Origin Materials, Inc. Reports Operating and Financial Results for Second Quarter 2023
– Origin 1 Initiated Start-Up, In-Line with Prior Guidance –
– FDCA Mass Production Moves Forward to Origin 2, Rather Than Origin 3 as Initially Planned, Due to Strong Commercialization Progress and Higher-Margin Opportunities –
– Origin 2 Outlook Updated; Phased Construction Plan Reduces Risk on Path to Profitability, with Phase 1 Start-Up Expected in Late 2026 to 2027, Phase 2 Start-Up Expected in 2028 –
– Origin to Supply Para-Xylene for Bio-PET to Customers Prior to 2030 Primarily Through Collaborations with
– Maintains 2023 Revenue and Adjusted EBITDA Outlook, Customer Demand Exceeds
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“In the second quarter, the Origin team continued to execute on our mission to enable the world’s transition to sustainable materials. In June, we announced that Origin 1, the world’s first commercial-scale plant to produce Origin’s intermediates – CMF, HTC, and oils and extractives – had initiated start-up. This is a major milestone in the deployment of our core technology platform, and we look forward to delivering materials to our customers and strategic partners. Since Origin became publicly traded in 2021, we have witnessed profound market shifts, presenting both opportunities and challenges. The greatest opportunity has been the commercialization of FDCA. Indeed, today we are pleased to announce that we are updating the product slate at our second commercial plant, Origin 2, to focus on the production of FDCA, for which we have seen much greater demand than anticipated, as we indicated in February. While we initially expected Origin 2 to primarily focus on para-xylene (‘pX’) production for bio-PET, we have made significant progress in FDCA product development and commercialization and we now plan to bring FDCA forward to Origin 2, rather than at our third planned commercial plant, Origin 3, as initially reported in 2021. FDCA is a highly strategic focus for our platform, as its applications tend to offer performance advantages, higher margins, and thus higher value uplift for our platform intermediate, CMF. Today we also face new challenges. As we first indicated in
Key Company Second Quarter and Recent Business Highlights
- Partnership with Sustainea Bioglycols, a joint venture between Braskem (NYSE: BAK) and Sojitz Corporation, centered on advanced bio-based materials produced using Origin’s technology platform and Sustainea’s bio-based glycol products and market expertise. As part of the partnership, Sustainea signed two multi-year capacity reservation agreements to purchase renewable chemicals from
Origin Materials , including bio-based PTA and bio-based FDCA.
- Partnership with Terphane, a global leader in specialty PET polyester films (“BOPET”), to produce sustainable, high-performance bio-polymer films. As part of the partnership, Terphane signed a multi-year capacity reservation agreement to purchase the advanced bio-polymer PEF for use in film applications, including food and beverage packaging and high-value industrial applications.
- Partnership with
Proman , a global leader in natural gas-derived products and one of the world’s largest producers of methanol, centered on low-carbon biofuel production utilizing Origin’s technology platform and Proman’s worldwide fuels capabilities and expertise. As part of the partnership,Proman andOrigin Materials signed an agreement to explore the production and global distribution of low-carbon biofuels.
Additional second quarter and recent business highlights include:
- Origin Materials Announces Startup of Origin 1, World’s First Commercial CMF Plant. New fundamental chemical building block, CMF, is expected to be available at commercial scale for the first time. Plant is designed to scale-up and deploy Company’s core technology platform, with a focus on funded joint development programs and qualifying materials for higher value applications.
Origin Materials and Husky Achieve Commercialization Milestone for Advanced Packaging. Recyclable PET polymer incorporating FDCA was successfully processed into preforms using Husky’s commercial-scale injection molding equipment and subsequently bottles. Origin’s novel hybrid polymer “PET/F” is expected to deliver enhanced performance compared with traditional PET and have up to 100% bio content.
