Origin Materials, Inc.

Thank you for standing by. This is the conference operator. Welcome to the Origin Materials second quarter 2021 earnings call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Ashish Gupta, Investor Relations. Please go ahead.

Thank you and welcome everyone to Origin Materials' second quarter 2021 earnings conference call. Joining the call today from Origin Materials are co-CEO Rich Riley, co-CEO and co-founder John Bissell, and CFO Nate Whaley. Ahead of this call, Origin issued its second quarter press release and presentation, which we will refer to today. These can be found on the investor relations section of our website at originmaterials.com. Please note that on this call, we'll be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today, should not be relied upon as representative about views as of any subsequent date, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC, including our quarterly report in Form 10-Q. In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of origin materials performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You'll find additional disclosures regarding the non-GAAP financial measures discussed on today's call and our press release issue this afternoon and our filings with the ICC, each of which is posted on our website. The webcast of this call will also be available on the investor relations section of our company website.

With that, I will turn the call over to Rich.

Thank you, Ashish, and thanks to everyone for joining us today. For today's presentation, we will be referring to the slides that were posted to the investor relations section of our website earlier this afternoon. We will begin on slide three. The second quarter of 2021 was momentous for Origin. First, as previously announced, we successfully completed the business combination in June and, as at the end of the second quarter, have $471 million in cash and equivalents on hand. Second, we made significant progress on our first commercial scale plants, Origin 1 and Origin 2, and are reaffirming our expectations as to capital budget, production timeline, and our anticipated ability to fully fund both projects from existing cash on hand and previously identified traditional financing sources. And third, our customer demand has more than tripled over the past six months, with offtake and capacity reservations of $3.5 billion as of today. As this is our first earnings call, I'll start with an overview of Origin Materials and then provide a commercial update. I will then turn it over to John, who will discuss Origin's intellectual property, core technology, updates on Origin 1 and Origin 2, and recent executive hires. Nate will wrap up with a financial overview. Origin was founded in 2008 with the mission to help solve climate change by enabling the world's transition to sustainable materials. Our patented drop-in core technology, economics, and carbon impact have gained the support of a growing list of major global brands and investors, including Pepsi, Nestle, Danone, Ford, and Mitsubishi Gas Chemical. The CPG companies mentioned have publicly disclosed their intent to migrate 100% of their current petroleum-based PET consumption to decarbonized and recycled materials. After extensively testing our technology, these market leaders have made significant financial contributions to Origin, both as investors and customers, demonstrating their environmental commitment and competence in our technology. We believe Origin is positioned to be an industry disruptor in the materials space at large commercial scale. Unlike other companies who serve smaller niche markets, we believe Origin is structurally advantaged to address an estimated trillion-dollar market that's just beginning to transition from petroleum feedstocks to sustainable ones, and that we're positioned to be the clear category leader based on the simple yet powerful fact that our technology was built around converting the lowest cost feedstock, wood residue, into decarbonized supply chain ready