Origin Materials, Inc. (ORGN) Q2 2021 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Origin Materials’ Second Quarter 2021 Earnings Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Ashish Gupta, Investor Relations. Please go ahead.

Thank you and welcome everyone to Origin Materials second quarter 2021 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. Out of this call Origin issued its second quarter press release and presentation which we will refer to today. This can be found on the investor relations section of our website at originmaterials.com. Please note that on this call, we'll be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect our views only as of today, should not be relied upon as representative about views of as 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 their financial results please refer to our filings with the SEC including our quarterly report form 10-Q. 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 an isolation from GAAP results. You'll find additional disclosures regarding the non-GAAP financial measures discussed on today's call and in our press release issue this afternoon, and in 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 will turn the call over to Rich.

Thank you, Ashish, and thanks to everyone for joining us today. For today's presentation, we will be referring to the slides that were posted to the Investor Relations section of our website earlier this afternoon. We will begin on slide 3. The second quarter of 2021 was momentous for Origin. First, as previously announced we successfully completed the business combination in June and as at the end of the second quarter have $471 million in cash and equivalents on hand. Second, we made significant progress on our first commercial scale plants Origin 1 and Origin 2 and are reaffirming our expectations as to capital budget, production timeline, and our anticipated ability to fully fund both projects from existing cash on hand and previously identified traditional financing sources. And third, our customer demand has more than tripled over the past six months with uptake and capacity reservations of $3.5 billion as of today. As this is our first earnings call, I'll start with an overview of Origin Materials and then provide a commercial update. I'll then turn it over to John who will discuss Origin's intellectual property, core technology, updates on Origin 1 and Origin two and recent executive hires .Nate will wrap up with a financial overview. Origin was founded in 2008 with a mission to help solve climate change by enabling the world's transition to sustainable materials. Our patented drop in core technology, economics and carbon impact have gained the support of a growing list of major global brands and investors including Pepsi, Nestle, Danone, Ford and Mitsubishi gas chemical. The CPG companies mentioned that publicly disclose their intent to migrate 100% of their current petroleum based PET consumption to decarbonized and recycled materials. After extensively testing our technology, these market leaders have made significant financial contributions to Origin both as investors and customers demonstrating their environmental commitment and competence in our technology. We believe Origin is positioned to be an industry disruptor in the material space at large commercial scale. Unlike other companies who serve smaller niche markets, we believe Origin is structurally advantage to address an estimated trillion dollar market just beginning to transition from petroleum feedstocks to sustainable ones. And they were positioned to be the clear category leader based on the simple yet powerful fact that our technology was built around converting the lowest cost feedstock, wood residue into decarbonized supply chain ready materials. While the big focus of the decarbonisation movement among the media and investors has been electric vehicles and renewable energy, 45% of the world's emissions come from the manufacturing of products with a significant portion coming from underlying chemical material. Over 10 million barrels of oil per day are used to create these materials, and the production process releases massive quantities of new carbon in the atmosphere. Origin's vision for the future is to replace these 10 million plus barrels per day with plant based feedstocks. We think the best place to start the transition to sustainable plant based materials is plastics, which represent an enormous and rapidly growing portion of the world's materials. When we say plastics, we're not just talking about water bottles and other consumer packaging that probably first comes to mind. Majority of plastics are used in textiles, cars and other household products. Just capturing a small portion of the incremental annual growth in plastics is more than enough to manage to build our business. Importantly, our solution is designed not to require companies to change their products or processes. There are near zero switching costs because we produce a material identical to what they currently use. The only difference is that our feedstock is derived from plants rather than petroleum. We think this is the path for us to deliver carbon negative materials at massive scale dramatically reduce carbon emissions and create products that are readily recyclable within the existing global infrastructure. Turning to slide 4, the attractiveness of our solution is what drove the early partnership and anchor investment from Danone, Nestle, and PepsiCo. Recently we have also taken significant steps to commercialize the business by broadening our customer base beyond consumer packaged goods into apparel and industrial and markets including automotive. In April, we announced a strategic partnership with PrimaLoft to develop carbon negative insulating fiber for outdoor gear but in apparel. PrimaLoft makes high performance insulation and fabric for over 900 global brands including iconic companies such as Patagonia, Lululemon, Adidas and Nike. This is a very significant partnership for us an example of being able to partner with a company in the supply chain to deliver materials to hundreds of brands. Many apparel companies are eager to decarbonize, but they don't actually manufacture their own products. This is where our partnership with PrimaLoft can have a huge impact. During the second quarter, we also announced the Net Zero automotive program with Ford Motor Company. Ford and other automakers have committed to electrifying a significant portion of global production, providing a tailwind for Origin. Because plastic helps make cars lighter and more energy efficient. EVs are estimated to use three times the amount of plastic per vehicle as internal combustion vehicles. Our Net Zero automotive program with Ford has tremendous opportunity for Origin to work with an industry leader to decarbonize the very large addressable market. Our partnerships with Ford and PrimaLoft demonstrate the steps we have taken to further commercialize the business and expand our end markets. Notably, corporate commitments to net zero are increasing daily, and Origin is engaged with many of the world's largest companies to help them achieve their decarbonisation, and sustainability goals. In addition to exciting customer and partnership announcements, we also announced last week that our CMF and HTC products have earned the U.S. Department of Agriculture certified bio based product label. This is a coveted third party verification that our products meet or exceed the biobased content requirement for the U.S. government. This certification qualifies our products for mandatory federal purchasing under the 2002 and reauthorized 2018 Farm Bill. With that, I would like to turn it over to John for technology overview and an update on Origin 1 and Origin 2.