- Origin Materials Creates Sustainable PET Bottle Caps, Enabling “All PET Mono-Material” Bottle and Cap Solutions, a Breakthrough in Recycling and Circularity. Origin’s patent-pending PET caps and tamper-resistant closures can be cost-competitively produced using recycled PET or bio-based PET. This “mono-material” makes “100% recycled PET” possible from cap to bottle and improves recyclability, because it is all one material, without the need for recyclers to separate caps from bottles. PET offers better oxygen and CO2 barrier than HDPE and PP, common cap materials.
- Origin Materials Announces Appointment of
Jim Stephanou to Board of Directors. Mr. Stephanou’s more than three decades of manufacturing, operations, and engineering experience enhances Board expertise.
Origin 2 Financing and Construction Update
For Origin 2, the Company is updating its previously disclosed capital budget and construction timeline. During the second quarter, Origin completed detailed assessments with its engineering partners and updated its capital project plan based on the results. Significant market shifts have presented both opportunities and challenges. Factors influencing the updated plan include:
- Significantly higher than anticipated demand for higher-margin products including FDCA, PEF, and liquid biofuels.
- Increased cost of labor, materials, process inputs, metallurgy (e.g., steel) due to volatile global materials markets, requiring engineering re-work.
- Inflation and higher interest rates.
- Higher costs due to COVID-related supply chain constraints and additional value engineering requirements that have extended project timelines.
The Company now expects Origin 2 to be completed in two phases, with Phase 1 estimated to be completed in late 2026 to 2027, and Phase 2 estimated to be completed in 2028, compared with our initial expectation for a mid-2025 completion. During Phase 1, the Company expects to achieve profitability from its oils and extractives stream. From this stream, Origin plans to produce a drop-in biofuel with potential applications including marine fuel and heat and power generation. Potential product benefits include improved energy density compared with existing renewable alternatives and the sustainability benefits of increased bio-content – value propositions expected to be in high demand given, among other things, the decarbonization goals set out by the
The Company continues to make progress developing new products and applications related to the design of Origin 2, including FDCA, PEF, PET/F, and liquid biofuels derived from our oils and extractives stream. Origin 2 production will focus primarily on FDCA, rather than pX for bio-PET as planned in early 2021. Apart from potential Origin 2 production, Origin plans to supply bio-pX to customers primarily through collaborations with strategic partners. Origin has been in active discussions with multiple strategic partners interested in licensing or co-developing low
The capital budget for Phase 1 of Origin 2 is expected to be up to
In January, Origin announced that the
Origin continues to work with leading financial institutions on other forms of traditional private financing and federal loan programs, including through the
Results for Second Quarter 2023
Cash, cash equivalents and marketable securities were
Revenue for the second quarter was
Operating expenses for the second quarter were
Net loss was
Adjusted EBITDA loss was
Shares outstanding as of
Full Year 2023 Outlook
Based on current business conditions, business trends and other factors, the Company is maintaining the following guidance for revenue and Adjusted EBITDA for fiscal year 2023:
- Revenue of
$40 million to$60 million
- Adjusted EBITDA loss of
$50 million to$60 million
For a reconciliation of a non-GAAP figure to the applicable GAAP figure, please see the table captioned ‘Reconciliation of GAAP and Non-GAAP Results' set forth at the end of this press release. These expectations do not consider, or give effect to, among other things, unforeseen events, including changes in global economic conditions.
Webcast and Conference Call Information
Company management will host a webcast and conference call on
Interested investors and other parties can listen to a webcast of the live conference call and access the Company’s second quarter update presentation by logging onto the Investor Relations section of the Company's website at https://investors.originmaterials.com/.
The conference call can be accessed live over the phone by dialing 1-855-327-6837 (domestic) or +1-631-891-4304 (international). A telephonic replay will be available approximately two hours after the call by dialing 1-844-512-2921, or for international callers, +1-412-317-6671. The conference ID for the live call and pin number for the replay is 10022002. The replay will be available until
About
Headquartered in
Non-GAAP Financial Information
To supplement the Company’s financial results presented in accordance with generally accepted accounting principles in
Non-GAAP financial measures are not defined under
The Company mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable
The Company is unable to reconcile forward-looking Adjusted EBITDA information provided in this press release to net income, the most closely comparable
For more information on this non-GAAP financial measure, please see the table captioned “Reconciliation of GAAP and Non-GAAP Results” set forth at the end of this press release.
