Origin Materials to cut workforce 28% to boost new business line

See Correction/Clarification at end of article

Materials science company Origin Materials Inc. announced Monday that it will reallocate company resources to its recyclable caps and closures business by reducing staffing companywide by 28%.

Shares in West Sacramento-based Origin (Nasdaq: ORGN) fell 21 cents, or 11.5%, on the news Monday to close at $1.62.

“As near-term demand for Origin’s PET caps continues to increase, potentially exceeding our currently planned manufacturing capacity for 2025 and 2026, we are proactively reallocating resources to our caps and closures business,” said John Bissell, Origin co-founder and co-CEO, in a news release. “Our first caps customer has signed an MOU for billions of caps, totaling over $100 million over an initial two-year term. Today, we are positioned to bring the world's first PET cap solution to a $65 billion market with attractive margins.”

Origin spokesman Evan Winchester, via email, declined to disclose the number of positions being eliminated or where they're located.

“All we have disclosed is the overall corporate level percentage,” Winchester said. He referred to the company's annual report, which at Dec. 31, said the company had 112 employees located in the United States and 50 employees in Canada, all of whom were full-time employees.

Part of Origin's resource reallocation includes converting the operations of its only biomass conversion plant in Canada to “on demand” status, Bissell said. The plant was designed to produce plastic without using petroleum products, replacing them with zero-carbon materials like biomass.

The company will reduce staffing at the Sarnia, Ontario, Canada plant “while preserving our ability to generate product at small volumes sufficient to explore scale-up with strategic partners.”

The move is part of Origin’s effort to “reduce our current overall cash burn,” the company said.

Origin said it expects the workforce changes to be largely completed by the end of this quarter. The company anticipates incurring approximately $600,000 in restructuring charges in connection with the workforce reduction, Bissell said in a news release.

Origin launched in 2008 to perfect technology to remove petroleum from PET plastic, replacing oil with renewable zero-carbon biomass like scrap wood.

The company for a year has been operating its first biomass conversion plant in Canada, which was a $130 million investment. Its next plant, to be built in Louisiana, will cost more than $1.6 billion to build. Origin has been looking for short-term revenue boosters as it prepares to build that facility.

Origin found a short-term revenue boost in the industry’s first-ever recyclable caps and closures, which it announced it developed in April. Most existing plastic bottle caps are not recyclable with the bottle, which is recyclable.

“Today we foresee rapid near-term growth in the caps and closures market, where we offer a powerful solution for product performance and recycling circularity. At the same time, we remain confident in the long-term potential for building additional businesses based on Origin’s biomass conversion technology – all in support of maximizing value for our shareholders and our mission to enable the world’s transition to sustainable materials,” said Rich Riley, co-CEO, in a news release.

In August 2023, Origin shares fell more than 66% after the company said it would take years longer to fully open its second manufacturing plant and that it would get into the biofuel business to more quickly bring on additional revenue. Analysts expressed concern about the heavy competition among makers of biofuels, which are a low-value commodity.

But being the first company to deliver a fully recyclable PET plastic container closure, as Origin announced earlier this year, excited investors and stock analysts, who said that the business was differentiated and has the potential to generate strong revenue.

Origin shares rose last month after the company said it had a customer lined up for its caps and closures business. The stock rose from about 90 cents per share to $1.40 in the days after the company reported earnings in August.