Thanks. I'm going to begin on slide 5. As Rich mentioned, Origin's technology platform uses proven traditional chemistry to convert carbon negative feedstocks like wood residues, postconsumer cardboard, mixed paper waste and construction waste into two principal intermediate chemicals CMF and HTC. These chemical intermediates will be used to make materials like PET that currently use petroleum an energy source in their manufacturer. Moving to slide 6, what separates Origin from these biomaterials companies is our proprietary CMF and HTC production properties which are based on sound, scalable, carbon efficient technology. The process to convert biomass is very carbon efficient. The vast majority of the carbon end up as one of our products. This is in stark contrast to thermal chemical properties such as gasification process and fermentation processes, which nearly invariably lose a substantial proportion of the carbon and feedstock to emissions. This carbon efficiency contributes both to the extraordinarily competitive economics of our process and to the very low carbon intensity of the process. While biologically mediated properties are often hindered by any variation and feedback, our homogeneous chemo catalytic process is robust to a huge range of variation. Similarly, components of the feedstocks that are non-volatiles such as salt can be showstoppers for thermal chemical properties, but they're largely immaterial to the performance of our process. The flexible nature of our chemistry enables many different feedstocks to be used. Sawmill and pulp mill residues, construction waste, agricultural waste, post-consumer paper packaging, pulp wood and mixed paper waste. That feeds back flexibility directly contributes to the low cost and carbon impact of our products. Finally, turning to slide 7, our process is constructed entirely of conventional physical and mechanical properties that have been used in countless chemical properties for centuries. Auto chemistry is new. The process physics are analogous to many processes had been in widespread operation for generations, crack helping among them. The use of conventional processes makes the technical scaling much more predictable and much lower risk as despite the vast number of chemical processes and operation that's applied to physical goods of civilization. There are very few examples of unsuccessful scaling for technical reasons. Since founding the company in 2008, Origin has made substantial improvements on the technology through continuous innovation licensing agreements. Today, we hold 19 families of patents protecting our proprietary production process to make CMS, HTC and their downstream products. We believe this IT provides a defensive moat around our technology. Now on to slide 8, I will turn to our progress on Origin 1 and Origin 2. We are of course continually reviewing construction costs and timeline to assess macroeconomic perturbations such as inflation and supply chain disruption, we were pleased to reaffirm our previously disclosed expected capital budget and production timelines for Origin 1 and Origin 2. In terms of timing, we expect the construction of Origin 1 to be completed before the end of 2022 with commissioning and production of the plant thereafter. We're pleased to be working with the leading capital product partners, Koch Modular Process Systems, Worley, KSH Solutions, and Jacobs Engineering Group. As of June 30, 2021 installation at most foundations for building and processor is a significant underway and on track for timely Origin 1 mechanical completion. We had also completed fabrication of the modules that contain the principle equipment used for the conversion of biomass feedstock into high value chemicals. And by the end of 2021, we expect the modules to be lifted erected roughly four months ahead of schedule. Similarly, Origin 2 remains on track for completion by mid 2025. Further, we are working with Worley, Delight and Fisher International to select the site for Origin 2 which we expect to have designated by the end of 2021 in line with our prior forecasts. Turning to slide 9, we thought it would be useful to provide more of the story behind Origin 1; how did it start, what are the modules look like, and what will it look like? You can see here the modules themselves. They're large 60 to 75 tons each. The modules are on site in Sarnia, Ontario, and ultimately they will be interconnected and erected. With slide 10, I'd like to write additional background on how we got to where we are today. We spent over 10 years developing and proving out this process invention pilot scale. That translated to process design and engineering, which in turn translated to these designs being fabricated and shot. An advantage of doing modular construction is that it offers better control over environmental conditions and therefore a more predictable schedule. Additionally, module construction also gives you better control over the quality of the work. Here on slide 10. You can see our CTO Ryan Smith, next to a vessel had a new module while it was in the shop. And now with slide 11, we see that those modules are transported to our site in Sarnia, Ontario, Canada. Those modules will be erected onto the anchor bolts in the foundation. Other pieces of equipment such as tanks are also delivered on site. We've labeled the 3-D model that you've seen before. You can see the conveyor that moves the feedstock of the system, the feedstock silo, the ISBL or inside battery limits equipment, which is where the real chemistry happens. You can see the process building where the solids handling happens for HTC. You'd also see more general items like the tank farm and an area for trucks to load and unload liquid materials. And you can see the brain regeneration area where we handled some of our [equipments]. So while there's work to be done other than the core process module authority fabricated on site that work is generally routine and it's particularly specific to our technology. Lastly, moving to slide 15, I'd like to talk to you about our efforts to strengthen Origins leadership team. We were excited to welcome Jim Wells, Ben Freireich, and Madhu Anand will play an instrumental role in scaling our platform technology. Jim has an incredible background. He is extremely experienced engineer and was instrumental in the execution of capital project [Indiscernible]. Madhu Anand brings extraordinary engineering analytic and processing expertise to Origin from Phillips 66, where she was the chief engineer of the hydro processing and NASA upgrading unit. Ben Freireich, is leading industry expert in solid particulate materials for both product and process R&D and joined us from PSRI where he led applied process research efforts for a consortium of over 30 multinational corporations. We're excited to be bringing that expertise to Origin. Recently, we further strengthened our team with the addition of Bob Nissen and the Origin 2, Project Director, who has a background with BP Jacobs, as well as David Balliow, Origin 2 Process Technology Director, who brings with experience from Worley and Burns and McDonnell. We're happy to welcome both of them on board. I look forward to their contributions for years to come. And with that, I will turn it over to Nate to discuss some financial details.

