Executive Summary / Key Takeaways

• LanzaTech Global (LNZA) is a leader in carbon recycling, transforming waste carbon into valuable fuels, chemicals, and materials using its proprietary gas fermentation technology, addressing the growing demand in sectors like sustainable aviation fuel (SAF) and chemicals.
• The company is strategically evolving its business model beyond pure licensing to incorporate incremental project ownership and operatorship, partnering with infrastructure capital providers to gain greater control over development timelines, accelerate deployment, and capture more economic upside.
• Recent financial results reflect this transition and inherent project lumpiness, with Q1 2025 revenue showing a year-over-year decrease but offset by significant non-cash gains on financial instruments, while liquidity remains a critical near-term focus, raising substantial doubt about going concern absent further capital.
• Key projects like Project Drake (EU SAF), the Norway Eramet collaboration (integrated CCU/CCS), and Project SECURE (US ethylene) are central to the near-term outlook, expected to drive future revenue and bolster liquidity upon reaching milestones like Final Investment Decision (FID) and project transfer.
• While facing significant risks including financing dependency, potential dilution, Nasdaq listing compliance challenges, and litigation, LanzaTech's technological differentiation, growing project pipeline, and strategic partnerships position it for potential long-term growth in the expanding circular carbon economy.

Setting the Scene: Transforming Waste Carbon into Opportunity

LanzaTech Global, Inc. operates at the vanguard of the emerging circular carbon economy, pioneering a nature-based approach to transform waste carbon streams into valuable chemical building blocks. At its core, the company's mission is to address the critical challenge of utilizing carbon efficiently in a world striving for decarbonization, asserting that "Carbon is not the enemy, but an essential part of our daily lives. The issue is how we source, utilize and dispose of the carbon we use." This vision positions LanzaTech within a dynamic industry landscape driven by increasing demand for sustainable products, regulatory tailwinds favoring low-carbon solutions, and the urgent need to decarbonize hard-to-abate sectors like aviation and heavy industry.

The company's strategy is rooted in its proprietary gas fermentation technology platform, which leverages specialized microbes to convert carbon-rich off-gases from industrial processes, gasified waste, and even CO2 with hydrogen into ethanol and other chemicals. This technology forms the foundation of its business model, historically centered on licensing this platform to customers who build, own, and operate biorefineries. Over nearly two decades of operation, LanzaTech has established a track record, culminating in six commercially operating plants by the end of 2023, demonstrating the viability of its technology at scale.

However, the path to commercialization has revealed inherent challenges within a pure licensing model, including dependence on licensee decision cycles and limited participation in the full value chain economics. In response, LanzaTech is strategically evolving, aiming to complement licensing with incremental ownership and operatorship in projects. This shift, underscored by partnerships with infrastructure capital providers like Brookfield Asset Management (BAM) and Olayan Group, is designed to provide greater control over project timelines, accelerate deployment, and unlock enhanced economic upside beyond traditional licensing fees. This strategic pivot is critical for LanzaTech to accelerate its growth trajectory and navigate the complexities of scaling disruptive technology in a nascent market.

Technological Foundation: The Microbe as a Carbon Refinery

LanzaTech's competitive edge is fundamentally tied to its proprietary gas fermentation technology. This platform utilizes specialized, non-GMO or engineered microbes in bioreactors to consume waste carbon gases (like CO, CO2, and H2) and produce ethanol or other target molecules. The core benefit of this technology lies in its ability to utilize diverse, low-cost, and often problematic waste feedstocks that would otherwise be emitted or flared, effectively turning pollution into a resource.

Quantifiable benefits of this technology, as demonstrated in scaled applications, include a stated ability to achieve 15-20% greater efficiency in carbon capture and conversion compared to certain alternative processes. Furthermore, the modular design of LanzaTech's facilities can offer lower upfront deployment costs, estimated to be 10-15% less than some competing technologies, contributing to a more favorable project economic profile. The company's operational experience across six commercial plants provides valuable know-how, enhancing the reliability and performance of new deployments.

Beyond its core ethanol production capability, LanzaTech is actively engaged in R&D to expand its product portfolio. Significant developments include demonstrating the production of isopropyl alcohol (IPA) at scale, a process now ready for licensing in 2024. IPA is a key feedstock for polypropylene, a massive market where LanzaTech's waste-derived product offers a low-carbon alternative to petrochemicals. The company has also developed genetically modified strains capable of co-producing ethanol and IPA, offering flexibility to impact both ethylene and propylene value chains. Further R&D is focused on the direct microbial production of monoethylene glycol (MEG), a key ingredient for PET fibers and bottles. These R&D efforts aim to develop new commercial strains for high-value molecules, with the strategic intent to unlock access to larger, higher-value chemical markets and enhance the economic potential of LanzaTech's platform, leveraging its scientific computing and AI capabilities to accelerate strain development.

Strategic Evolution and Project Acceleration

The strategic evolution towards greater project control is manifesting through key initiatives and partnerships. The collaboration with Brookfield Asset Management, established in October 2022, aims to accelerate the development and financing of commercial production facilities in key regions. LanzaTech is working to transfer its first project under this partnership, the Eramet collaboration in Norway, which represents a first-of-a-kind integrated CCU & CCS facility targeting hard-to-abate industries. This project is expected to reach Final Investment Decision (FID) and transfer to Brookfield, demonstrating the viability of this new model.

Similarly, Project Drake, a 30 million gallon per year ethanol-to-SAF project in the EU, exemplifies this shift. LanzaTech has been developing this project and recently secured an exclusivity and financing commitment agreement with a new financial partner, receiving an initial $5 million fee. This partner intends to fund the remaining capital to reach FID and participate in the project's development, allowing LanzaTech to maintain significant upside participation.

Another cornerstone project is Project SECURE, a DOE-funded initiative with Technip Energies in the US Gulf coast. This project will demonstrate the production of sustainable ethylene from captured CO2 emissions at an ethylene cracker, representing a highly replicable opportunity given the global installed base of crackers. Expected to commence work in the second half of 2024, Project SECURE highlights LanzaTech's ability to integrate its technology into existing industrial infrastructure to decarbonize major chemical value chains.

Complementing these project-specific efforts, LanzaTech is also building regional partnerships, such as the joint venture with Olayan Group in the Middle East, focused on developing a pipeline of opportunities in Saudi Arabia and the broader region. The CarbonSmart business, while facing recent regulatory hurdles in the EU, is also part of this strategic evolution. By negotiating long-term off-take agreements with licensees like ArcelorMittal (MT) (a two-stage contract with potential annual revenue of $10 million to $20 million), LanzaTech is securing access to product volumes, enhancing its ability to meet growing demand from customers in chemicals and fuels and capture more value.

Operational Performance and Financial Health

LanzaTech's financial performance over recent periods reflects both the inherent lumpiness of project development revenue and the impact of strategic initiatives and macroeconomic factors. For the three months ended March 31, 2025, total revenue was $9.48 million, a decrease of 7.4% compared to $10.24 million in the prior year period. This was primarily driven by a decline in higher-margin engineering services and JDA/contract research revenue, partially offset by a significant increase in lower-margin CarbonSmart product sales ($4.20 million vs. $0.86 million). Cost of revenues increased by 11.0%, largely mirroring the increase in CarbonSmart sales.

Operating expenses saw mixed trends in Q1 2025. R&D expenses decreased by 3.3% to $16.49 million, reflecting lower consumables and facilities costs. However, Selling, General and Administrative (SGA) expenses increased substantially by 42.7% to $15.75 million, primarily due to a $5.3 million increase in professional fees associated with streamlining business priorities, partially offset by lower personnel costs following the reorganization efforts initiated in late 2023/early 2024. These reorganization efforts are expected to yield approximately $5.3 million in annualized operating expense savings.

The net loss for Q1 2025 was $19.23 million, an improvement from the $25.51 million net loss in Q1 2024. This improvement was significantly influenced by non-cash items, particularly a large $34.3 million gain from the decrease in the fair value of the Convertible Note (which subsequently converted in May 2025), partially offset by losses related to the Brookfield SAFE extinguishment and changes in the fair value of the Brookfield Loan and warrants. Loss from equity method investees also increased significantly to $6.53 million in Q1 2025, primarily due to LanzaJet's performance.

Liquidity remains a critical area. As of March 31, 2025, cash and cash equivalents stood at $13.78 million, with short-term investments of $7.41 million. Total cash, cash equivalents, and restricted cash decreased significantly by $29.70 million from December 31, 2024, to $16.03 million, driven by cash used in operations ($21.10 million in Q1 2025), partial repayment of the Brookfield Loan ($12.50 million), and capital expenditures.

The company explicitly states that its existing cash and short-term investments are not projected to be sufficient to fund operations through the next twelve months from the Q1 2025 filing date (May 19, 2025), raising substantial doubt about its ability to continue as a going concern. The recent $40.0 million Series A Preferred Stock financing in May 2025 provides a near-term liquidity boost, but the company's ability to secure the contemplated Subsequent Financing ($35.0 million to $60.0 million) and obtain necessary stockholder approvals is crucial for long-term viability.

Competitive Landscape and Positioning

LanzaTech operates within a competitive landscape encompassing various players in the biofuels, sustainable chemicals, and carbon capture and utilization sectors. Key direct competitors include companies like Gevo (GEVO), Neste (NESTE), and Archer Daniels Midland (ADM), each with distinct strengths and market positions.

Compared to Gevo, which focuses on isobutanol from biomass, LanzaTech's waste carbon recycling technology offers a differentiated feedstock advantage and potentially lower environmental impact per unit of output. While Gevo may exhibit faster processing speeds in some areas, LanzaTech's R&D pipeline for new strains (IPA, MEG) and its strategic partnerships (like LanzaJet for SAF) position it strongly in emerging, high-value markets. Financially, LanzaTech's recent revenue growth rate has outpaced Gevo's, and its gross margins, while variable, appear more favorable than Gevo's negative margins, suggesting better operational efficiency in its core processes.

Against larger, established players like Neste and ADM, LanzaTech competes primarily on technological innovation and feedstock flexibility rather than scale or financial might. Neste is a leader in renewable diesel and SAF from biomass, leveraging significant scale and integrated supply chains, resulting in higher profitability and cash flow. ADM utilizes its vast agricultural network for biofuels and chemicals, benefiting from cost leadership and global reach. LanzaTech's advantage lies in its ability to utilize diverse waste streams, including industrial off-gases and CO2, which are not typically accessible to biomass-focused players. While LanzaTech's current scale results in higher per-unit costs compared to the efficiencies of Neste or ADM's large-scale operations, its technology's adaptability and lower environmental footprint provide a unique value proposition, particularly as regulations increasingly favor advanced, non-food-based feedstocks.

LanzaTech's competitive moat is built on its proprietary microbial strains and fermentation process, offering a distinct pathway for carbon utilization. Its strategic partnerships, such as the 25% ownership in LanzaJet and collaborations with infrastructure partners, enhance its market access and project execution capabilities, partially offsetting the scale advantages of larger competitors. However, LanzaTech's vulnerability lies in its current financial position and smaller operational scale, which could constrain its growth and expose it to pricing pressures from more cost-efficient rivals. The ability to successfully execute its strategic shift to project development and secure necessary financing is paramount to leveraging its technological advantages and strengthening its competitive standing.

Outlook and Risks

LanzaTech's outlook for 2024, as reaffirmed in recent earnings calls, anticipates total revenue between $90 million and $105 million, representing significant growth over 2023. Adjusted EBITDA is guided to be a loss between $65 million and $55 million, reflecting expected top-line growth coupled with cost control measures. Management expects revenue to be heavily weighted towards the second half of 2024, with a strong concentration in the fourth quarter, driven by several key projects reaching FID and entering the construction phase, which unlocks equipment revenues. The ramp-up of recently commissioned facilities in India and Belgium is also expected to contribute incremental recurring revenue.

The path to profitability has been reset, with positive Adjusted EBITDA now anticipated beyond late 2024/full year 2025, primarily reflecting delays in project development timelines attributed to macroeconomic factors and regulatory uncertainties, rather than an erosion of the project pipeline itself. The company is actively pursuing its strategic plan to accelerate growth and improve financial performance, focusing on high-quality revenue streams and disciplined cost management, including the annualized operating expense savings from the recent reorganization.

However, significant risks temper this outlook. The most immediate is the substantial doubt about the company's ability to continue as a going concern, contingent on its success in raising significant additional capital and executing strategic options. The recent $40.0 million Series A financing provides a bridge, but the ability to secure the Subsequent Financing and obtain necessary stockholder approvals is uncertain and subject to external conditions. Failure to do so could trigger a costly redemption obligation for the Series A Preferred Stock, potentially leading to asset liquidation.

Further risks include potential substantial dilution for existing stockholders from the exercise of outstanding equity instruments and the contemplated Subsequent Financing. Compliance with Nasdaq's continued listing standards, particularly the minimum bid price requirement, also poses a challenge, with potential delisting negatively impacting liquidity and market access. Litigation related to the FPA and the Convertible Note conversion adds further uncertainty and potential financial obligations. Project timing delays, influenced by macroeconomic conditions and regulatory hurdles, remain a risk to achieving revenue targets and accelerating the path to profitability.

Conclusion

LanzaTech Global stands at a pivotal juncture, possessing a commercially proven technology capable of addressing critical needs in the burgeoning circular carbon economy. The strategic shift towards greater project control and value capture, supported by partnerships with infrastructure capital providers, represents a necessary evolution to accelerate growth and overcome the limitations of a pure licensing model. While recent financial performance and liquidity challenges underscore the difficulties inherent in scaling disruptive technology and navigating complex market dynamics, the company's robust project pipeline, technological differentiation, and efforts to streamline operations provide a foundation for future potential.

The near-term outlook is heavily reliant on the successful execution of key project milestones and the securing of necessary financing, which remain subject to significant risks. Investors must weigh the long-term potential of LanzaTech's unique carbon recycling platform and its expanding product portfolio against the immediate financial uncertainties and execution challenges. The company's ability to leverage its technological edge, convert its pipeline opportunities into tangible revenue, and achieve financial sustainability will ultimately determine its success in realizing its vision of a profitable circular carbon economy.