Materials science company Origin Materials Inc. said it signed its first customer for its new recyclable caps business, a contract anticipated to generate $100 million in revenue over an initial two-year period.
Rich Riley, co-CEO of West Sacramento-based Origin (Nasdaq: ORGN), didn’t name the customer during a conference call with investors and analysts, but he said the new product is seeing increasing demand.
The first customer committing to $50 million per year is “an idea of the quanta per customer we can see in this business,” Riley said. “We have a robust pipeline of potential customers."
Earlier this year, West Sacramento-based Origin announced it had developed the first fully recyclable PET plastic bottle caps. All existing plastic bottle caps are made of a softer plastic that is not easily recyclable like the PET plastic that makes up most beverage bottles.
Riley said production should begin at the end of this year, and Origin anticipates revenue to begin early in 2025, ramping up quickly in 2026.
He said Origin will be first to market with PET caps. The company will also license its technology, which will add revenue to its PET caps business.
Origin tested its cap production on high-speed machines with optical quality controls during July in Germany and Switzerland, and it produced more than 1 million caps to check quality control and production methods.
Origin launched in 2008 to perfect technology to remove petroleum from plastics, replacing oil with renewable zero-carbon biomass like scrap wood.
The company last year opened its first commercial PET plant in Canada at a cost of $130 million. Origin’s next plant in Louisiana will take several years to open and will cost more than $1.6 billion. Origin’s main goal remains to decarbonize plastic worldwide, but since building billion-dollar manufacturing plants is a financial strain on a small company, it has been looking at ways to roll out revenue-generating products using its platform to keep its balance sheet healthy.
In the European Union, Origin is also lining up customers for a fully recyclable and tethered cap, to meet EU requirements for tethering caps to bottles for a more complete circular and sustainable waste stream.
“They perform better than today’s other plastic caps," said John Bissell, co-CEO of Origin, calling the PET caps “the Holy Grail for packaging circularity.”
He said Origin’s PET caps are more effective and lighter than the softer plastic that makes up most plastic caps.
“If you are going to connect a bottle with a cap, it makes sense to use the same material,” Bissell said. It makes the return of the bottle for recycling simpler, cleaner and easier.
Origin reported a loss of $19.5 million for the second quarter, compared with a loss of $6.46 million a year earlier. Revenue in the recent quarter rose 2% to $7.03 million.
At the end of the second quarter, Origin had $132.2 million in cash, cash equivalents and marketable securities, which is enough money for the company to operate for the foreseeable future without having to raise capital through an equity sale, said Matt Plavan, chief financial officer.
The existing capital will give the company runway to make it to its expected onset of new revenue in the first quarter of 2025, which will also be the start of “significant recurring revenue” from caps and closures, Plavan said.
