LanzaTech Global, Inc. Announces Second Quarter 2023 Financial Results

Source: 8/9/2023, Location: North America

Operating revenues of $12.9 million for second quarter 2023, an increase of 31% over second quarter 2022
Current cash, restricted cash, and investments of $161.1 million provides financial flexibility to execute business strategy through year-end 2024 without further need for additional capital resources
Reiterate outlook for achieving positive adjusted EBITDA by year-end 2024
Expanding geographic footprint in Europe and India with expected commercial plant startups in 2023
Updating full year 2023 revenue and adjusted EBITDA outlook due to improved project visibility and financial results to date

LanzaTech Global, Inc., a carbon recycling and leading Carbon Capture and Utilization (“CCU”) company, reported its financial and operating results for the second quarter of 2023.

Financial Results Summary
In the second quarter, revenue totaled $12.9 million, an increase of 31% compared to $9.9 million in the second quarter of 2022, and a quarter-over-quarter increase of 34%. Results reflect continued growth across the business, driven primarily by increases in engineering and other services revenue in the Company’s biorefining segment as projects progressed through the development pipeline.

Cost of revenues in the second quarter increased 46% over the same period last year, reflecting 31% higher revenue year-over-year for the quarter and the significant costs of engineering and other services on our sustainable aviation fuel project in the UK.

Operating expenses totaled $32.7 million in the second quarter, a 52% increase from the prior year, reflecting year-over-year overall headcount growth, expedited expansion of key teams including engineering and strategic projects to accelerate project development across the business and within our Brookfield project pipeline, innovation and process improvement in our gas fermentation platform, commercialization efforts for our isopropanol-producing microbe, and general public company costs. These costs support efforts critical to the Company’s strategic growth objectives. Operating expenses in the second half 2023 are expected to be lower than in the first half as the Company experienced several one-time expenses in the first half, mainly attributable to professional services associated with the closing of the business combination.

Net loss totaled $(26.8) million compared to net loss of $(15.9) million in the second quarter of 2022. Adjusted EBITDA for the second quarter totaled $(23.8) million, compared to $(17.9) million in the second quarter of 2022. Adjusted EBITDA of $(47.3) million for the first half includes the impact of several one-time expense add backs associated with the business combination completed earlier this year and initial securities registration. Adding back these one-time costs of approximately $4 million, mostly related to professional services associated with LanzaTech’s business combination transaction, is intended to provide a more accurate picture of the Company’s operating performance.

Management Commentary
“During the second quarter we made meaningful progress toward each of the strategic objectives we’ve outlined for the year. We moved two commercial scale projects to the advanced engineering stage, continued to progress our projects with IndianOil in India and with ArcelorMittal in Belgium toward expected startup in the third and fourth quarters, respectively, and commenced startup of our fourth facility with our JV partner in China.” said Jennifer Holmgren, Board Chair and Chief Executive Officer of LanzaTech. “We continue to illustrate the flexibility of our technology across a variety of waste feedstock sources and anticipate demonstrating the commercial viability of our isopropanol-producing microbe later this year. These important developments continue to validate that we have a gigaton scale carbon abatement solution many industries across the globe will need to rise to the current climate challenges.”

Operational Highlights
• Continued Progress Toward Three Full-Scale Commercial Startups in 2023: The Company progressed three key projects toward commercial scale operations this quarter, broadening its global footprint. In India, progress over 2Q 2023 has led to expected start up at partner IndianOil Corporation’s facility in 3Q 2023. In Belgium, commercial scale production at partner ArcelorMittal’s facility is expected in 4Q 2023. In China, successful startup was achieved in 2Q 2023 at partner Shougang’s facility and ramp up to full-scale production is underway.

• Demonstration of Isopropanol-Producing Microbe at Scale: The Company is ahead of schedule in demonstrating production of its isopropanol-producing microbe at scale. Isopropanol can be used to make polypropylene, which had an estimated market size of $120 billion in 2022. This progress is expected to enable partners to use the same LanzaTech biorefining hardware to produce more than one product, taking advantage of commodity price changes due to market fluctuations and demand cycles.

• SAF Market Opportunity Set Continues to Scale: Recent announcements from LanzaJet including the planned completion of its 10 million gallon per year Freedom Pines Fuels facility, as well as from LanzaTech regarding its sustainable aviation fuel (SAF) project in the United Kingdom, continue to demonstrate the significant opportunity for the Company in supplying its waste-based ethanol to producers of SAF via LanzaJet’s Alcohol to Jet technology. The ambitious production targets of SAF market participants are expected to drive a substantial opportunity for the Company due to the limitations of competing renewable feedstocks longer term.

• PET Production Expands Potential End Markets: The recently announced production of PPKNatura—the world’s first polyethylene terephthalate (PET) resin made from captured carbon emissions—with Plastipak Packaging, Inc. opens significant new end markets for the Company, including the food and pharmaceutical packaging markets where recycled PET cannot be used.

Balance Sheet and Liquidity
As of June 30, 2023, LanzaTech had $161.1 million in total cash, restricted cash, and investments compared to $194.9 million at the end of first quarter 2023. LanzaTech does not have any outstanding debt, other than the Brookfield SAFE and the Fixed Maturity Consideration associated with the Forward Purchase Agreement, as described in the Company’s filing on Form 10-Q for the quarter ending June 30, 2023, which, for accounting purposes, are treated as debt instruments and are classified as liabilities on the Company’s condensed consolidated balance sheet as of June 30, 2023. The Company believes that the current liquidity position will be sufficient to execute its business plan and achieve its growth objectives.

2023 Guidance
LanzaTech is updating its 2023 outlook for total revenue and adjusted EBITDA to reflect increased visibility into the progression of its current project pipeline while considering 2023 financial results to date. The Company expects total revenue for the full year 2023 of $80 million to $100 million. Adjusted EBITDA is forecasted to be $(75) million to $(65) million. The updated financial guidance reflects recent shifts in expected project milestone timing which push certain expected revenues from late 2023 into early 2024. As such, the Company reiterates its previous target of reaching positive adjusted EBITDA by the end of 2024.

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