materials. While the big focus of the decarbonization movement among the media and investors has been electric vehicles and renewable energy, 45% of the world's emissions come from the manufacturing of products, with a significant portion coming from underlying chemical materials. Over 10 million barrels of oil per day are used to create these materials, and the production process releases massive quantities of new carbon into the atmosphere. Origin's vision for the future is to replace these 10 million-plus barrels per day with plant-based feedstocks. We think the best place to start the transition to sustainable plant-based materials is plastics, which represent an enormous and rapidly growing portion of the world's materials. When we say plastics, we're not just talking about water bottles and other consumer packaging that probably first comes to mind. The majority of plastics are used in textiles, cars, and other household products. Just capturing a small portion of the incremental annual growth in plastics is more than enough demand to build our business. Importantly, our solution is designed not to require companies to change their products or processes. There are near zero switching costs because we produce a material identical to what they currently use. The only difference is that our feedstock is derived from plants rather than petroleum. We think this is the path for us to deliver carbon-negative materials at massive scale, dramatically reduce carbon emissions, and create products that are readily recyclable within the existing global infrastructure. Turning to slide four, the attractiveness of our solution is what drove the early partnership and anchor investment from Danone, Nestle, and PepsiCo. Recently, we have also taken significant steps to commercialize the business by broadening our customer base beyond consumer packaged goods into apparel and industrial end markets, including automotives. In April, we announced a strategic partnership with Primaloft to develop carbon-negative insulating fiber for outdoor gear, bedding, and apparel. Primaloft makes high-performance insulation and fabric for over 900 global brands, including iconic companies such as Patagonia, Lululemon, Adidas, and Nike. This is a very significant partnership for us, an example of being able to partner with a company in the supply chain to deliver materials to hundreds of brands. Many apparel companies are eager to decarbonize, but they don't actually manufacture their own products. This is where our partnership with Primaloft can have a huge impact. During the second quarter, we also announced the Net Zero Automotive program with Ford Motor Company. Ford and other automakers have committed to electrifying a significant portion of global production, providing a tailwind for Origin, because plastic helps make cars lighter and more energy efficient. EVs are estimated to use three times the amount of plastic per vehicle as internal combustion vehicles. Our Net Zero automotive program with Ford is a tremendous opportunity for Origin to work with an industry leader to decarbonize a very large addressable market. Our partnerships with Ford and Primaloft demonstrate the steps we have taken to further commercialize the business and expand our end markets. Notably, corporate commitments to Net Zero are increasing daily, and Origin is engaged with many of the world's largest companies to help them achieve their decarbonization and sustainability goals. In addition to exciting customer and partnership announcements, we also announced last week that our CMF and HTC products have earned the U.S. Department of Agriculture certified bio-based product label. This is a coveted third-party verification that our products meet or exceed the bio-based content requirement for the U.S. government. This certification qualifies our products for mandatory federal purchasing under the 2002 and reauthorized 2018 Farm Bill. With that, I would like to turn it over to John for a technology overview and an update on Origin 1 and Origin 2.

