Agilyx AS

OTC:AGXXF

So good morning, everybody, and welcome to the Agilyx Half Year 2023 Results Presentation. We've got Tim and Russ and Joe and Carsten here to present this morning. And then we'll do Q&A at the end. [Operator Instructions].

And with that in mind, I will hand over to Tim.

Very good morning, everybody. And thank you, Louise, for the introduction. Pleased to be here this morning. I'm very pleased to be joined by, as Louise mentioned, a few of my colleagues, Joe Vaillancourt, the CEO of Cyclyx. We're going to be talking a fair amount about Cyclyx today, so we thought it would be great for him to join.

And very much appreciate him being up in the middle of the night to do this, along with Russ Main, our CFO. And then also Carsten Larsen, the CCO of the company. So without any further ado, let's move into the review. So let's start with the reality that it is a difficult economic environment. I think nobody is under any illusion of the fact that things are challenging out there on various factors.

But we continue, we believe, to make very good progress despite this. And some of the examples that we will go into in a little bit more depth over the coming pages are listed on this page. The first one is something that we flagged just a few days ago. It's the continued construction of the initial unit in Japan with Toyo Styrene. There were some nice pictures there about how that unit is now coming together, being reassembled after the various parts of the equipment that we provide were shipped to Japan.

But we're also advancing the TruStyrenyx plant, the bigger plant, 100 tonnes per day, 30,000 tonnes a year plant with INEOS and Technip in the U.S. We're also very excited about the BioBTX collaboration, focusing in on circular aromatic chemicals. That's that chunk of the petrochemical industry, which is really second only to the ethylene and propylene piece, and which we are in a unique position to go after with our friends in BioBTX. In addition, you're going to hear a lot about Cyclyx. Cyclyx is continuing to move forward with the FID, towards the FID for the first Cyclyx Circularity Center.

We'll give you an update on that. And also developing, what I think is probably almost the -- at least the equally important aspect of how do you actually access the waste in the first time, which is all built around this Cyclyx 10 to 90 development, focused at the moment on Houston, but really now scaling out and beginning to see the pathway to significant volumes, a really significant volumes in the next year. I won't steal too much more of Joe's thunder on that because that's one of the reasons why Joe is here today, is to be able to share some of his excitement about what's happening in cyclic -- so let's turn on to Page 5, and Carsten will give a little bit more on the Agilyx conversion business.

Yes, very happy to, Tim. And good morning, everyone. As you can see, the revenue from the first half of 2023 for the Agilyx conversion business was $4.6 million, which is up $2.2 million versus the first half 2022. Obviously, a major contributor to this was Toyo Styrene in Japan, as Tim just touched upon. That project is progressing very well.

Following the acceptance testing that we did in this quarter in the U.S., the plant is now in construction in Japan, and you saw the pictures on the previous slide. We expect the plant to start up in the first quarter of 2024. In addition, we continue to build our partnership with Technip. TruStyrenyx is where we combine the Agilyx conversion technology with Technip's purification technology and really enable that closed-loop recycling of polystyrene. We do see significant opportunities in this space.

We are advancing the collaboration with INEOS, and this project is in the final engineering phase. We also have license discussions ongoing with Kumho, and we're progressing on other projects like the one we shared that you are familiar with. Last but not least, and in the space of mixed waste plastic to aromatics, we have fast tracked the project with BioBTX. So we're already now in that engineering stage, and we've signed an engineering contract with BioBTX. In addition, we are discussing both a license agreement but also an equipment purchase agreement with BioBTX.

And with that, I hand over to Joe Vaillancourt for an update on Cyclyx.

Very Thanks, Carsten. Good morning, everyone. It's great to be with you again. I'll be providing a brief update to the Cyclyx business. The headline really is that the Cyclyx value proposition elements show increasing validation by the major players in the advanced recycling industry, creating significant demand for Cyclyx, which in turn is driving our growth.

