Welcome to the Origin Materials Third Quarter 2022 Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to your host Ashish Gupta, Investor Relations. Ashish, you may begin.

Thank you and welcome everyone to Origin Materials' third quarter 2022 earnings conference call. Joining the call today from Origin Materials are Co-CEO, Rich Riley Co-CEO and Co-Founder, John Bissell; and CFO, Nate Whaley. Ahead of this call, Origin issued its third quarter press release and presentation which we will refer to today. These can be found on the Investor Relations section of our website at originmaterials.com. Please note on this call, we will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views as of today should not be relied upon as representative of our views of any subsequent date and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect our financial results, please refer to our filings with the SEC including our quarterly report on Form 10-Q dated August 3rd, 2022. In addition, during today's call we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of Origin Materials' performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You will find additional disclosures regarding the non-GAAP financial measures discussed on today's call and our press release issued this afternoon and our filings with the SEC each of which is posted on our website. The webcast of this call will also be available on the Investor Relations section of our company website. With that, I'll turn the call over to Rich.

Thank you, Ashish and thanks to everyone for joining us. For today's presentation, we will be referring to the slides that are posted to the Investor Relations section of our website earlier this afternoon. I will start by reviewing Q3 highlights then provide a commercial and regulatory update. I will then turn it over to John who will discuss our recent Alternative Fuels & Chemicals Coalition award and construction progress on Origin 1 and Origin 2. Nate will wrap up with the financial overview. We will begin on slide three. We continue to execute on our plan and make progress on our mission to enable the world's transition to sustainable materials. First we have seen a more than nine-fold increase in our customer demand since our announcement to become a public company in February 2021 with offtake in capacity reservations increasing to $9 billion today. Second, we remain well capitalized and on track for completion of Origin 1 by the end of 2022 with preparations for commissioning and start-up now well underway with plant commissioning to be complete by the end of Q1 2023 and start up beginning shortly thereafter. We are also maintaining our previously disclosed capital budget for Origin 1 of $125 million to $130 million. For Origin 2, the previously disclosed capital budget construction timeline and financing assumptions are unchanged. As reported previously, the State of Louisiana pending finalization is expected to award a private activity bond volume cap allocation to Origin in the amount of $400 million. We also expect to receive more than $100 million in pending state and local incentives. As discussed on prior calls, front end design of Origin 2 is underway with detailed engineering set to begin in 2023. And third, we remain well-capitalized with approximately $362.2 million in cash and cash…

Thanks, Rich. In early October, Origin received the 2022 Alternative Fuels & Chemicals Coalition Global Biobased Economy Performance Award. The award, which is sponsored by the Industrial Biotechnology Journal, is given annually to recognize companies that are advancing science and contributing to the production and commercialization of industrial biotechnology products. Origin was selected for outstanding performance and achievements in the commercialization and scale-up of our patented technology platform which, as many of you know, turns the carbon found in sustainable wood residues into useful carbon-negative materials for a wide range of end products, including clothing, textiles, plastics, packaging, car parts, tires, carpeting, and toys. Turning to slide 7, I am going to provide a construction update for Origin 1 and Origin 2. For those interested in the Origin 1 story, and the continued progress made by our team, I would like to point you to a new construction update video that we posted today to the investor relations section of our website. For Origin 1, our first plant, located in Sarnia, Ontario, construction is progressing well and we remain on track for mechanical completion by the end of 2022, a considerable achievement despite the pandemic and supply-chain related headwinds. We expect plant commissioning to be complete by the end of Q1 2023 with start-up beginning shortly thereafter. We are maintaining our previously disclosed capital budget for Origin 1 of $125 million to $130 million. During the third quarter, we further strengthened our Origin 1 operations leadership team and support staff. I’m very proud of how our team has executed against our construction milestones as we draw closer to commercial production. This is a large manufacturing plant with a lot of moving parts, and what we’ve been able to accomplish to date, despite COVID and macro supply chain issues, truly shows…