Cautionary Note on Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding Origin Materials’ business strategy, estimated total addressable market, anticipated synergies from partnerships, access to financing sources, budget and timelines for Origin 2, ability to de-risk path to profitability, anticipated timing to profitability, anticipated benefits of and demand for our potential products and platform, higher margin opportunity for FDCA, benefits of updating the product slate at Origin 2, ability to convert capacity reservations and offtake agreements into revenue, commercial and operating plans, product development plans and announcements of such plans, anticipated growth and projected financial information and ability to realize the anticipated benefits of any partnerships discussed in the press release. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the management of
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
(In thousands, except share and per share data) |
(Unaudited) |
|
2022 |
||
ASSETS |
|
|
|
||
Current assets |
|
|
|
||
Cash and cash equivalents |
$ |
65,523 |
|
$ |
107,858 |
Restricted cash |
|
490 |
|
|
490 |
Marketable securities |
|
152,170 |
|
|
215,464 |
Accounts receivable |
|
7,280 |
|
|
— |
Other receivables |
|
6,815 |
|
|
4,346 |
Inventory |
|
346 |
|
|
— |
Derivative asset |
|
160 |
|
|
— |
Prepaid expenses and other current assets |
|
3,268 |
|
|
3,341 |
Total current assets |
|
236,052 |
|
|
331,499 |
Property, plant, and equipment, net |
|
220,807 |
|
|
154,183 |
Operating lease right-of-use asset |
|
2,479 |
|
|
2,779 |
Intangible assets, net |
|
142 |
|
|
160 |
Other long-term assets |
|
17,224 |
|
|
5,079 |
Total assets |
$ |
476,704 |
|
$ |
493,700 |
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities |
|
|
|
||
Accounts payable |
$ |
6,755 |
|
$ |
10,384 |
Accrued expenses |
|
4,355 |
|
|
8,414 |
Operating lease liability, current |
|
611 |
|
|
619 |
Other liabilities, current |
|
397 |
|
|
51 |
Derivative liability |
|
9 |
|
|
344 |
Total current liabilities |
|
12,127 |
|
|
19,812 |
|
|
|
|
||
Earnout liability |
|
22,386 |
|
|
42,533 |
|
|
7,345 |
|
|
7,185 |
Assumed common stock warrants liability |
|
26,249 |
|
|
30,872 |
Notes payable |
|
5,189 |
|
|
5,847 |
Operating lease liability |
|
1,962 |
|
|
2,249 |
Other liabilities, long-term |
|
8,943 |
|
|
8,297 |
Total liabilities |
$ |
84,201 |
|
$ |
116,795 |
|
|
|
|
||
STOCKHOLDERS’ EQUITY |
|
|
|
||
Preferred stock, |
|
— |
|
|
— |
Common stock, |
|
14 |
|
|
14 |
Additional paid-in capital |
|
377,059 |
|
|
371,072 |
Retained earnings |
|
25,077 |
|
|
21,772 |
Accumulated other comprehensive loss |
|
(9,647) |
|
|
(15,953) |
Total stockholders’ equity |
|
392,503 |
|
|
376,905 |
Total liabilities and stockholders’ equity |
$ |
476,704 |
|
$ |
493,700 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) |
||||||||||||
|
|
Three months ended |
|
Six months ended |
||||||||
(In thousands, except share and per share data) |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Revenues |
|
$ |
6,898 |
|
$ |
— |
|
$ |
8,602 |
|
$ |
— |
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
|
6,814 |
|
|
— |
|
|
7,774 |
|
|
— |
Operating expenses |
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
5,396 |
|
|
2,649 |
|
|
10,471 |
