilities in North America, Europe, and Asia that has operated for over fifty years.
Partnership with IMDvista, a global leader in high-speed testing systems, headquartered in Switzerland with locations around the world including the United States, Germany, and Taiwan with systems in use on every continent. IMDvista manufactures advanced camera systems that inspect thousands of closures per minute and which are expected to give Origin the ability to inspect billions of caps per year.
Announced our first caps and closures product, the world’s first CSD (carbonated soft drink) PET cap, the lightest of its kind ever produced at commercial scale.
Announced the first tethered PET cap, a breakthrough in circularity, designed to improve cap collection rates for recycling.
We have accelerated the procurement of multiple additional high-throughput commercial production lines to complement our first line, which is already purchased. We aim to bring the first of these manufacturing systems online during the fourth quarter 2024. At full capacity following ramp-up, our initial systems are expected to generate between $45 million and $65 million in annual revenue depending on product mix.
We achieved another technical milestone with the successful completion of a capping trial on a commercial bottling line applying Origin PET caps to thousands of filled beverage containers. We used recycled PET (rPET) with no additives used to modify the polymer.

Additional first quarter commercialization updates include:

We announced the successful conversion of wood residue feedstock into sustainable intermediates at Origin 1, our first commercial-scale plant. This marked an evolution from the corn starch-based production we have employed since commencement of plant operations in October of last year. We are using locally sourced, Forest Stewardship Council (FSC) controlled wood residues produced by a sawmill as a byproduct of lumber and wood flooring production. From that mill’s wood chips, shavings, and sawdust we produced our sustainable intermediates, which can be used to make a wide variety of products that normally would be made from petroleum. The plant, located in Sarnia, Ontario, Canada, is first and foremost an asset used to support Origin market development, including customer materials testing and formulation in preparation for Origin 2 scale-up. Strategic partners remain engaged as we collaborate in market development activities.
For Origin 2, we continue to engage customers as part of our asset light strategy for further biomass conversion technology scale up. Timelines and economic forecasts will depend on the partner and the deal structure, which can explore a range of scenarios and locations including Geismar, Louisiana as well as Asia brownfield scenarios, with updates to be provided as we finalize those partnerships. Despite near-term macroeconomic challenges, to which the Company is adapting through less capital-intensive revenue generating initiatives, customer demand remains strong, as reflected by our total offtake agreements and capacity reservations in excess of $10 billion. We continue to engage with multiple parties to explore a variety of plant designs and evaluate potential brownfield sites. We continue to perform funded joint development work including testing and optimizing various feedstocks to generate information that could influence our scale-up strategy.

Results for First Quarter 2024

Cash, cash equivalents and marketable securities were $146.6 million as of March 31, 2024.

Revenue for the first quarter was $6.8 million compared to $1.7 million in the prior-year period, driven mostly by our supply chain revenue.

Operating expenses for the first quarter were $18.1 million compared to $13.0 million in the prior-year period, an increase of $5.1 million consisting primarily of $2.3 million increase in general and administrative expenses and $2.0 million increase in depreciation expenses driven by Origin 1 coming online during the fourth quarter of 2023.

Net loss was $13.9 million for the first quarter compared to net income of $9.8 million in the prior-year period.

Adjusted EBITDA loss was $12.9 million for the first quarter compared to $9.7 million in the prior-year period.

Shares outstanding as of March 31, 2024 were 146.5 million including 4.5 million shares that are subject to forfeiture based on share price performance targets previously disclosed in our filings.

For a reconciliation of non-GAAP figures to the applicable GAAP figures, please see the table captioned ‘Reconciliation of GAAP and Non-GAAP Results' set forth at the end of this press release.

Full Year 2024 Outlook

Based on current business conditions, business trends and other factors, the Company is maintaining the following guidance for 2024 revenue and net cash burn: