Origin Materials (ORGN) 14 Nov 242024 Q3 Earnings call transcript

Good afternoon, everyone. Thank you for standing by. This is the conference operator. Welcome to the Origin Materials Third Quarter 2024 Earnings Call. [Operator Instructions] The conference is being recorded. opening call introductions, Co-Founder over Product for to would and time, Officer. the turn to this remarks I and like Chief At Ryan Smith ahead. go Please

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everyone. thank Great. for Thank afternoon, and you. joining Good us you

Co-Founder, press Speaking first today the next. and part Origin's questions co-CEO, call Origin speak to Matt Ask will Relations its we'll Ahead of and analysts Origin be John call, can issued and submitted quarter co-CEO Plavan, discuss website Rich section CFO, at Investor Then Campaign. this Bissell; XXXX originmaterials.com. has Riley; found third of release is our and open the questions from These presentation. as our on of

current and that to subject discussion and from release events. These Please no during as expectations not These statements a new be uncertainties. to could any today, assumptions, our views making upon future or relied undertake cause to date, which uncertainties should reflect the representative information of to and in are today, materially will light actual about or as are of our based be view risks note we and statements on forward-looking subject forward-looking statements risks revisions any obligation differ variety statements to these we expectations. that of of results revise of results subsequent publicly

the our XX-Q with important could Form affect that filings and including our report factors discussion please further other material results, refer the today. For to risks on our filed financial on SEC, quarterly

and in as from of Origin or measures These believe results. non-GAAP a measures, in we measures substitute useful we not should addition are for as non-GAAP discuss call, supplemental performance. will to financial today's be considered GAAP isolation During Materials which

will press regarding will which the measures our with posted on additional afternoon find disclosures to today's issued the website. this and call SEC, filings be our in non-GAAP release our discussed You financial

our of Relations that, will available also to company turn on I the over of the section webcast be this call will call website. The Investor With Rich.

business, Because caps Customer demand our is Thank rate market you, of everyone. and System and confidence aggressively are what closures Ryan. test, its first have is able Good success factory produce product Origin's achieved more higher growth. our for caps to of With demand. of determine our and systems our our to will recent meet the CapFormer building we to strong ability and premium PET . largely afternoon, we completed execute fit. pent-up scale-up plan now additional with acceptance

XXXX, rate will exiting we on be the We a Origin of first XXXX. positive expect growth see anticipate that to EBITDA and run healthy basis in half

Now we got about moment. this how let's to talk

we achieved to of we CapFormer System test fully milestone several expected, our caps, necessary systems test, functional profitability, as as the our on successful everything course into inspection caps. PET factory subsystems produced sheet ran for well In of quarter, as including a this finishing this recycled PET our quality initial fully the turning million visual such acceptance formed our as System. CapFormer First, journey systems,

first system commercial acceptance success test Origin's our as that line means is system. of isn't This proprietary the test. and over It's with the test during efficiency envisioned the XX% performing this

applications recycling processing listening circularity breakthrough and and of the Origin's elements, of System of September. you its design we In world finishing know, some see other the can this video of CapFormer secrets. post released revealed thermoforming, which most you As packaging offers for quarter, in and novel in performance. The

caps consumption of we our our producing current visited and couldn't us of per customers partners XXX Simply excess be is whose our and PET and attending commercial partners, put, eyes. Our approach manufacturing about prospective along own caps witnessed prospective prospective saw billion system and our CapFormer hand. works excited production first year more at their it. cap with speeds validation customers the customers with and System The total in

centered on and beverage Commercial to and time first track. commercialization Caps begin will production in is remains our this to on closures Furthermore, scale as caps at world's on launching viable Closures we market our our plan which commercially business PET engage with going the customer qualification track output. continue to quarter we

on and expectations caps are revenue Our closures track.

