Origin Materials, Inc.

Thank you and welcome, everyone, to Origin Materials' second quarter 2023 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 has 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 on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views as of today should not be relied upon as representative about views 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 on 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 on Form 10-Q filed on August 9, 2023. 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 will find additional disclosures regarding the non-GAAP financial measures discussed on today's call and our press release issued this afternoon and our filings with the SEC, 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'll turn the call over to John.

Thank you, Ashish, and thanks to everyone joining us. Today, we will be referring to the slides that were posted to the investor relations section of our website earlier this afternoon. I will begin with a discussion of Origin 1 startup, provide an update on Origin 2, and discuss product development. Rich will then review our Q2 highlights and provide a commercial and regulatory update. Nate will conclude with a financial overview. Regarding Origin 1 and the continued progress made by our team, I would like to point you to a new video that we posted today in the investor relations section of our website, providing a closer look at plant startup. I will begin on slide 5 with an update for Origin 1. In late June, we announced that OriginOne, the world's first commercial-scale plant to produce origins intermediates, CMF, HTC, and oils and extractives, had initiated startup in line with prior guidance. This is a tremendous milestone in our journey to deharmonize the world's materials. It is also a testament to the strength of our team, which faced considerable COVID-19 and other related supply chain headwinds. OriginOne, located in Sarnia, Ontario, Canada, scales up our core technology platform for converting sustainable wood residues into intermediate chemicals. And we expect the power of our platform intermediates to be transformative for the chemical industry and how the world makes physical goods. OriginOne is first and foremost a strategic asset to qualify applications of our intermediates. Apart from perizymia and biopet, using product from OriginOne, we plan to explore or qualify FDCA, epoxies, resins, surfactants, sustainable carbon black, bioasphalt, and biofuels. We expect to gradually ramp up Origin 1 operations, and we aim to optimally fulfill customer demand while we produce samples and qualify materials. We remain confident that we'll be able to meet our production goals to support our revenue guidance. Origin 1 enables the commercial scale production of CMF, a versatile chemical building block that can be used to make numerous downstream products, including paraxylene, which is a precursor to PET plastic, and SCCA, which can be used in numerous sustainable products and materials such as the next-gen polymer PEF. The commercialization of a molecule like CMF is historic, on the order of the commercialization of the ethylene molecule. After working with CMF for over a decade, we couldn't be more enthusiastic. Turning to slide seven, we say that CMF is a new chemical building block, but what do we mean by that? An important chemical building block has a low cost of production, high versatility across applications, and differentiated performance. What we've seen historically is that when you combine those three qualities, you have a high-impact building block. Throughout history, a relatively small number of key chemicals have unlocked and transformed the chemical industry. The most recent ones, polycarbonate, acrylate, and urethanes, were commercialized in the 1980s. Introducing a new building block chemical is hard and takes time, but it's worth the effort. In 1942, ethylene reached a major milestone, the first production of ethylene through the catalytic cracking of ethane. What followed was decades of process improvements, market penetration, and the rise of ethylene to a $125 billion market. CMF is a similarly powerful molecule due to its low cost of production, high versatility, and differentiated performance. In the case of CMF, the differentiation is the low carbon intensity when it's produced from biomass using the origin process and the performance advantages of some of its applications. Over the next decade, growing CMF will be analogous to growing an oak tree. For the first few years, most of an oak's growth occurs underground as the root system is established. Only then does the tree get taller, stronger, grow branches, and become a mature oak. Similarly, in the chemical building block business, the first phase is to establish a foundation for long-term growth. We are engaged in these foundation building activities every day, and we are excited about and committed to the journey ahead of us. Turning to slide eight, we see CMF's versatility and transformative power. Here, a simplified chemical product manifold describes some of the chemistry that CMF makes possible in an industrial scale. From CMF, we can develop new classes of diols, amines, and diacids, in addition to drop-in molecules like parazymine, which you're familiar with as the precursor to PET plastic. Those chemical families, in turn, can be used to produce a range of surfactants, epoxies, polyurethanes, polyamides, and more. Growing and cultivating the branches of our CMF tree is the job of R&D and the work we do in collaboration with our partners. Turning to slide nine, we're excited to announce the mass production of FTCA, a high-value downstream application for CMF. We'll move forward to Origin 2 rather than Origin 3 as initially planned in April 2021. We're bringing FECA forward for several