|
|
4,985 |
General and administrative |
|
|
8,619 |
|
|
5,864 |
|
|
16,275 |
|
|
10,935 |
Depreciation and amortization |
|
|
347 |
|
|
160 |
|
|
635 |
|
|
308 |
Total operating expenses |
|
|
14,362 |
|
|
8,673 |
|
|
27,381 |
|
|
16,228 |
Loss from operations |
|
|
(14,278) |
|
|
(8,673) |
|
|
(26,553) |
|
|
(16,228) |
Other income (expenses) |
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
2,426 |
|
|
1,936 |
|
|
5,440 |
|
|
3,768 |
Interest expenses |
|
|
(2) |
|
|
— |
|
|
(2) |
|
|
— |
Gain (loss) in fair value of derivatives |
|
|
(266) |
|
|
1,430 |
|
|
494 |
|
|
596 |
Gain (loss) in fair value of warrants liability |
|
|
(2,143) |
|
|
18,803 |
|
|
4,623 |
|
|
17,029 |
Gain in fair value of earnout liability |
|
|
7,508 |
|
|
33,188 |
|
|
20,380 |
|
|
48,414 |
Other income (expenses), net |
|
|
420 |
|
|
247 |
|
|
(948) |
|
|
698 |
Total other income, net |
|
|
7,943 |
|
|
55,604 |
|
|
29,987 |
|
|
70,505 |
Net income (loss) before income tax expenses |
|
|
(6,335) |
|
|
46,931 |
|
|
3,434 |
|
|
54,277 |
Income tax expenses |
|
|
(129) |
|
|
— |
|
|
(129) |
|
|
— |
Net income (loss) |
|
$ |
(6,464) |
|
$ |
46,931 |
|
$ |
3,305 |
|
$ |
54,277 |
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
||||
Unrealized gain (loss) on marketable securities, net of tax |
|
$ |
1,504 |
|
$ |
(4,805) |
|
$ |
2,914 |
|
$ |
(9,380) |
Foreign currency translation adjustment, net of tax |
|
|
3,272 |
|
|
(1,693) |
|
|
3,392 |
|
|
(808) |
Total comprehensive income (loss) |
|
$ |
(1,688) |
|
$ |
40,433 |
|
$ |
9,611 |
|
$ |
44,089 |
Net income (loss) per share, basic |
|
$ |
(0.05) |
|
$ |
0.34 |
|
$ |
0.02 |
|
$ |
0.40 |
Net income (loss) per share, diluted |
|
$ |
(0.05) |
|
$ |
0.33 |
|
$ |
0.02 |
|
$ |
0.38 |
Weighted-average common shares outstanding, basic |
|
|
139,265,248 |
|
|
137,141,655 |
|
|
139,154,557 |
|
|
136,985,440 |
Weighted-average common shares outstanding, diluted |
|
|
139,265,248 |
|
|
142,195,637 |
|
|
143,039,435 |
|
|
142,078,752 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||
|
Six months ended |
||||
(in thousands) |
|
2023 |
|
|
2022 |
Cash flows from operating activities |
|
|
|
||
Net income |
$ |
3,305 |
|
$ |
54,277 |
Adjustments to reconcile net income to net cash from operating activities: |
|
|
|
||
Depreciation and amortization |
|
635 |
|
|
308 |
Amortization on right-of-use asset |
|
301 |
|
|
281 |
Stock-based compensation |
|
4,651 |
|
|
2,573 |
Realized loss of marketable securities |
|
706 |
|
|
— |
Amortization premium of marketable securities |
|
285 |
|
|
— |
Change in fair value of derivatives |
|
(494) |
|
|
(596) |
Change in fair value of common stock warrants liability |
|
(4,623) |
|
|
(17,029) |
Change in fair value of earnout liability |
|
(20,380) |
|
|
(48,414) |
Change in fair value of incremental acquisition fee accrual |
|
— |
|
|
(150) |
Changes in operating assets and liabilities: |
|
|
|
||
Receivables |
|
(9,748) |
|
|
(377) |
Inventory |
|
(346) |
|
|
— |
Prepaid expenses and other current assets |
|
72 |
|
|
1,038 |
Other long-term assets |
|
(12,144) |
|
|
— |
Accounts payable |
|
2,111 |
|
|
2,157 |
Accrued expenses |
|
49 |
|
|
2,476 |
Operating lease liability |
|
(354) |
|
|
(193) |
Other liabilities, current |
|
347 |
|
|
489 |
Other liabilities, long-term |
|
(7) |
