LanzaTech Global, Inc. Common Stock 2026 Q2 Earnings Call

Good morning everyone, and thanks for joining us. I'm Joseph Caminiti with LanzaTech Global Inc.'s investor relations team, and I'd like to thank you for attending today's earnings call and business update. Earlier this morning, we issued a press release announcing our financial and operating results for the second quarter ended June 30, 2026, which has been posted to the investor relations section of our website, lanzatech.com. If anyone needs a copy of the press release, you may contact Alpha IR Group at lnza@alpha-ir.com. Joining us from LanzaTech's management today are Jennifer Holmgren, Chief Executive Officer, and Sushmita Koyanagi, Chief Financial Officer. Before we begin, I'd ask that you take note of the cautionary language regarding forward-looking statements contained in today's press release and in the risk factors section in the company's annual report on Form 10-Q for the fiscal second quarter ended June 30, 2026.

The same language applies to comments made on today's conference call, including the Q&A session as well as the live webcast. Please note that the company's actual results may differ from those anticipated by such forward-looking statements for a variety of reasons, many of which are beyond our control. Please see our recent filings with the Securities and Exchange Commission, which identify the principal risks and uncertainties that could affect our business prospects and future results. Unless required by law, we assume no obligation to update publicly any forward-looking statements. In addition, we will be discussing and providing certain non-GAAP financial measures today, including adjusted EBITDA. Please see our earnings release and our filings for a reconciliation of these non-GAAP measures to their most directly comparable GAAP measures. With that, I'll turn the call over to Jennifer.

Thank you and good morning, everyone. Before Sushmita walks you through the numbers in detail, I want to take a few minutes to put our second quarter in context. As you can see on slide 3, Q2 reflects a meaningful transformation in the business with the clearest signs of progress showing up in our revenue stability, lower operating expense base, and improved adjusted EBITDA. Q2 reflects real progress against the actions we've been taking to reshape LanzaTech for the current market. Over the past year, we've made deliberate, sometimes difficult decisions to restructure our business as we transition from an R&D-led model towards project development, ownership, and commercialization. As part of this restructuring, we reduced headcount, renegotiated key contracts, and refocused spending towards areas most critical to commercialization. You'll see this discipline show up in our year-over-year operating results.

Revenue of $9 million in the quarter was generally consistent with last year, despite the organizational changes we implemented throughout 2025. More importantly, operating expenses declined by approximately $23 million year-over-year, from $35.1 million to $11.7 million, while adjusted EBITDA improved from a loss of $29.7 million to a loss of $7.5 million. We believe these results demonstrate that the actions we've taken have fundamentally reset our cost structure and significantly improved the economics of the business. Sush will walk you through the financial results in more detail and discuss our outlook for the balance of the year. It is worth reiterating that as we pivot towards development-focused economics, our revenue generation is going to be less even over periods, particularly in the early stages of this transition.

While we are in the earlier stages of this pivot, we have advanced against some meaningful milestones since the last time we held an earnings call, and continuing to execute against this strategy will see a conversion of our technology into revenue and long-term value capture. Getting our cost structure right was necessary. Converting our pipeline into commercial reality is what we believe will actually re-rate this business, and that's where I want to spend the rest of my time. First, I'll spend a few moments walking through some project updates and certification progress. The single most important development this quarter is our progress towards certification of our first plant for mandated European fuel markets. As you can see on slide 4, certification is the gateway to turning customer interest into monetizable demand across regulated fuel markets.

We are currently undergoing the world's first ISCC EU certification pathway for recycled carbon fuels at our facility in China. ISCC EU certification verifies compliance with the EU's Renewable Energy Directive, RED, sustainability, and greenhouse gas criteria, and it's also recognized by the U.K.'s Department for Transport. Thus, this single certification represents a potential gateway to accessing both markets. Critically, in the EU, one certification can cover aviation, road transportation fuels, and marine fuels simultaneously. Without it, producers cannot sell into these regulated markets at all. However, with the certification in hand, our CarbonSmart ethanol production becomes eligible to satisfy underlying demand across all three. We have applied significant focus here given its importance as achieving ISCC EU certification will be critical to our end market diversification and ultimately our economics in the near term.

Indeed, we are in active negotiations for what we expect to be our first sale of ISCC EU-certified ethanol, timed with completion of the certification process. This is not yet another certificate. It is a near-term pathway to monetizing recycled carbon and generating revenue in regulated fuel markets where verified carbon intensity carries real value. Certified fuel should create margin-accretive revenue opportunities because they solve a regulated compliance need for large industry players with significant volumes, not just a commodity fuel need. The constraint on our commercial demand has never been customer interest in our technology. Rather, it has been the absence of this certification. Major market participants across these value chains already understand that using LanzaTech ethanol helps them meet their regulatory obligations. They have simply been waiting for the product to be certified.

This process has taken longer than we would have liked, but that is because we are not simply applying under an existing pathway. We are helping to create one. These are new fuel categories, and the regulatory and certification frameworks required to recognize them are only now coming into place. Credible certification requires robust methodology, transparent carbon accounting, and traceability that regulators, customers, and investors can rely on. We have been working closely with policymakers, certifying bodies, and other stakeholders to build that foundation for over a decade. Our first China plant is effectively the pilot for getting this right. Once certified, this process will serve as a template for future certifications, reinforcing LanzaTech's role as a first mover and a leader in helping to establish recycled carbon fuels as a new category in mandated markets. We expect future plant certifications to move faster, expanding market access, and strengthening our business case.

Now, on to project milestones. As you can see on slide 5, we are advancing multiple proof points of commercial progress and embedded value across projects, partnerships, and platforms. On the SAF side specifically, we continue to advance site-level milestones in the U.K. and Belgium. In May, we selected North Sea Port, Ghent, Belgium, as the permanent site for Europe's first commercial-scale Alcohol-to-Jet SAF facility using the LanzaJet ATJ process. We are targeting production of roughly 79,000 tons of SAF and 9,000 tons of renewable diesel annually. That site selection, together with the client environmental impact assessment scoping notification, is a meaningful de-risking step on our path to FID. We have already demonstrated that our platform can process carbon from municipal solid waste and industrial gases. We are now extending that capability farther with biomass and agricultural residues in India and CO2-rich gases in China.

Taken together, these projects reinforce the breadth of carbon sources that the LanzaTech platform can address and the progress we are making across multiple geographies and feedstock pathways. I want to highlight two additional proof points for how this technology is proving to have commercial value, a value that is not fully reflected by looking only at near-term revenue. Firstly, LanzaTech holds an 8.3% ownership stake in our Shougang LanzaTech joint venture, which completed its IPO on the Hong Kong Stock Exchange in June. Driven by strong initial trading volume, the JV's market capitalization escalated to roughly $1.32 billion as of August 12th, at which point, LanzaTech's retained equity held an estimated market value of around $110 million. We believe our ownership represents real embedded value as well as public market validation that companies built on our technology can attract investor support and scale in commercially demanding sectors, including steel and ferroalloy.

Secondly, we entered a multi-year partnership with BRIGHT at the Technical University of Denmark to build a next-generation biofoundry, extending our innovation pipeline in carbon-to-value biotechnology. This shows how LanzaTech can create value beyond our current core markets by applying synthetic biology, AI-enabled analytics, automation, and carbon conversion expertise to new carbon-to-value opportunities. Because this is being advanced through a model fully supported by our partner, it allows us to pursue these opportunities in a capital-efficient way. Now, I want to spend a moment on how we are thinking about our ethanol platform more broadly.

As we show on slide 6, ethanol gives us multiple routes to value across markets and time horizons through both direct use into road, marine, and CarbonSmart ethanol products, and with downstream processing for SAF and CarbonSmart applications. SAF remains an important strategic market. Our Project Dragon, Humber, and Project Flight projects will each represent roughly 23 million gallons of SAF production per year and approximately $150 million USD of potential offtake revenue annually. That is why Alcohol-to-Jet, or ATJ, matters commercially. It is not just a technology pathway. It is a commercial platform with the potential to generate profitable revenue and value. LanzaJet was recently valued at approximately $650 million USD through its most recent funding round.

As a reminder, we hold a 46% ownership stake in LanzaJet, and ATJ gives LanzaTech a way to convert ethanol into higher value SAF, as well as participate in upfront project development, recurring licensing and service revenue, and future fuel offtake tied to one of the strongest demand and highest value markets in the energy transition. We are not, however, narrowly viewing the value of our ethanol platform through a single end use. Ethanol is a versatile platform molecule with relevance across multiple large markets, including fuels and chemicals. That optionality has value, particularly given how policy, infrastructure, and customer demand are evolving uniquely across sectors and geographies. We see several ethanol pathways where we can create value faster and without the need for ATJ conversion facilities.