Thank you John. I'll begin with some commentary on our second quarter results, provide a financing update for Origin 2, and then finish with our 2021 outlook. Speaking to slide 16, second quarter operating expenses were $6.7 million compared to $1.7 million during the same period in the prior year. Adjusted EBITDA loss was $3 million for the second quarter compared to a loss of $1.6 million in the prior period, and finally, net income was $62.5 million for the second quarter compared to a net loss of $1.7 million in the same period in the prior year. As of June 30, 2021 Origin had 136.7 million shares outstanding, excluding 4.5 million shares held by certain stockholders that are subject to forfeiture based on share price performance targets applicable to earn out shares. Turning to our balance sheet as a result of successful business combination with RDS Origin ended the second quarter with $471 million in cash and cash equivalents. Based on preliminary feedback from leading financial institutions that specialize in financing similar sized capital projects, which indicated that our financing assumptions are reasonable and executable, we are able to reaffirm our expectation of fully funding the construction of both plants using our existing balance sheet, cash, and cash equivalents and previously indicated traditional financing sources. Upon completion of Origin 1 and Origin 2, we expect beginning generating positive EBITDA and anticipate our business would generate sufficient cash to allow us to build Origin 3 and beyond. Hence, we do not anticipate needing to raise additional equity capital fund our current business or capital project needs. Further, we would note that we anticipate having approximately $100 million of excess cash beyond the capital budget of Origin 1 and Origin 2. Finally, as John mentioned earlier, we received many questions on inflationary pressures. We are continually updating our cost estimates in real time based on current inputs we've received from vendors and suppliers I'm pleased to report projected construction costs are still within the overall capital budget. Wrapping up with our full year 2021 outlook, we're expecting adjusted EBITDA loss of up to $25 million and capital expenditures of up to $111 million consistent with our previous outlook. With that, I will turn it back to Rich for closing remarks.