a caps profit quarter first during with generation and gross We projected the XXXX expect trajectory initial to significant in thereafter. next closures and year, generation healthy of growth begin revenue

potential testing who in Customer strong multiple MOU pipeline I to, I've $XXX offering PET throughout strong, remain as hands engaged caps more billions want our alluded as million beyond. about the qualification, now in you and alongside announced our customers. next caps momentum, prospective know of our many year systems purchase are customers of online of and know for caps, can of buyers our to potential come details a

talk Let me more. about cause about tell to you yet why aren't would and us we them it what talking

commencement phase. time trials volumes, be in period customers have means to and This the economics. qualification and increase. customers of we've we qualification of of own which qualification fourth them we delivery extend lines Presently, ramp-up performing the tests, the at they the for them of time and discussed That the at caps production, year. of which attended start production, are a have delivered purchase slated quarter sign explicitly multiple we our in announce definitive caps completed expect following prospective Many we and each commercial position to engaged this rate agreements period with will their commercial which including the is are will a through we've customer, Once testing. to geographies,

accepting ongoing commercialization a it prospective as we with as capabilities. we scale customer to With and shipments. new to we new develop our our production believe capacity can't continue formats great begin features. as planned, as are demand customers and cap an We produce qualify to is we and cap wait progressing strong in basis sell customers position on expand can every will and We production can

John, will details I our to topic, in for share about over the this who the ahead. on it growing quarters plans will business turn more For

calls revenue in announce our deliver expect is by sufficient more we current and positive be XXXX, Today, end profitable we significant additional plan EBITDA that manufacturing you, Origin invest This these to assets during a to into growth. they to alone to Thank basis CapFormer a X demand rate the of XXXX. and in achieve production generate milestone of excited our meet System the System good we're enhance X half and run our and plan Further, first ability to for CapFormer believe these the enable to on Rich, systems CapFormer could positive afternoon, bringing to or System everyone. achieve EBITDA.

produce to give total, this of of SKUs billion format, To X production volume we both our depend come majority required the between XX maximize business, we we exceed we per billion and The will online. our for when estimate volume such will X on the mix of a will line production to as throughput sense factors believe capacity produced the significantly as you that during as which and additional initial previously of product systems expected year increase fully and XXXX efficiency, is expect MOU. growth announced and will the be service XXXX CapFormer caps trajectory operational, our in caps and

What thermoforming to an with a it, This finish. knowledge caps video to was This PET journey And with cap breakthrough. represents speeds our precision at enable high the a full I can efficiency. feat commercial product encourage you Acceptance who We the of out. processing check for system quarter, Factory Origin Origin from and and shared it seen is Test really a to you're technical operating. combination those showing in we true start circularity. make demonstrated a advanced breakthrough materials It haven't follows seeing in

operating technology. is high thermoforming, a System. to level. These the the next PET of thermoforming machines our unit roll we've fed is of speed cycle First, taken XXX% are this this amazing And of recycled In world and technology the into at lines. CapFormer sophisticated

forming, various to and of system the heating, caps the optical deliver trimming, container and finishing of we line. cooling post-processing, inspection with undergo followed end and the of the caps perform the forms we portion at our where Our

consumption I life our running ways. of multiple prospective XXX coming Not customers test. least, attended, As integrated Rich who who to for witnessed to could commercial firsthand. aspect factory they the a seamlessly. manufacturing partners, moment powerful that of system team in our per system everyone attended components the from subsystems see representing multiple the novel was Origin of year prospective mentioned, reality critical our A this a our acceptance to customers caps believe over billion combining high-speed,

our caps believe scalable. highly is We business

our capacity paste ], is minimal most adjustment. a called the product our a of line operation. risk straightforward part Growing minor copy Our their bottling on and the changes essentially exchanging requires operations, and a chuck customers' which is notably [ oversimplifying at to

the will systems We by improving plan, more standing up In capacity design partners, continually expansion largely expand existing of our alongside and and CapFormer of our over support our systems time. incrementally already part process online. groundwork steady we systems is a for of capabilities. the ensuring multiple with excellent new have capacity additional and This potential PET processing identified relatively partners for bringing

produce we for the initial many demand. believe the to we online, the add as can We growth once occur production CapFormer as continue online. with the steep systems sell we XXXX, keep indicative said, during as foreseeable commercial curve to X can we plan which, expect Systems of to After come caps to pace future market is we

are of and premium enabling commercially caps to category we lead superior proud the products, PET sustainability. Our now closures, viable and performance are

team a forward in testing continuous team tooling printing generally XD in-house helps is caps than could share new Improving and we CapFormer details also We and throughput more development sharing are which efforts. about launched in latest to our of assist results with progress more of pleased future the also The other the faster minor double these equipment the of R&D and system, testing relatively to working improvement, of capabilities, formats modifications. will us System and our for In upgrades closures. rapid the that capabilities the look on spirit the the has move features. and prototyping including

