Origin Materials' Q3 2025: Contradictions Emerge on Convertible Debt, Burn Rate, Demand, and Cash Flow

Guidance:

• Revenue and run-rate adjusted EBITDA guidance remains unchanged.
• 2026 revenue expected to be $20M–$30M.
• Company reiterated a separate revenue band of $100M–$200M as stated on the call.
• Expect to reach adjusted-EBITDA run-rate breakeven in 2027.
• Complete FAT through CapFormer Line 6 by end of 2025; Line 7/8 start-up may extend into Q1 2027 (updated from Q4 2026).
• May draw additional convertible debt tranches in 2026 at management's discretion.

Business Commentary:

* Financing and Cash Management: - Origin Materials secured a $15 million initial close of a convertible debt facility with the capacity for additional tranches up to a total of $90 million. - The financing strategy is designed to optimize cash management and cost of capital, allowing flexibility to respond to evolving working capital needs and equipment funding requirements.

• Manufacturing Capacity and Product Development:
• The company is on track to complete factory acceptance testing through CapFormer Line 6 by the end of 2025, with Lines 7 and 8 startup potentially extending into Q1 2027.
• Origin is making progress with technology advancements, including impact resistance and multi-day heated horizontal stress testing, to improve product performance and market competitiveness.

• Commercialization and Customer Demand:
• Origin has executed its water-first go-to-market strategy with a strong customer pipeline and qualified products with PET caps in key markets.
• The first order from Berlin Packaging was recently fulfilled, opening up new distribution opportunities globally.

• Strategic Partnerships and Market Expansion:
• Origin Materials announced a strategic review engagement with RBC Capital Markets to explore strategic alternatives for the company.
• The company has participated in international conferences to showcase its products and is receiving significant interest from the market, indicating strong potential for future growth.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management emphasized financing that "strengthens our balance sheet and provides access to substantial additional capital," repeated that "demand is strong" (water and CSD), and highlighted operational progress (FAT completion targets, product development wins and the Berlin Packaging order) as reasons for optimism.

Q&A:

• Question from Frank Mitsch (Fermium Research): Can you describe the milestones/mileposts required to access the additional $75 million of convertible debt beyond the initial $15M?
  Response: Management deferred specifics until the upcoming 8-K, saying milestone and deal terms will be detailed there and declined to provide further detail on the call.

• Question from Frank Mitsch (Fermium Research): The burn rate in Q3 was $15M; can you offer outlook for burn over the next few quarters?
  Response: Q3 burn ~ $15M (roughly $10M OpEx, $5M CapEx); H1 OpEx was ~ $20M; expect a similar OpEx/CapEx split into 2026 and net burn to decline as gross profit ramps.

• Question from Frank Mitsch (Fermium Research): When will Lines 2 and 4 generate product quality acceptable to customers and enable customer qualification (given NASDAQ extension to April 2026)?
  Response: Lines 2 and 4 are starting up and management expects significant progress toward customer qualification through the end of Q1, though they won't commit to specific customer revenue timing.

• Question from Frank Mitsch (Fermium Research): Any color on the first order from Berlin Packaging and prospects for follow-on orders?
  Response: First order is being shipped (assumed water application); management has not yet received customer feedback and will use that feedback and newly established customer support to inform cost/performance and future orders.

• Question from Ask Origin investor: Please explain the various phases of qualification (FAT, SAT, customer qualification) and their significance.
  Response: Two distinct processes: customer qualification (running caps on customer bottling lines to verify throughput and package performance) and equipment qualification (FAT at supplier, SAT after installation, then internal line start-up to dial in production specs).

• Question from Ask Origin investor: How does customer demand in Europe compare to the U.S., given changing policy/administration stances?
  Response: Demand is strong in both US and Europe driven by end-of-life and recycling priorities; management sees continued interest in PET caps and no meaningful reduction in recycling-focused demand.

