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LanzaTech Global, Inc. (LNZA)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 revenue was $9.9M, materially below internal targets due to a delayed LanzaJet sublicensing event (~$8M expected) and softer ethanol pricing; adjusted EBITDA loss widened to $27.1M, and net loss was $57.4M .
  • Management expanded the model beyond licensing: first long-term ethanol offtake with ArcelorMittal (one-year ~$6M potential; five-year 5k–10k tons → ~$10–$20M/yr), plus advancement of “Project Drake” with a $5M exclusivity fee and intent to finalize financing by year-end, and Norway/Eramet project moving to Brookfield FID in coming months .
  • Liquidity improved to $89.1M in cash/restricted cash/investments at 9/30 (post $40M Aug convertible note); subsequent $10M FPA-related settlement paid to reduce share overhang and potential price pressure .
  • Q4 set up for wide outcome range: base ~$10M, potential ~$20M upon Norway transfer (if positive FID), ~$4M from Project SECURE, ~$8M from LanzaJet sublicensing, and material Project Drake impact if agreements finalize; timing is the key variable and some items could slip into Q1’25 .
  • Catalysts: execution on Project Drake agreements, Brookfield FID for Norway, Project SECURE contracting, and LanzaJet sublicensing tranches; management continues cost actions and portfolio shifts to own more value chain economics .

What Went Well and What Went Wrong

What Went Well

  • First long-term ethanol offtake agreement: ArcelorMittal one-year (~$6M) and five-year (5k–10k tons → ~$10–$20M/yr) expected to strengthen CarbonSmart volumes and enable longer customer commitments .
  • Strategic evolution to co-develop/finance projects with infrastructure partners (Brookfield, Olayan JV); advancing Norway (Eramet) to FID in ~6 months and moving multiple early-stage projects forward .
  • Project Drake milestone: $5M exclusivity/financing commitment received; management expects material Q4 cash flow/income if agreements finalize and tailwinds into 2025 .
    “By controlling more feedstock, operations, and off-take… we are building multiple pathways to cash flow generation and are working to accelerate our timeline to profitability.” — CEO Jennifer Holmgren .

What Went Wrong

  • Revenue miss vs plan: ~$7M below target primarily due to delayed LanzaJet sublicensing and weaker China ethanol pricing; gross margin fell to 18% on mix (more low-margin CarbonSmart) and lack of near-100% margin LanzaJet recognition .
  • Operating expenses elevated YoY to $34.8M (flat QoQ) as pre-FID project costs were expensed; adj. EBITDA loss widened to $27.1M vs $19.1M prior-year .
  • Earnings quality sensitivity to licensing timing persists; management did not reaffirm full-year numeric guidance, instead outlining scenario drivers with timing uncertainty into Q4/Q1’25 .

Financial Results

MetricQ1 2024Q2 2024Q3 2024Q3 2023
Revenue ($USD Millions)$10.24 $17.38 $9.94 $19.61
Gross Profit ($USD Millions)$3.5 $11.9 $1.8 $5.2
Operating Expenses ($USD Millions)$29.6 $34.7 $34.8 $29.8
Net Loss ($USD Millions)$(25.5) $(27.8) $(57.4) $(25.3)
Net Loss per Share (EPS $USD)$(0.13) $(0.14) $(0.29) $(0.13)
Adjusted EBITDA ($USD Millions)$(22.15) $(17.75) $(27.08) $(19.06)
Revenue DisaggregationQ1 2024Q2 2024Q3 2024Q3 2023
Revenue from contracts with customers and grants ($M)$6.25 $6.24 $5.20 $14.16
Revenue from sales of CarbonSmart products ($M)$0.86 $0.94 $2.21 $2.26
Revenue from collaborative arrangements ($M)$2.22 $1.33 $0.92 $1.57
Revenue from related party transactions ($M)$0.91 $8.87 $1.62 $1.62
KPIsQ1 2024Q2 2024Q3 2024
Gross Margin %34% 68% (42% ex-LanzaJet uplift) 18%
JDA & Contract Research Revenue ($M)$4.3 $2.8 $1.8
CarbonSmart Revenue ($M)$0.9 $0.9 $2.2
Cash, Restricted Cash & Investments ($M)$92.3 (3/31) $75.8 (6/30) $89.1 (9/30)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024$90–$105M (reiterated Q1 & reaffirmed Q2) Scenario-based with wide potential outcomes; no numeric update. Q4 drivers: base ~$10M; Norway transfer ~$20M (if positive FID); Project SECURE ~$4M; LanzaJet sublicensing ~$8M; Project Drake “material” Reduced precision; numeric range not reaffirmed; emphasized timing uncertainty
Adjusted EBITDAFY 2024$(65)M to $(55)M (reiterated Q1 & reaffirmed Q2) Not explicitly updated in Q3 release; focus on project timing and cash outcomes Maintained prior context; no new numeric range provided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Business model evolution (owning more of value chain)Introduced partnerships (Brookfield, Olayan); pipeline build; reiterated path to profitability Explicit shift beyond licensing; pursuing ownership/offtake; ArcelorMittal offtake; Norway FID with Brookfield within ~6 months Accelerating involvement; more control/upside
SAF momentum/LanzaJet sublicensingFreedom Pines commissioning; expected production; LanzaJet stake to ~37%; more sublicensing tranches expected Freedom Pines not yet producing; timing uncertainty; additional sublicenses could drive ~$8M revenue in Q4; share tranches pending Near-term delay; medium-term pipeline intact
Project SECURE (DOE $200M)Award negotiations; expected 2024 start; replicable at steam crackers Expect ~$4M revenue in Q4 if contracting finalized; site identified, hydrogen integration considerations Progressing; contracting/tech integration clarity
CarbonSmart fuel sales & ethanol pricingFirst direct fuel sales; building licensing/permits; China/Southeast Asia focus CarbonSmart up to $2.2M; ethanol price drop in China constrained trading; ArcelorMittal offtake to improve access/volumes Mix improving; pricing headwinds easing with offtake
Financing/Liquidity$100M ATM shelf; reiterated sufficient liquidity; cost actions $40M 8% PIK convertible notes closed; cash to $89.1M; $10M FPA settlement post-Q3 Balance sheet strengthened; reduced overhang
Legal/FPADispute disclosed; potential damages vs shareholder $10M settlement to one party to reduce shares/pressure De-risking; fewer shares/overhang
Nutritional protein expansionNot featured in Q1/Q2 as primary product (though bacteria co-product sold) Announced capability to produce single-cell protein as primary product; extensive LCA; 85% protein, all 20 amino acids New growth vector; market development underway
Hydrogen/regulatory (GREET)Blue/green hydrogen focus; policy tailwinds in UK/EU; SAF mandates Hydrogen not required to be green to reduce CI in protein; SECURE hydrogen integration options Pragmatic CI management; integration flexibility