process, Group, with will our and of shipment quarter, our CapFormer for home the schedule, began we production products. finalizing we commissioning preparing plan and in with suppliers finished first arranging equipment partners materials Michigan coordinating delivery to the engaging are the City Together, logistics to plan qualify of become start-up with what site, for to our System. the Red used This and

the phases of Lastly, patents we prosecution. application this multiple and quarter, various progressed through

and today which advance to maintain are the billions domestic as to recycled patent to positioned year, products, quarter PET and cap upon and this process. In see our and part the expect our and parcel caps, work cannot We the $XX that downcycled. portfolio and of into and to effectively with market leading protect that both international extremely sum, technology billion process we be consumes address proprietary only new systems, caps well caps billions manufacturing we closures per proprietary

a the forward fully some circular, progress pleased of for solution later and Our year. and needs start the needed cap desperately market has with packaging offers this production looking time. commercial our mono-material We're to

biomass and to technology, process For technology. conversion continue Origin's furanics, products the we advance and

investor provide as investors with Although caps profitability, focus of we have to report. our expect path we business, to Origin and furanics Origin's update to when namely will communication closures appropriate substantive the news be we

As in operating company's on in half somewhat plant X, the demand origin becoming with of reduced are we conversion previously announced Ontario with first EBITDA biomass focus the consistent and our Sarnia, staffing. on 'XX, positive

scale at product overall up This our approach generate preserves to volumes with explore strategic burn. reducing sufficient current partners our cash to while ability

And strong we we technology hand caps expect deals it I'll PET our establish now economic business, drive and to biomass foundation to situated regarding and to conversion closures a over platform. our ideally to be Matt. Ceramics As

the We afternoon, highlights. John. key $XXX Thanks, release, and million the ended quarter cash, of comments third everyone. of less focus We my I and securities, a so on with the will marketable XX, results tables XXXX. million Good in couple December provided earnings $XX quarter equivalents cash financial than

between of quarter rate compared the $XX in cash million year, and point quarter is million burn million. amount three to the guidance line our $X.X ] $XX guidance is $X.X run million trending also third quarter at within for range $XX Origin's revenue this burn to year As million which million. this cash and the [ for in with $XX was a our revenue prior year

refer Also, chain these revenue. we activation of to what are comprised as as expected, supply revenues

to of to will onset ahead, our nature Rich, just capital drive Looking guidance, basis by having XXXX to new in the highlighted half and growth of as in profile a recurring prior the expect a significant equity John we caps EBITDA begin revenue to be closures markets. that initiative the rate on us from without and reiterate of run caps our closures to margin XXXX in access revenue we anticipate XXXX. QX with in and first and And positive

Now for I'd first we like questions. to open question, up please. the have may the Operator, call

today [Operator Frank Instructions] Mitsh from Our first from Research. comes question Fermium

$XX million then have ramp customers said the you this caps I is you How X about out $XXX watching So you only ramp wanted you of have that that right ramp. mentioned over, that you signed do That XXX but MOU expect correct? like And a [ had now a right million significant ] X; $XXX -- that and customers X years, I X. billion Are closures? still year year we million, think now, million you on know customer? X. in year $XX covers with cap the significant looking at you that

you're did annual have Yes $XXX factory million do X-year announced billion at representing term, and we fairly so off, acceptance customers this that to with XXX but referenced, expect this stages don't an caps various that think point. their Rich. X. us not precise test it does the question. is the you into of we're have giving the Appreciate year qualification we've I in guidance and And ramp wildly own processes. MOU at which Frank, Yes, of initial we aggressively over

more So months. in we coming the hope to have news customer

time -- on goodbye called line Geismar guess you on structure, could line very Any to the very the X et on That's depend the taking indicate Origin yes, you brownfield facility, Asia? be I and in would will helpful. begs time an partners, were specifically at structure give deal did the that but to out potential And that well, yes, on XX-Q, helpful. and discussions and it but Origin where -- Geismar, looking been saying is. cetera, obviously, location which question, Asian have you the But color place there there deal

this is Yes. John. Frank,

Geismar that the So the into think sinking right at site doesn't not seem I now key amount sufficiently capital that on it's that holding that a our just likely right of focused worth we're reasonable thing like spot or is least likely now.

of sort the decision. And so that's approximate

what Asian think And like a like ready have we a of seem sort that but think to fruit we of this really certainly, a time I to plant, point at it point. don't have think appropriate over provide I efficient is we detail which give more lot relationships Origin way to think brownfield with could it's and a think I to don't before, have proceed quite bear few those. an like don't X with we're that. a on lot we information But I exclusive beyond