Thank you, Nate. I would like to wrap up with three simple reasons that we are so excited about where Origin is today and what its future holds. First, we are the industry disrupter with a clear line of sight to commercial scale and the category leader in carbon negative materials. Second, demand is very strong, and we think Origin will be supply constrained for the foreseeable future. Third, our financing is on track or ahead of schedule to bring Origin 1 and Origin 2 online and begin production. Thank you for your time today. Now we'll open up the line for questions.

Thank you. We will now begin the question and answer session. [Operator Instructions] Our first question comes from Frank Mitsch of Fermium Research. Please go ahead.

Hi, guys, it's Lisa on for Frank. The first question on slide 4, you lay out the growth in off take agreements and capacity reservations, which has now reached $3.5 billion. How are you guys expecting this level to track over the next 12 months? And which end markets are expected to provide the most incremental opportunities?

Hi, this is Rich. Great question. We're experiencing really strong demand from across the board. If you think about just six months ago, we had customers that were only from the CPG, vertical. And since then, we've had apparel companies, automotive companies, building materials companies, and we're experiencing a wide range of demand from those verticals as well as additional companies really around the world. So it's not any one specific category that's driving this growth. It's really across the board and in addition, we continue to partner with other chemical companies who want to build on top of our materials.

Got it. And as a follow up, could you guys share your thoughts on future bio premiums and carbon credits in terms of your pricing?

Sure. So our pricing strategy, let's take PET, for example we typically start with third party projections for the forward pricing of PET and then add a reasonable premium to that to account for the carbon negativity of our materials, and the sustainability. And to some extent, the fact that we can offer a fixed rate pricing to our customers, which takes the volatility out of their cost structures. And overall, we're trying to be strategic about it. And we want our customers to feel competent that we see them as long term partners. We want to be a very meaningful part of their supply chain going forward. And part of that means offering very fair pricing and not trying to take advantage of them anyway when it comes to pricing, but we are commanding reasonable premiums.

Our next question comes from Stephen Byrne of Bank of America. Please go ahead.

Yes, I'd like to keep that discussion going on these additional contracts that you've been talking about here Rich? How would you describe the structure of these additional contracts? And how firm is pricing in them?

Sure. Hi, Steve. So these contracts are, first of all, they're large. So they're typically over $100 million. They're 5 to 10 years in length and they're typically with big companies and they would normally start with what we call a capacity reservation, which specifies the product, the price, the quantity and the duration of the contract. And then we'll move that into an offtake agreement, certainly in time for project financing of the plants. And so that's the very standard structure that we use with most of our customers.