Thanks.

I'm going to begin on slide 5. As Rich mentioned, Origin's technology platform uses proven traditional chemistry to convert carbon-negative feedstocks like wood residues, post-consumer cardboard, mixed paper waste, and construction waste into two principal intermediate chemicals, CMF and HTC. These chemical intermediates will be used to make materials like PET that currently use petroleum as a feedstock and energy source in their manufacturer. Moving to slide six, what separates Origin from niche biomaterials companies is our proprietary CMF and HTC production processes, which are based on sound, scalable, carbon-efficient technology. The process to convert biomass is very carbon-efficient. The vast majority of the carbon ends up as one of our products. This is in stark contrast to thermochemical processes such as gasification or paralysis and fermentation processes, which nearly invariably lose a substantial proportion of the carbon and feedstock to emissions. This carbon efficiency contributes both to the extraordinarily competitive economics of our process and to the very low carbon intensity of the process. While biologically mediated processes are often hindered by any variation in feedstock, our homogeneous chemocatalytic process is robust to a huge range of variation. Similarly, components of the feedstocks that are non-volatile, such as salt, can be showstoppers for thermochemical processes, but they are largely immaterial to the performance of our process. The flexible nature of our chemistry enables many different feedstocks to be used. Sawmill and pulp mill residues, construction waste, agricultural waste, post-consumer paper packaging, pulpwood, and mixed paper waste. That feedstock flexibility directly contributes to the low cost and carbon impact of our product. Finally, turning to slide seven, our process is constructed entirely of conventional physical and mechanical processes that have been used in countless chemical processes for centuries. While the chemistry is new, the process physics are analogous to many processes that have been in widespread operation for generations, craft pulping among them. The use of conventional processes makes the technical scaling much more predictable and much lower risk, as despite the vast number of chemical processes in operation that supply the physical goods of civilization, there are very few examples of unsuccessful scaling for technical reasons. Since founding the company in 2008, Origin has made substantial improvements on the technology through continuous innovation and licensing agreements. Today, we hold 19 families of patents protecting our proprietary production processes to make CMF, HTC, and their downstream products. We believe this IP provides a defensive mode around our technology. Now on to slide eight, I will turn to our progress on Origin 1 and Origin 2. We are, of course, continually reviewing construction costs and timelines to assess macroeconomic perturbation, such as inflation and supply chain disruption, We are pleased to reaffirm our previously disclosed expected capital budget and production timelines for Origin 1 and Origin 2. In terms of timing, we expect the construction of Origin 1 to be completed before the end of 2022, with commissioning and production at the plant thereafter. We are pleased to be working with the leading capital partners Koch Modular Process Systems, Worley, KSH, and Jacobs. As of June 30, 2021, Installation of most foundations for building and process areas is significantly underway and on track for timely Origin 1 mechanical completion. We'd also completed fabrication of the modules that contain the principal equipment used for the conversion of biomass feedstock into high-value chemicals. And by the end of 2021, we expect the modules to be lifted and erected roughly four months ahead of schedule. Similarly, Origin 2 remains on track for completion by mid-2025. Further, we are working with Worley, Deloitte, and Fisher International to select the site for Origin 2, which we expect to have designated by the end of 2021, in line with our prior forecast. Turning to slide 9, we thought it would be useful to provide more of the story behind Origin 1. How did it start? What do the modules look like? And what will it look like? You can see here the modules themselves. They're large, 60 to 75 tons each. The modules are on site in Sarnia, Ontario, and ultimately they will be interconnected and erected. With slide 10, I'd like to provide additional background on how we got to where we are today. We spent over 10 years developing and proving out this process at bench and pilot scale. That translated to process design and engineering, which in turn translated to these designs being fabricated in the shop. An advantage of doing modular construction is that it offers better control over environmental conditions and therefore a more predictable schedule. Additionally, modular construction also gives you better control over the quality of the work. Here on slide 10, you can see our CTO, Ryan Smith, next to a vessel head in a module while it was in the shop. And now with slide 11, we see that those modules are transported to our site in Sarnia, Ontario, Canada. Those modules will be erected onto the anchor bolts in the foundation. Other pieces of equipment, such as tanks, are also delivered on site. We've labeled a 3D model that you've seen before. You can see the conveyor that moves the feedstock to the system, the feedstock silo, the ISBL, or inside battery limits equipment, which is where the real chemistry happens. You can see the process building where the solids handling happens for HTC. You can also see more general items like the tank farm and an area for trucks to load and unload liquid materials. And you can see the brine regeneration area where we handle some of our aqueous frames. So while there's work to be done other than the core process module that's already fabricated on site, that work is generally routine and isn't particularly specific to our technology. Lastly, moving to slide 15, I'd like to talk to you about our efforts to strengthen Origin's leadership team. We were excited to welcome Jim Wells, Ben Fryreich, and Madhu Anand, who will play an instrumental role in scaling our platform technology. Jim has an incredible background. He's an extremely experienced engineer and was instrumental in the execution of capital projects while at Dow AgroScience. Madhu Anand brings extraordinary engineering, catalytic, and processing expertise to origin from Phillips 66, where she was the chief engineer of the hydro processing and NASA upgrading unit. Ben Fryreich is a leading industry expert in solid particulate materials for both product and process R&D and joined us from PSRI. where he led applied process research efforts for a consortium of over 30 multinational corporations. We're excited who will be bringing that expertise to Origin. Recently, we further strengthened our team with the addition of Bob Neeson, the Origin 2 project director, who has a background with BP at Jacobs, as well as David Vallow, Origin 2 process technology director, who brings with him experience from Worley and Burns and McDonald. We're happy to welcome both on board. I look forward to their contributions for years to come, and with that, I will turn it over to Nate to discuss some financial details. Thank you, John.