Great.

go Looking forward along. to we as updates

Byrne from Our from Steve next question Bank comes America. of

of Just down technology now of Are licensing scale whether manufacturing sell this any the that greater exclusively just you to to of them path that been expressing is you've full interest as Is Now any acquiring becoming technology demonstrated outright or describe has the to producer? prospective be path these either another forward effectively and in here it curious working. customers? what this of it? value it view proposition a you by discovered going caps an you

Yes.

a really question. it's excellent think -- an I it's

one. acceptance for us critical is a obviously view Our important it's to factory -- test that the is

market, necessary various the of in caps, additional milestones of useful, point this had caps, have sorts have But maybe producing more we think are to interest in of not there the et in cetera. is kind commercial think going here I although to technology. shipping licensing I having of that be maybe -- important actually strictly are them conversations those that terms

open that we of make all ways that There think sort something that's we to there a lot I license structural of and sense. could think we're win are parties involved. the to for is think

the and a to pour makes also other most that straightforward there's to to building this might it for Until sort of some that We our way us way better access more resources until us technology. think it. monetize alternative be for out sense the into value continue and efficient that's to monetize of capacity

us, So what see and our there. with partners the it's I think driving on table now, And But our own and customers. options for on are for all up. -- pursue we'll shows production it

the the out the either rate there And plant, just the a interest HTC? question of the what's about seeing recent operating or Sarnia that furanics plant been still a in that that reflection And you're of is of in months? level

Yes.

operating the CMF to prior. of rate would reflection of a but than say is lower is was months of HTC. more our of And of sort towards now, the in it market in that caps we're So publish isn't of resources it reflection that's and a it plant than interest last something the right the opportunity reallocation I couple ready

still slightly interest, think quite positive interest is players I delta more generally more speaking, the pretty it's HTC. I'd CMF interest earlier is CMF, say that's but I'd than there's say I was. more rate because whereas HTC in change change on level a -- in see accessible a think or on than the CMF sort of and probably of And we if was consistent interesting of on rate change more a the of lot and HTC

of both products cases, a So I But mild we think we're use. HTC. seeing we can a interest accumulated pickup have on that little bit in in

focus getting our usefully that we up that closures and our customers running cash make on so can as And product we can. deploying soon and can sure flowing really and of as as we're caps resources view is to let's we as many

in this you new application or comment, alternative? ] as new opportunity last of of that a Or a new HTC [ terms John, seeing and interest on more is, X HTC. black in are just is maybe carbon anything And that

Yes.

because we necessarily a often interest that them I do to around we've we parties a the see would -- but about is were talked think around excited be tends that felt put applications specific that those black, about had we of discussed be. that when when discussion think but were were nascent already our from without perspective we didn't I is think talked originally what other what be we about we the carbon lot more -- trying to HTC have term things. before, on term nearest But may them, which in interested and we I bound

in So applications from of -- feeling bit thing pull so from sort starting we to applications we a little were products. a think those But in other see agricultural that very strong more materials were some we're those of to battery pushing than more I interest bit little them. over

we're don't to interest those want So But starting of I'd what thought to ones see parties. exactly sort of we are. what I further -- of some out those say, as applications get other the that into in from some

and section questions submitted turn like Ask Officer Ryan by And Origin now call. answering to prior for Product I'd over a to today's to it Smith, Q&A investors Chief Co-Founder

investors earnings all Prior our Campaign. submit we questions of Origin operator. you, call, to our to Thank invited Ask part as

So thank who participated. much everyone to you so

caps during with answered our some have with questions questions. analyst generally a focus We'll of them thoroughly relevant we great answering questions our be our and today, on closures and business. and we the submitted asked before were, many Origin's profitability, You course, path call remarks to most today time the prepared our Q&A. And of these

aware high should transaction But first, at be purchase quite a that subject long. orders to questions that a stock. sale the and and I'll can actual say, acknowledge Therefore, purchase filing to about between want constraints. we've few time stock be of received management's the you XXbX-X are level, timing I the a

decided triggers they take advance XXbX-X-driven well in effect. could may of So be when

Additionally, withholding. vests is common sell to shares as to sufficient stock a practice cover tax

margins I'll said, direct the that caps. and to around Matt, first with question So my pertains it our to

us what unit economics. past, else Matt, what attractive. and that in so can said caps we margins you And about tell the they're learned our But about we've