There are many exciting developments happening with Cyclyx. Unfortunately, not everything ongoing will be discussed today. But over the coming weeks and months, you'll see a handful of notable developments that you'll be interested in. Before I get on to the half year results, I just wanted to sort of reinforce and highlight 2 main value propositions that Cyclyx provides. In the first instance, we have a series of innovations that allow us to take pretty much all waste plastics, including very low-grade plastics, and develop custom feedstocks responsive to the specifications of the chemical industry but also the mechanical industry, recycling industry.

That's great. We know how to process. We feel like that's a very differentiated capability that we have. But as we know, another challenge is that there just isn't a lot of waste plastic in the supply chain. Most of it is destined for landfill.

And so as Tim has mentioned, the 10 to 90 programs, which are really programs developed for partnerships with commercial, industrial and municipalities are designed to divert plastics from landfill into our supply chain so that we can deal with them. And we believe that those 2 service offerings are unique and differentiated in the marketplace. And so how has that sort of translated into the performance? So for the first half of this year, -- but you can see we had a decrease in volume with 2,600 tons delivered versus 4,600 year-over-year. That was primarily due to timing from a few major customers, both in terms of their maintenance scheduling as well as their scale-up efforts.

Our expectation is that the second half volumes will be significantly higher than that of the first half of the year. But to provide some perspective, in the last 24 months, the Cyclyx team has developed and delivered over 16,000 metric tons of 35.3 million pounds. And so from an industry perspective, those are significant volumes. But what we've done in that same period through the first half of this year is built a competency to deliver up to 70,000 tons annually, quickly scaling up to 200,000 tons in preparation for the first circularity center that's in development. Before I talk about that, we'll talk a little bit about the 10 to 90 programs. It's notable. So we have about 20 or so commercial industrial 10 to 90 programs, and those are all scaling well, providing new sources of plastics that were landfill destined prior.

However, the most notable municipal program we have ongoing is with the city of Houston. And what's notable about that is that we are actually going from a typical single-stream recycling approach to a 10 to 90 all plastic and bag program. And since we've launched that at the beginning of this year, we've tripled the volume per household of the plastics recovered.

And so that is now scaling -- that is deemed to be very successful by the participants. It's scaling now across the city of Houston, and we have a handful of local communities, other cities and close proximity to Houston that will be spreading that 10 to 90 program in support of the first CCC. So we're really excited about that. It's the first of its kind program and it's scaling now very significant volumes for us. Relative to the first CCC that was announced earlier this year, it's progressing well.

We're at the final stages of engineering. Our expectation is that the final investment decision will be late September with construction starting immediately thereafter. So we're pretty excited about that. And as I said, there are other developments that are associated with this as well as new programs that we're not prepared to share today, but you'll see some announcements here in the coming weeks.

So with that, that concludes my Cyclyx overview. I'll hand it off to Russ.

Russ, you're on mute.

Sorry about that. Welcome -- thank you, everyone, good morning. Could you please turn it to the income statement, please? I'll give you the highlights of the performance for the first half of the fiscal year. As Joe and Carsten have mentioned, our revenue is up as a group consolidated up to $300,000.

Agilyx revenue is up 93% due mainly -- due to the Toyo project compared to the first half of last year. And Cyclyx revenue is down 35% period-on-period, mainly due to some downtime with our customers on facility maintenance. So we see -- we'll talk a little bit more about that going forward, but we see that starting to ramp back up in July. So we see a good traction for that to continue to increase in the second half of the year, which we'll get into a little bit further later. As far as margins go, you're seeing a significant improvement from the first half of last year, due mainly to the profitability of the Toyo project and other conversion projects that are in the results.

And we'll continue to see improvement in our gross margin line, especially as we start to in the second half of the year, hopefully generate some more license revenue and continued revenue from Toyo for some commissioning and spare parts that we see coming through on the conversion projects going forward as well as margins on the engineering work that Carsten mentioned with BioBTX.

From an operating expense perspective, if you break out the difference of the $1.2 million in increased costs, it's about half driven between R&D and sales and marketing with G&A being flat period-on-period. R&D expense is driven about $600,000 increase in costs over the prior period, driven mainly by technology improvements as we continue to refine our product portfolio. And then in sales and marketing, it's -- basically, that's headcount. We're increasing the business development capabilities in Cyclyx as we grow out that organization as well as we added a salesperson in the North American region to help us to generate further growth in North America.