I'll begin with some commentary on our second quarter results, provide a financing update for Origin 2, and then finish with our 2021 outlook. Speaking to slide 16, second quarter operating expenses were $6.7 million compared to $1.7 million during the same period in the prior year. Adjusted EBITDA loss was $3 million for the second quarter compared to a loss of $1.6 million in the prior period. And finally, net income was $62.5 million for the second quarter compared to a net loss of $1.7 million in the same period in the prior year. As of June 30, 2021, Origin had 136.7 million shares outstanding, excluding 4.5 million shares held by certain stockholders that are subject to forfeiture based on share price performance targets applicable to earn out shares. Turning to our balance sheet, as a result of Successful business combination with Ardeus origin in the second quarter with $471 million in cash and cash equivalents. Based on preliminary feedback from leading financial institutions that specialize in financing similarly sized capital projects, which indicated that our financing assumptions are reasonable and executable, we are able to reaffirm our expectation of fully funding the construction of both plans using our existing balance sheet, cash and cash equivalents, and previously indicated traditional financing sources. Upon completion of Origin 1 and Origin 2, we expect to begin generating positive EBITDA and anticipate our business will generate sufficient cash to allow us to build Origin 3 and beyond. Hence, we do not anticipate needing to raise additional equity capital to fund our current business or capital project needs. Further, we would note that we anticipate having approximately $100 million of excess cash beyond the capital budget of Origin 1 and Origin 2. Finally, as John mentioned earlier, we have received many questions on inflationary pressures. We are continually updating our cost estimates in real time, and based on current inputs we've received from vendors and suppliers, I'm pleased to report projected construction costs are still within the overall capital budget. Wrapping up with our full report, year 2021 outlook, we are expecting adjusted EBITDA loss of up to $25 million and capital expenditures of up to $111 million, consistent with our previous outlook. With that, I will turn it back to Rich for closing remarks.

Thank you, Nate. I would like to wrap up with three simple reasons that we are so excited about where Origin is today and what its future holds. First, we are the industry disruptor with a clear line of sight to commercial scale and the category leader in carbon negative materials. Second, demand is very strong, and we think Origin will be supply constrained for the foreseeable future. Third, our financing is on track or ahead of schedule to bring Origin 1 and Origin 2 online and begin production. Thank you for your time today. Now we'll open up the line for questions.

Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. We will pause for a moment as callers join the queue. Our first question comes from Frank Mitch of Farmium Research. Please go ahead.

Hey, guys. It's Aziza on for Frank. The first question, on slide four, you lay out the growth and offtake agreements and capacity reservations, which has now reached $3.5 billion. How are you guys expecting this level to track over the next 12 months, and which end markets are expected to provide the most incremental opportunities?

Hey, this is Rich. Great question. You know, we're experiencing really strong demand from across the board. If you think about just six months ago, we had customers that were only from the CPG vertical. And since then, we've had apparel companies, automotive companies, building materials companies, and we're experiencing a wide range of demand from those verticals as well as additional companies really around the world. So it's not any one specific category that's driving this growth. It's really across the board. And in addition, we continue to partner with other chemical companies who want to build on top of our materials.

Got it.

And as a follow-up, could you guys share your thoughts on future bio premiums and carbon credits in terms of your pricing?

Sure. So, our pricing strategy, let's take PET for an example. You know, we typically start with third-party projections for the forward pricing of PET and then add a reasonable premium to that to account for the carbon negativity of our materials and the sustainability. And to some extent, the fact that we can offer fixed rate pricing to our customers, which takes the volatility out of their cost structures. And overall, we're trying to be strategic about it. And we want our customers to feel confident that we see them as long-term partners. We want to be a very meaningful part of their supply chain going forward. And part of that means offering very fair pricing and not trying to take advantage of them in any way when it comes to pricing. But we are commanding reasonable premiums.

Great. Thank you.

Thank you.

Our next question comes from Steve Byrne of Bank of America. Please go ahead.

Yes, I'd like to keep that discussion going on these additional contracts that you've been talking about here, Rich. How would you describe the structure of these additional contracts and how firm is pricing in them?

Sure. Hi, Steve. So these contracts are, first of all, they're, they're large. So they're, they're typically over a hundred million dollars. They're five to 10 years in length and they're typically with big companies. And they, they, we normally start with what we call a capacity reservation, which specifies the product, the price, the quantity and the duration of the contract. And then we'll move that into an offtake agreement. certainly in time for project financing of the plants. And so that's the, that's the very standard structure that we use, um, with, with most of our customers.

And then origin one, you, you're going to start up in early 2023. Are you at a point where you're starting to, uh, negotiate with tollers and, and if so, how firm of a pricing can you get from them for the upgrade of that, um, of the CMF all the way to paraxylene or even PET?

It's a great question. Yeah, we are. Ben, by the way. Oh, go ahead, John. Oh, I'm sorry. Go ahead. No, go ahead, John. It's a great question. So, hey, Steve, by the way, nice to talk to you again. The key here is, you know, there are a variety of different steps in the tolling manufacturing chain coming off of Origin 1. In the broad scope, there are some areas where we have quite a bit of certainty, and we really do understand quite well what sort of the cost, let's say, callers are on what that's going to look like. And there are other areas where, you know, there's a little bit less certainty. But generally speaking, if you're looking at sort of the overall quantity of demand or revenue that we're expecting to generate from Origin 1, I think for the majority of that, we have a pretty good understanding of the callers on cost. for that section, for the total manufacturing of that. And in many ways, that's because a substantial amount of the downstream processing is chemistry that's pretty well understood and which mirrors, or let's say, mirrors is a good word, mirrors existing chemistry. So we sort of understand what the throughput's gonna be, we understand what the reaction profile's gonna be, we understand how the equipment that it's gonna be operating in performs, And in many cases, you know, these are, this won't be the first time that tollers have operated in this general style of chemistry. So, it's not sort of first of a kind for these guys. They really understand it pretty well. And so, all that to say, I think we have a pretty good understanding of it, even though it isn't 100% locked at this point, just because, you know, generally speaking, you don't get that kind of long-range commitment on pricing from tollers, which I think is probably why you asked the question.

And just real quickly, Is the HTC that will be produced out of Origin 1 have a fate? What are you going to do with that?

It does have a fate. We haven't disclosed exactly what that fate's going to be yet, in large part because it's, you know, as is the case for most of the products that are coming out of Origin 1, those products are being used for commercial and market development and application development for products other than PET. and other than HTC Fuel. And so we really see that as an opportunity to advance the ball in some of the higher margin, higher value kind of product areas for us. So that also means that we're, as is typical for us, we're working with other companies on those products and applications. And we disclose them when those companies are, when we are ready to disclose them, but I don't think we've done so for HTC at this point. But it will be, it will have a, it will have a destiny.

Okay, thank you.

Once again, if you have a question, please press star, then 1. Our next question comes from Mark Connolly of Stevens. Please go ahead.

Thank you. Very happy to hear Nate's comments on inflation. But we're obviously seeing a lot of companies across a lot of industries spending more on CapEx, either to get things done with more certainty or, you know, because this stuff has gotten more expensive. So how have you guys been impacted so far, and are there significant pressure points if this labor-short, transportation-constrained environment continues?

John, do you want to take that?

You're right. Yeah, sure. Yeah, we have seen, as you say, there is movement in the supply chain. We are seeing inflation in certain areas. But I'd say for Origin 1 in particular, we've seen, you know, I'd say modest impacts there. And frankly, they've been both puts and takes on it. And so that's why we feel pretty comfortable that – or very comfortable, I should say, that we're going to deliver that on budget on – in our prior capital budget. I think, you know, for Origin 2, we have – looked at that originally with materials prices that were substantially higher than what a lot of us were seeing in 2020. And we just carried those forecasts across. We didn't take advantage of the trough in materials pricing and labor pricing that everybody saw in 2020. And so from that perspective, I think, you know, frankly, we're sort of seeing a return to what we were expecting the prices to be when we originally put that forecast together. Yeah. And for OriginOne, of course, we've actually we've made a lot of those purchases already for raw materials in the places where you see some of that inflation occurring.

Okay. And the second question, your initial quantities of CMF and HSC from origin one and two are going to be relatively limited, you know, considering the size of the market and the potential interest. My understanding is your strategy has been to reserve some of that tonnage for new development customers. But how do you prioritize, given that you've got early sponsors and early customers that are likely going to want more than you can actually produce?

That's a great question. So the way that we think about that is really which – it has to do with which products and which markets are strategic for us. And a lot of that has to do with where do we see – and this is probably unsurprising, where do we see the performance of our sort of non-drop-in, non-PET products? Where do we see the performance advantages really show up? What are those applications? And how do we double down essentially with that material and those applications? And I'd say the other thing that we find is while our customers are always interested in more material, I'd say that's sort of a consistent drumbeat across the board for us is they all want more. The reality is they understand there's a somewhat limited amount of material, as you say, coming out of origin one relative to, of course, the total market size for these applications. And so they're focused also alongside us on doing the work that is most valuable with that material in order to move these markets along beyond these sort of beyond PET, beyond drop-in markets. And so I think there's a lot of... common interest in getting these markets moved along as easily as possible, even though, of course, as you say, they want as much as they can get as soon as they can get it.

Thank you. Appreciate it.

Our next question comes from Eric Stein of Craig Hallam. Please go ahead.

Hi, everyone. Thanks for taking the questions. Eric, just to take that last question a little bit further, I mean, even beyond origin one, as you play this out, clearly you're seeing a big expansion in what you've got under contract, you know, off takes in that 3.4. But are you sensing that your customers are starting to get concerned or at least look at a little further and see some scarcity value to the production that you're planning? And I guess I'm just wondering, Is that something that you could, you know, potentially ask for prepayments or things along those lines that could maybe accelerate, you know, Origin 2 or Origin 3's timeline and then going forward?

Yeah, it's a great question. So, we are placing some orders on Origin 3 already as an example, and as part of our It's part of our contracting process when we go from a capacity reservation to fully reserving the capacity. There's a choice of a prepayment or going straight to offtake. And we do think it's likely that many customers will choose to make prepayments as they have in the past. And, you know, having that demand, those prepayments are the kind of things that will help us accelerate Origin 3 to the extent we can. And and origin and beyond.

Yep, and just to be clear when you talk about. Origin 1 and origin 2 being fully funded and also having access. You're not. It doesn't sound like you're factoring in any prepayments. If that were to be the case, that would be above and beyond the projections that you just gave today. And as you said, would serve to accelerate things.

It's true that we have not included prepayments in any of our. funding assumptions. And yeah, if we were to receive meaningful prepayments, that would clearly help fund Origin 3 and beyond. Yep.

Okay, good. And maybe this last one for me, just curious, as you've gone through this process, as things develop, the merger closes, all that, if anything has changed or any updated thinking on the feedstock strategy,

Um, how you're approaching that. Yeah, um, on the, on the, which strategy.

Oh, go ahead.

Just on feedstock. I mean, whether it's location, I know you can use it. Yeah, you can use a wide range of materials, but, you know, are you, are you starting to think that that there are a few that would be optimal?

I'm just looking for any details there. Yeah, got it.

So, no, we haven't seen a huge change in our feedstock strategy or even really much of a modest one. I think what we're seeing is consistent support of our view of the feedstock markets for our process, which really means, you know, lots of it available, very consistent pricing historically and looking forward to, you know, obviously we're looking at sites that have great access to feedstock. And I think, you know, that includes, of course, you know, sawmill and pulp mill residuals, but all sorts of other materials as well. And I think, generally speaking, we feel like there are, frankly, if anything, more opportunities than we were expecting to see these pulp mill sites than we were anticipating originally. So I think, you know, Definitely seeing reinforcement and maybe even more opportunity than we were expecting on the feedstock side.

Okay. And I did jump on a little late, so I apologize. But just to confirm, did you say that Origin 2 you thought that or you were hoping to have a site selected? Was it by the end of 2021? Did I hear that correctly?

That's correct. Okay. Thank you.

Our next question comes from Pavel Molchanov of Raymond James. Please go ahead.

Thanks for taking the question. In your comments about financing for Origin 2, you talked about kind of commercial lending arrangements. What's the role of the public sector in how you're thinking about Origin 2?

Hey, Paul. It's Nate. Let me see if I can take that one. It's a great question. One, I think that first you have to remember that we do consider ourselves fully funded, and we see that through a combination of what our traditional project financing, and that does include some government support programs. We think there are some terrific programs available through loan guarantees, for instance, domestically through the USDA, U.S. Department of Energy. But we also are fully prepared to do this through a conventional project finance or municipal bond market.

Understood.

Okay, so those are all options. How many sites for Origin 2 are you choosing from? And I guess, what's the geographic scope of those options? Yeah, sure.