And then Origin 1, you you're going to start up in early 2023. Are you at a point where you're starting to negotiate with [Strollers] and if so, how firm of a pricing can you get from them for the upgrade of the CMF all the way to a paraxylene or even PET?

It's a great question. We are, yes go ahead John. I am sorry. Go ahead.

It's a great question. So the hayseeds, by the way, that second, again, the key here is, there are variety of different steps in the tow manufacturing chain coming off Origin 1. So in the broad scope, there are some areas where we have quite a bit of certainty and we really do understand quite well, what sort of the cost, let's say collars are on what that's going to look like and there are other areas where there's a little bit less certainty. But generally speaking, if you're looking at the overall quantity of demand, or revenue that we're expecting to generate from Origin 1, I think for the majority of that, we have a pretty good understanding of the collars on cost for that section for the tow manufacturing event. And in many ways, that's because a substantial amount of the downstream processing is chemistry that's pretty well understood and which mirrors or let's say, yes mirror is a good word, mirrors existing chemistry. So we sort of understand what the throughputs going to be, we understand what the reaction profile is going to be, we understand how the equipment that is going to be operating and perform and in many cases, these are, this won't be the first time that [Strollers] have operated in this general style of chemistry. So it's not sort of, first of a kind for these guys. They really understand it pretty well. And so all that to say, I think we have a pretty good understanding of it, even though it isn't 100% locked at this point, just because generally speaking, you don't get that kind of long range commitment on pricing from [Strollers] which I think is probably why you asked the question.

And just real quickly, is the HTC that will be produced out of Origin 1 have a phase, what are you going to do with that?

It does have a phase. We haven't disclosed exactly what that phase is going to be yet in large part because it's as is the case for most of the products that are coming out of Origin 1 those products are being used for commercial and market development and application development for products other than PET and other than HTC and so we really see that as an opportunity to advanced the ball in some of the higher margin, higher value kind of product areas for us. So that also means that we're as typical for us, we're working with other companies on those products and applications and we disclose them when those companies are when we are ready to disclose them, but I don't think we've done so for HTC at this point. But it will have a depth in it.

[Operator Instructions] Our next question comes from Mark Connelly of Stephens Inc. Please go ahead.

Thank you, very happy to hear Nate's comments on inflation. But we're obviously seeing a lot of companies across a lot of industries, spending more on topics, even get things done with more certainty or because this stuff has gotten more expensive. So how have you guys been impacted so far? And are there significant pressure points if this, labor short transportation constraint environment continues?

Yes. So I think, you're right, yes, sure. We have seen, as you say there is movement in the supply chain. We are seeing and placed in certain areas. But I'd say, for Origin 1 in particular, we've seen I'd say modest impacts there and frankly there have been both puts and takes on it. And so that's why we feel pretty comfortable. But we're very comfortable. I said, we're going to deliver that on budget in our prior capital budget. I think for Origin 2, we had looked at that originally, with materials prices that were substantially higher than what a lot of us were seeing in 2020 and we just carried those forecasts across. We didn't take advantage of the trough in materials pricing, and labor pricing everybody saw in 2020. And so from that perspective, I think frankly, we're sort of seeing a return to what we were expecting the prices to be when we originally put that forecast together. And for Origin 1, of course, we've actually, we've made a lot of those purchases already for raw materials in the places where you see some of that inflation occurring.

And second question, your initial comment on CMF and HTC from Origin 1 and 2 are going to be relatively limited, considering the size of the market and the potential interest. My understanding is your strategy has been reserved some of that tonnage for new development customers. But how do you prioritize given that you've got early sponsors and early customers that are likely to want more than you can actually produce?