And that person is also helping to drive the performance of the INEOS project, as Carsten mentioned. If we look at any of the net financial items. Really, it's a net difference between our gain on warranties and the write-off we do and the impairment we do on the Regenyx investment that we do every period as in the prior year. We have considered in the equity method of accounting for Regenyx and any investment we make to that facility is impaired on a regular basis. So that -- so that really, that's $162,000 is really a net offset between the gain on warranty valuation and the impairment for Regenyx.

Let's go to the next slide on cash flow. Some of the highlights, cash flow, net cash from operations, of course, driven primarily by the loss for the period of $11 million. Some of the offsets to that were really it's -- we've had some improvements in working capital. We've done, I think, a really good job in managing working capital as well as some minor offsets. We have the valuation, the fair value gain on financial instruments, which is the warrants.

And you get the $1 million for Regenyx, which below is you see the cash coming out for the write-off of the Regenyx investment funding.

But overall, I think the story here is continuing to really focus on cash flow and making sure we keep our costs in line, which we'll discuss a little bit later in this presentation as well. From a net cash from investments, primarily the outflow of cash is due to the additional prepurchasing of equipment and engineering services for the CCC build-out. So we're continuing to see us starting to work on the CCC project. And those funds were coming from below, where you see the proceeds from Cyclyx member contributions, our partners are prepaying for that service.

So we've had an injection of cash of about $8.5 million over the period. And you can see the spend coming out in the purchase of property and equipment for the CCC. And then lastly, I think I'll mention that a couple of things from the subsequent events that have happened since the -- which are in our financial statements. We did secure a debt facility of $5 million in July with DNB ASA, and it's at a 12% annual coupon rate. And also, not mentioned in the financial statements, but we did receive a true-up payment from Toyo for some cost overruns in August.

So that was about $562,000. So that's a -- it's a help to our cash flow. And you can see our ending cash at the period was $8.1 million. And just to be clear, that does not include the $5 million credit facility that we brought in after the period. Next slide, please.

Just a couple of highlights on what we believe is our expectations for the second half of the year. As Carsten mentioned, we do -- we are confident and we do hope to still bring in our committed 2 licenses during the fiscal year. And we're continuing to negotiate with Kumho and BioBTX for those licenses. So that will, one, improve our revenue as well as gross profit because they're highly high-margin, revenue-generating streams. And we'll continue to recognize revenue on the BioBTX engineering work that we're working on currently.

Cyclyx volume, we did have the issue in the first half of the year with downtime with some of our customers. However, we're continuing to source the product, as Joe mentioned. And the 10 to 90 programs are really highlighting that this company is successfully taking landfill-bound plastics and converting it and diverting it to custom process feed that will be -- you'll be seeing that benefit in the second half of the year.

And as Joe mentioned, we've processed up to 16 kilotons to date, and we do see that volume starting to pick up, and that's been seen in our results for July. We do see that, that feedstock volume is starting to pick up again for the second half of the year, and we do expect that to continue for the rest of the period. And as Joe mentioned, we'll have some further announcements on the CCC advancing. But it is advancing very well as we look at that for the second half, and you'll see more on that in the near term.

And with that, I'll turn it back over to Tim, please. Thank you.

We still haven't learned these. Have we? So let's go to the next slide, Louise. So look, what I wanted to do at this point was to reconnect with the sort of strategic opportunity that we're facing and then look towards the future and point you towards some of the things that are coming, which I think reasons to be very excited about the direction of where the business is going. But let's start with the things that haven't changed.

Because I talked about some environmental challenges in terms of the economic reality of where we are. But we hold firm still to the fact that regarding the circular economy, the train has left the station. And so these things may be having an impact on the rate and pace of the direction of travel, but they don't change the direction of travel. Because this reality on this page, and I'm not going to go through it in detail, hasn't changed. It is still something that has to be addressed by society in general and by actually us down at an individual level.

