Q4 2024 LanzaTech Global Inc Earnings Call
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Mhm.
Later in the call there will be a question and answer session.
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And now at this time.
Speaker Change: I will turn things over to Kate Walsh, Vice President of Investor Relations and tax. Please go ahead.
Kate Walsh: Good morning, and thank you for joining us for Lanza Tech Global Inc's third quarter of 2024 earnings Conference call.
Speaker Change: On the call today I'm joined by our Board Chair and CEO, Dr. Jennifer Holmgren, and our CFO, Jeff Hardwick Bryan.
Yeah.
Jennifer Holmgren: Over the course of the past year, we have been evolving our business model to complement our licensing business and enhance our capability to develop and finance our own projects where we have more control over their timing and ultimate performance. and in which we expect to achieve greater economics, including greater upside for LanzaTech and the product and profits of these projects. This evolution can be seen in our recently announced project in Norway, which is expected to reach final investment decision within six months, and which we expect to be the first project to be developed with our infrastructure capital partner, Brookfield Asset Management, which committed $500 million for such LanzaTech projects.
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Speaker Change: Earlier. This morning, we issued a press release with our third quarter 2024 financial and operating results as well as an investor presentation summarizing the company's performance and key operational highlights for the quarter.
Speaker Change: Please also reference our quarterly report on Form 10-Q for the quarter ended September 32024 filed today.
Speaker Change: Both our press release and Investor presentation can be found in the Investor Relations section of our website at Www Dot lands attack Dot com.
Speaker Change: Before we begin I'd like to direct you to the disclaimers in the front of our Investor presentation and remind you that today's call includes forward looking statements.
Speaker Change: Any statements describing our beliefs.
Speaker Change: Those plans strategies expectations projections forecast and assumptions are forward looking statements.
Jennifer Holmgren: It can also be seen in the creation of our joint venture with the Orian Group in the Middle East, which we expect will finance and cultivate a growing pipeline of commercial opportunities in that region.
Speaker Change: Please note that the company's actual results may differ from those anticipated by such forward looking statements for a variety of reasons many of which are beyond our control.
Jennifer Holmgren: And it can be seen in another project, our Project Drake, which I'm excited to announce today as it has reached a major milestone, which should have significant positive impact on our fourth quarter financial performance and drive the meaningful amount of income. for 2025 if we rapidly finalize the agreement as expected. Comparable to a project dragon in the UK, Project Drake is a 30 million gallon per year EU-based ethanol-to-sustainable aviation fuel project that we have been developing over the last three years, which will utilize ethanol from LanzaTech's waste-to-ethanol technology platform and convert it to SAF via the LanzaJet platform.
Speaker Change: Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business prospects and future results.
Speaker Change: Unless required by law, we assume no obligation to update publicly any forward looking statements.
Speaker Change: In addition, we will be discussing and providing certain non-GAAP financial measures today, including adjusted EBITDA.
Speaker Change: Please see our earnings release and filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures.
Speaker Change: With that I'll turn the call over to Jennifer.
Jennifer Holmgren: Thank you Kate and everyone joining us today, it's been a dynamic Newsweek and we appreciate your time and ongoing support of venture back.
Jennifer Holmgren: We have completed the front-end engineering and design, or feed work, for inside-the-battery limits of this project and expect to reach investment decision and fully finance the construction stage of this project in 2025. Today, I'm announcing that we have entered into an exclusivity and financing commitment agreement with a new financial partner, whereby they intend to acquire certain rights in the development of this project, fund the remaining capital needed to reach FID, and enter into a development services agreement with LanzaTech for this remaining work. We expect to maintain significant upside participation in this project and have already received the first $5 million in fees associated with this agreement and expect to share more about this exciting project and its potential additional impact on our 2024 and 2025 results later in the quarter as we finalize these agreements.
Speaker Change: First let's address the elephant in the room, our third quarter revenue was $9 $9 million about $7 million below target.
Speaker Change: This is primarily due to two factors one we were expecting another lens forget sublicense event that would have resulted in the issuance of the second tranche of land to get shares to them to take in the third quarter and close to $8 million in revenue associated with that event similar to our second quarter.
Speaker Change: And two while our carbon smart revenue more than doubled quarter over quarter to $2 $2 million in Q2, we do.
Speaker Change: Due to the market dynamics of ethanol pricing being depressed in a target market for Q3 that was still significantly below our expectations for the quarter.
Speaker Change: While we are actively evaluating material cost reduction opportunities across the business as well as opportunities to reallocate resources to focus on that accelerate commercial activities. I also want to talk with you today about the evolution of our business model to accelerate revenues and profitability.
Jennifer Holmgren: I want to clarify that we are not shifting to a capital-intensive business model where we're taking binary company risk on individual projects. Rather, we're taking more control over our own success, shortening project development life cycles, and positioning ourselves for greater upside in multiple projects by partnering with world-class visionary capital partners from the earliest stages of our project development. Securing capital for development-stage projects is difficult and time-consuming, especially on a project-by-project basis, which is why we have adopted this partnership approach with strong capital partners for financing the various stages of project development and securing financing partnerships up front, and then designing and developing projects to meet our partners' investment criteria.
Speaker Change: Having worked with partners like <unk>, or so of middle and Indian oil Corporation to develop and construct startup and operate six commercial scale bio refineries. We believe we have established and know how and infrastructure to develop our own commercial projects.
Speaker Change: <unk> has grown primarily with our licensing business model, which allows for rapid capital light scaling. It is a tough model that leaks is dependent upon the adoption in decision cycles of our licensees and often does not allow us to capture the full value of our technology.
Speaker Change: Over the course of the past you had been evolving our business model to complement our licensing business and enhanced capability to develop and financial projects, where we have more control over their timing and ultimate performance.
Jennifer Holmgren: We are also continuing to expand access to ethanol volumes produced from our licensee biorefineries in order to grow our carbon smart business and its margins. Today, we also announced a two-stage ethanol offtake agreement with ArcelorMittal, a short-term contract with a $6 million annual revenue potential, and a five-year contract with annual commitments of 5,000 to 10,000 tons, generating a potential $10 to $20 million per year. This is our first long-term ethanol purchase agreement, which enhances our access to product and allows Carbon Smart customers to make longer, larger commitments, which has the potential to significantly boost our future revenues.
Speaker Change: And in which we expect to achieve greater economics, including greater upside for Lam should take into products and profits of these projects.
Speaker Change: This evolution can be seen in our recently announced price you can normally which is expected to reach final investment decision within six months and which we expect to be the first project to be developed without infrastructure capital partner Brookfield asset management.
Speaker Change: Committed $500 million for such lands with tech projects.
Speaker Change: It can also be seen in the creation of our joint venture with the <unk> group in the Middle East, which we expect to finance and cultivate a growing pipeline of commercial opportunities in that region.
Jennifer Holmgren: This progress is thanks to the foundation we developed for delivering Carbon Smart ethanol to our customers and trading ethanol from our China plant.
And it can be seen in another project.
Speaker Change: Drake, which I'm excited to announce today as it has reached a major milestone.
Should have significant positive impact on our fourth quarter financial performance and drive the meaningful amount of income.
Jennifer Holmgren: Now let's talk further about why we're in a strong position for 2025 and beyond. If we look back at what LanzaTech team has accomplished since our last earnings call, it is truly impressive and speaks to the solid foundation we continue to build for long-term growth. First, on the sustainable aviation field front, in addition to Project Drake, we have announced several projects and milestones which demonstrate the interest in LanzaTech ethanol produced from waste resources to produce SAF through Circular. That is our joint offering in partnership with LanzaTech. The global market for sustainable aviation fuel produced for methanol is experiencing significant growth, and we expect the pull of our ethanol's feedstock for SAF to grow right along with it.
For 2025, if we rapidly find the life of the agreement.
Speaker Change: Expected.
Speaker Change: Comparable to our project Dragon in the UK project joint gives us 30 million gallons per year.
Speaker Change: The ethanol to sustainable aviation fuel project that we have been developing over the last three years, which will utilize ethanol from lands at next week's to ethanol technology platform and convert it to SaaS.
Speaker Change: Atlanta kept platform, we have completed the front end engineering and design or feed work for inside the batter limits at this project and expect to reach final investment decision and fully finance the construction stage of this project in 2025.
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Jennifer Holmgren: There are projects underway in the UK, the EU, India, Australia, and New Zealand, and we expect LanzaTech's Freedom Pines fuel facility here in the U.S. to start producing barrels imminently. What all these projects reinforce is the massive interest in our ethanol producing technology which provides a critical source of feedstock for the multiple SAF projects underway leveraging LanzaTech's technology. During the third quarter, we also expanded the scope of our work with our New Zealand Command to assess the use of municipal solid waste as a local feedstock for shaft production in New Zealand. after successfully completing a feasibility study for locally grown woody waste.
Speaker Change: Today I'm announcing that we have entered into an exclusivity and financing commitment agreement with a new financial partner.
Speaker Change: By the intent to acquire certain rights into the development of this project and the remaining capital needed to reach if I boot and enter into a development services agreement with lands for the sweep making work.
Speaker Change: We expect to maintain significant upside participation in this project and have already received the first $5 million in fees associated with this agreement and expect to share more about this exciting project and its potential additional impact on our 2024 and 2025 or so later in the quarter as we finalize.
Jennifer Holmgren: This builds upon the work we're doing with Wagner Sustainable Fuels in Australia, our first circular project around municipal solid waste as feedstock for their planned SAF refinery at the Port of Brisbane. And adding to our project using municipal solid waste as feedstock to ethanol production is the master licensing agreement with CitySuite that we signed in September to develop multiple ways to ethanol plants across Japan. We are in the early stages of executing this plan, but are truly excited about developing a replicable global blueprint for other countries and businesses to follow on how to access and utilize the carbon log in local garbage.
Speaker Change: These agreements.
Speaker Change: I wanted to clarify that we are not shifting to a capital intensive business model, where we're taking binary company risk on individual projects, rather we're taking more control over our own success shortening project development life cycles, and positioning ourselves for greater upside in multiple projects.
Speaker Change: By partnering with World Class visionary capital partners from the early stages of a project development.
Speaker Change: Securing capital for development stage projects is difficult and time consuming, especially on a project by project basis, which is why we have adopted this partnership approach with strong capital partners for financing the various stages of project development and securing financing partnerships upfront and then.
Okay.