reasons. First, we've seen stronger FECA commercialization progress than we anticipated two years ago. Second, FECA applications tend to be performance advantaged and thus offer higher margins than Paris Island and PET. Third, we have validated the drop-in deployment of FECA within the PET market, providing a clear pathway to commercialization that is on strategy for us and our customers. Fourth, we are excited for the potential of FTCA in other polyester and nylon applications, and we look forward to providing updates on these as appropriate. In summary, we are seeing broad support and momentum for FTCA commercialization. Indeed, the U.S. Department of Energy has previously shortlisted FTCA as one of the most promising biochemicals of the future. Turning to slide 10, our FTCA go-to-market strategy is to begin with drop-in applications before moving into higher-margin applications requiring additional development work. These drop-in applications are not expected to require meaningful retooling of existing methods of production. We expect to develop FGCA within existing PET markets with the following phase approach. One, commercialize drop-in next-gen hybrid PETF polymers, offering performance advantages compared with traditional PET. Two, commercialize the advanced polymer PEF, which also offers performance advantages compared to traditional PET. Today, we are providing an update for Origin 2, our second commercial plant to be built in Geisman, Louisiana. As just mentioned, we continue to make progress developing products and applications related to the design of Origin 2, including FDCA, PEF, and liquid biofuels derived from our oils and extractives stream. While Origin 2 will focus primarily on FDCA production, and some of our PET customers have already begun expanding their orders to include FDCA, We remain committed to providing paraxylene for our BioPEP customers and plan to bring commercial quantities of paraxylene to the market before 2030. While our current plan is a rational prioritization of Origin's researches towards more profitable, typically performance-enhanced chemical applications at Origin 2, we also see massive demand for our drop-in BioParaxylene. We believe that the best way to meet this demand will be through collaborations with others. We've been in active discussions with multiple strategic partners who are interested in licensing or co-developing low-carbon bio-parasitizing plants using Origin's technology, both in the U.S. and across the globe, and most of which are large, well-capitalized industrial producers of petro-PTA, PET, and other downstream products who recognize the need for more sustainable products. We are also updating our previously disclosed capital budget and construction timeline for Origin 2. As we first indicated in May 2022, we are facing a higher-cost capital project environment than in early 2021 when we announced the initial plan for Origin 2. As such, we are revising the plan's outlook and introducing a phased approach to construction. Adapting in this manner to the high-cost environment helps to reduce project risk as we move forward on the path of profitability. Turning to slide 11, since Origin became publicly traded into 2021, we have witnessed profound market shifts, presenting both opportunities and challenges. Factors influencing our updated plan include significantly higher than anticipated demand for higher margin products, including FPCA, DEF, and liquid biofuels, increased cost of labor, materials, process inputs, and metallurgy due to volatile global material markets requiring engineering rework, inflation and higher interest rates, and higher costs due to COVID-related supply chain constraints and additional value engineering requirements that have extended project timelines. Turning to slide 12, we now expect 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 extractive stream. From this stream, Origin plans to produce a drop-in biofuel with potential applications including marine fuel and heat and power generation. Potential benefits include improved energy density compared with existing renewable alternatives and the sustainability benefits of increased biocontent. Value propositions expected to be in high demand given, among other things, the decarbonization goals set out by the International Maritime Organization, a body of the United Nations. Phase two will expand production to include the mass production of platform chemicals, CMF, and HTC. Phasing the plan is intended to enhance overall efficiency while improving short-term and long-term economics. The capital budget for Phase 1 of Origin 2 is expected to be up to $400 million, while the capital budget for Phase 2 is projected to be up to $1.2 billion. This compares to the original $1.07 billion aggregate capital budget estimate first provided in February 2021. As Nate will discuss in more detail, we are exploring multiple opportunities to finance Origin 2, including a combination of existing cash, previously indicated traditional project financing, federal and state government programs, licensing agreements, and strategic partnerships. We expect capital expenditures of up to $50 million for 2024, with the majority of Origin 2 capital spend to occur following the project's final investment decision, or FID, in 2025. In summary, the Origin 2 project represents a significant scale of our technology, core processing capabilities, This scale-up will be instrumental in enabling Origin to execute on its mission and greatly expands our ability to deliver product and address customer demand. We remain deeply committed to the project, and we will do the work, make the investment, and build the relationships to make Origin 2 a success. With that, I would like to turn it over to Rich, who will review our Q2 highlights and provide a commercial and regulatory update.

