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Origin Materials(ORGN) - 2023 Q3 - Earnings Call Transcript
ORGNOrigin Materials(ORGN)2023-11-10 03:27
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Financial Data and Key Metrics Changes - The company reported its highest quarterly revenue to date of 7.1million,comparedtonorevenueintheprioryearperiod[30]−Operatingexpensesforthethirdquarterwere7.1 million, compared to no revenue in the prior year period [30] - Operating expenses for the third quarter were 12.9 million, up from 9.7millionduringthesameperiodlastyear,primarilyduetoincreasesingeneralandadministrativeexpenses[31]−Thenetincomeforthethirdquarterwas9.7 million during the same period last year, primarily due to increases in general and administrative expenses [31] - The net income for the third quarter was 30.9 million, compared to 8.3millioninthesameperiodlastyear,withapproximately8.3 million in the same period last year, with approximately 28 million of this increase attributed to gains from fair value adjustments [58] Business Line Data and Key Metrics Changes - The company has commenced commercial scale production at Origin 1, producing CMF and HTC, and is in the process of sending materials to customers and strategic partners [2][10] - The operational performance of Origin 1 has been described as close to flawless, with expectations to ramp up production and vary feedstocks in the coming months [11][22] Market Data and Key Metrics Changes - Major tire companies, rubber companies, and specialty carbon users have expressed interest in the HTC produced at Origin 1, indicating a broad market demand for the products [3] - The company has over 10billioninsignedofftakeagreementsandcapacityreservations,reflectingstrongalignmentandincentiveforbringingitstechnologytomarket[45]CompanyStrategyandDevelopmentDirection−Thecompanyaimstomaximizeshareholdervaluewhilebringingsustainableproductstomarket,withafocusoncashgenerationandmanagingexpenses[28][49]−Thestrategicpartnershipsareincreasinglyfocusedonhowtobringworld−scaleplantsonlineasquicklyaspossible,withinterestfrompartnersgrowingsincethecommencementofoperationsatOrigin1[26][43]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthecompany′stechnologyanditsroleinthetransitiontodecarbonizedmaterialsmanufacturing,highlightingtheimportanceoftheirbiomassconversiontechnology[29]−Thecompanyisprioritizingnear−termcashgenerationandhasadjusteditsguidanceforEBITDAlosstoarangeof10 billion in signed offtake agreements and capacity reservations, reflecting strong alignment and incentive for bringing its technology to market [45] Company Strategy and Development Direction - The company aims to maximize shareholder value while bringing sustainable products to market, with a focus on cash generation and managing expenses [28][49] - The strategic partnerships are increasingly focused on how to bring world-scale plants online as quickly as possible, with interest from partners growing since the commencement of operations at Origin 1 [26][43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's technology and its role in the transition to decarbonized materials manufacturing, highlighting the importance of their biomass conversion technology [29] - The company is prioritizing near-term cash generation and has adjusted its guidance for EBITDA loss to a range of 45 million to 50million,improvedfromapreviousrangeof50 million, improved from a previous range of 50 million to $60 million [34] Other Important Information - The company has received a funding award from BioMADE to advance U.S. Department of Defense sustainability goals, which is seen as a positive validation of its attractiveness as a funding target [27] - The company is engaged with many of the world's largest consumers and producers of caps enclosures, indicating strong market interest in its technology [50] Q&A Session Summary Question: Can you speak to the diversity of feedstocks that you've been able to run at Origin 1? - The company has primarily been running on starch and has seen excellent yield performance, but has not yet transitioned to biomass [65][66] Question: What are customers saying about the product quality? - The materials produced have met customer expectations, and the company is already sending materials to customers, which will drive revenue in the short to medium term [67][91] Question: What is the status of financing for Origin 2? - The company is focused on optimal funding strategies for Origin 2 and has seen increased interest from strategic partners [80][81] Question: How is the company managing cash flow and production? - The company is prioritizing revenue-generating projects and is implementing a cash conservation program to balance the need for EBITDA positivity with maintaining forward momentum [49][48] Question: Are you receiving any RINs or other credits from sales in Origin 1? - The company does not anticipate receiving RINs, as the majority of products from Origin 1 are directed towards chemicals and materials applications rather than fuel applications [132]