Jennifer Holmgren: Turning now to progress with industrial off-gases as a feedstock for ethanol production, our collaboration with Aramid in Norway represents what we believe to be the first-of-a-kind integrated CCU and CCS facility designed to achieve leading-edge carbon abatement results for hard-to-abate industries. Metals, cement, chemicals, shipping, and aviation are among the hardest industrial sectors to abate, and we see a number of avenues ahead where we can leverage and replicate the work we're doing in Norway to provide profitable decarbonization solutions to other companies grappling with the same situation. As we expand our biorefining global reach, we're also expanding our platform's capabilities.
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Speaker Change: Designing and developing projects to meet our partners' investment criteria.
Speaker Change: We are also continuing to expand access to ethanol volumes produced from our licensee by our refineries in order to grow our carbon smart business shipments margins.
Speaker Change: Today, We also announced a two stage ethanol off take agreement with actual of middle or short term contract with a $6 million annual revenue potential and a five year contract with a new commitments of 5000 to 10000 tons generating a potential $10 million to $20 million per year.
Jennifer Holmgren: In early October, we announced our ability to produce single-celled protein, a product we're calling LanzaTech Nutritional Protein. The estimated $1 trillion alternative protein market is expected to grow significantly, and our nutrient-rich product is designed to be an ideal ingredient for animal feed, pet food, and human nutrition that can be produced from CO2, oxygen, and hydrogen anywhere in the world. Our bioreactors have been producing protein as a co-product to ethanol for years, and now we have developed the capability to produce protein as the primary product.
Speaker Change: This is our first long term ethanol purchase agreement, which enhances our access to product and allows carbon smart customers to make longer larger commitments, which has the potential to significantly boost our future revenues. This progress is thanks to the foundation, we developed for delivering carbon smart ethanol to our customers.
Speaker Change: And trading ethanol from our China plant.
Speaker Change: Now, let's talk further about why we're in a strong position for 2025 and beyond if you look back of a lens that the team has accomplished since our last earnings call. It is truly impressive and speaks to the solid foundation, we continue to build for long term growth.
Jennifer Holmgren: Importantly, we continue to develop partnerships with animal, pet, and human food producers to enable us to aggregate demand for the production of LanzaTech nutritional protein at commercial scale.
Speaker Change: First on the sustainable aviation fuel front. In addition to projects, we have announced several projects in milestones, which demonstrate the interesting labs I think ethanol produced from waste resources to produce staff through circle there.
Jennifer Holmgren: To close, we are focused on a strong Q4 to finish the year. With nearly two months left, there's still a lot of time on the clock to execute what we have in process. Several of the largest initiatives we have in development right now have some element of timing uncertainty, which results in a large range of potential fourth quarter financial outcomes. Those initiatives are Project Drake, where we are finalizing agreements, our project in Norway, where we are preparing a package for FID review by Brookfield, and Project Secure, which we announced in March of this year and is progressing well.
Speaker Change: As a joint offering in partnership with Lam chicken.
Speaker Change: The global market for sustainable aviation fuel produced from ethanol is experiencing significant growth and we expect the pull of our ethanol as a feedstock for SaaS to grow right along with it.
Speaker Change: There are projects underway in the U K, the EU, India, Australia, and New Zealand, and we expect land tickets driven buying steel facility here in the U S producing barrels imminently.
Yeah.
Okay.
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Speaker Change: With all these projects reinforces the massive interest in our ethanol producing technology provides a critical source of feedstock for the multiple shaft projects underway leveraging them to catch technology.
Jennifer Holmgren: We are working on finalizing the contracting framework with Technip Energies and the Department of Energy. Additionally, the next LanzaJet sub-licensing event and the related issuance of additional shares of LanzaJet to LanzaTech has timing and certainty as well. It's important to note that we expect these projects will unlock access to cash that will significantly bolster our financial liquidity.
Speaker Change: During the third quarter, we also expanded the scope of our work with our New Zealand commenced yet to assess the use of municipal solid waste at a local feedstock for shaft production in New Zealand.
Speaker Change: After successfully completing feasibility study from locally grown woody waste.
Speaker Change: This builds upon the work we're doing with Wagner sustainable fuels in Australia, our first shook their projects around municipal solid waste feedstock for their pan fast we find that we have to pull the Brisbane and adding to our product excusing municipal solid waste as a feedstock to ethanol production is the master licensing agreement with <unk> Suisse.
Jennifer Holmgren: I am confident that the moves we're making with our business model will improve the certainty of development timelines as we go forward and will be accretive to our short-term and long-term business economy. We expect these moves will allow us to control more of the feedstock operations and offtake in our asset portfolio, which should increase our cash flow generation and accelerate our path to profitability.
Speaker Change: Shined in September to develop multiple wish to ethanol plants across Japan.
Geoffrey Trukenbrod: And with that, I'll turn it over to Jeff for the financial update. Thank you, Jennifer. Good morning, everyone, and thank you for joining us on the call.
Speaker Change: We are in the early stages of executing this plan, they're truly excited about developing a replicable global blueprint for other countries and business just a follow on how to access and utilize the carbon block in local garbage.
Geoffrey Trukenbrod: I'm going to provide some additional details associated with our results for the third quarter of 2024 and further details on our expectations for the fourth quarter. As Jennifer mentioned, headline revenue for the third quarter of 2024 was lighter than expected, but would have been in line with expectations if the next LanzaJet sub-licensing agreement had been signed in Q3 as we expected. For Q3, we reported $9.9 million of total revenue, which included $5.9 million of biorefining revenues, $1.8 million of revenue from joint development agreements and contract research, and $2.2 million of revenue associated with carbon smart product sales.
Speaker Change: Turning now to progress with industrial gas as a feedstock.
Speaker Change: Feedstock for ethanol production.
Speaker Change: Collaboration with government and Norway represents what we believe to be the first of a kind integrated TCE and Tcs facility designed to achieve leading edge carbon abatement results for hard to abate industries.
Speaker Change: Metal shipments chemical shipping and aviation are among the hardest industrial sectors to abate and we see a number of avenues ahead, where we can leverage and replicate the work we're doing in Norway to provide profitable decarbonization solutions to other companies grappling with the same situation.
Geoffrey Trukenbrod: Drilling down into these separate revenue categories, fire refining revenues of $5.9 million in Q3 was similar to Q2, excluding the $7.9 million related to the additional LanzaJet share consideration we received in Q2. As compared to Q3 of the prior year, this quarter was down $6.5 million, with the key variance item being higher engineering services revenue being reported in Q3 of 2023. Specifically, the engineering services associated with Project Dragon were particularly high in the third quarter of last year as that work was wrapping up.
Speaker Change: As we expand our bio refining global reach we're also expanding our platform's capabilities in early October we announced our ability to produce single cell protein.
Speaker Change: Recalling lens nutritional protein.
Speaker Change: The estimated $1 trillion dollar alternative protein market is expected to grow significantly and are nutrient rich product is designed to be an ideal ingredient for animal feed at truth and human nutrition that can be produced from shield, two oxygen and hydrogen anywhere in the world.
Geoffrey Trukenbrod: Going forward, we expect to see quarter-over-quarter uplift related to the monetization of engineering work to be done on Project Drake and other projects we have in our pipeline. Joint development and contract research revenue for the third quarter of 2024 was sequentially down $1 million to $1.8 million, as compared to $2.8 million for second quarter 2024, primarily due to the completion of a few pieces of government projects and some downtime before new projects kick off in fourth quarter, with results materializing in 2025.
Speaker Change: Our bio reactors have been producing protein as a co product of ethanol three years and now we have developed the capability to produce protein is the primary product importantly, we continue to develop partnerships with animal pet and human food producers to enable us to aggregate demand for the production of lamps that nutritional protein at commercial.
Geoffrey Trukenbrod: We announced the project ADAPT, government funding in October and expect to receive at least one other government contract before the end of the year, which sets us up nicely for 2025 growth in this category. And for CarbonSmart, product sales revenue for the third quarter of 2024 was $2.2 million, up significantly from 2Q24 of $0.9 million and in line with third quarter 2023. The quarter-over-quarter increase this year was driven by incremental direct fuel product sales built upon having the right licensing structure of partners and supply chain in place, which we announced during our 2Q24 earnings call.
Speaker Change: Scale.
Speaker Change: To close we are focused on a strong Q4 to finish the year with nearly two months less there's still a lot of time on the clock to execute what we have in process. Several of the largest initiatives. We have in development right now have some element of timing uncertainty, which resulted in a large swing to a potential fourth quarter fine.
Speaker Change: Actual outcomes.
Speaker Change: Those initiatives are.
Speaker Change: Project to date, where we are finalizing agreements Ah project in Norway.
Speaker Change: Paying a package for review by Brookfield, and project secured which we announced in March of this year and it's progressing well.
Geoffrey Trukenbrod: We had access to more volumes, but ethanol prices for fuels dropped in China, where we had targeted to sell these volumes, prompting us to scale back our trading activity. Going forward, we expect to have access to more volumes from our solar metals plant in Ghent, which will drive growth in our carbon-smart business for Q4 and beyond.
Speaker Change: We're working on finalizing the contracting framework with Technip energies and the department of energy.
Speaker Change: Additionally, the next land suggests sublicense fee events in the related issuance of additional shares of landscape the lancet thick X timing uncertainty as well.
Geoffrey Trukenbrod: Turning now to cost of revenue, which was $8.1 million as compared to $14.4 million for third quarter 2023 and $5.5 million for second quarter 2024. This was largely related to headcount allocations associated with the delivery of our biorefining services and JDA work during the third quarter of 2024 and the higher carbon smart sales. Gross margin was a relatively low 18% of revenue for the quarter as a function of revenue mix, including additional lower margin carbon smart sales and the fact that we did not realize the revenue, which was effectively 100% margin, associated with another bond's share issuance.
Speaker Change: It's important to note that we expect these projects will unlock access to cash that will significantly bolster our financial liquidity.
Speaker Change: I am confident that the moves we're making with our business model with improved certainty of development timelines as we go forward and will be accretive to our short term and long term business economics.
Speaker Change: We expect these moves will allow us to control more of the feedstock operations and our stake in our asset portfolio, which should increase our cash flow generation and accelerate our path to profitability and with that I'll turn it over to Jeff for the financial update.