We are singularly failing the future if we don't address this problem of waste. So let's go to the next page because on the next page, this is McKinsey's take on what that opportunity translates to over the next 20 or so years. So the chart on the left-hand side, let's start with the numbers across the top, the 350 going to 700. Those are the millions of tons of polymer plastic demand according to McKinsey. The reality is that despite all of the pressure, all of the discussion about eliminating plastic, the development of middle classes around the world means that the amount of plastic being produced is expected to double over that period of time.

And even McKinsey's most sort of kind of optimistic forward-looking view in terms of what's going to happen in terms of recycling says, yes, you do penetrate that. But you're catching up with these numbers going ahead, which creates this enormous opportunity. So you can see they estimate somewhere between 14% and 21% of total recycling in 2030. You get to 19% to 30% by 2040. But the number down the bottom says, this is how much money you need to spend in order to actually make that happen.

So more than $40 billion in chemical recycling, that's not the amount in mechanical, just in the chemical recycling, the green part of that, over $90 billion by 2040. So there is a huge opportunity here. And there is a direction of travel, which means that this is going to happen and it's going to happen, and technology is going to be required to make that occur. But there is a limiting factor right now. Do you want to move on to the next page?

Because as we've alluded to before, everybody got very, very excited about recycling, mechanical recycling, first of all, then chemical recycling. Lots of people, lots of companies getting into this. It's really only in, I would say, the last year for the industry, fortunately for us, the last 3 or 4 years, that we recognize that the great limiting step is going to be feedstock. How do you actually get the material in the right quantity, in the right quality and at the right price? And this chart is our take on sort of the lay of the landscape, if you like, of that.

Because whether you try to recycle through mechanical means or others, if you can't get that feedstock solution right, you will run into an economic roadblock that is going to be a major problem for you. And if you want to be successful in this in the long term, accessing feedstock on the right part of the cost curve is the key to long-term success. That's what Cyclyx is pointed at. That's what Cyclyx is addressing for all the different types of recycling. That is why Exxon, Lyondell, others and so many more in the consortium, and we've been making more announcement recently are focused on it.

And the CCC concept, which we're talking about, we'll come back to again, is a key element of that. But I really want to emphasize, it's just 1 element. There's lots of people out there that are now talking about processing capability, Processing capability with our understanding, the sourcing side of it, what we call 10 to 90, is really not going to deliver you the quantity, the quality and the cost basis that you need to actually make whatever recycling it is that your customer is wanting to do happen effectively. So then let's turn to the recycling piece. So we talk -- everybody knows about mechanical recycling.

And we talk generally about chemical recycling, but the reality is there's lots of different types. If we start at the bottom, what we are referring to more and more as chemical recycling because actually that's what most people mean by it, is what we would talk about as waste to an intermediate. This is taking mixed waste and turning it into a sort of generic oil, could be called a pyrolysis oil or synthetic crude, whatever you want to call it.

There's lots of different names out there because this is the place where everybody plays. You're producing something that then needs to go back through a refinery or a chemical plant before it can actually be used back to its original plastic use or whatever it might have been. In other words, there's lots of additional steps. It's a complicated supply chain through there. And there's all kinds of things going on in terms of competitive intensity, discussions around mass balance, et cetera, et cetera.

The space that we're focusing on now is this piece in the middle, yellow or gold, I prefer to call it gold. The molecular recycling, what we refer to as waste to product. What are we trying to do here? We're trying to take waste, and with our technology in partnership, go straight back to a fungible tradable product. So not going back through to some generic oil, but going back to styrene, styrene that can go to hundreds of different customers directly because it's pure, it's equivalent.

With BioBTX going back to aromatic chemicals, benzene, toluene, xylene, these building blocks that represent about 40% of the total value of the petrochemical industry. And with Mitsubishi and the PMMA going straight back to a product that can go straight to a pure replacement drop in product for Virgin.

