The economic headwinds plaguing just about every tech startup right now have found their way to one the city's more prominent clean-tech companies.
LanzaTech Global Inc. on Wednesday posted fourth-quarter revenue up 77% year-over-year, to $20.5 million, but its full-year revenue of $62.6 million came in below the company's $80 million to $100 million full-year expectations. The company, which is developing carbon-recycling technology, is making several executive moves as a result of the performance.
Steven Stanley, LanzaTech's chief commercial officer, and Carl Wolf, chief operating officer, will be leaving the venture, the company said Wednesday — part of a 33% reduction of what the company in a statement called its "go-forward executive team."
The company is reducing its overall headcount by 5%, a move expected to reduce its annualized operating expenses by $5.3 million.
The company said it expects to end 2024 with a global headcount below 400 employees after ending 2023 with approximately 415 employees.
Additionally, Aura Cuellar, who had been serving as executive vice president of growth and strategic projects, was named president, a new position for the company.
Jennifer Holmgren, board chair and CEO of LanzaTech, said the company's "cost control discipline" will continue through 2024, according to Wednesday's earnings call.
In a conversation with Chicago Inno on Thursday, Holmgren said that while the Q4 results missed, she remains confident in LanzaTech's outlook moving forward.
"We increased revenues by around 70% year-over-year. It's just a couple of things in the fourth quarter that ended up getting moved to the first quarter 2024," she said. "One of the things we've done is we've gotten more projects in our pipeline, and that means if one gets delayed because of some decision by a customer or some regulation by a government, it doesn't matter because we'll have another project to substitute it for."
Holmgren said the biggest factor for LanzaTech's slow Q4 was related to the company's CarbonSmart business, where planned opportunities did not materialize during the quarter due in part to policy requirements around ethanol and fuel in Europe.
"That was a $10 [million] to $20 million plug that we had there that we thought would materialize in November and December," she said.
During the earnings call, Holmgren also pointed to ESG fatigue among some business entities along with increased interest rates and the cost of steel as elements that factored into the company's slow end to 2023.
"[A] tougher macroeconomic and higher inflationary environment leading to changes in steel prices and availability of equipment, combined with a lack of uniform regulatory protocols, have elongated the recent project development cycles," she said.
As a result of the Q4 numbers, the company also cut 2023 cash-bonus payouts for executive and management teams by 80%, representing approximately $3 million in cash savings.
"Right-sizing the organization and the headcount optimization will ensure focus on commercial growth in our core businesses, and the cash-bonus decisions will send a clear message to management that we are focused on delivering financial results," Holmgren said during the earnings call.
LanzaTech ended 2023 with $121.4 million in cash on hand, which the company said provided runway for more than 15 months.
What's next for LanzaTech
LanzaTech in 2023 was named one of Time Magazine's most influential companies and was one of 15 Chicago companies featured on the Deloitte Technology Fast 500 list. That recognition came after the company was selected as one of 15 finalists for the Earthshot Prize in 2022. The company also was a Chicago Inno Fire Blazer honoree in 2022.
The company opened three commercial-scale plants in 2023, bringing its total number of operating plants to six and upping its production capacity to 310,000 tons per year of ethanol, with the ability to abate more than half a million tons per year of carbon that would otherwise enter the atmosphere, according to Holmgren.
LanzaTech offers a carbon transformation that converts carbon waste into sustainable fuels and chemicals.
Approximately 100 billion gallons of sustainable aviation fuel (SAF) is needed to meet the world's fuel needs, according to the company, while the current annual production capacity of SAF stands at approximately 120 million gallon.
LanzaTech went public in 2022 in a merger with a special purpose acquisition company. That came after it helped launch a sustainable-fuel company called LanzaJet in 2020 that opened its first plant in Georgia earlier this year and secured $30 million from Southwest Airlines earlier this week.
LanzaTech still holds a 25% stake in LanzaJet with an opportunity to get additional shares as the company grows.
"Even against the somewhat difficult macro backdrop and challenging phase cycles, our market opportunity remains outstanding, and we are committed to accelerating our growth by adding and advancing projects through our commercial pipeline," Holmgren said on the call.