Thanks, John. Moving to slide 13, customer demand remains strong, with offtake and capacity reservations now exceeding $10 billion, up from $9.3 billion in February 2023. We are excited to have crossed this significant milestone and to highlight that the majority of the growth in demand was for FTCA, which is where our team has been focused. As mentioned in prior calls, we do not plan to provide updates on this number every quarter, but we'll provide updates as appropriate. We are maintaining 2023 guidance for revenue of $40 million to $60 million, and adjusted EBITDA loss of $50 million to $60 million. We're also pleased that revenue generated by joint development agreements and our supply chain activation program continue to grow in the second quarter in line with guidance. We continue to see strong positive tailwinds for our technology and business model. Origin continues to explore several programs funded by the IRA, or Inflation Reduction Act, including the Department of Energy's Advanced Industrial Facilities Deployment Program, or AIFD. which we expect to hear feedback on by the end of the year, and the Section 48C Advanced Manufacturing Tax Credit. We remain optimistic that these programs could provide meaningful support for the construction of Origins plants. Turning to slide 14, in early August, we were excited to announce a strategic partnership with Sustainia Bioglycols, a joint venture between Braskem, the largest thermoplastic resin producer in the Americas, and a global pioneer in biopolymers, and Sojitz Corporation, a Japanese global trading company with wide-ranging market networks and a strong presence in Asia. Our partnership centers on advanced bio-based materials and is part of the partnership sustaining assigned two multi-year capacity reservation agreements to purchase renewable chemicals from Origin, including bio-based PTA and bio-based FTCA. Turning to slide 15, in late July, we were pleased to announce that Origin and Husky, a pioneering technology provider of injection molding equipment and services to the food and beverage packaging and consumer products industries, had achieved a milestone in the commercialization of PET, incorporating the sustainable chemical FDCA for advanced packaging and other applications. Specifically, Origin successfully polymerized the bio-based sustainable chemical FDCA into the common recyclable plastic PET. Husky then molded the resulting PETF hybrid polymer into preforms that were then blown into bottles. The companies used Husky's injection molding technologies and manufacturing equipment, a commercial manufacturing scale level of processing, demonstrating the ability of PETF, the polymer made with FDCA, to be integrated into existing PET production systems. This innovation demonstrates a pathway for the drop-in market adoption of FDCA to produce superior polymers cost-effectively from biomass using Origin technology. Our PETF polymers offer improved performance compared with traditional PET plastic, with properties like enhanced mechanical performance and superior barrier properties controlled by adjusting manufacturing conditions and the quantity of the FDCA copolymer. Turning to slide 16, in early August, we announced a strategic partnership with Terfane, a global leader in specialty PET polyester films, to produce sustainable, high-performance biopolymer films. As part of the partnership, Terfane signed a multi-year capacity reservation agreement to purchase the advanced biopolymer PEF for use in film applications, including food and beverage packaging in high-value industrial applications. Turning to slide 17, in early August, we announced a strategic partnership with Promen, a leader in natural gas-derived products and one of the world's leading producers of methanol, centered on low-carbon biofuel production, utilizing Origin's technology platform and Promen's worldwide fuels capabilities and expertise. As part of the partnership, Promenade Origin Materials signed an agreement to explore the production and global distribution of low-carbon biofuels. Low-carbon intensity biofuels made from wood waste reflect the future of biofuels as the industry moves aggressively towards decarbonization. Origin's technology platform is uniquely positioned to deliver these renewable fuels using our oils and extractives intermediate stream. We are excited to partner with Promenade. a company that brings significant expertise across engineering, procurement, and construction related to world-scale sustainable technology development. Over the long term, we see the potential for biomass-derived low-carbon-intensity fuels to be used in marine and other transportation fuels, industrial applications, heat and power generation, and more. Turning to slide 18, in early August, we announced a recyclability innovation and new product line with Origins All-PET Bottle Caps Enclosures. In 2021, the global caps and closures market was $65 billion. This market is expected to grow to approximately $100 billion by the end of the decade. Today, caps are typically made from different materials and bottles, presenting challenges for recycling and separating material streams and putting a ceiling on the amount of recycled content that can go into a bottle. The