That's a great question. So the way that we think about that is really which it has to in which products and which markets are strategic for us. And a lot of that has to do with where do we see and this is probably unsurprising, where do we see the performance of our sort of non dropping non PET products, where do we see the performance advantages really show up? What are those applications? And how do we double down essentially with that material or those applications? And I'd say the other thing that we find is, while our customers are always interested in more material, I did that sort of consistent drumbeat across the board for us is, they all want more. And the reality is they understand there's somewhat limited amount of material, as you say, coming out of Origin 1, relative to of course, the total market size for these applications. And so they're focused also alongside us on doing the work that is most valuable with material in order to move these markets along, beyond the sort of beyond the PET beyond dropping markets, and so I think there's, a lot of common interest in getting these markets moved along as easily as possible, even though of course, as you say, they want as much as they can get as soon as they can get it.

Our next question comes from Eric Stine of Craig-Hallum. Please go ahead.

Hi, everyone, thanks for taking the questions. Just to take that last question a little bit further. I mean, even beyond Origin 1 as you play this out, clearly, you're seeing a big expansion in what you've got under contract off takes in that 3.4. But are you sensing that your customers are starting to get concerned or at least look out a little further and see some scarcity value to the production that you're planning? And I guess I'm just wondering, is that something that you could potentially asked for prepayments or things along those lines that could maybe accelerate Origin 2 or Origin 3's timeline and then going forward?

Yes, that's a great question. So, we are placing some orders on Origin 3 already as an example, and as part of our contracting process, when we go from a capacity reservation to fully reserving the capacity. There is a choice of a prepayment or going straight to offtake and we do think it's likely that many customers will choose to make pre-payments as they have in the past. And having that demand, those pre-payments are the kinds of things will help us accelerate origin 3 to the extent we can and Origin 4 and beyond.

Yes. And just to be clear, when you talk about an Origin 1 and Origin 2 being fully funded, and also having access, you're not, it doesn't sound like you're factoring in any pre-payments. If that were to be the case, that would be above and beyond the projections that you just gave today. And as you said, it would serve to accelerate things?

It's true that we have not included prepayments in any of our funding assumptions. And if we were to receive meaningful prepayments that would clearly help fund Origin 3 and beyond.

And maybe this last one for me just curious as you've gone through this process, as things develop, the merger closes all that if anything has changed or any updated thinking on the feedstock strategy how you're approaching that?

On which strategy? Go ahead.

I mean feedstock. I mean, whether it's location. I know you can use a wide range of materials. But are you starting to think that there were a few that would be optimal? Just looking for any details there.

Yes. Got it. Certainly. No, we haven't seen a huge change in our feedstock area even really much more modest one. I think what we're seeing is consistent support of our view of the feedstock market for our process, which really means lots of it available, very consistent pricing, historically, and looking forward. Obviously, we're looking at sites that have great access to feedstock and I think that includes, of course, I saw it on pulp mill residuals, but all sorts of other materials as well. And I think generally speaking, we feel like there are, frankly, if anything more opportunities than we were expecting to see these pulp mill sites than we're interesting originally. So I think definitely seeing reinforcement and maybe even more opportunity than we were expecting on the feedstock side.

And I did jump on a little late. So I apologize. But just to confirm, did you say that Origin 2, you thought that or you were hoping to have a site selected? Was it by the end of 2021? Did I hear that correctly?

That's correct.

Our next question comes from Pavel Molchanov of Raymond James. Please go ahead.

Thanks for taking the question. In your comments about financing for origin 2 you talked about commercial lending arrangements. But what's the role of the public sector? And how you're thinking about Origin 2?

Pavel its Nate, let me see if I can take that one. It's a great question. One, I think that you thought first, you have to remember that we do consider ourselves fully funded. And we see that through a combination of what our traditional project financing, and that does include some government support programs, we think there are some terrific programs available through loan guarantees, for instance, domestically through the USDA, U.S. Department of Energy. But we also are fully prepared to do this through conventional project finance or the municipal bond market.