Sure. that different margin, I'll margins, answer operating There's gross question. margin.

that's is to from inquiry economies an hear scale the XXXX, what North I XXXX first achieving a expect, as line business. might margins often inefficiencies fair dynamic XXXX, the we positive which startup metric manufacturing if a even in leverage to the will around move think reaching margins said regard that's be in because a and tend because of to and the of you rate on up this of with half you run per our amount in of we gross people during gross will. operations EBITDA important call as few our I scale And our times Star, really think ultimately

to that not therefore, are I that very near caps We're forming incumbent giving And per and closures inject think about costs guidance into time gross out mold. to due profit products. understand specific as think discussions. industry which PET versus to But favorable takes caps a we of can in say at thermoforming se, product. manufacturing when versus we're injection around is it pricing produces the a is platform, in plastic cap the cost premium what experiencing effective stamp per leverage technology. you molding important our And a term very is XXX% basically the And that's

bigger a you -- the production size. this translates of cap the to can advantage imagine, amplifies that, And as format cost lower

way, we to in larger said another to become bringing as excited molding. So And we're injection product hence, online, the compared earlier. more SKUs reason about additional size, cost-effective Sean the the the referred cap which

to how sharing. now, going for going behave able what factors the what better we're we've our But think think to confidence operations over up running those to -- they're these us at visibility probably generate So comfortable got time. think and I give going that I and of share into be have more that's to it's likely specifics, the will be attractive we really combination point caps margins, that to are we're and the

Great.

potential the John, of we switch of to going platform. Origin's of and continue And I'm Now a with about about couple to long-term OMX. investors to John questions. asking enthusiasm over furanics questions lot a and have ask

and there? think more running, up caps asking about can is OMX, specifically once us what we expect I tell you could So

Yes.

both continue excited think a about So substantial of ton I to is with associated our OMX -- and time data from most think broadly. that the technology. stuff furanics then, operations that that course, be it, And already, at just asset those technology from of ongoing I operating we've even we learning the of from had the We're we're obviously furanics doing OMX. analysis the work

to can do, I we we OMX. learned And to we bring and or think nicely time we'll So some interesting and what between want by and our OMX from focus we what doing take then think learn closures I together back furanics then. Catlin to it after technology can now can growing the learn have things with the sort we we've really have achieved do of with profitability business what and put already that

match lot that a ability And related I asset focus resources and some things not be things it I'm out. exactly on ago, our that it's what the plan do years think not I point. plan plan But would of be sure that if for what but hard the we it very to think far we think OMX once the appropriately have there's furanics -- predict again. really we may would to design. I to technology with do to a the with couple It's do at flexible OMX the can thought by a exciting of

I'll I'm do earnings quote investor, excited come And asked, to An them Great. just you. about get to last question, going back to for then the right. what All directly, have my I call? next before John, they

going City. be a landing starting location, of mean I to excited Yes. I'm so some about we've equipment caps of system we're shipping tested. to with going at our that Red we're be there. The to already it to going to going caps be customers. stuff those -- be lot that produce is shipping the to We're We're that to

. a of of happening or next between All sort bit. give little roughly earnings take is that now call, in the and

stuff we're the And so that's excited about. that

have I in already let's said, and technology works caps we closures. have think we new -- I as call even technology, advancements it, the around

incredibly I think that's think I exciting.

of this business, in able and We engineering capital the cycle deploy caps investment to quite again in that cycles. expect of the because to required quickly of kind be closures shorter technology advancement the just

that's So exciting. incredibly

And then, new customers. able of course, being announce to

as through gratifying cycles Rich earlier, those think, kinds going get just to all as But the be we things else but it's need mentioned well. of appropriate to qualification for and not us everybody As really, I well.

just customer on -- to they it done what or So us depends extent on to by announced getting customer prior things not. to things want

it's a corner. the shorter really business And is is chemicals work, think which really We're all the business. The much these it's I to And excited shorter cycle, long. fun, about. most quite cadence looking cadence lot to be a of there's part the of really, to is frankly, So be think around exciting doing caps forward and that closures things. the maybe I what's right

call you And who you, everyone questions. update. our next . thank sent to our Thank this in look day. We and who and forward the for Great. to everyone joined John, to concludes

do Ladies you thank call We joining. presentation. conclude for gentlemen, that, we'll with today's and conference and

disconnect may lines. now your You