This is the area where there is very limited competitive intensity because very few people have got technology that can play there and where we see the real focus of our next stage of development for Agilyx, leveraging to Cyclyx capability across all these different spaces. We go to the next page, please. So therefore, what we're really saying to you is that we are going to focus our strategy on the areas where we have the strongest advantage, and that has become clearer and clearer over this period.

I'm going to start with the Agilyx side and then move on to the Cyclyx. So in terms of Agilyx, recognizing this sort of macroeconomic backdrop where customers are more risk-averse in terms of capital spending decisions, everybody can see the cost of capital. But it's an area where still we have very, very high confidence in our technology. Let me give you something that we haven't announced yet but it's built in here. So we recently had a patent, actually in the mixed waste plastic space, challenged by -- we've called it here a strategic major in France.

That's Total, so Total attacking one of our patents in court in France. They lost. Our patent was upheld. So we have very, very strong basis for our technology, in addition to the basis that we have with Technip, with TruStyrenyx, with BioBTX and the BTX space and also in the PMMA space with Mitsubishi. But that is where we're going to focus.

We're going to focus on these circular pathways, the waste-to-product pathways because that's where we have the key differentiation. Now we also need to recognize that the world is a tough place and that these things have slowed down. And so we want to be very upfront here and say we are going to reduce our ambition in terms of the number of projects per year that we bring through. And we are going to resize or rightsize our Agilyx team to reflect that. What in the fact we're going to be doing is effectively rightsizing Agilyx in order to be able to rightsize Cyclyx.

So we're going to be, and we have taken action now, to do this on the Agilyx conversion business, recognizing that reality but teeing up the next phase of Cyclyx. So let's talk about that. Cyclyx is addressing an industry-wide feedstock challenge. This is now known everywhere. You talk to industrial players, you talk to financial players who've been deep in this market, this is the issue.

How do I get all the feedstock? And the Cyclyx opportunity to service the entire plastic recycling market is absolutely huge. That's what we're going to be focused on, and we are looking creatively at how can we meet that increased demand and how can we capture more of that value and how can we drive growth? And I'd love to talk to you more about it today. But what we are certain is that, as Joe alluded to, there are some things very [indiscernible] talked already about the FID on the CCC.

But there are some things that are very imminent, and we plan on coming back to the investment community and doing a deeper briefing on Cyclyx in late September in order to be able to shed more light on where are we going, what are we doing, what are the opportunities and how can we really take advantage of this huge growth opportunity within Cyclyx.

So with that, thank you very much. I think that we are on to the stage of Q&A. We appreciate your attention, and we'll open the floor to any questions that you might have.

So as I said previously, if you have any questions, just raise your hand or feel free to put them in the chat. I see we have a question for Adam Forsyth at Longspur.

I hope you can hear me okay?

Yes.

A couple of questions, if I may. Firstly, just the mention there of post-period cost true-up at Toyo. I wonder if that's related to supply chain. And do you think there are any lingering supply chain issues out there that might affect your delivery time lines on [indiscernible] directly on Toyo? Or do you think you may be out of woods in that regard?

Then on the maintenance scheduling at Cyclyx. Is that something that could have an impact in the future? Or is it something that as you get more projects effectively diversifies out? In other words, any 1 scheduling issue doesn't really become an issue going forward? And then on rightsizing, are you going to see any one-off costs? Would we be expecting something at year-end? And finally, you talked about macro impacts. I just wonder, generally, if you see any specific outcomes from the EPA's consultation on plastic pollution. Is there anything? There -- I know they're really offering a leadership role rather than any firm policy, but I wonder if you think there's anything in that, that's specifically good.

Right. I'm going to try and make sure, I can't recover all of that. So let me go through the first one on Toyo. I think we're out of the woods on that one. So everything is being delivered. There might be a few sort of little things, but the big sort of piece is over in terms of that threat. Let me go to the rightsizing. The rightsizing we do not see having any sort of cost impact. This basically is predominantly, not uniquely, but it is predominantly in the U.S., and it really relates to headcount reduction. So we don't have contracts that require or have implications regarding costs there. Okay. The Cyclyx one -- Louise help me, sorry.

