Origin Materials, a packaging technology company, has announced an organisational realignment to expedite its journey to profitability.
The company is shifting resources towards its caps and closures business, which is seeing a surge in demand.
This move is expected to reduce overall cash burn and accelerate production capacity to meet the growing needs for polyethylene terephthalate (PET) caps projected for 2025 and 2026.
Origin Materials co-founder and co-CEO John Bissell said: “As near-term demand for Origin’s PET caps continues to increase, potentially exceeding our currently planned manufacturing capacity for 2025 and 2026, we are proactively reallocating resources to our caps and closures business.”
Origin has secured a memorandum of understanding with its first formal caps customer for billions of caps, representing more than $100m over an initial two-year period.
“Today, we are positioned to bring the world's first PET cap solution to a $65bn market with attractive margins,” Bissell added.
The strategic shift involves operating Origin 1, the company's biomass conversion plant in Ontario, Canada, on an on-demand basis with reduced staffing.
This decision will allow Origin to maintain its ability to produce small volumes for strategic scale-up partnerships while managing cash burn.
Bissell further commented: “As we establish a strong economic foundation through our PET caps and closures business, we expect to be ideally situated to drive deals regarding Origin’s biomass technology and furanics platform.”
The workforce adjustments associated with this realignment are expected to be largely completed by the end of this quarter.
Origin anticipates incurring about $0.6m in restructuring charges due to the workforce reduction, which is estimated at 28%.
These charges will consist of roughly $0.5m in cash expenditures and approximately $0.1m in noncash expenses.
Despite these changes, Origin is maintaining its financial guidance for 2024, with projected revenue between $25m and $35m and a net cash burn of $55m to $65m.
Additionally, the company's first commercial-scale PET cap mass production system is set to commence operations later this year, with revenue from caps expected to ramp up in the first quarter of 2025.
Origin Materials co-CEO Rich Riley said: “Today we foresee rapid near-term growth in the caps and closures market, where we offer a powerful solution for product performance and recycling circularity.
“At the same time, we remain confident in the long-term potential for building additional businesses based on Origin’s biomass conversion technology - all in support of maximising value for our shareholders and our mission to enable the world’s transition to sustainable materials.”
This month, Origin Materials launched its PET caps and closures manufacturing system.