So, generally speaking, you know, we saw many dozens of potential sites, you know, at the sort of top of the funnel that satisfied our roughest criteria. And then as we've honed that down, You know, we're seeing, let's call it six to eight sites at this point that we think are really, really good sites that meet every single one of our criteria and each of which would be spectacular. I'd say generally speaking, you know, the Gulf region broadly is attractive geographically because it has, you know, generally low cost of feedstock. It has lots of extremely skilled labor, both on the construction and the operational side. It has, you know, an incredibly knowledgeable sort of industry infrastructure around capital projects and processes of this sort. So I think that I would say that that is likely. But, you know, I wouldn't at this point narrow it down beyond that. Although we have, you know, again, we have a handful of sites that we're extremely excited about.

Got it. Thanks very much, guys. Thank you.

Our next question is a follow-up from Mark Connolly of Stevens. Please go ahead.

Thank you. Just a couple of big-picture questions. You've pointed out in the past that the big plastic producers aren't your competitors but are potential customers, partners, collaborators. What needs to happen for those relationships to grow, and what will we see from the outside?

When are we going to see these, and what's it going to look like? I'll start, and maybe, John, you can add if I missed anything.

But we have existing relationships with Solvay, Mitsubishi Gas Chemical, Step-On, and a few other chemical companies where they're taking our our materials and then, you know, further engineering them into higher value applications, including going into engine components and things like that. So we certainly see them as sort of customers in a way of taking our materials to market. We've also talked about the tolling relationships and partnerships like that, which are inactive discussions. And then we've also talked about our open-mindedness towards licensing as we, you know, try to get more supply online over time. So we really approach those partnerships with a very open mind and with a lot of different ways to work together.

Do you expect in the next six months to be telling us about more of these kinds of relationships? That's really sort of what I'm looking for is timing.

Yeah, timing is always hard with these big companies and big partnerships. But we have an active pipeline of conversations going on. with other chemical companies. So I would think we would have things to share in the coming months.

Okay. And just a second question. As we think about the transition to CMF, and I suppose HTC, but I'm more interested in CMF, what role in getting that message out to consumers are you going to play versus your customers? You know, are you expecting most of the plastic buyers to be the ones that really do the promoting of this? I'm just trying to understand how you think about, you know, you mentioned early on, you know, easy gets all the press. So how do you attract more attention?

Yeah, so we'll certainly be as visible and promoting as much as we can. But if you think about the magnitude of some of our partners, think about Pepsi's and Nestle's and Danone's of the world and the Fords and others that we're talking to. And, you know, I think their marketing platforms and ability to put things on labels and deliver consumer messages will be really what pushes it through.

Okay, yeah. I wasn't expecting you to tell me there was going to be a big ad budget. And just last – With respect to Origin 1 and 2, what kind of milestones should we be watching for in the second half to know whether you're on track, and what are we likely to hear from you?

Yeah, great question. I think the big ones to look for are, for Origin 1, it's erection of the modules. Getting those modules up and bolted down to the foundation is difficult. We don't expect it to accelerate the overall timeline for Origin 1, but hitting that ahead of schedule the way that we're now expecting to, or ahead of our original schedule, I think really shows that we're moving this thing along. And I think it gives us just yet another thing to look at and say, okay, this is moving the way it's supposed to. So I think that's one that I would look for. And I think the second one on Origin 2 is really site selection. We mentioned in our prepared remarks that that we had selected Worley in particular to work with us on the front end engineering for Origin 2. You know, Worley's sort of the best in class in this kind of stuff. And so bringing them in, you know, we were originally anticipating to announce that more like end of year. And so, you know, we pulled that forward quite a bit. We've gotten it done already. So we're moving along there. And then I think that, you know, the second big one is one that came up in an earlier question. you know, when are we going to have the site selected, and we're still anticipating having that selected by the end of the year. So I think that's what I would keep an eye out for.

Super. Thank you.

This concludes the question and answer session. I would like to turn the conference back over to Mr. Riley for any closing remarks.

Thanks, Arielle, and thank everyone for joining us today. We look forward to future discussions updating you on our progress. Have a great evening.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.