• Question from Ask Origin investor: Have trade shows generated any concrete developments?
  Response: Trade shows produced multiple concrete but not-yet-public commercial opportunities and significant inbound interest, expanding the sales and business-development pipeline.

• Question from Ask Origin investor: What should investors be most excited about looking forward?
  Response: Near-term milestones: bringing capacity online to serve larger customers, continued product feature development to expand addressable market, and secured financing to fund execution.

Contradiction Point 1

Convertible Debt Financing and Milestones

It involves the conditions and milestones associated with the convertible debt financing, which are crucial for understanding the company's financial strategy and growth plans.

Can you clarify if there are milestones required to access the additional $75 million in convertible debt financing? What specific milestones must be achieved? - Frank Mitsch (Fermium Research, LLC)

20251114-2025 Q3: We've executed a secured convertible debt facility with an initial close of $15 million in cash by the end of this month, with the capacity for additional tranches up to a total of $90 million as needed to maintain a healthy cash flow and to fund growth. - [John Bissell](CEO)

Can you confirm if there are milestones required to access the additional $75 million in convertible debt financing, and describe those milestones? - Frank Mitsch (Fermium Research, LLC)

2025Q3: Yes, the 8-K with the deal terms will be out by month end, providing detailed terms. At this point, it's best to review the terms together to understand the instrument properly. I'll provide further detail on the deal terms once filed. - [Matthew Plavan](CFO & COO)

Contradiction Point 2

Burn Rate and Financial Expectations

It involves the company's financial forecasting and operational spending, which are critical for investor understanding of the company's financial health and sustainability.

What's your outlook for the burn rate in the next couple of quarters? - Frank Mitsch (Fermium Research, LLC)

20251114-2025 Q3: The burn rate consists of operating expenses and capital expenditure for CapFormers. In Q3, it was roughly $10 million on OpEx and $5 million on CapEx, consistent with previous quarters. We expect the burn rate to remain relatively consistent, reducing as we start generating gross profit. - [Matthew Plavan](CFO & COO)

What is your outlook for the burn rate in the next few quarters? - Frank Mitsch (Fermium Research, LLC)

2025Q3: The burn rate is a combination of current operating expenses and cash operating expenses. We've seen roughly $10 million on OpEx and $5 million on CapEx in Q3, which is consistent with the first half of the year. We expect this trend to continue into 2026. - [John Bissell](CEO)

Contradiction Point 3

Customer Demand and Market Growth

It involves differing perspectives on the level of customer demand and market growth potential, which are crucial for strategic planning and investor expectations.

Can you compare customer demand in Europe versus the U.S. due to the current U.S. administration's environmental policies and how this influences your growth strategy? - Investor

20251114-2025 Q3: We see strong demand for PET caps due to sustainability concerns around end-of-life recycling in both the U.S. and Europe. The focus on recycling and sustainability remains strong, and we expect this to continue to fuel demand for our products. - [John Bissell](CEO)

What are the key growth drivers for the future? - Ryan Smith

2025Q2: Markets where we see the greatest opportunity are the water, beverage, and health and personal care markets, which together represent approximately $85 billion in global demand. - [John Bissell](CEO)

Contradiction Point 4

Financial Stability and Cash Flow

It involves differing statements regarding financial stability and cash flow, which are essential for the company's operational continuity and investor confidence.

Can you provide an update on the company's cash position and convertible debt financing? - Frank Mitsch (Fermium Research)

20251114-2025 Q3: We've executed a secured convertible debt facility with an initial close of $15 million in cash by the end of this month, with the capacity for additional tranches up to a total of $90 million as needed to maintain a healthy cash flow and to fund growth. - [John Bissell](CEO)

How is our NASDAQ listing status affected by trading below $1 for an extended period? - Investor

2025Q2: Financial strength and cash flow management remain a top priority of the company. We believe our current cash and cash equivalents and marketable securities will be sufficient to meet our operating needs and capital expenditure requirements for at least the next 12 months. - [Matthew Plavan](CFO & COO)