industry has long sought a monomaterial solution for caps and bottles, so we are thrilled to have launched our all PET bottle caps and closures business. Apart from improving post-consumer recycling, our design and manufacturing innovation makes made-with-100% recycled PET possible from cap to bottle. Origins PET caps may be cost-competitively produced with any type of PET, from recycled PET to Origins 100% bio-based carbon-negative virgin PET. Notably, PET performs better than HTPE and PP common cap materials, offering improved oxygen and CO2 barriers. With our PET caps business, we identified a global sustainability challenge and an opportunity to solve it. An all PET bottle and cap enclosure system is an obvious necessary next step in beverage packaging and recycling. We are proud that our team's expertise in PET led to this tremendous advancement for recycling, and we look forward to providing updates on this new business line. I'd like to take a moment to spotlight how our platform is stronger today than when we first became public and provide a look ahead. Turning to slide 19, Over the last two years, our platform evolution can be summarized in one word, performance. When we first listed on the NASDAQ, we called ourselves the world's leading carbon negative materials platform, emphasizing our competitive cost of production and powerful carbon advantage. Since then, we've developed higher margin, higher performance products, such as carbon black for automotive tires and products such as FDCA, PEF, and our hybrid polymer PETF. Reflecting this strong base of innovation, we now have intellectual property across 31 patent families, more than a 50% increase since February 2021. Our performance-advantaged products carry all the benefits of our platform in terms of competitive cost of production and low-carbon footprint, but include additional benefits specific to their applications. Because of our success in these developmental efforts, today we are proud to say high-performance, low-carbon, better materials start with Origin. Turning to slide 20, the Origin platform stands apart from other technologies by offering the best value uplift for biomass. Origin is fundamentally economically advantaged compared to other biomass conversion technologies. This is because of the simplicity of our technology, which is able to chemically convert woody biomass into chemicals, a more direct means of producing intermediate chemicals than alternative processes like paralysis, with almost zero carbon loss during the conversion. Our products can command a premium for their sustainability and performance characteristics across a wide array of applications. The result is that our platform, which has such which acts something like a petrochemical refinery, except utilizing biomass as the key feedstock instead of oil, is able to deliver several times the margin of competing technologies. Turning to slide 21, we expect the gross margins of our intermediate streams to grow stronger with time. Product development, the versatility of our intermediates and economies of scale, will drive long-term value creation. For those who have followed our story, you have already witnessed our platform evolve to take advantage of higher margin opportunities. most notably with the acceleration of FDCA to Origin 2. This is just one example of our strategy of pursuing the highest value, most impactful opportunities for our versatile platform. Turning to slide 22, often we're asked who our competition is. The answer is simple. Capacity is our competition. The chemical industry, our supply chain partners, consumer brands, all of us are working together to achieve the same goal, better materials that help fight climate change. Our ability to grow our business is not limited by competition, it's enhanced by cooperation. The way we win is to bring on additional capacity as quickly, intelligently, and safely as we can. Our strategy is twofold, build and license. While we plan to build, own, and operate Origin 1 and Origin 2, licensing is key to our ability to scale rapidly. Last quarter, we announced our first potential licensing agreement with SCGP. We continue to explore other licensing agreements with many of our customers, and we are well positioned to take advantage of a host of strategic opportunities around the world to increase production strategically in a way that plays to local strengths, whether it's feedstock availability, government incentives, skilled industrial talent, and burning existing facilities or other opportunities. Turning to slide 23, in early June, we were thrilled to announce the appointment of Jim Stefano to the Origin Board of Directors. Jim's proven track record leading manufacturing and technology initiatives for global companies is highly complementary to the skill set of our board, and will prove invaluable as we ramp up Origin 1 operations throughout the year and begin commercial production. Jim brings to Origin over 30 years of experience in the manufacturing, operations, and engineering, including his current role as CEO of Integrated Project Services, an engineering and construction services provider to the life sciences sector. With that, I will turn it over to Nate to discuss some of the financial details.