Management Commentary

  • “Third-quarter 2024 ended on a disappointing note… due primarily to a timing delay related to a LanzaJet sublicensing event… and… softer ethanol pricing.” — CEO Jennifer Holmgren .
  • “We are announcing our first long-term committed off-take agreement with… ArcelorMittal… and the advancement of Project Drake… positioning us for greater upside as compared to a pure licensing arrangement.” — CEO .
  • “Gross margin… 18%… as a function of revenue mix… and the fact that we did not realize… near-100% margin… associated with another LanzaJet share issuance.” — CFO Geoff Trukenbrod .
  • “We expect these moves will allow us to control more of the feedstock, operations and offtake… increase our cash flow generation and accelerate our path to profitability.” — CEO .
  • “We ended the quarter in a stronger cash position… attributable to the $40 million investment… Carbon Direct Capital…” — CFO .

Q&A Highlights

  • Project Drake accounting: $5M exclusivity fee expected to be recognized in Q4 as part of broader development services revenue and incremental to base ~$10M run-rate .
  • Costs: Elevated OpEx reflects pre-FID project work (internal/external); management reducing many OpEx line items vs budget, with project cost recoup expected upon transfer .
  • Infrastructure partners: LNZA aiming for more control without taking binary project risk; exploring multiple infra partners beyond Brookfield; retaining licensing/equipment/engineering/services economics .
  • Q4 lumpiness: Timing (12/31 vs 1/1) can materially swing revenue; management views it as when, not if .
  • LanzaJet status: Freedom Pines has started FID/shakedowns; not yet producing SAF; updates forthcoming .
  • SECURE specifics: Site identified; potential to integrate hydrogen sources; staged CI improvements over time .
  • Ethanol offtake economics: ~$6M tied to first-year 5k tons; $10–$20M p.a. for 10k tons in subsequent years; pricing/volumes drive outcomes .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3’24 EPS and revenue was unavailable at time of analysis due to data access limits; as a result, we cannot quantify beats/misses vs consensus. Values would normally be retrieved from S&P Global.
  • Given estimate unavailability, comparisons to consensus could not be included; management indicated an internal miss (~$7M below target) primarily due to LanzaJet timing and ethanol pricing .

Key Takeaways for Investors

  • Mix and timing matter: Without LanzaJet sublicensing, margins compress sharply; expect volatility until licensing tranches and project transfers normalize cash/revenue cadence .
  • Business model pivot is material: Owning offtake and project participation (Drake, Norway/Eramet, ArcelorMittal) can unlock higher-margin, recurring economics vs pure licensing .
  • Q4 is event-driven: Track Brookfield FID on Norway ($20M revenue on positive FID), Drake agreements ($5M already received; potential material Q4 impact), Project SECURE contracting ($4M), and LanzaJet sublicensing (~$8M) .
  • Liquidity strengthened; overhang reduced: $40M PIK convertible note, $89.1M cash/investments at 9/30, $10M settlement to reduce share pressure .
  • CarbonSmart trajectory improving with structural offtake: ArcelorMittal agreement should stabilize volumes; watch ethanol pricing and ICC certification for EU access .
  • New platform optionality: Nutritional protein opens significant TAM with compelling LCA; early partnerships needed to scale demand .
  • Trading setup: Near-term stock drivers are binary project/timing outcomes; medium-term thesis hinges on replicable “lift & shift” platform with infra capital, SAF tailwinds, and chemicals (SECURE) scaling .