|
|
128 |
Net cash used in operating activities |
|
(35,634) |
|
|
(3,032) |
Cash flows from investing activities |
|
|
|
||
Purchases of property, plant, and equipment, net of grants |
|
(72,284) |
|
|
(25,045) |
Purchases of marketable securities |
|
(2,499,506) |
|
|
(1,655,200) |
Sales of marketable securities |
|
2,462,950 |
|
|
1,647,787 |
Maturities of marketable securities |
|
101,792 |
|
|
71,168 |
Capitalized interest on plant construction |
|
— |
|
|
(47) |
Net cash (used in) provided by investing activities |
|
(7,048) |
|
|
38,663 |
Cash flows from financing activities |
|
|
|
||
Proceeds from exercise of stock options |
|
55 |
|
|
268 |
Net cash provided by financing activities |
|
55 |
|
|
268 |
Effects of foreign exchange rate changes on the balance of cash and cash equivalents, and restricted cash held in foreign currencies |
|
292 |
|
|
(3,480) |
Net (decrease) increase in cash and cash equivalents, and restricted cash |
|
(42,335) |
|
|
32,419 |
Cash and cash equivalents, and restricted cash, beginning of the period |
|
108,348 |
|
|
47,127 |
Cash and cash equivalents, and restricted cash, end of the period |
$ |
66,013 |
|
$ |
79,546 |
Reconciliation of GAAP and Non-GAAP Results
We believe that the presentation of Adjusted Earnings before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA) is appropriate to provide additional information to investors about our operating profitability adjusted for certain non-cash items, non-routine items that we do not expect to continue at the same level in the future, as well as other items that are not core to our operations. Further, we believe Adjusted EBITDA provides a meaningful measure of operating profitability because we use it for evaluating our business performance, making budgeting decisions, and comparing our performance against that of other peer companies using similar measures.
We define Adjusted EBITDA as net income or loss adjusted for (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) interest income, (iv) interest expense, (v) change in fair value of derivative, (vi) change in fair value of warrants liability, (vii) change in fair value of earnout liability, and (viii) other (income) expenses, net.
|
|
Three months ended |
|
Six months ended |
||||||||
(in thousands) |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Net income (loss) |
|
$ |
(6,464) |
|
$ |
46,931 |
|
$ |
3,305 |
|
$ |
54,277 |
Stock based compensation |
|
|
2,405 |
|
|
1,656 |
|
|
4,651 |
|
|
2,573 |
Depreciation and amortization |
|
|
347 |
|
|
160 |
|
|
635 |
|
|
308 |
Interest income |
|
|
(2,426) |
|
|
(1,936) |
|
|
(5,440) |
|
|
(3,768) |
Interest expense |
|
|
2 |
|
|
— |
|
|
2 |
|
|
— |
(Gain) loss in fair value of derivatives |
|
|
266 |
|
|
(1,430) |
|
|
(494) |
|
|
(596) |
(Gain) loss in fair value of warrants liability |
|
|
2,143 |
|
|
(18,803) |
|
|
(4,623) |
|
|
(17,029) |
Gain in fair value of earnout liability |
|
|
(7,508) |
|
|
(33,188) |
|
|
(20,380) |
|
|
(48,414) |
Other (income) expenses, net |
|
|
(420) |
|
|
(247) |
|
|
948 |
|
|
(698) |
Adjusted EBITDA |
|
$ |
(11,655) |
|
$ |
(6,857) |
|
$ |
(21,396) |
|
$ |
(13,347) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230809375994/en/
Investors:
ir@originmaterials.com
Media:
media@originmaterials.com
Source: