LanzaTech (LNZA) - 2025 Q2 - Quarterly Results

Executive Summary This report provides an executive overview of LanzaTech Global, Inc.'s Q2 2025 financial and operational performance, highlighting key results and strategic initiatives Introduction LanzaTech Global, Inc. reported Q2 2025 financial and operating results, emphasizing operational execution and strategic transformation - LanzaTech Global, Inc. (NASDAQ: LNZA) reported Q2 2025 financial and operating results, highlighting a focus on operational execution and strategic transformation[1] Second Quarter 2025 Highlights Q2 2025 saw decreased revenue, increased net and Adjusted EBITDA losses, alongside strategic efficiency initiatives, commercial project advancements, and SAF grant funding Financial Summary LanzaTech reported decreased revenue and increased net and Adjusted EBITDA losses for Q2 and H1 2025 compared to prior periods Key Financial Results (Three Months Ended June 30, in millions of US dollars) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $9.1 | $17.4 | -47.7% | | Cost of revenue | $6.2 | $5.5 | +12.7% | | Operating expenses | $35.1 | $34.7 | +1.2% | | Net loss | $(32.5) | $(27.8) | +16.9% | | Adjusted EBITDA loss | $(29.7) | $(17.8) | +66.9% | Key Financial Results (Six Months Ended June 30, in millions of US dollars) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $18.6 | $27.6 | -32.6% | | Cost of revenue | $13.7 | $12.3 | +11.4% | | Operating expenses | $68.1 | $64.3 | +5.9% | | Net loss | $(51.7) | $(53.3) | -3.0% | | Adjusted EBITDA loss | $(60.2) | $(39.9) | +50.9% | Operational and Strategic Highlights LanzaTech implemented efficiency measures, advanced commercial projects, and secured a £6.4 million UK grant for SAF facilities, transitioning to a commercially focused enterprise - LanzaTech announced executive leadership transitions and workforce reductions in May and June 2025 as part of strategic measures to scale its global business with greater cost efficiency and transition to a commercially focused enterprise[5] - The company is advancing key commercial projects, deepening strategic partnerships, and growing its pipeline of carbon transformation opportunities, including scaling sustainable aviation fuel (SAF) production[5] - LanzaTech was awarded a £6.4 million grant from the UK's Advanced Fuels Fund in July 2025 to accelerate the development of two commercial-scale SAF facilities (DRAGON 1&2 projects) using its ethanol-to-jet technology[5] Detailed Financial Performance This section provides an in-depth analysis of LanzaTech's revenue, cost of revenue, operating expenses, net loss, and Adjusted EBITDA loss for the reporting period Revenue Analysis Q2 2025 total revenue significantly decreased to $9.1 million, driven by lower licensing and engineering services, partially offset by CarbonSmart™ growth - Total revenue decreased by $8.3 million (47.7%) year-over-year in Q2 2025, from $17.4 million to $9.1 million[11] Revenue Breakdown (Three Months Ended June 30, in millions of US dollars) | Revenue Type | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Licensing revenue | $1.1 | $8.5 | -87.3% | | Engineering and other services revenue | $1.9 | $5.1 | -62.7% | | JDA and contract research revenue | $2.3 | $2.8 | -17.9% | | CarbonSmart revenue | $3.8 | $0.9 | +322.2% | - The significant decline in licensing revenue was primarily due to a $7.5 million LanzaJet sublicensing revenue received in the prior period[11] Cost of Revenue Analysis Cost of revenue increased by 13% in Q2 2025 to $6.2 million, primarily due to a revenue mix shift towards lower-margin CarbonSmart sales - Cost of revenue increased by $0.7 million (13%) in Q2 2025, reaching $6.2 million compared to $5.5 million in Q2 2024[7] - The year-over-year increase was driven in part by a change in revenue mix related to CarbonSmart sales increase, a lower margin business as compared to biorefining and JDA revenues[7] Operating Expense Analysis Operating expenses slightly increased to $35.1 million in Q2 2025, mainly due to higher professional fees for financing and strategic initiatives - Operating expenses were $35.1 million in Q2 2025, a slight increase from $34.7 million in Q2 2024[8] - The year-over-year increase was primarily due to higher professional fees related to financing and strategic initiatives[8] Net Loss Analysis Q2 2025 net loss increased to $32.5 million, driven by strategic option evaluation expenses and non-cash equity method losses, partially offset by financial instrument gains - Net loss for Q2 2025 was $32.5 million, an increase from $27.8 million in Q2 2024[9] - The increase was primarily a result of expenses associated with evaluating strategic options and a $3.3 million non-cash loss recognized in equity method investees[9] - A $6.7 million non-cash gain on financial instruments recognized in Q2 2025 partially offset the increase in net loss[9] Adjusted EBITDA Loss Analysis Adjusted EBITDA loss widened to $29.7 million in Q2 2025, due to higher