California-based carbon negative materials firm Origin Materials announced on Nov. 20 it is cutting 30 percent of its workforce.
It described the layoffs as an "organizational realignment that reflects the acceleration of higher margin revenue opportunities and the deferral of research programs with strong, but longer-term economic impacts."
The move comes after the company faced pushback from shareholders in September amid delays to its initial plan for a second biofuels plant in Louisiana. The firm’s co-CEO Rich Riley said in May 2022 that the firm"‘is facing a higher-cost capital project environment than in early 2021, when we announced the initial plan for Origin 2."
The markets have reacted to the news of workforce cuts, with Origin’s per-share stock price dropping from $0.94 on Nov. 20 to $0,88 on Nov. 21, and seating at $0.80 by Nov. 22. The company’s stock price also took a strong hit when it first announced delays to its second biofuels project, with per-share stock price from around $4.35 on Aug. 9 to $1.45 on Aug. 10 — a one-day drop of almost 67 percent.
Origin anticipates that it will incur approximately $2.7 million in restructuring charges in connection with the workforce reduction, consisting of cash expenditures for employee separation costs of approximately $500,000 and non-cash expenses for the accelerated vesting of certain equity awards of approximately $2.2 million.
“Consistent with our previously announced focus on near-term revenue opportunities and cash management as we commercialize the business and deploy our technology platform, we have taken action to reduce certain expenses and reallocate resources,” John Bissell, co-founder and co-CEO of Origin said in a statement.
“The changes we are implementing support our plan to execute priority initiatives representing high-margin, near-term opportunities, while deferring some research programs with strong, but longer-term economic impacts," he said. "We believe these actions will substantially extend our cash resources while maintaining momentum with our partners, who are committed to bringing Origin’s technology to market. This was a difficult decision that involves parting ways with many talented team members who have committed themselves to our mission. We are deeply appreciative of their contributions to Origin and will do our best to support them in future endeavors.”
The Sacramento, Calif.-based materials company started operations of its Origin 1 plant in June this year, the world's first commercial chloromethyl furfural (CMF) plant, located in Sarnia, Ontario. The facility had reached mechanical completion in January.
CMF is a chemical building-block made from sustainable wood residues that can be used to make downstream products, including PET feedstock paraxylene and FDCA (furandicarboxylic acid), which can be used in sustainable products and materials such as next-gen polymer PEF (polyethylene furanoate).