No. The next one I had was EPA.

EPA, look, I think in general, again, our footprint, the approach we have, the asset-light approach helps us to be flexible around opportunities and regulatory changes. And so in general, we are extremely pleased with these things. We see opportunities associated with them -- or our customers do, which then translates through to us. So I think in general, we see these things as being constructive. I did mention mass balance, there's continued discussion about that.

But we again see that where you have some potential implications in 1 region, the fact that we have got a very global footprint, global project base means that we do have the flexibility. I would also say that when it comes to things like mass balance, our waste-to-product pathways are much, much more robust and much less reliant on that. So they really hit the sweet spot in terms of people who are worried about mass balance. And then there was a question on Cyclyx, which maybe Joe can answer.

Yes, happy to. So relative to the downgraded demand, we actually have been careful to structure our contracts to be as close to take-or-pay as possible. So even though we had lower revenue, we actually had guaranteed payments for the capacity that they've provided. So we have a 20,000 ton per year backstop. So it doesn't translate well to revenue from an accounting practice, but it actually, from a cash flow perspective, doesn't hurt us when that happens. We certainly don't expect interruptions in production impacting the CCC and that the off-takers are guaranteed through a take-or-pay there.

Yes. And I might add, Joe, that I think from a diversification point of view, 2 things: I mean the expectation is that there isn't 1 CCC. We have a lot of interest in these. So there is more opportunity. And the other thing that's worth flagging is the brokering announcement that was made, which is allowing Cyclyx to also address a broader range of output opportunities.

So we do see derisking happening from that perspective, albeit that the contracts in the base case are being structured to be as low risk as possible. But we see further derisking happening through those things as well.

Elliott?

Congrats on the results. I suppose just kind of following on a bit from Adam's questions but getting more granular. On -- just regards to Cyclyx yes, it sounds like, obviously, the -- you can look at it as a back-end loaded year in terms of volumes. How do you think the volumes could look compared to, for example, H2 last year? Are you expecting the volumes to be significant increase?

Has your customer kind of alluded to potentially higher volumes? And the second point there is just around kind of pricing as well. Would you say that the move is just kind of a downgrade in volumes -- sorry, a downward path in volumes for H1? Or has there been a change in pricing on the Cyclyx side as well?

So there's been no change in pricing. And in fact, part of the derisking -- there's price adjustments that increased the price when the demand is lower. So in that regard, it's positive. Not sure how much we can get into forecasting, but we are feeling pretty good about the second half volumes in total for the year.

Got it. And then on the conversion side, I know it's tough, but is there any chance you can give any more color on maybe the other projects you've got in the oven right now? Like for example, could you foresee any other projects coming into construction this year? Or do you think it could be quite tricky given the, like you said, the macroeconomic backdrop?

Yes. I think I would say that our focus is on license and construction around, we mentioned the 2, Kumho and BioBTX. Those are the most likely in those next stages. And the timing of when the license, when construction is something that we talked about, the licensing stage of that, very soon. And we would anticipate that once you saw the license construction comes fairly soon afterwards.

There are other projects being worked on, but those are the 2, those are the most advanced. And so those are the ones that we are highlighting here because they're the most relevant regarding potential near-term revenue.

[Fabian], you had a question.

Yes. Could you give some color on your outlook for your cash flow? I mean, you have a lot of prepayments both for the CCC but also on net working capital here. Do you expect cash burn to be fairly stable going forward, to increase or come down? And think maybe also if you could comment on how you consider your liquidity at the moment.

Sure. Fabian, I can start on that. I think you're going to start to see -- we're forecasting for the second half of the year our cash burn to improve with some of the inflows of cash from the revenue generating from the conversion projects. And from Cyclyx, the prepayments really help us there, and we don't see any change there. So I think for the second half of the year, we definitely see the cash burn improving.

And you can see for our first half cash burn, it was just under $1 million a month. And so we do believe that, that will improve for the second half of the year. And the license revenue is really nice cash inflow for us as well as if we can get those licenses negotiated in the near term, then we have a good chance to get some good down payments for construction as well for the projects that we just mentioned. So we believe, with that said, our position should be good if we can continue to convert those opportunities.