Geoffrey Trukenbrod: On the operating costs front, third quarter 2024 operating expenses were $34.8 million, up approximately $5 million from prior year. Essentially flat as compared to second quarter 2024, and overall below budget as we have focused on controlling and reducing our costs. The increase year-over-year is driven by expenses associated with projects that we are developing with the intent of transferring them to our infrastructure capital partners later this year or early next year, at which point we expect to recoup these costs.
Jeff: Thank you Jennifer good morning, everyone and thank you for joining us on the call.
Jeff: To provide some additional details associated with our results for the third quarter of 2020 for further details on our expectations for the fourth world.
Speaker Change: As Jennifer mentioned headline revenue for the third quarter of 2024, it was lighter than expected, but would have been in line with expectations in the Netherlands, a Jones sublicense agreements have been signed in Q3 as we expected for.
Geoffrey Trukenbrod: And as for adjusted EBITDA, our third quarter 2024 adjusted EBITDA loss was $27.1 million as compared to third quarter 2023 adjusted EBITDA loss of $19.1 million. The year-over-year variance is attributable mostly to lower revenues reported year-over-year and the higher year-over-year project development expenses in OPEX that I just discussed.
Speaker Change: For Q3, we reported $9 $9 million total revenue, which included $5 $9 million and buy a refinery or others.
Speaker Change: $1 8 million of revenue from joint development agreements and contract research and $2 2 million of revenue associated with carbon smart product sales.
Speaker Change: Going down into the separate revenue categories.
Speaker Change: Refining revenues of $5 $9 million in Q3 was similar to Q2, excluding the $7 $9 million related to the additional lands a judge share consideration we received in Q2.
Geoffrey Trukenbrod: Wrapping up my remarks related to third quarter 2024, I'll give an update on our cash position. At the end of September, we had $89.1 million in cash on hand, including cash restricted cash and investments. This compares to $75.8 million at the end of second quarter 2024. The increase in our cash position quarter over quarter is attributable to the $40 million investment by CarbonDirect Capital we closed in August and announced on our second quarter call. We ended the quarter in a stronger cash position than forecasted, even on lower-than-expected revenues due to our focus on cost control and the fact that the forecasted revenues that we did not recognize in Q3 were not expected to have material cash flowing back.
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Speaker Change: Compared to Q3 of the prior year. This quarter was down $6 5 million key variance item being higher engineering services revenue to be recorded in Q3 of 2023, specifically the engineering services associated with project Dragon were particularly high in the third quarter of last year, because that work is ramping up.
Speaker Change: Going forward, we expect to see quarter over quarter uplift related to the monetization of engineering work done on project and other projects we have in our pipeline.
Speaker Change: Joint development contract research revenue for the third quarter of 2024 sequentially down $1 billion to $1 8 million as compared to $2 $8 million for second quarter 2024, primarily due to the completion of a few pieces of government projects and some downtime for new projects kick off in fourth quarter with results materializing in 2025.
Geoffrey Trukenbrod: Post-September 30th, we made a $10 million settlement payment to ACM, which is one of the two parties involved in the Ford Purchase Agreement that was put in place in 2023. It was our decision to fully satisfy our obligations to ACM under the FBA in cash in order to achieve two main benefits. First, we reduced the number of issued and outstanding common shares. And second, we limited future downward pressure on our stock price in the event that ACM was to sell their equity position in LanzaTech on the open market.
Speaker Change: We announced the project adapt government funding in October thanks back to receive at least one other government contract before the end of the year, which sets us up nicely for 2025 growing its Kevin.
Speaker Change: And for carbon smart product sales revenue for the third quarter of 2024 was $2 2 million up significantly from Q2 to $24.
Geoffrey Trukenbrod: Now I'd like to take some time and discuss our fourth quarter out. As Jennifer mentioned, we have a wide range of possible outcomes for the final four of this year. Potential drivers of revenue for fourth quarter 2024 include five key components. First, for the past three quarters, our current base business has generated about $10 million per quarter. Second, we expect our project in Norway to be in Brookfield's hands for FID evaluation soon, and we estimate that represents approximately $20 million of revenue for us upon positive FID. Third, Project Drake is in a similar ballpark to our project in Norway in terms of potential cash flow and income for fourth quarter in addition to baselining revenue for 2025.
Speaker Change: <unk> 9 million and in line with third quarter 2023.
Speaker Change: Quarter over quarter increase this year was driven by incremental direct fuel product sales built upon having the right licensing structure partners and supply chain inflation, which we announced during our Q4 earnings call.
Speaker Change: Had access to more volumes, but that's it.
Speaker Change: Oil prices for fuels rock in China, where we had targeted to sell these volumes, prompting us to scale back our trading activity.
Speaker Change: Going forward, we expect to have access to more volumes commercial metals plant, which.
Speaker Change: It will drive growth in our carbon smart business for fourth quarter and beyond.
Geoffrey Trukenbrod: Fourth, assuming we rapidly finalize our award contracting process for Project Secure, we forecast reporting approximately $4 million of revenue before the end of the year. And finally, LanzaJet is working tirelessly on a number of sub-licensing agreements, and the successful signing of another agreement could result in additional share consideration and incremental revenue during the quarter. We discussed our LanzaJet sub-licensing arrangement in detail during our second quarter 2024 earnings call, so I won't go into it as much today. But the potential for us to receive both the second and the third and final tranche of LanzaJet equity in the next several months would also be expected to result in significant revenue recognition associated with that shared consideration.
Speaker Change: Turning now to cost of revenue, which was $8 $1 million as compared to $14 4 million for third quarter, 2023, and $5 $5 million for second quarter 2004.
Speaker Change: This was largely related to head count allocations associated with the delivery of our by our refining services and J&J work.
Speaker Change: The third quarter of 2024, and the higher carbon smart sales.
Speaker Change: Gross margin was a relatively low 18% of revenue for the quarter as a function of revenue mix, including additional lower margin carbon smart sales and the fact that we did not realize the revenue with respectively on a percent margin associated with another ones jet share issuance.
Speaker Change: On the operating cost front third quarter 2024, operating expenses were $34 $8 million.
Jennifer Holmgren: With that, I'll turn the call back to Jennifer for some closing remarks before we open the call for Q&A.
Speaker Change: Up approximately $5 million from prior year, essentially flat as compared to the second quarter 2024, and overall below budget as we have focused on controlling and reducing our costs.
Jennifer Holmgren: Jennifer? Thank you, Geoff. I want to close by reiterating a few key points. First, we're happy with the progress we're making to evolve our business model and develop projects like the Aramid Collaboration in Norway and Project Drake in the EU. Second, there is strong enthusiasm for alcohol-to-jet-enabled SAF projects and our waste-based low-carbon ethanol. This has led to exciting announcements with Wagner Sustainable Fuels and Air New Zealand, with more anticipated. Third, we remain sharply focused on commercial growth and increased product sales in tandem with disciplined cost control in order to accelerate our path to mid-term profitability and positive cash flow from our operations.
Speaker Change: The increase year over year is driven by expenses associated with projects that we are developing with the intent of transferring them towards infrastructure capital partners. Later this year or early next year at which point, we expect to recoup these costs.
Speaker Change: And as for adjusted EBITDA, Our third quarter 2024, adjusted EBITDA loss was $27 1 million.
Speaker Change: Third the third quarter of 2023, adjusted EBITDA loss of $19 1 million.
Speaker Change: The year over year variance is attributable mostly to lower revenues reported year over year and a higher year over year project development expenses in Opex that I just discussed.
Speaker Change: Wrapping up my remarks related to third quarter 2024, I'll give an update on our cash position at the end of September we had $89 $1 million in cash on hand, including cash restricted cash and investments. This compares to $75 $8 million at the end of the second quarter of 2024.
Operator: With that, let's open up the call for questions. At this time, if you would like to ask star N1 on your telephone keypad. to withdraw your questions. Once again, to ask a question, please press the star.
Speaker Change: The increase in our cash position quarter over quarter is attributable to the $40 million investment by carbon direct capital we closed in August and announced on our second quarter call.
Leo Mariani: We'll take our first question from Leo Mariani with Ross, please go ahead. Thank you guys. Why don't you ask a little about some of these revenue components here.
Speaker Change: We ended the quarter and a stronger cash position than forecasted even on lower than expected revenues due to our focus on cost control and the fact that the forecasted revenues that we did not recognize in Q3 were not expected to have material cash flow impact.
Leo Mariani: I guess I'm a little confused on Project Drake. I guess you guys said that you received $5 million already. So is that $5 million of revenue that's going to hit in the fourth quarter? Is it going to be accounted for as something else? And then is that $5 million included as part of that roughly $10 million base revenue business that you expect or that would be additional to that?
Speaker Change: So September 30th we made a $10 million settlement payments ACO, which is one of the two parties involved in the forward purchase agreement put in place in 2023.
Speaker Change: It was our decision to fully satisfy our obligations to ACM under the FDA and cash in order to achieve two main benefits.
Speaker Change: First we reduced the number of issued and outstanding common shares.
Speaker Change: We limited future downward pressure on our stock price in the event the ACO was to sell our equity position in <unk> on the open market.
Geoffrey Trukenbrod: Hey, Leo. Good morning. Thanks for joining us on the call. So to address it, so Project Drake is a project we've been working on for a while. The $5 million is an exclusivity fee associated with it. We do expect it to think about it as a, effectively as a deposit or the first part of a broader payment in Q4 associated with. the paying for the development services packages work that we've done. So, you know, we expected we. Assuming we're able to finalize the agreements, then we do expect that $5 million to be part of what will be recognized as revenue, and not part of that $10 million that you quoted, which is, we're just trying to connotate there that that's what the business has been doing.
Speaker Change: Now I'd like to take some time to discuss our fourth quarter outlook.
Jennifer Holmgren: As Jennifer mentioned.
Jennifer Holmgren: Mid range of possible outcomes for the final quarter of this year.
Speaker Change: Drivers of revenue for fourth quarter 2024 include five key components first for.
Speaker Change: For the past three quarters, our current base business has generated about $10 million per quarter.
Second.
Speaker Change: We expect our project in Norway to be in Brookfield has RFID evaluation soon and we estimate that represents approximately $20 million of revenue for us upon positive.
Speaker Change: Third project terrific because it has similar ballpark for a project in Norway in terms of potential cash flow and income for fourth quarter. In addition to baseline revenue for 2025.
