• Revenue: $9.9 million, approximately $7 million below target.
• Bio-refining Revenues: $5.9 million.
• Joint Development Agreements and Contract Research Revenue: $1.8 million.
• Carbon Smart Product Sales: $2.2 million, more than doubled quarter-over-quarter.
• Cost of Revenue: $8.1 million.
• Gross Margin: 18% of revenue.
• Operating Expenses: $34.8 million, approximately $5 million increase from prior year.
• Adjusted EBITDA Loss: $27.1 million, compared to $19.1 million loss in the prior year.
• Cash Position: $89.1 million at the end of September 2024.
• Investment by Carbon Direct Capital: $40 million closed in August.

• Warning! GuruFocus has detected 1 Warning Sign with LNZA.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• LanzaTech Global Inc (NASDAQ:LNZA) is evolving its business model to develop and finance its own projects, aiming for greater control over timing and performance.
• The company has established partnerships with major players like Brookfield Asset Management and the Olean Group, securing significant financial commitments for future projects.
• LanzaTech Global Inc (NASDAQ:LNZA) has announced several new projects, including Project Drake and a joint venture in the Middle East, which are expected to drive future revenue growth.
• The company is expanding its carbon smart business, with a new long-term ethanol purchase agreement with ArcelorMittal, potentially generating $10 million to $20 million annually.
• LanzaTech Global Inc (NASDAQ:LNZA) is diversifying its product offerings with the development of LanzaTech Nutritional Protein, targeting the growing alternative protein market.

Negative Points

• Third quarter revenue was $9.9 million, significantly below the target due to delays in sublicensing agreements and depressed ethanol pricing.
• The company is experiencing high operating expenses, partly due to costs associated with developing projects to FID (Final Investment Decision) stage.
• LanzaTech Global Inc (NASDAQ:LNZA) faces challenges in securing timely project agreements, leading to uncertainty in revenue recognition.
• The company's adjusted EBITDA loss increased to $27.1 million in Q3 2024, compared to a $19.1 million loss in the same quarter last year.
• There is a dependency on external factors such as ethanol market dynamics and project partner decisions, which can impact financial performance.

Q & A Highlights

Q: Can you clarify the revenue recognition for Project Drake and whether the $5 million received is part of the base revenue? A: Geoff Trukenbrod, CFO: The $5 million is an exclusivity fee for Project Drake and is expected to be recognized as revenue in Q4. It is not part of the $10 million base revenue, which represents the business's consistent performance quarter over quarter.

Q: How are cost savings initiatives impacting your financials, given the recent increase in cash costs? A: Dr. Jennifer Holmgren, CEO: Current expenses are high due to costs associated with getting projects like Drake and the Norwegian project to FID. These costs will be recouped upon project transfer. Geoff Trukenbrod, CFO, added that despite these project costs, they have reduced other operating expenses relative to budget.

Q: Can you elaborate on the new business model involving infrastructure partners and whether LanzaTech will invest equity in these projects? A: Dr. Jennifer Holmgren, CEO: LanzaTech is partnering with infrastructure investors like Brookfield and others to finance projects, allowing them to retain significant upside without shifting to a capital-intensive model. They are developing projects to FID and then transferring them to partners, which helps control timelines and increase revenue potential.

Q: Regarding the Norwegian project, what benefits does the emitter receive, and how does this model work with infrastructure partners? A: Dr. Jennifer Holmgren, CEO: Emitters benefit from reduced emissions without having to invest in gas fermentation refineries. Infrastructure partners finance the projects, allowing LanzaTech to work with emitters who traditionally wouldn't invest in such projects. This model also allows LanzaTech to retain 50% of the offtake, increasing revenue potential.

Q: What is the status of the Freedom Pines facility, and how does it relate to the broader climate policy landscape? A: Dr. Jennifer Holmgren, CEO: The Freedom Pines facility has started feed into the system but is not yet producing SAF. Regarding climate policy, the bipartisan nature of the IRA as a jobs bill supports LanzaTech's operations, and the global nature of their projects mitigates reliance on U.S. policy alone.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.