SG&A from cost optimization, lower revenue, and increased cost of sales, with short-term restructuring impacts - Adjusted EBITDA loss was $29.7 million in Q2 2025, compared to $17.8 million in Q2 2024, representing a 66.9% increase[10] - The increase was primarily attributable to higher selling, general and administrative expenses as a result of cost optimization efforts, along with lower revenue and higher cost of sales period-over-period[10] - Short-term restructuring costs impacted the quarter ended June 30, 2025, despite being expected to reduce long-term expenses[10] Financial Position and Liquidity This section reviews LanzaTech's balance sheet and liquidity, highlighting changes in cash, restricted cash, and investments, primarily driven by recent financing activities Balance Sheet and Liquidity Total cash, restricted cash, and investments increased to $39.6 million by June 30, 2025, primarily due to a $40.0 million preferred equity financing - As of June 30, 2025, the Company had $39.6 million in total cash, restricted cash, and investments, compared to $23.4 million as of March 31, 2025[12] - The increase reflects the $40.0 million preferred equity financing completed in May 2025, which bolstered liquidity to support near-term operational execution and strategic SAF initiatives[12] Management Commentary CEO Dr. Jennifer Holmgren emphasized building an efficient, scalable business with a path to profitability, streamlining operations, and prioritizing capital-light growth for SAF - CEO Dr. Jennifer Holmgren stated the company's focus on building a more efficient, scalable business with a path to profitability[13] - In Q2, LanzaTech took important steps to streamline operations and shift resources toward commercial execution, especially relating to the high-growth market for sustainable aviation fuel (SAF)[13] - The company is prioritizing capital-light growth through licensing and partnerships, supported by strong regulatory and customer momentum[13] About LanzaTech LanzaTech Global, Inc. is a carbon recycling company transforming waste carbon into sustainable fuels, chemicals, materials, and protein using biorecycling technology - LanzaTech Global, Inc. is the carbon recycling company transforming waste carbon into sustainable fuels, chemicals, materials, and protein[14] - Using its biorecycling technology, LanzaTech captures carbon generated by energy-intensive industries at the source, preventing it from being emitted into the air and giving it a new life as a clean replacement for virgin fossil carbon[14] Forward-Looking Statements This section cautions that future plans and financial prospects are subject to risks and uncertainties, advising against undue reliance and noting no obligation to update except as required by law - This press release includes forward-looking statements regarding the plans, strategies, and prospects, both business and financial, of the Company, based on management's beliefs and assumptions[15] - Forward-looking statements are inherently subject to risks, uncertainties, and assumptions, and actual results or outcomes could differ materially from those discussed[15] - The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law[16] Non-GAAP Financial Measures Explanation LanzaTech uses Adjusted EBITDA as a non-GAAP measure to supplement GAAP, defining it by excluding specific non-cash items from net loss, explaining its utility and limitations - LanzaTech presents Adjusted EBITDA as a non-GAAP financial measure to supplement GAAP financial statements and provide investors with additional information regarding financial results[17] - Adjusted EBITDA is defined as net loss, excluding the impact of depreciation, interest income, stock-based compensation expense, changes in fair value of various liabilities, and loss from equity method investees[18] - The company notes limitations of Adjusted EBITDA, including that it is not GAAP, may not be comparable to other companies, and excludes significant non-cash expenses like stock-based compensation and depreciation[19] Consolidated Financial Statements This section presents LanzaTech's consolidated balance sheets, statements of operations, and cash flows, providing a comprehensive overview of the company's financial position and performance Consolidated Balance Sheets Total assets decreased to $116.3 million by June 30, 2025, with liabilities also down, and shareholders' equity shifting to a deficit Key Balance Sheet Data (in thousands of US dollars) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total assets | $116,296 | $174,683 | -33.5% | | Total liabilities | $128,311 | $161,236 | -20.4% | | Total mezzanine equity | $13,169 | $0 | N/A | | Total shareholders' equity/(deficit) | $(25,184) | $13,447 | -287.4% | - Cash and cash equivalents decreased from $43.5 million at December 31, 2024, to $37.4 million at June 30, 2025[21] - Current liabilities significantly increased from $30.4 million to $55.8 million, largely due to the introduction