LanzaTech Global, Inc. Q1 FY2024 earnings call

• Financial results for Q1 were in line with internal forecast and prior guidance, with revenue ~$10 million, gross margin 34%, and gross profit $3.5 million, all up year-over-year.
• Announced Project SECURE where Technip Energy was selected by the U.S. Department of Energy for a $200 million grant for a sustainable ethylene project from CO2 emissions.
• LanzaJet inaugurated the world's first ethanol-to-SAF facility in Soperton, Georgia, and LanzaTech is in a $100 million investment round.
• Advanced commercial project pipeline with 8 operating projects, 9 net additions of qualified project opportunities to the pipeline, and projects in various development stages.
• Reiterated 2024 financial and operating guidance, including expected revenue of $90 million to $105 million and adjusted EBITDA of -$65 million to -$55 million.
• Completed reorganization initiatives with estimated annualized operating expense savings of $5.3 million and global head count below 400.

Total revenue for the first quarter of 2024 was $10.2 million, growing by 6% year-over-year and in line with forecasts. CarbonSmart revenue was approximately $1 million, JDA & Contract research revenue was $4.3 million, both up year-over-year. Biorefining revenue declined year-over-year to $5 million but benefited from engineering services revenue across projects in early and advanced stage engineering and start-up services. Gross profit was $3.5 million, up 87% year-over-year, with first quarter gross margins at 34%, up approximately 570 basis points from full year 2023. Operating expenses were $29.6 million, down 14% year-over-year, largely due to one-time expenses in Q1 2023 related to the Go Public transaction. CapEx spent in Q1 2024 was $1.3 million.

• Reiterated 2024 revenue guidance of $90 million to $105 million, with midpoint reflecting ~55% top line growth over the previous year.
• Anticipates Q2 revenue to have 20% to 40% quarter-over-quarter growth and a strong back half of the year with multiple projects moving into later stages of development and construction.
• Expects Biorefining revenue growth from engineering services and equipment package sales, and Project SECURE to kick off in 2024.
• Anticipates moderate year-on-year growth in CarbonSmart and JDA & Contract research businesses.

• The company's actual results may differ from forward-looking statements due to various reasons beyond control, including market, policy, and operational uncertainties.
• Risks associated with the successful execution of commercial projects, including delays in project commencement, construction, and ramp-up to full production.

Q: Wanted to just start off on the revenue side here. So if I heard you guys right, you're expecting roughly 20% revenue growth in 2Q versus 1Q here. If I do the math, that gives you about 23% of your revenues in the first half relative to your midpoint of your full year revenue guidance. Given that, can you just elaborate a little bit on what you expect to hit in the second half of '24, which obviously has to be a pretty big significant ramp to hit that guidance this year?

A: Yes. Leo, and thanks for being on as always. So yes, we put a little bit of a range for Q2, so 20% to 40% growth over the first quarter, just to reiterate that. So there's a little bit of variability there in [ finding ] projects as well. But yes, that does certainly suggest that we expect a large ramp in the back half of the year. We did reiterate our guidance. So we do expect to be in those revenues in the back half. It's a function of a combination of things, including a variety of projects moving into the construction stage as well as ongoing projects that has already moved into as well as the other components of our revenue.

Q: I wanted to ask about the project pipeline and some growth that you mentioned, 9 projects added to that pipeline. I was wondering if you could give us some flavor for what those projects were and if you expect to maintain that pace in terms of projects being added to the pipeline or that will be lumpy again as well, I should say, quarter-to-quarter.

A: Let me address that. [ Deposit ] pipeline just because it's early stage for us, will be a little lumpy and silly. However, we are adding projects both to the top of the funnel and getting projects through to FID. So we do expect to see construction this year. The projects that are being added to the front of the funnel, however, are tough for me to discuss the specific partners because of the fact that a lot of those are still not named partners. However, we are starting to also see interest from companies to start replicating projects. We've done that in China, we have 4 projects with the same partner, and we're starting to see filling up the funnel with partnerships related to companies that are overly building plans.