Thanks, John. I will begin with some commentary on our third quarter results, then our financing expectations for Origin 1 and Origin 2, and finish with an update on our 2022 outlook. Speaking to slide 23, third quarter operating expenses were $9.7 million compared to $7.1 million during the same period in the prior year. Adjusted EBITDA loss was $8.4 million for the third quarter compared to a loss of $5.7 million in the same period of the prior year. And finally, net income was $8.3 million for the third quarter compared to a net income of $27.9 million in the same period in the prior year. Turning to our balance sheet, Origin ended the third quarter with $362.2 million in cash and cash equivalents and marketable securities. We maintain our expectation of fully funding the construction of both Origin 1 and Origin 2 using our existing balance sheet cash and cash equivalents and previously indicated traditional financing sources. With regard to the financing of Origin 2, as we’ve discussed on prior calls, the State of Louisiana, pending finalization, is expected to award a Private Activity Bond, tax-exempt bonds authorized by the state and local governments for the financing of qualified projects with private capital, volume cap allocation to the company in the amount of $400 million. We also expect to receive more than $100 million in pending state and local incentives. As Rich discussed, we anticipate various federal tax credit, grant, loan, and other programs targeted towards promoting advanced manufacturing from the IRA to be incrementally beneficial for the financing of Origin 2 once the details of those programs are finalized by the relevant government agencies. We maintain that our financing assumptions for Origin 2 remain reasonable and achievable, with Origin 2 fully funded from existing cash on hand…

Thank you, Nate. In closing, I'm incredibly proud of our team's continued execution as we draw closer to the commissioning and start-up of Origin 1 and encouraged by the strong momentum that we continue to see for our industry-leading technology, as the world moves aggressively to a zero-carbon future. I would like to thank all of our customers for their commitments to Origin, our team and construction and engineering partners for their contribution to our company's success and our shareholders for their continuous support. And with that, I would like to ask the operator to open the line for questions.

[Operator Instructions] And our first question comes from Steve Byrne from Bank of America. Please go ahead, Steve.

Yes. Thank you. You indicated that there's a fraction of the CMS that you're going to produce at Origin 2 that has already been allocated to produce para-xylene and the derivatives PET. I'm curious, what fraction of the CMS capacity at that plant are you allocating to that pathway? And so therefore, what fraction are you going down another path, which I would assume would be the furan based chemistries like PEF. And why did you come to this conclusion? Do you have a view that the furan chemistries could potentially create more value, than going down the path of PET?

Yes. Thanks, Steve, great question. So we're not disclosing the specific allocations of our CMF from Origin 2 at this time. But we've always talked about and planned for a portion of the CMF to go to those higher-value applications. You mentioned PEF, I would call out surfactants is another one. And CMF is this incredibly flexible molecule, that can go on to be a lot of things. And we've talked a lot about para-xylene and PET and have seen enormous demand for that. And we're excited to continue engaging with customers and potential customers, around additional even higher value applications of our CMF. And it's one of the great things about Origin 1 coming online, is it enables us to produce large-scale samples to those development partners as we build on the CMF platform.

And you picked up almost another $1 billion in offtake agreements. Is it fair for us to assume that those are mostly PET-based? And if not, what else are you getting in there now? And maybe more specifically do you have any offtake agreements yet for the carbon black or the HTC or do you think you need product from Origin 1 to deliver to your partners before you could really establish some offtake agreements for the HTC?

Yes. So it was another very strong quarter for demand, and a meaningful part of that is from our sort of flagship para-xylene and PET offerings but for other materials as well. And we've previously announced some offtake agreements for HTC, going to the carbon black application. And again, we are excited for Origin 1 to come online and provide larger scale samples, as we work to get even more carbon black offtake agreements. And the carbon black is not quite as drop-in as our para-xylene offering. And so, being able to provide meaningful samples is important to continuing to advance that business.

Very good. Thank you.

Thank you.

And our next question comes from Frank Mitsch from Fermium Research. Please go ahead, Frank.

Hi. good afternoon, folks. I wanted to talk about the time line on Origin 1 and the capital spend associated with it. You're maintaining the 125 budget – 125, 130 budget. And you also indicated that you're going to spend this year up to $175 million in CapEx, but it looks like year-to-date you guys have spent $58 million for the first three quarters. So can you just kind of walk us through the spending to get to that $125 million $130 million over the next couple of quarters, please?