of PIPE Warrant liability ($28.35 million) and Brookfield Loan liability ($19.4 million)[21] Consolidated Statements of Operations and Comprehensive Loss Q2 2025 net loss increased to $32.5 million, while H1 net loss slightly decreased to $51.7 million, with total revenues declining significantly year-over-year Statements of Operations Highlights (Three Months Ended June 30, in thousands of US dollars) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $9,084 | $17,375 | -47.7% | | Total cost and operating expenses | $41,325 | $40,177 | +2.8% | | Loss from operations | $(32,241) | $(22,802) | +41.4% | | Net loss | $(32,499) | $(27,799) | +16.9% | | Net loss per common share - basic and diluted | $(0.15) | $(0.14) | +7.1% | Statements of Operations Highlights (Six Months Ended June 30, in thousands of US dollars) | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Total revenues | $18,567 | $27,619 | -32.8% | | Total cost and operating expenses | $81,861 | $76,575 | +6.9% | | Loss from operations | $(63,294) | $(48,956) | +29.3% | | Net loss | $(51,728) | $(53,307) | -3.0% | | Net loss per common share - basic and diluted | $(0.25) | $(0.27) | -7.4% | - Selling, general and administrative expense increased significantly to $19.1 million in Q2 2025 from $11.7 million in Q2 2024[23] Consolidated Statements of Cash Flows H1 2025 saw stable operating cash usage, decreased investing cash, and a substantial increase in financing cash due to preferred stock and PIPE Warrant proceeds Cash Flow Summary (Six Months Ended June 30, in thousands of US dollars) | Cash Flow Activity | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(42,815) | $(42,942) | -0.3% | | Net cash provided by investing activities | $11,529 | $29,502 | -60.9% | | Net cash provided by financing activities | $25,619 | $224 | +11337.1% | | Net decrease in cash, cash equivalents and restricted cash | $(6,092) | $(13,393) | -54.5% | - Proceeds from issuance of preferred stock ($15.05 million) and PIPE Warrant ($24.95 million) significantly boosted financing activities in H1 2025[25][26] - Cash, cash equivalents and restricted cash at the end of the period decreased to $39.6 million in H1 2025 from $62.9 million in H1 2024[26] Supplemental Financial Disclosures This section provides supplemental financial disclosures, including non-cash investing and financing activities and a reconciliation of GAAP net loss to Adjusted EBITDA Supplemental Non-Cash Investing and Financing Activities H1 2025 non-cash activities included cashless equity issuance for Convertible Notes, Brookfield Loan issuance, and non-cash changes in lease liability and ROU assets Supplemental Non-Cash Activities (Six Months Ended June 30, in thousands of US dollars) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Acquisition of property, plant and equipment under accounts payable | $106 | $235 | | Right-of-use asset additions | $0 | $8,934 | | Cashless issuance of equity for Convertible Notes | $8,132 | $0 | | Issuance of the Brookfield Loan | $6,216 | $0 | | Non-cash change in lease liability on partial termination | $13,025 | $0 | | Non-cash change in ROU assets on partial termination | $(13,085) | $0 | Reconciliation of GAAP Net Loss to Adjusted EBITDA This reconciliation details adjustments from GAAP Net Loss to Adjusted EBITDA, with Q2 2025 adjustments including depreciation, stock-based compensation, and fair value changes, resulting in a $29.7 million Adjusted EBITDA loss Reconciliation of GAAP Net Loss to Adjusted EBITDA (Three Months Ended June 30, in thousands of US dollars) | Adjustment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Loss | $(32,499) | $(27,799) | | Depreciation | $1,054 | $1,458 | | Interest income, net | $(192) | $(513) | | Stock-based compensation expense and change in fair value of Brookfield SAFE and warrant liabilities | $2,024 | $(3,344) | | Change in fair value of Convertible Note | $(7,837) | $0 | | Change in fair value of PIPE Warrant | $3,400 | $0 | | Change in fair value of Brookfield Loan | $1,019 | $0 | | Loss from equity method investees, net | $3,335 | $1,719 | | Adjusted EBITDA | $(29,696) | $(17,752) | Reconciliation of GAAP Net Loss to Adjusted EBITDA (Six Months Ended June 30, in thousands of US dollars) | Adjustment | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Loss | $(51,728) | $(53,307) | | Depreciation | $1,835 | $2,988 | | Interest income, net | $(630) | $(1,661) | | Stock-based compensation expense and change in fair value of Brookfield SAFE and warrant liabilities | $1,372 | $(14,091) | | Loss on Brookfield SAFE extinguishment | $6,216 | $0 | | Change in fair value of FPA Put Option and Fixed Maturity Consideration liabilities | $0 | $23,770 | | Change in fair value of Convertible Note | $(42,980) | $0 | | Change in fair value of PIPE Warrant | $3,400 | $0 | | Change in fair value of Brookfield Loan | $12,445 | $0 | | Loss from equity method investees, net | $9,867 | $2,400 | | Adjusted EBITDA | $(60,203) | $(39,901) |