Leo Mariani: Conservatively speaking, it's been doing a little bit better than that, quarter-over-quarter, year-to-date. So, if that's not in that $10 million, that would be incremental. Okay, that's helpful.
[music].
Speaker Change: Fourth.
I mean, we rapidly finalize our award contracting process for projects sure the forecast recording approximately $4 million of revenue before the end of the year and.
Leo Mariani: And then just wanted to jump over to the cost side here. You guys have talked a lot about cost savings initiatives, you know, for quite some time. And I guess if I just look at the numbers here, you know, I guess I define your cash cost as basically cash G&A plus R&D. I guess those numbers have gone up the last three quarters here.
Speaker Change: And finally Lanza Jed is working tirelessly on a number of sub licensing agreements and the successful signing with other agreement could result in additional share consideration and incremental revenue during the quarter.
Speaker Change: We discussed our lands again sub licensing arrangement and detailed during our second quarter of 2024 earnings call. So I won't go into it as much today the potential for us to receive both the second and the third and final tranche of lands in equity in the next several months, but also be expected to result in significant revenue recognition associated with venture consideration.
Geoffrey Trukenbrod: So can you kind of help me out a little bit with the cost savings initiatives that they not yet hit the numbers, or maybe they were going to be higher than you reported, and now there's sort of less growth, I guess, in the cost. So I'm just trying to understand that.
Speaker Change: Yeah.
With that I'll turn the call back to Jennifer for some closing remarks before we open the call for Q&A Jennifer.
Jennifer Holmgren: And, you know, how do you think cost evolves your role into, you know, a fourth quarter in the future? Thank you for the question, Leo. What is happening is, as you know, Project Drake and also Project XLXs, we are delivering those projects to FID, and then they are transferred or sold, if you will. Because we're doing all the work now, we're doing, we're expensing all of that cost now. That includes external dollars, because as you know, to get to FID, we also have to do feed package with external contractors. We also have to do... applications permitting all of these things for environmental issues.
Speaker Change: Thank you, Jeff I want to close by reiterating a few key points first we're happy with the progress, we're making to evolve our business model and develop projects like the <unk> collaboration in Norway and project can be.
Speaker Change: Second there is strong enthusiasm for alcohol to jet enabled SaaS product et cetera, right space and low carbon ethanol.
Speaker Change: This has led to exciting announcements with Radnor sustainable fuels and New Zealand with more anticipated.
Speaker Change: Third we remain sharply focused on commercial growth increased product sales in tandem with disciplined cost control in order to accelerate our path to mid term profitability and positive cash flow from our operations.
Jennifer Holmgren: So there is an awful lot of work internal and external that is required to get a project to FID. All of those expenses are being booked right now. And then when the projects, both Drake and Exelexis, the Norwegian project get transferred, we will be in a position to simply recoup all those costs.
Speaker Change: With that let's open up the call for questions.
Speaker Change: Thank you at this time I would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: You may withdraw your question at any time by pressing star two.
Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.
Geoffrey Trukenbrod: Jeff, do you want to add something to that? Yeah, I would just say that with that, and Jennifer's absolutely right, that that has driven a significant component of our OPEX. OPEX is fairly consistent quarter over quarter, but it is, that piece of it is... Overshadowing some of the cost reductions we've had on specific OPEX items. So we've actually reduced, you know, quarter over quarter, many of our OPEX line items, as well as reduced it relative to budget for the year. So we're driving costs down relative to what we planned at the beginning of the year.
Speaker Change: We'll take our first question from Leo Mariani with Roth. Please go ahead. Your line is open.
Leo Mariani: Hey, guys.
Leo Mariani: I'll ask a little about some of these revenue components here I guess I'm a little confused on project Drake.
Leo Mariani: I guess you guys said that you received $5 million already so is that $5 million of revenue that's going to hit in the fourth quarter or is it going to be accounted for as something else.
Leo Mariani: And then is that $5 million.
Leo Mariani: Included as part of that roughly $10 million base revenue business that you expect or that would be additional to that.
Geoffrey Trukenbrod: And on things like, you know, Salaries and Benefits Expense, you know, Contracts and a variety of other things, we reduce costs over a quarter.
Leo Mariani: Yes.
Leo Mariani: Hey, Leo good morning, Thanks for joining us on the call so to address it. So project Drake is a project we've been working on for a while to $5 million.
Leo Mariani: Okay, and then just on your, you know, sort of bit of a tweak to the business model here, you talked about bringing in, you know, infrastructure partners, you know, to finance, I guess, you know, new projects, maybe accelerate some of these. Can you provide a little bit more color there, you know, is Lanza going to be putting, you know, some equity into these projects? Maybe it's a small amount, but maybe it's zero, I don't know, just wanted to get a sense of that. And I guess maybe, you know, do you have discussions going on with multiple infrastructure partners?
Leo Mariani: And exclusivity fee associated with it we do expect it to think about it as effectively as it deposit or the first part of a broader payment in Q4 associated with.
Leo Mariani: Paying for them.
Leo Mariani: Development services packages work that we've done.
Leo Mariani: So yes, we.
Leo Mariani: We expected.
Leo Mariani: Assuming we are able to finalize the agreements that we do expect that $5 million and part of what will be recognized as revenue and not part of that kind of $10 million and you quoted which is I'm just trying to condensate there that thats what the business has been doing.
Leo Mariani: And presumably, this is beyond Brookfield, other people other than Brookfield?
Jennifer Holmgren: That's absolutely right, Leo. As you know, a while back ago, we announced we were doing a JV with Olayan. That JV is now completed. Olayan, as you will know, we are working with them in the Middle East, especially in the Kingdom of Saudi Arabia. That JV is completed, and we are now developing projects together in that region, and you'll hear a lot more about that in the coming quarters.
Leo Mariani: Little conservatively speaking has been doing a little better than quarter over quarter year to date.
Leo Mariani: Not in that $10 million that would be incremental to them.
Speaker Change: Okay. That's helpful. And then just wanted to jump over to the cost side here you guys have talked a lot about cost savings initiatives.
Leo Mariani: Good morning.
Leo Mariani: And then I guess, if I just look at the numbers here.
Jennifer Holmgren: In addition, there is the project Drake that we're transferring to an infrastructure type investor. Because of the fact that our relationship with Brookfield is regional, Europe, US, UK, we are actually talking to multiple other infrastructure partners. The key for us in relationship to infrastructure partners is getting a project to FID. Once that happens, we have multiple folks that have committed to building them, whether they be ethanol projects or SAF projects. One of the things that a lot of our infrastructure partners are excited about is the ability to go all the way through SAF via LanzaJet, starting with ethanol made from resources via the LanzaTech technology.
Leo Mariani: If I recall on your cash cost is basically cash G&A plus R&D I guess those numbers have gone up the last three quarters here. So.
Leo Mariani: Can you kind of help me out a little bit with the cost savings initiatives that they are not yet hit the <unk>.
Leo Mariani: Numbers or maybe they were going to be higher than you reported and now they're sort of.
Leo Mariani: Growth I guess and then of course I'm, just trying to understand that in.
Leo Mariani: How do you think costs evolved as you roll into fourth quarter into next year.
Speaker Change: Thank you for the question Neil what is happening is as you know project Drake and also project X elections, we are delivering those projects too.
Speaker Change: And then they are transferred or sold if you will because we're doing all the work now we're doing with <unk>.
Jennifer Holmgren: We call that integration circular, but the point is clear. It's all about the feedstock and the importance of the feedstock in building SAF projects globally. There's lots of interest from infrastructure partners on that.
Speaker Change: <unk> all of that cost now that includes external dollars because as you know to get to FID.
Speaker Change: We also have to do feed package with external contractors. We also have to do.
Speaker Change: <unk>.
Leo Mariani: Does that address your question, or do you need more than that? Oh, that was helpful, thank you.
Speaker Change: Applications permitting all of these things for environmental issues. So there is an awful lot of work internal and external that is required to get a project all.
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Jeffrey Campbell: Our next question comes from Jeffrey Campbell with... Go ahead, you're on line. Good morning. I'd like to sort of pick up the discussion. and Borges of Norway. for future efforts.
Speaker Change: All of those expenses are being booked right now and then when the projects fall Drake and extra lexis. The Norwegian project get transferred we will be in a position to simply recoup all those costs, Jeff do you want to add something to that yes.
Jeff: Yes, I would just say that with that and generally thats a rate that is driven.
Jeffrey Campbell: First, if I understand this correctly, the emitter is not contributing capital to the project. What specific benefit is it receiving? Then second, does this suggest a template where emitters will agree provide waste carbon, but the projects can be financed by other parties. And then third, will the financers retain a long-term interest in the project, or is this going to be something more similar to, say, a partnership flip-type structure where the partner retains most of the cash flow up to a targeted return?
Jeff: A significant component of our Opex opex is fairly consistent quarter over quarter, but it is.
Jeff: That piece of it is.
Jeff: Yes.
Jeff: Overshadowing some of the cost reductions we've had on specific opex items, and so we've actually reduced quarter over quarter. Many of our Opex line items as well as reduced relative to budget for the year. So we're driving costs down relative to what we planned at the beginning of the year and on things like go ahead.
Jeff: Salaries and benefits expense contracts, a variety of other things, we reduce cost quarter over quarter as well.
Jennifer Holmgren: as well as Roberta Delano. Hi, Jeffrey, thank you for the questions. Let me start by saying that part of the shift in the business model is not just taking more control by developing the projects and getting them to FID, but it is also, as you can see from the Norwegian project, we are also retaining 50% of the offtake so that we can get the revenues that a producer would normally get, which is the upside from selling the product, the ethanol or the SAF or anything else, right? So that's an important part of this. So we will be receiving those revenues in addition to our normal revenues, our Brookfield arrangement, and this is what we would do generally, is we still receive the licensing, the equipment, the engineering, and the services revenue.
Jeff: Okay, and then just on your sort of bit of a tweak to the business model here.
Jeff: Talked about bringing in infrastructure.
Jeff: Infrastructure partners.
Jeff: Finance.
Jeff: New projects to accelerate some of these can provide a little more color there.
Jeff: And long as theyre going to be putting some equity into these projects maybe it's.
Jeff: Small amount.
Jeff: Maybe zero I don't know just wanted to get a sense of that and I guess, maybe you know do you have discussions going on with multiple infrastructure partners and presumably this is beyond Brookfield other people other than brookdale.