Yes, sure. So we laid out the capital. And by the way, thanks, Frank. Appreciate the question. [indiscernible] We laid out that CapEx expectation at the beginning of the year and it was really anticipating that we might need to place some early orders for a large-scale equipment for Origin 2. We expect that $125 million to $130 million budget that we laid out for Origin 1 is, we're still expecting mechanical completion by the end of this year. So I think, we'll likely hit that pretty cleanly. But I think that, what we're seeing right now is that we probably don't need to have quite as many orders for Origin 2, but we want to leave space for that and make sure that we have the sort of right capital allocation there. And in particular, we want to make sure that we don't exceed it. And so that was sort of the general thinking alongside that. But in any case, if it isn't spent this year on Origin 2, it will be spent sometime next year. We would expect all of that would be timing issues associated with CapEx, not a guidance up down in general for the project.

All right. And it makes some sense, given the fact that you're anticipating steel costs, et cetera. So the cost of the equipment to come down. And if we're looking at 2025, there's no rush to get the equipment right now. Is that the right way to read that?

Exactly, the right way to read that, Frank.

All right. Great. And then, I mean congrats on the ever-rising upward capacity reservations offtake agreements getting to $9 billion. As you think about that, and let's make the assumption that much of that comes to fruition. What does that get us up to in terms of origin numbers? I mean are we past two? Are we past three? Are we past four, in terms of that very large number?

Yes. Thanks, Frank. We are taking orders across all three plants for a variety of products and some products are more sold out than others. But yes, we've been taking orders on Origin 3 to be specific.

All right. Implying that Origin 2 is probably booked up at this point?

So Origin 2 is substantially committed for para-xylene and PET.

And so as we said in the script, our sales efforts are evolving to what we've talked about in the past of focusing on advanced CMF derivatives, carbon black and other high-margin products.

Got you. All right. Thank you so much.

Thank you.

[Operator Instructions] And our next question comes from Eric Stine from Craig-Hallum. Please go ahead Eric.

Yeah. Hi, it's Aaron Spychalla on for Eric. Thanks for taking the questions. First, maybe on just testing and sales cycle. Can you talk about the evolution there over the past year plus as customer demand has grown and the outlook there as Origin 1 comes online?

Yeah. So our sales cycle tends to be a relatively small number of relatively large deals, and they can take a variety of time to come to fruition. Some move really fast, some require more R&D engagement and things like that. So there's not really a number of months or things like that that I could point to, but I would say demand continues to be very strong, continues to be strong across applications and geographies, as well as strong across our product portfolio.

All right. And then, can you just give an update on the feedstock strategy? Any update there, pricing economics, margins as the market is developing and you're moving forward?

Yeah, sure. So feedstock strategy that we're expecting to use for both Origin 1 or Origin 2 is residuals from the timber and lumber processing industry. There are other feedstock that are available in the region of Origin 2 that we may also incorporate into that feedstock strategy everything from agricultural residuals to even things like post-consumer recycled corrugated cardboard or paper products, mixed paper, et cetera. So that's the feedstock strategy. Our interest in that is both economic because those kind of feedstock tend to be lower value to other industries. And so, of course, that means better economic value to us. But also there's a driver from a mission side too. Those feedstock often are used or not used in such a way that they release significant CO2 and methane emissions those biogenic or biologically derived feedstocks when they get put into a landfill for example, they will often decompose anaerobically in the landfill and generate methane emissions, which are really a very potent form of greenhouse gas, and so intercepting those kinds of biologically generated feedstocks even cardboard of course originally came from a tree somewhere and preventing them from going to the landfill and instead using them in our technology, which can ultimately lock it into a -- lock the carbon into a material is a particularly powerful way of avoiding and mitigating greenhouse gas emissions to using our technology in addition to as I said the economic benefits of using feedstock right there.

Right, right, understood. Thanks for taking the question. I’ll hop back in.

That concludes today's live Q&A segment. I will now turn it over to Ashish Gupta, Investor Relations to conduct the next segment of our investor Q&A.