Yes. Can you just remind me what a typical license sales in for the cash inflow would be on 100 tons per day project?

Yes. We've always given guidance that it's around $750,000 per 50-ton unit, and it is negotiable per whichever we talk to. So it is negotiable and it could be higher, it could be lower depending on the circumstances. But that's what we target.

Yes. And I would maybe just add to that for clarity, that $750,000 per 50-ton unit was on the basis then of an ongoing royalty on throughput afterwards. There are certain players who would prefer to pay more upfront and have a royalty-free license. So that just gives you that this number is -- don't just sort of assume that, but it's -- that's the kind of the box that we're in. And then sometimes, these things can change based on the royalty number that they want to pay, which can be anything from zero through to kind of a fairly standard royalty.

So that's why there's a window here, I would just say.

And finally, do you have any comments on the lead time between the license sale and when you would expect to report core equipment sales to the most relevant projects, which you mentioned? And maybe also the construction period for these? I know it can vary between projects.

Carsten, do you want to take that? I assume -- you wanted to.

I am happy -- I was unmuting myself because I'd like to do that. And Fabian, great question, but it really depends on the pathway that you see. So 1 of the projects that we have with INEOS has been a pretty standard project going through that kind of engineering phase FEL 1, 2, 3, the kind of traditional. And in previous meetings, we talked about this capability of fast-tracking projects. So 1 typical that you see here is the BioBTX, where we really fast track that.

We announced that. I think, in the last meeting we had with you, we announced it. Basically, we're already in the FEL 3 engineering in that project. So you can expect that what we're doing is trying to shorten that period of time. And again, 1 advantage with the partnership with Technip that we have on TruStyrenyx is that we really try and move that kind of license agreement upfront of the engineering.

So you typically have an initial negotiation phase, a license contract, then you will do some engineering, PDPs, et cetera, and then you'll have equipment. So count on the fact that what we're doing is trying to focus and narrow in on that product to -- waste-to-product space and shortening that time.

Does that mean that it may take a quarter or 2 between the license sale and the recognition of core equipment then?

So what I would comment on is that the traditional kind of approach have been more like FEL 2, FEL 3, and that's been taking up to 24 months and then you've done it. And what we're doing right now is definitely much shorter than that, as you can see with the BioBTX.

But that's on the engineering side, isn't it? I mean, more on the lead time between the license sale and the core equipment recognition.

Yes. And the advantage with the model is that once customers have signed a license, that you have the right to use the equipment. You would expect the equipment to come relatively soon after that because you paid for the right to use the equipment. You wouldn't do that if you wouldn't buy the equipment. So that's a relatively short time period, okay. There is an engineering, a small engineering phase in between.

Are there any more questions? There's nothing in the chat.

Okay. Well, look, thank you very much, everyone. Really appreciate your attention. Really appreciate the questions. Obviously, we're available for follow-up off-line. But look, we just want to reemphasize the fact that despite some headwinds on the conversion business, our conversion business remains sound. Our strategic focus is going to narrow and really came in the target this waste to product space, where we know that we have competitive advantage. And we know that actually even against major strategics in the home country, we've been able to win our patent cases. And so that is not a flimsy claim that we're making regarding the technology capability. On Cyclyx, as you've heard, as you know already, we're really addressing the critical limiting step of driving the circular economy.

It is unique. I think it is uniquely backed by major strategics as well as a large consortium. And we are very much looking forward to being able to tell you a lot more about this before the end of September. And so that gives you a sense of the imminence of timing and the expectations that we have. And I think that for those of you who are already excited about the potential of Cyclyx, I think that will further enhance your belief in it. So looking forward to that, and you'll be hearing a lot more from Joe in that regard in due course. So thank you very much. Really appreciate it and look forward to talking to you again in due course. Thank you.

Thanks very much, everybody.

Thanks, everyone.

Thank you. Bye-bye.