Origin Materials Inc. anticipates that its new business of manufacturing recyclable plastic caps and closures for beverages could add $45 million to $65 million in annual revenue starting next year, the company's co-CEO said.
West Sacramento-based Origin (Nasdaq: ORGN) makes zero-carbon plastic precursor chemicals, and it found during its research that it could make a fully recyclable plastic bottle cap for plastic bottles.
Currently, most manufacturers of caps and closures modify plastics to be able to manufacture them, and in doing so, make the caps difficult if not impossible to recycle, said Origin co-founder and co-CEO John Bissell on a conference call with investors and analysts.
Origin had a team of its polymers scientists working with some of the unique molecules it produces through its proprietary processes to see if there were some ways to make a recyclable bottle cap, Bissell said. The team found a way, and also found that it doesn’t require Origin’s PET plastic.
Most beverage bottles are made from fully recyclable PET plastic, while most plastic bottle caps are made from softer HDPE plastic, which breaks down with recycling.
Origin plans to finance high-throughput equipment to manufacture caps and closures at multiple facilities and should have some operations running in the fourth quarter this year, said co-CEO Rich Riley. By about nine months from now, the company expects to be producing caps and closures at an annualized revenue rate of $45 million to $65 million, representing significant and recurring revenue with potential for growth. Caps and closures is a $65 billion market, Riley said.
In April, Origin announced it developed the first sustainable and fully recyclable plastic bottle cap for plastic bottles. It has since announced partnerships with Swiss company PackSys Global AG to make the caps and commercial manufacturing machines and Swiss company IMDvista, which develops advanced camera systems that inspect thousands of closures per minute. Origin also announced it's developed a tethered cap, which stays attached to the bottle after opening, to comply with a new recycling rule in the European Union starting in months, Bissell said.
Origin Materials had revenue of $6.825 million in the first quarter, compared to $1.7 million in the prior-year period. Origin lost $17.2 million in the first quarter, compared to earning comprehensive income of $11.3 million the year-earlier period.
The company forecast 2024 revenue in a range of $25 million to $35 million. It also said it had a net cash burn rate between $55 million and $65 million, which means that it has cash to meet its goals, eliminating the need for an additional equity capital raise, Bissell said.
Origin’s main business is using waste wood to make zero-carbon and recyclable plastic precursor chemicals. Plastic traditionally is made from petroleum. Origin's product is a drop-in replacement for petroleum in the manufacture of PET plastic, which is the most recycled plastic on the planet.
Earlier this year, Origin’s first manufacturing facility in Sarnia, Canada, successfully converted its operations from using corn starch as an input to using scrap wood and sawdust from a nearby wood floor manufacturer. The company is also developing a much larger manufacturing plant in Louisiana.
Origin has backing from Mitsubishi Group, Nestle SA, Danone SA and PepsiCo Inc. (Nasdaq: PEP), all of which are potential customers for Origin’s zero-carbon PET for industrial goods and packaging.