Thank you Ross. As we've done on our last two earnings calls we invited all investors to submit questions for our third quarter call as part of our Ask Origin campaign. Once again we were pleased to see such a high level of participation and want to thank everyone who submitted a question. In the interest of time we'll be taking the most commonly asked questions. Our first question is for Rich. Rich, what are some customers in the investor presentation order book page unnamed, excuse me, why are some of the customers in the investor presentation order book unnamed? And when will you name them?

Yeah. So as you can see from the order book increase demand is very strong and we continue to see significant sales traction, and when it comes to actually press releasing these customers that's in close coordination with these customers. And sometimes, we don't announce some right when deals are signed or released their names for a variety of reasons. A notable example would be that some customers want to wait and announce their relationship with us in conjunction with their own broader ESG announcements. So we really defer to customers on when making our relationship public works best for them.

That makes a ton of sense. I appreciate the color there. John, since you did such a great job covering feedstock and our focus on sustainability of the biomass feedstock. I just wanted to see if there's anything else you wanted to touch on there or if we thought it was best to move on to the PFAS question?

Yes. I think that was a good question. As you mentioned I gave a pretty comprehensive answer to Aaron on it. I think one other thing that might be worth noting is that on the economic side the fact that we can use feedstocks such as those that I described is what allows us to access tax-exempt bond financing for projects like Origin 2. So there's the, sort of, primary economic impact of using feedstocks like that which is that they're less expensive. And of course there's a mission-oriented impact of avoiding pretty potent greenhouse gas emissions. But there's a secondary economic impact which is that it allows us to access a really attractive kind of financing for these projects. And that can make a real difference as well. So that might be worth highlighting for folks too. A – Ashish Gupta: Thank you for being so thorough with all of that. And, I guess, could you clarify for folks, is there any PFAS in our products?

Yes. So it's an interesting question. We get this more often than I would expect as a chemist by the way PFAS stands for Per Polyfluorinated Alkyl Substances. And that's a class of compounds, which as a chemist you wouldn't necessarily associate with any of the stuff that we are doing, but there are substance of concern I would say for the human species. And so since we're dealing with chemistry materials and sustainability of chemistry materials then they tend to come up as part of that kind of discussion. And the short answer is, no. We don't have any per polyfluorinated alkyl substances in our products nor do we have those processes in our -- sorry those chemicals that is intermediate or solvents or something like that in our processes. So we don't really touch them. But there's something that sort of actually hits on a broader category of products and I would say a broader category of applications that you can use our products for which we sometimes think of as sort of safer chemicals and intermediates places where we can provide an intermediate that performs as well or perhaps even better than the fossil-based equivalent material or analog, but doesn't have some of the health impacts. And so I would say there are --of course sustainability is a big driver for materials and chemicals these days as it should be. I think another one is security of materials and chemicals the security of supply. Of course with the sort of geopolitics of the world these days that's something that is more top of mind for people. But I think another huge driver of change in the Materials & Chemicals world is this sort of human health and safety component as we understand better the impact that some…

Sure. No. Look we continue to consult with the leading financial institutions specializing in financing capital projects exactly like this. And we're pleased to reaffirm our financing assumptions for Origin 2 remain reasonable and achievable. I'll remind you that $400 million private activity bond allocation from the state of Louisiana we announced earlier provides a strong foundation for the financing of Origin 2. Again in combination with some of the non-volume tax-exempt financing structures this could enable the debt financing of Origin 2 using entirely tax-exempt bonds. We're continuing to work with the state and local agencies in Louisiana on our bond financing and we're pleased to report that Origin 2 financing remains on track. We're also continuing to work with financial institutions on other forms of traditional private financing, federal loan programs including through the USDA and the Department of Energy. I should also just reiterate that some of the federal programs that Rich mentioned earlier including the recently passed Inflation Reduction Act which can also provide incremental sources of funds for Origin 2.

Great. Really appreciate all of that extra color Rich, Sean and Nate. That will conclude the Q&A portion of today's call. I'll now turn it back to Rich for closing remarks.

Thanks, Ashish, and thank you all for joining us today and we look forward to keeping everyone updated on our progress. This concludes the call.

This concludes today's conference call. Thank you for attending. Goodbye.