Speaker Change: That's absolutely right Neil.
Jeff: As you know.
Along a while back ago, we announced we're doing a JV with <unk> that JV has now completed or lay on as you will know we are working with them in the middle East, especially in the Kingdom of Saudi Arabia that JV is completed and we are now developing projects together in that region and you'll hear a lot more about that.
Jennifer Holmgren: In the agreement with Brookfield, we have to get the project to FID and also we need to get it to the point where there is a specific return to them. If there is upside beyond that, we can potentially share in it. But it's a path for us to be able not just to control the timelines, but also it is a path to expand who we work with. We have been working to date with emitters who want to build a plant. Indian oil, right? They need ethanol to blend into gasoline. They need ethanol to make SAF.
Jeff: In the coming quarters. In addition, there are the project Drake that we're transferring as to an infrastructure type investor and because of the fact that Brookfield has a relationship with Brookfield is regional.
Jeff: Europe U S U K.
Jeff: We are looking.
Jeff: We are actually talking to multiple other infrastructure partners. The key for us in relationship to infrastructure partners is getting a project.
Jeff: And once that happens we have multiple folks that have committed to building them, whether they'd be ethanol projects or SaaS projects. One of the things that a lot of our infrastructure partners are excited about is the ability to go all the way through SaaS via land suggests starting with ethanol made from <unk>.
Jennifer Holmgren: And so we tend to work with these kinds of folks, ArcelorMittal. They will fund their own plant. But there are a lot of other emitters who want to reduce their carbon intensity, but don't want to put a gas fermentation refinery at that site and pay for that because it takes them outside of the core business. And that is where our infrastructure partners have a big role to play. They enable us to work with them, even though traditionally these folks would not have been in the pipeline because we wouldn't have had the revenues. And I would just say one last thing about this.
Jeff: Least resources via the <unk> technology, we call that integration should you there, but the point is clear it's all about the feedstock and the importance of the feedstock and building shaft projects globally, and there's lots of interest from infrastructure partners on that.
Jeff: <unk>.
Jeff: Does that address your question.
Jennifer Holmgren: It is important to note that these relationships with infrastructure partners depend so much on the fact that we have six commercially operating plants. We've established the credibility. These are now cookie cutter projects, right? They're not first of a kind. And so that's why we have so much interest from infrastructure. And of course, the benefit to the emitter, as you asked initially, is the fact that they are reducing their emissions, which is something that is critically important to them.
Jeff: Or do you need more than that.
Jeff: That was helpful. Thank you.
Speaker Change: Thank you. Our next question comes from Jeffrey Campbell with Seaport Research Partners. Please go ahead. Your line is open.
Jeffrey Campbell: Good morning.
Speaker Change: I'd like to sort of pick up the <unk>.
Jeffrey Campbell: <unk>.
Jeffrey Campbell: Changed.
Jeffrey Campbell: This plan here.
Jeffrey Campbell: Norway.
Jeffrey Campbell: As for future efforts.
Speaker Change: First of all I understand this correctly the emitters not contributing capital to the project. So what specific benefit is it receiving.
Jeffrey Campbell: Now, that's very helpful. and I. the pool of money that can go into the project.
Jeffrey Campbell: And then second.
Jeffrey Campbell: Does this suggest that template where emitters will agree to provide waste carbon but the project's going to be financed by other parties.
Jennifer Holmgren: I was curious to know what motivated ArcelorMittal to do that. for more exposure into the ethanol business, particularly, as you noted, weak ethanol price. I heard Carmen. Well, what we've announced this quarter actually is that we are accessing 5,000 tons from the first year of ethanol and then 10,000 tons for the next five years. So they've always intended to sell the ethanol themselves, they've just agreed that we could take a portion of it and therefore create more upside from the value we bring than a standard license. But the last thing I would say is they've never wavered on their interest to use their carbon to make fuels and chemicals versus use their carbon to make power.
Jeffrey Campbell: And then third.
Jeffrey Campbell: Will the Financers retain a long term interest in the project or is this going to be something more similar to say a partnership flip type structure, where the hardware retains most of that cash flow up to targeted return.
Jeffrey Campbell: Cash flows revert to the lines.
Hi, Geoffrey Thank you for the questions.
Speaker Change: Let me start by saying that part of the shift in the business model is not just taking more controlled by developing the projects and getting them to.
Speaker Change: But it is also as you can see from the Norwegian project. We are also retaining 50% of the offtake. So that we can get the revenues that it producer, we're normally get which is the upside from selling the product the ethanol or the SaaS or anything else right. So that's an important part.
Jennifer Holmgren: I think there's a view that just wasting carbon and power production is not the future. And so they've leaned into the idea of making a product like ethanol and beyond.
Speaker Change: Of this we will.
So we will be receiving those revenues. In addition to our normal revenues have Brookfield arrangement ambitious what we would do generally is we still received the licensing the equipment the engineering and services.
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Leo Mariani: Okay, and let me ask one question on a different subject.
Jennifer Holmgren: Will obtaining green hydrogen be a necessary ingredient for success in the incipient LanzaTech nutritional protein effort? whatever source of hydrogen is appropriate. Is this likely to represent a capital? should an existing Lanza facility wish to convert to a program. So first of all, the great thing about nutritional protein is that, The production of protein is so energy intensive, so water intensive, that even if you use gray hydrogen to use CO2 to make protein, you actually reduce the carbon intensity of the protein product. Obviously, you reduce it more when you use blue and green. So we are not dependent on green hydrogen, and in fact, we can transition.
Speaker Change: Revenue.
Speaker Change: In the agreement with Brookfield, we have to get the project to FID and also we need to get it to the point, where there is a specific return to them. If there is upside beyond that we can potentially sharing it but it's it's a path for us to be able not to.
Speaker Change: To control the timelines, but actually there is a path to expand who we work with.
Speaker Change: We have been working to date with and mirrors, who want to build a plant Indian oil right they need ethanol to.
Speaker Change: Blended into gasoline they.
They need ethanol to make SaaS and so we tend to work with these kinds of folks Arcelor Mittal, They will fund their own plant.
Okay.
Yeah.
Yeah.
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Speaker Change: A lot of other emitters, who want to reduce our carbon intensity.
Speaker Change: Want to put.
Jennifer Holmgren: We can have an impact from gray to blue to green. You have to remember that there are food security issues as well and food availability for a growing population, not just low-carbon food, and LanzaTech Nutritional Protein allows you to do both, not just one.
Speaker Change: Our guests have foundation refinery at that site and paid for that because it takes them outside of the core business and that is where our infrastructure partners has a big role to play they enable us to work with them. Even traditionally these folks would not have been in the pipeline because we wouldn't.
Jennifer Holmgren: Now will there be a capital expense? The reaction would require CO2 and hydrogen, as well as a small amount of oxygen, so if you wanted to convert a plant, you would need to add some safety systems that would be different, and then if hydrogen is available, you could build out to add hydrogen, but really the expense would be minimal compared to starting from scratch. Okay, now that's helpful.
Speaker Change: The revenues and I would just say one last thing about this it is important to note that these relationships with infrastructure partners depend so much on the fact that we have six commercially operating plants. We've established credibility. These are now cookie cutter projects right Theyre not first of a kind.
Speaker Change: And so that's why we have so much interest from infrastructure and of course, the benefit to the emitter. As you asked initially is the fact that they are reducing their emissions, which is something that is critically important to them.
Jennifer Holmgren: Thank you.
Yeah.
Thomas Meric: Our next question comes from Thomas Meric with Johnny Montgomery. Please go ahead. Good morning, team. Thanks for the time. Just wanted to follow up on a few things related to the Transfer the Norwegian project. Is it correct that the $20 million is a quarterly number, or will some of that be spread out over multiple quarters? And then second part of that is what do we model for kind of free cashflow conversion of that bucket of revenue? And then finally. just thinking about future projects that have transferred to infrastructure partners, you know, Brookfield or otherwise. How do we think about...
Okay.
Speaker Change: No that's very helpful.
Okay.
Speaker Change: And I agree I think being able to widen.
Speaker Change: Yeah.
Okay.
Speaker Change: The pool of money that can go into the projects is really critical.
Right.
Speaker Change: I was curious to know what motivated arcelormittal too I guess.
[music].
Speaker Change: Okay.
Speaker Change: As for more exposure to the ethanol business, particularly as we noted weak ethanol pricing.
Speaker Change: Carbon smart during the third quarter.
Speaker Change: Well our sure we've announced this quarter actually is that we are accessing.
Speaker Change: 5000 tons from the first year of ethanol and then 10000 tons for the next five years.
Thomas Meric: of free cash flow conversion of those projects and then kind of as a side to that. What have you learned from the first project that you want to carry forward into the future ones? Thanks, Thomas. Great to hear from you and appreciate the question.
Speaker Change: So Dave always intended to sell the ethanol themselves. They've just agreed that we could take a portion of it and therefore.
Speaker Change: Create more upside from the value, we bring but Dennis standard license, but the last thing I would say is they have never wavered on their interest too.
Geoffrey Trukenbrod: A couple different questions in there, and so I'll try and unpack both of them. So first in terms of just the dollar amounts that we're talking about here relative to the fourth quarter. As Jennifer mentioned, there's a catch-up aspect of a recouping of cost aspect of costs that we've incurred previously that we expect to recognize, you know, in the quarter. So those are actually kind of more the one-time – I don't want to call it a one-time, but it's kind of catching up on the retrospective expense. There is a long-tail future revenue expectation associated with those projects as well as we continue to play the kind of majority role in those projects.
Speaker Change: Use the carbon to make.
Speaker Change: Fuels and chemicals versus used carbon to make power I think there is a view that just wasting carbon and power production is not the future and so they've leaned into the idea of of making the product.
Speaker Change: Like ethanol and beyond.
Speaker Change: Okay, and let me ask one question on a different subject.
Speaker Change: We will obtain green hydrogen DNS certain ingredients for success.
Jennifer Holmgren: We'll continue to be providing development services. We'll continue to, in some cases, provide additional engineering support. We'll provide startup services. All of our kind of traditional economics associated with one of our projects as a licensor, you know, will translate to these projects. The owner or the customer in those cases will – you know, if it's Brookfield who takes it over, one of the other infrastructure partners, they will effectively be the customer. We're going to be doing kind of build-on-operate as a service, so it does create this long-tail, you know, revenue stream associated with us, but the 20 is indicative of the catch-up of the cost we've incurred, you know, to this point.
Speaker Change: The Atlanta segments personal protein effort.
Speaker Change: Whatever source of hydrogen as appropriate.
Speaker Change: Is this likely to represent a capital expense.
Speaker Change: Existing lanza facility, which converts in protein production.
Speaker Change: So first of all of the.
The great thing about nutritional protein is bad.
Speaker Change: <unk>.
Speaker Change: The production of protein is is so energy intensive so water intensive that even if you used gray hydrogen too.
Speaker Change: To convert to use <unk> to make protein you actually reduce the carbon intensity of the protein product. Obviously, you reduce it more when you use blue and green. So we are not dependent on green hydrogen and in fact, we can transition we can have an impact from grade to bloom to green you have to remember.
Jennifer Holmgren: Please go ahead, Joe. No, I was just going to add one quick thing.
Jennifer Holmgren: You asked about replicability and why we're choosing one project to begin with as, you know, to transfer to Brookfield. One is to learn how to transfer a project, but also we're trying to develop a platform that is replicable, a design with partners in the EPC world, in this case Fluor, and in other cases Technique, that can be replicated across the world. So the amount of time it takes to get there and the cost of getting there for us, since we bear the cost until the transfer, are lower. We call this a lift and shift strategy, and so this first project with Brookfield, with Aramet, with Fluor, is something that we hope to duplicate, and we have identified multiple locations and created a pipeline where we could just literally move the same exact copy of that project somewhere else.
Speaker Change: But there are food security issues as well in food availability for a growing population.
Speaker Change: Not just low carbon food and Lanza Tech mutational protein allows you to do both not just one now will there be a capital expense.
Speaker Change: The reaction would require <unk> and hydrogen as.
Speaker Change: As well as a small amount of oxygen. So if you wanted to convert a plant you would need to add some safety systems that would be different and then it's hydrogen is available.
Speaker Change: You could build out to add hydrogen, but really the expense would be minimal compared to starting from scratch.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Helpful. Thank you.
Jennifer Holmgren: Project Drake is also an example of that. Project Drake represents the 30 million gallon per year facility that we developed for Project Dragon, and it is an ethanol to SAF facility, and we absolutely intend to replicate that across the world in partnership with LanzaJet. So we're very excited that we are creating a platform that can be duplicated.
Speaker Change: Thank you.
First question comes from Thomas <unk> with Janney Montgomery. Please go ahead. Your line is open.
Speaker Change: Good morning team. Thanks for the time just wanted to follow up on a few things related to the transfer of the Norwegian projects.
Is it correct that the $20 million.
Speaker Change: A quarterly number or will some of that be spread out over multiple quarters.
Speaker Change: And then second part of that is.
Jennifer Holmgren: And it's something that, to just be specific about what have we learned, we've learned a lot associated with each of these projects that we've been developing at these pre-FID stages. And it's part of the reason, and part of what we commented in our prepared remarks about this evolution of our business model. It's given us the ability to develop these projects and continue to develop projects. led us to this conclusion that partnering with capital partners at the very earliest stages of these projects, so that we're well aligned with them throughout the pre-FID stage, it was also important.
Speaker Change: What do we model for kind of free cash flow conversion of that bucket of revenue.
Speaker Change: And then finally.
Speaker Change: Just thinking about future projects that were transferred to infrastructure partners Brookfield or otherwise.
Speaker Change: How do we think about.
Speaker Change: Free cash flow conversion of those projects and then kind of as a side to that.
Speaker Change: What have you learned from the first project that you want to carry forward into the future ones.
Speaker Change: Yeah.
Speaker Change: Okay.
Thomas Meric: Thanks, that's it for me.
Speaker Change: Thanks, Tom it's great to hear from you and I appreciate the question.
Speaker Change: Couple of questions in there so I'll try to unpack both of them. So first in terms of just the dollar amounts that we're talking about here relative to the fourth quarter as Jennifer mentioned, there is a catch up aspect of our recruiting across aspect of cost that we've incurred previously that we expect to recognize in the quarter. So those are actually kind of more than one time, so I won't call it a onetime but it's.
Jason Gabelman: We will move next with Jason Gabelman with T.D. Cohen. Please go ahead. Your line is open. Morning. Thanks for taking my questions.
Jason Gabelman: I wanted to ask on the revenue buildup for 4Q, given the lumpiness of the revenues quarter to quarter and the potential for things to move around, are these revenues that if you don't earn in 4Q, you expect to get a 1Q25, just so that we properly kind of calibrate our expectations on the delivery on these revenues? That's right. It's not a question of if, but a question of when, and so how long it takes to do some of the transfers and complete agreements is really what this is all about, rather than a yes or a no decision on going forward.
Speaker Change: Retrofit kind of is kind of catching up on the retrospective expense.
Speaker Change: There is a long tail future revenue expectation associated with those projects as well as we continued to play.
Speaker Change: Kind of majority rule and those projects will continue to be providing development services will continue to in some cases provide.
Speaker Change: All engineering support will provide certain services all of our kind of traditional <unk>.
Speaker Change: Economics associated with one of our projects.
Speaker Change: A licensor.
Speaker Change: Will translate to these projects.
Speaker Change: The owner or the customer in those cases, we'll fulfill it takes it over one of the other infrastructure partners. They will if I can give you the customer we're going to be doing it kind of build on operate as a service. So it does create this long tail revenue stream associated with us with the 'twenty is indicative of catch up.
Jason Gabelman: Got it, that's helpful, thanks.
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Geoffrey Trukenbrod: And then the $10 million base business, what does that exactly represent? I'm just trying to understand how that could potentially grow over time so we have more confidence in kind of what the company can earn steady state moving forward. Thanks, Jason. I think what we're trying to connotate there is that if you kind of look at the three prior quarters and the engineering services, the JDA contract research, you know, the work we've been doing kind of quarter over quarter, you know, we expect to continue and then we're adding additional revenue as things convert through the pipeline.
Speaker Change: To this point.
Speaker Change: Okay.
Speaker Change: Please go ahead.
Speaker Change: No I was just going to add one quick thing.
Speaker Change: You asked about Replicability and why we're choosing one project to begin with.
Speaker Change: As to.
Speaker Change: To transfer to Brookfield, one has to learn how to transfer project, but also we're trying to develop a platform that is replicable at design with partners in the EPC World in this case fluor and in other cases technique that can be replicated across the world. So the amount of time it takes to get there.
Geoffrey Trukenbrod: And so we talked about we had a project kind of move, you know, out of advanced engineering and into the kind of post FID construction stage. We got additional projects that we expect to move into those stages, which will, you know, continue to create additional revenues while we continue to bring projects through the same stages that we've been working on. So it is really the same. The story we've been trying to articulate previously, which is that it's about taking projects, building the pipeline and converting those projects through the various stages of our pipeline. We're excited about a couple of those projects now having moved beyond advanced engineering.
Speaker Change: And and the cost of getting there for us since we bear the cost until the transfer Andover, we call. This a lift and shift strategy and so this first project with Brookfield with Ara met with floor is something that we hope to duplicate and we have identified multiple locations and cream.
Geoffrey Trukenbrod: We think that's something that we've been telling the market and telling you that we expect it to do later this year, and so we are pleased that that is happening, but we expect more of those in 2025 and kind of creating additional revenue associated with that. Got it.
Speaker Change: <unk> pipeline, where we could just literally moved the same exact copy of that project somewhere else project. Drake is also an example of that this is a project Drake represents 30 million gallon per year facility that that we developed for project Dragon.
Jason Gabelman: And my final question is on the ethanol offtake agreement. So just trying to understand this $6 million number, is that tied directly to ethanol prices? So that $6 million is going to move around based on where ethanol prices are.
Speaker Change: And it is an ethanol to SaaS facility and we absolutely intend to replicate that across the world in partnership with Lam suggests so we're very excited that we are creating a platform that can be duplicated.
Geoffrey Trukenbrod: And then what exactly is driving the change from the $6 million to the wider $10 to $20 million range? Is that just the offtake volumes? That's right. So we are using approximate numbers based on both ethanol trading numbers, but also on our Carbon Smart business and what value we can get for that ethanol. And the only difference between that is the two numbers is in the first case, it's 5000 tons per year, which is what we have acquired for the first year of production. And the rest is 10,000 tons per year for the five years after that first year.
Speaker Change: And it's something that can just be specific about what do we learn so we've learned a lot of associated with each of these projects that we've been developing these three stages.
Speaker Change: Part of the reason part of weekly commented in her prepared remarks about this evolution of our business model.
Speaker Change: Ability to develop these projects and continue to develop projects.
Speaker Change: Yes.
Speaker Change: Led us to this conclusion that familiar with capital partners at the very earliest stages of.
Speaker Change: These projects.
Speaker Change: Well aligned with them throughout the pre op IV stage. There was also an important component.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thanks, that's it for me.
Geoffrey Trukenbrod: And that's how we got those numbers. We intend to continue to do this. We have been using almost a spot timing for asking for ethanol from China that we then put into our carbon smart products. And now what we're doing is we're trying to get long term offtake commitments from our production facilities and in turn flip that over to offtake commitments for our carbon smart users. And I think that will give them certainty that they'll be able to access product as well. So it really is us getting product and then transferring that product to other to our customers and creating more certainty and for us also creating more upside.
Speaker Change: Thank you we will move next with Jason gave women with TD Cowen. Please go ahead. Your line is open.
Speaker Change: Good morning, Thanks for taking my questions.
Speaker Change: I wanted to ask on the revenue buildup for <unk>, given the lumpiness of the revenues quarter to quarter and the potential for things to move around or are these revenues that if you don't earn in <unk> you expect together <unk> 25.
Speaker Change: So that we properly kind of calibrate our expectations on delivery on these revenues.
Speaker Change: Okay.
Speaker Change: That's right. It's it's not a question of if but a question of when and so how long it takes to do some of the transfers and in complete agreement since really what this is all about rather than a.
Jennifer Holmgren: I mean, the licensing model is you leave a lot of money on the table for the value that you've generated. And while that's good because somebody else is putting the capital, we would like our business to participate more based on all the IP that we've generated. So that's why we're transitioning.
Speaker Change: Hey, yes, or no decision on going forward.
Speaker Change: Got it that's helpful. Thanks, and then.
Speaker Change: The $10 million base business, what does that exactly represent I'm just trying to understand.
Speaker Change: How that could potentially grow over time, so we have more confidence in kind of what the company can earn steady state moving forward.
Geoffrey Trukenbrod: Okay, great. That's really helpful, Collar.
Steve Byrne: Thanks for the help.
Speaker Change: Yes, Thanks, Jason I think what we're trying to condensate there is that if you kind of look at the three prior quarters in the engineering services contract.
Steve Byrne: Our next question... Byrne with Bank of America, please go ahead, your line. Yes, thank you. I'd like to drill a little bit more into your nutritional protein product. Is this actually a protein or is it a series of amino acids? And I ask, are you able to affect the composition of amino acids in what is produced? You know, in some cases, it could really have a benefit in animal feed for certain amino acids. That's one. I'm not sure. The other question I had on this is... What's the source of nitrogen for this process? Are these bacteria able to fix atmospheric nitrogen into organic nitrogen?
Speaker Change: Contract research and the work we've been doing kind of quarter over quarter. We expect to continue and then we're adding additional revenue as things convert through the pipelines that we've talked about we had a project in a move out of advanced engineering and into the kind of post.
Speaker Change: Construction stage, we've got additional projects that we expect to move into those stages.
Speaker Change: Two to create additional revenues, while we continue to bring projects through the same stages that we've been working so it is really the same.
Speaker Change: Yes, sorry, we've been trying to.
Speaker Change: Particularly previously which is that it's about taking projects building pipeline and converting those projects through the various stages of our pipeline and we're excited about a couple of those projects.
Speaker Change: Beyond advanced engineering.
Speaker Change: That's a fairly compelling market I'm, telling you that we expected to do later this year and so we're pleased with that.
Jennifer Holmgren: And then the last one, Jennifer, your comment about you know, the carbon footprint of animal feed. very provocative. Have you done any life cycle analysis on this product and you know the carbon intensity of it as opposed to the carbon intensity of either animal feed or animal protein? Great. Thanks, Steve, for the great series of questions.
Speaker Change: It's happening, but we expect more of those.
Speaker Change: 25.
Speaker Change: Revenue associated with those.
Speaker Change: Got it.
Speaker Change: My final question is on the ethanol off take agreement. So just trying to understand the $6 million number is that tied directly to ethanol prices. So that's $6 million is going to move around based on where ethanol prices are.
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And then what exactly is driving the train from the $6 million to the wider $10 million to $20 million range is that just the the offtake volumes.
Jennifer Holmgren: So let me address the last one first and then work backwards. So absolutely, we have done both life cycle and cost analysis for this protein. This protein has all 20 amino acids. Our bacteria has all 20 amino acids and is 85 percent protein. And so it looks very different than plant protein and very similar to animal protein. We do not affect the amino acid composition. There's no need to because we have all 20. We have learned how to genetically modify the organism to add vitamins and minerals. I shouldn't say vitamins and minerals, vitamins or other beneficial products like anti-inflammatories, omega-3s, etc.
Speaker Change: That's right. So we are using approximate numbers based on both ethanol trading numbers, but also on our carbon smart business and will value, we can get for that ethanol and the only difference between that is the two numbers is in.
Speaker Change: In the first case, it's 5000 tons per year, which is what we have acquired for the first year of production and the rest is 10000 tons per year for the five.
Okay.
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Speaker Change: The years after that first year and that's how we got those numbers.
Speaker Change: We intend to continue to do this.
Speaker Change: We had been using almost spot.
Jennifer Holmgren: That is from a genetically modified material. Our initial offering will be, as always, the non-genetically modified material that has been optimized to provide the 20 amino acids.
Speaker Change: Timing for asking for ethanol from China that we then put into our carbon smart products and now what we're doing is we're trying to get long term offtake commitments from our production facilities and in turn flip that over to off take commitments for our carbon smart users.
Jennifer Holmgren: I would add something also quite important. In our current system, we have a lot of experience with nutritional protein because, as you know, today, our organism, our bacteria, is alive. It does produce ethanol as a primary product, but approximately 10% of the carbon goes to growing the bacteria, right? It's alive and reproducing. We typically remove that bacteria from the bioreactor and we dry it, and we already sell it as fish food. That is already marketed. We sold 25,000 tons of protein since we started our ethanol facilities. And we just, the only shift now is to say, hey, we want protein to be the primary product because the world is, you know, population is growing.
Speaker Change: And I think that will give them certainty that they'll be able to access product as well. So it really is us getting product and then transferring that product to other to our customers and creating more certainty and for US also creating more upside I mean, the licensing model as you leave a lot of money on the table for the value that <unk>.
Speaker Change: <unk> generated and.
Speaker Change: While that's good because.
Speaker Change: Somebody else's, putting the capital.
Speaker Change: We would like our business to participate more in.
Speaker Change: Based on all the IP that we've generated so that's why we're transitioning.
Speaker Change: Okay.
That's really helpful color. Thanks for the help.
Jennifer Holmgren: And it's difficult to grow food. The reality is we're making it harder and harder to grow food. And so fundamentally, we felt why not leverage our capability to make a product that's 100% food versus food being a co-product.
Speaker Change: Thank you. Our next question comes from Steve Byrne with Bank of America. Please go ahead. Your line is open.
Speaker Change: Yes, thank you I'd like to add.
Speaker Change: More into.
Speaker Change: Nutritional protein product.
Jennifer Holmgren: And then the last thing I would say is you asked an important question, where does the nitrogen and the sulfur come from? Unfortunately, we don't fix nitrogen from the atmosphere. So this is still an enclosed bioreactor. And inside the bioreactor, where the water is, where the bacteria lives, we have to add vitamins and minerals, nitrogen, sulfur, etc., to help the bacteria produce those amino acids. However, net net, the economics, as well as the life cycle are excellent. And we have done some comparisons, and we'll be posting more and more comparisons. But really, one commercial plant that would produce 45,000 tons, just like our ethanol facilities, 45,000 tons of nutritional protein is the equivalent of 200 million chickens per year.
Speaker Change: Yes.
Speaker Change: Only a protein or <unk>.
Speaker Change: Sure.
Speaker Change: Asset.
Speaker Change: Are you ask are you able to.
Speaker Change: The composition of amino acids.
Speaker Change: And what is produced.
Speaker Change: Could really have a chronic animal.
Speaker Change: The animal feed.
Certainly amino acids.
Okay.
Speaker Change: That's one.
Okay.
Speaker Change: Another question I had on SaaS.
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Speaker Change: What's the source of nitrogen for for this process.
Speaker Change: Thanks Victor.
Speaker Change: Six.
Speaker Change: Atmospheric nitrogen into organic nitrogen.
Speaker Change: And then the last one Jennifer your comment about.
Speaker Change: Carbon carbon footprint of animals.
Speaker Change: Yes, very provocative.
Speaker Change: Dani.
Speaker Change: Mark cycle analysis.
Speaker Change: This product.
Speaker Change: The carbon in Pennsylvania.
Jennifer Holmgren: That is the type of impact that this nutritional protein can have. And it does it without impacting water supply, because it's in an enclosed bioreactor and it doesn't have the same needs as growing plants. So really, the carbon intensity is tremendously lower, the impact on food is tremendous, and we already have the experience having done it using the currently byproduct of our work producing ethanol.
Speaker Change: As opposed to <unk>.
Speaker Change: Carbon intensity.
Speaker Change: Animal feed animal protein.
Speaker Change: Great. Thanks, Steve for the Great series of questions. So let me address the last one first and then work backwards. So absolutely we have done both lifecycle and cost analysis for this protein. This protein has all 20 amino acids or bacteria.
Speaker Change: Has all 20 amino acids and is 85% protein and so it looks very different than plant protein and very similar to animal protein.
Steve Byrne: Interesting. Can't imagine what CO2 emissions are from 200 million chickens.
Speaker Change: We do not affect the D amino acid compensation. There is no need to because we have <unk>, we have learned how to genetically modify the organism to add vitamins and minerals.
Jennifer Holmgren: But also wanted to just ask you a little bit about Project Secure. What's the level of interest that you've received from some of the polyethylene producers along the U.S. Gulf to include one of their ethylene crackers in this project? And how close are you to identifying a site? So working with our partner, TechMeet, we have, in fact, identified a primary site.
Speaker Change: I, Shouldnt say vitamins and minerals vitamins or other beneficial products like anti Inflammatories Omega threes et cetera.
Speaker Change: That is from a genetically modified material our initial offering will be as always the non genetically modified materials that has been optimized to provide 20 amino acids.
Jennifer Holmgren: We're just not able to discuss it right now. There is a lot of interest and it's not, so that would be interest here in the US for Project Secure. But as we travel the world, many who are. have crackers in Europe and the Middle East, are also quite interested in a replica of what is Project Secure. So our ability to extend and replicate that project globally is a very important part of our future plan.
Speaker Change: I would add something also quite important in our current system, we have a lot of experience with <unk>.
Speaker Change: Attritional protein because as you know today.
Speaker Change: Our organism our bacteria is alive. It does produce ethanol as the primary product, but approximately 10% of the carbon goes to growing the bacteria right. It's alive and we producing we typically we moved that bacteria from the bio reactor and we dry it and we already felt let us tissue.
Jennifer Holmgren: And I wanna add one thing because we don't talk about it enough, but I think you saw us announce with IKEA that we have been producing isopropanol. not just ethanol. And we have a bacteria now that's genetically modified that co-produces ethanol and isopropanol. So you can imagine that a project secure today is making ethylene, but a project secure tomorrow, because our isopropanol bacteria is ready to commercialize, that project could produce isopropanol and ethanol, and then make ethylene and propylene by going over techniques, Hummingbird technology. So now we're impacting the ethylene and the propylene value chain.
Speaker Change: That is already marketed we sold 25000 tons of protein since we started our ethanol facilities and we.
Speaker Change: We just the only ships now which to say hey, we want protein to be the primary product because the world is.
Speaker Change: Population is growing and it's difficult to grow food.
Speaker Change: The reality is we're making it harder and harder to grow food and so fundamentally we felt why not leverage our capability to make a product that's 100% full.
Speaker Change: Food versus food being a co product and then the last thing I would say as you asked an important question, where does the nitrogen into social come from and Fortunately, we don't fix nitrogen from that in the sphere. So this is still an enclosed bioreactor.
Jennifer Holmgren: And that is the beauty of our technology, because that should not take any additional capital investment, it just takes putting in that new bacteria. So we see a path, and that's what our partners see globally, a path to making both ethylene products and propylene products, and really growing their low carbon portfolio. As far as I know today, very little non-100% fossil carbon propylene and polypropylene are made today. So this is game changing. Very good.
Speaker Change: And inside the bioreactor, where the water is where the bacteria lives, we have to add vitamins and minerals nitrogen sulfur et cetera to help the bacteria produce those amino acids. However, net net the economics as well as the.
Speaker Change: Lifecycle are excellent and we have done some comparisons and will be posting more and more of these <unk>.
Speaker Change: Comparisons, but really one commercial plan that.
Pavel Molchanov: Thank you.
Speaker Change: We produced 45000 tons.
Speaker Change: Just like our ethanol facilities 45000 tons of nutritional protein is the equivalent of 200 million chickens per year that is the type of impact that this nutritional protein can have and it does it without impacting our water.
Jennifer Holmgren: with Raymond. Yeah, thanks for taking the question. If we go to the website of Freedom Pines, there actually have not been any updates on the SAP plan since the grand opening in January. So I thought I would see if you guys can give us the latest on that facility. Thanks, Pavel.
Speaker Change: Supply because attendant includes bio reactor and it doesn't have the same need says is growing plants.
Speaker Change: So really the carbon intensity is tremendously lower the impact on on food is tremendous and we already have the experience having done it using easing that it currently byproduct of our our work at <unk>.
Jennifer Holmgren: First of all, noted that we need to update the website. We have, in fact, started feed into the system and we are not producing SAF right now. You'll be the first to know when we do, but right now we have started feed, so we're past the early shakedown. Okay, that's helpful.
Speaker Change: Producing ethanol.
Speaker Change: Interesting kind of imagine what C. O two emissions are from 200 million chickens.
Speaker Change: Okay.
Speaker Change: Also I wanted to just ask you a little bit about projects secure.
Jennifer Holmgren: Let me zoom out as well. You know, given that we're three days out from the election, and a lot of questions about, for example, Section 45Q tax credits. a part of the broader climate conversation in Washington, just generally, what are your thoughts on? What we can expect that would be directly relevant for your business.
Speaker Change: What's the level of interest.
Speaker Change: From.
From some of the polyethylene producers selling in the U S Gulf.
Speaker Change: What other ethylene crackers in this project.
Speaker Change: And how close are you to identifying a site.
Speaker Change: So working with our partner technique, we have in fact identify the primary site were just not able to discuss it right. Now there is a lot of interest and it's not so that would be interest here in the U S for project secure but as we traveled the world many who are.
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Jennifer Holmgren: Yeah, that's a great question, and I wouldn't dare to pretend that I am a politician or a pundit or somebody that could address your question. in the broader view. But I will address it from our business.
Speaker Change: <unk> crackers in Europe, and the Middle East are also quite interested in a replica of what is project secure so our ability to extend and replicate that project globally.
Jennifer Holmgren: First of all, it's great that the election is behind us because it removes uncertainty. One of the biggest problems we've had is that the election and the results and what people's opinion of how it could be different has impacted projects moving forward, right? Everybody's just waiting to see what happens. I would also say that you have to remember that we are not just doing projects in the U.S. We are a global company with projects in India, in Europe. Middle East, and so our geographically diverse business. is not just impacted by the U.S. elections. And the fact is that different countries have different motivations for what they do.
Speaker Change: A very important part of our future plan.
And I I wanted to add one thing because we don't talk about it enough, but I think you saw us announce with Ikea that we have that we had been.
Speaker Change: Producing isobutanol.
Speaker Change: Not just ethanol and we have as actelion out that genetically modified that co produce its ethanol isopropanol. So you can imagine that a project secured today is making ethylene, but if project secure tomorrow, because our IP isopropanol activities ready to commercialize at that project could produce.
Jennifer Holmgren: You know that in the Middle East, in the Kingdom of Saudi Arabia, they're focused on the circular economy to try to grow an alternate business. And that's why we're working with Roland. You know that in Europe, it's about carbon abatement. That's why we have projects in Norway and the UK and the EU, and they're all focused on getting away from food. We have projects in Australia and New Zealand markets where SAS is so critically important to their industries because of the fact that they are so far away from everything. And so they need low-carbon fuel as a license to continue to grow.
Speaker Change: Isobutanol and ethanol and then make ethylene and propylene by going over technique coming for technology. So now we're impacting the ethylene and propylene value chain and that is the beauty of our technology because that should not take any additional capital investment.
Speaker Change: <unk>, putting in that new bacteria, so we see a path and that's what our partners see globally.
Speaker Change: After making both ethylene products and propylene products and really growing their books their low carbon portfolio as far as I know today very little non 100% fossil carbon propylene and polypropylene are made today. So this is game changing.
Jennifer Holmgren: And in New Zealand, specifically, to continue to grow their tourism business. They're an eco-tourism country, right? You need to get people there with low-carbon intensity products, and you need to get them back out of there with low-carbon intensity fuels. So really, what the administration does may impact the U.S., but the reality is the IRA is bipartisan. And the reason it's bipartisan is not a carbon project or a climate bill. It's actually a jobs bill.
Speaker Change: Alright, thank you.
Speaker Change: Thank you. Our next question comes from Pavel <unk> with Raymond James. Please go ahead. Your line is open.
Speaker Change: Yes, thanks for taking the question.
Speaker Change: If we go to the website of freedom Pines.
Jennifer Holmgren: So I think I I think the fact that the election is fastest is we can move on strong support for public, private and and job creating. technologies, which frankly, is what we are. So I think, you know, It's where we are, and it's good progress in my mind that we can move forward.
Speaker Change: There actually has not been any updates on the SaaS plan since the Grand opening in January so I thought it would.
Speaker Change: See if you guys can.
Speaker Change: Give us the latest on that facility.
Speaker Change: Thanks.
Speaker Change: Then.
Speaker Change: First of all noted that we need to update the website.
Jennifer Holmgren: Thanks very much.
Speaker Change: We we have and in fact.
Speaker Change: He started feed into the system.
Operator: And that does conclude our Q&A.
Speaker Change: And we are not producing shaft right now you'll be the first to know when we when we do but but right now we have started feed so we're past.
Teasel Green: Hello, I'm Teasel Green first. Thank you everybody for joining us. As you can see, we continue to make steady progress in executing our commercial strategy, even during times like this, when we and our industry are facing a number of headwinds. LanzaTech is in a unique position where we have six commercial scale facilities already operating and the progress we're making is building on that solid foundation. We've earned the right to develop projects, to build projects, to access offtake. These things are really important in growing our revenue and getting us to profitability. We're looking forward with confidence.
Speaker Change: The early Shakedowns.
Speaker Change: Okay. That's that's.
Speaker Change: Thats helpful.
Speaker Change: Let me zoom out as well.
Speaker Change: Given that we're three days out from the election.
Speaker Change: And a lot of questions about <unk>.
Speaker Change: For example.
Speaker Change: Section 45, Q tax credits as well.
Speaker Change: Part of the broader climate conversation in Washington, just generally what are your thoughts on.
Speaker Change: What we can expect that would be.
Speaker Change: Directly relevant for your business next year.
Teasel Green: for our strong 2025 and beyond, and we thank you for all your support. It's not an easy journey. We'll get there with the help of everybody who's on this line.
Speaker Change: Yeah, that's a great question and I wouldn't dare to pretend that I am.
Speaker Change: Politician or a pundit or somebody does that could address your question.
Speaker Change: Sure.
Speaker Change: In the broader view, but I will address it from our business first of all it's great that the election is behind us because it removes uncertainty one of the biggest problems. We've had is that the election and the results and what People's opinion of how it could be different hedge impacted projects moving forward right everybody's just waiting to see what happens.
Teasel Green: Thank you.
Operator: And this does conclude today's presentation. Thank you all for your participation.
Speaker Change: I would also say that you have to remember that we are not just doing projects in the U S.
Speaker Change: We are a global company with projects in India and Europe.
Speaker Change: Middle East and so our geographically diverse business.
Speaker Change: Is not just impacted by the U S elections, and the fact is that different countries have different motivations for what they do.
Speaker Change: But in the Middle East the Kingdom of Saudi Arabia, and a focus on the shifts in the economy to try to grow in alternate business and Thats why were working really hand, you'll note that in Europe. It's about carbon abatement. That's why we have projects in Norway, and the UK and EU and they're all focused on getting away from food, we have projects in Australia, and New Zealand market.
Speaker Change: We're SAS is so critically important to their industries because of the fact that they are so far away from everything until they need low carbon fuel as a license to continue to grow and in New Zealand, specifically to continue to grow their tuition business, there and ecotourism country right you need to get people there with low carbon intensity.
Speaker Change: Products and you need to get them back out of there with low carbon intensity feels so really you know.
[music].
Speaker Change: What the administration does may may impact.
Speaker Change: The U S. But the reality is the irony is.
Speaker Change: Bipartisan and the reason, it's bipartisan it's not a carbon.
Speaker Change: Project or a climate.
Speaker Change: Bill its actually jobs Bill so I think I.
Speaker Change: I think.
Speaker Change: The fact that the election as fast as we can move on strong support for public private and and job creating them.
Speaker Change: Technologies, which frankly is what we are so I think you know.
Speaker Change: It's where we are and it's good progress in my mind that we can move forward.
Thanks very much.
Okay.
Speaker Change: Thank you Andy.
Speaker Change: This does conclude our Q&A session I will turn the call back to Jennifer Holmgren for closing remarks.
Okay.
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Speaker Change: Okay.
Speaker Change: Thank you everybody for joining us as you can see we continue to make steady progress in executing our commercial strategy even during times like this when we are in it and our industry are facing a number of headwinds.
Speaker Change: Len to take us in a unique position, where we have six commercial scale facilities already operating and the progress you are making is building on that solid foundation. We've earned the right to develop projects to build projects to access offtake.
Speaker Change: Things are really important and growing our revenue and getting us to profitability.
Speaker Change: We're looking forward with confidence.
Speaker Change: For our strong 2025 and beyond and we thank you for all your support.
Speaker Change: It's not an easy journey, we will get there with the help of everybody who's on this one.
Speaker Change: Thank you and this does conclude today's presentation.
Speaker Change: Thank you all for your participation and you may disconnect at any time.
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