Understood. Those are all options. How many sites for Origin 2 are you choosing from and I guess what's the geographic scope of those options?

Yes. Sure. So generally speaking we saw many dozens of potential sites at the sort of top of the funnel that satisfied our roughest criteria. And then as we've honed that down we're seeing let's call it 6 to 8 sites at this point that we think are really good sites that meet every single one of our criteria, and each of which would be spectacular. I think generally speaking the Gulf region broadly, is attractive geographically, because it has generally low cost of feedstock, it has lots of extremely skilled labor, both on the construction and the operational side. It has an incredibly knowledgeable sort of industry infrastructure around capital projects and processes of this sort. So I think that I would say that that is likely. But I wouldn't, at this point, narrow it down beyond that, although we have again, we have a handful of sites that we're extremely excited about.

Our next question is a follow up from Mark Connelly of Stephens Inc. Please go ahead.

Thank you. Just a couple of big picture questions. You've pointed out in the past that the big plastic producers aren't your competitors, but our potential customers, partners to others? What needs to happen for those relationships to grow? And what will we see from the outside? When are we going to see these? And what's it going to look like?

I'll start and maybe John, you can add, if I missed anything, but we have existing relationships with Solvay, Mitsubishi Gas Chemical, [Indiscernible] and few other chemical companies where they're taking our materials, and then further engineering them into higher value applications, including going into engine components and things like that. So we certainly see them as sort of customers in a way of taking our materials to market. We've also talked about the towing relationships and partnerships like that, which are in active discussions. And then we've also talked about our open mindedness towards licensing as we try to get more supply online over time. So we really approach those partnerships with a very open mind, and with a lot of different ways to work together.

Do you expect in the next six months to be telling us about more of these kinds of relationships? That's really sort of what I'm looking for is the timing?

Yes. Timing is always hard with these big, big companies and big partnerships. But we have an active pipeline of conversations going on with other chemical companies. So I would think we would have things to share in the coming months.

Second question, as we think about the transition to CMF and I suppose HTC, but I'm more interested in CMF. What role in getting that message out to consumers? Are you going to play versus your customers? Are you expecting most of the plastic buyers to be the ones that really do the promoting of this? I'm just trying to understand how you think about you mentioned early on easy gets all the press So how do you attract more attention?

Yes. So we'll certainly be as visible and promoting as much as we can. But if you think about the magnitude of some of our partners think about the Pepsi's and Nestlé’s and Danone of the world and the Fords and others that we're talking to and I think their marketing platforms and ability to put things on labels and deliver consumer messages will be really what pushes it through.

Yes. I wasn't expecting you to tell me there was going to be a big ad budget. Just went with respect to Origin 1 and 2 what kind of milestone should we be watching for in the second half to know whether you're on track? And what are we likely to hear from you?

Yes. Great question. Actually, the big ones to look for are for Origin 1 is the erection of the modules. Getting those modules up and, and bolted down to the foundation is we don't expect it to accelerate the overall timeline for Origin 1. But hitting that ahead of schedule, the way that we're now expecting to or ahead of our original schedule I think really shows that we're moving this thing along. Right. And I think it gives us just yet another thing to look at and say, okay, this is moving the way it's supposed to. So I think that's one that I would look for and I think the second one on Origin 2 is really site selection. We mentioned in our prepared remarks that we had selected Worley in particular to work with us on the front end engineering for Origin 2. Worley is sort of best in class in this kind of stuff. And so bringing them in we were originally anticipating to announce that more like end of the year, and so we pulled that forward quite a bit. We've gotten it done already. So we're moving along there. And then I think that the second big one is one that came up in the earlier question when are we going to have the site selected and we're still anticipating having that selected by the end of the year. So I think that's what I would keep an eye out for.

This concludes the question and answer session. I would like to turn the conference back over to Mr. Riley for any closing remarks.

Thanks everyone for joining us today. We look forward to future discussions, updating you on our progress. Have a great evening.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.