Good morning, everybody, welcome to the Agilyx Half Year 2023 results presentations. We've got Tim and Russ and Joe and Carsten here to present this morning. Then we'll do Q&A at the end. If you have a question, please, you know, either use the Raise Your Hand function on Teams, or you can use the chat if that's easier. We will just kind of come to you and unmute you effectively at, at, at the appropriate time so that you can ask your questions. With that in mind, I will hand over to Tim.
Very good. Good morning, everybody, and thank you, Louise, for the introduction. Pleased to be here this morning. Very pleased to be joined by, as Louise mentioned, a few of my colleagues, Joe Vaillancourt, the CEO of Cyclyx. We're gonna 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, you know, let's start with the reality that it is a difficult and economic environment.
I think nobody is under any illusion of the fact that things are challenging out there on various factors. We continue, we believe, to make very good progress despite this. Some of the examples that we will go into in a little bit more depth over the coming pages are, 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. Some nice pictures there about, you know, how that unit is now coming together, being reassembled after the various parts of the equipment that we provide were shipped to Japan.
We're also advancing, the TruStyrenyx plant, the bigger plant, 100 tons per day, 30,000 tons 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, you know, second only to the ethylene and propylene piece, and which we're in a unique position to go after with our friends in BioBTX. In addition, you're gonna 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.
Also developing what I think is probably the 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- 90 development, focused on, at the moment, on Houston, but really now scaling out and beginning to see the pathway to significant volumes, 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's here today, is to be able to share some of his excitement about what's happening in Cyclyx. Let's turn on to page 5, and Carsten will give a little bit more on the Agilyx conversion business.
Yeah, very happy to, Tim, and good morning, everyone. As you can see, the revenue for the first half of 2023 for the Agilyx conversion business was $4.6 million, which is up $2.2 million versus the first half of 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 US, the plant is now in construction in Japan, 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. This project is in the final engineering phase. We also have license discussions ongoing with Kumho. We're progressing on other projects, like the one with Shell that you are familiar with. Last but not least, in the space of mixed waste plastic to aromatics, we have fast-tracked the project with BioBTX. We're already now at that engineering stage. 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. With that, I hand over to Joe Vaillancourt for an update on Cyclyx.
Great. 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 the two main value propositions that Cyclyx provides.
In the first instance, you know, 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. So, as Tim has mentioned, the 10- 90 programs, which, 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. We believe that those two service offerings are unique and differentiated in the marketplace.
How has that sort of translated into the performance? For the first half of this year, 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. To provide some perspective, in the last 24 months, the Cyclyx team has developed and delivered over 16,000 metric tons, or 35.3 million pounds. From an industry perspective, those are significant volumes.
What we've done in that same period through the first half of this year is built the 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, though, we'll talk a little bit about the 10- 90 programs. It's notable, so we have about 20 or so commercial, industrial 10- 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- 90 all plastic in a bag program.
Since we've launched that at the beginning of this year, we've tripled the volume per household of the plastics recovered. 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 in close proximity to Houston, that will be spreading that 10- 90 program in support of the first CCC. 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. Pretty excited about that.
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. With that, that concludes my Cyclyx overview, and 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, our revenue is up, as a group, consolidated up $300,000. Agilyx revenue is up 93%, due mainly due to the Toyo project, compared to the first half of last year. Cyclyx revenue is down 35%, period on period, mainly due to some downtime with our customers on facility maintenance. We see...
We'll talk a little bit more about that going forward. We see that starting to ramp back up in July. 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. 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 expenses driven about $600,000 increase in costs over the prior period, driven mainly by technology improvements as we continue to refine our product portfolio. Then in sales and marketing, basically, that's headcount. We're, 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.
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. 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 in cash flow. Some of the highlights for 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, we've had some improvements in working capital. We've done a, I think, a really good job in managing working capital, as well as some minor offsets. We have the, the valuation, the fair value gain on financial instruments, which is the warrants. You, you get $1 million for Regenyx, which below is... You see the cash coming out for the write-off of the Regenyx investment funding.
Overall, I think the story here is, you know, continuing to, to really focus on cash flow and, 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 pre-purchasing of equipment and engineering services for the CCC build-out. 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.
You know, you can see the spend coming out in the purchase of property and equipment for the CCC. Lastly, I think I'll, I'll mention that a couple things from that 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. 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. 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.
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 two licenses during the fiscal year. We're continuing to negotiate with Kumo and BioBTX for those licenses, so that will, one, improve our revenue as well as gross profit 'cause they're highly, 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, we did have the issue in the 1st half of the year with downtime with some of our customers. However, we're continuing to source the product, as, as Joe mentioned, and the 10 to 90 programs are really highlighting that, you know, 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. As Joe mentioned, we've, we've processed up to 16 kilotons to date, and we do see that volume starting to pick up, and, 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, we, we do expect that to continue for the rest of the period. As Joe mentioned, we'll have some further announcements on the CCC advancing, but it, 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. With that, I'll turn it back over to Tim, please. Thank you.
... You're on mute, Tim. We still haven't learned this, have we? Let's go to the next slide, Louise. Look, what I wanted to do at this point was to reconnect with the, 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 are reasons to be very excited about the direction of where the business is going. Let's start with the things that haven't changed, 'cause I talked about, you know, some environmental challenges in terms of the economic reality of where we are. We hold firm still to the fact that regarding the circular economy, the train has left the station.
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. This reality on this page, and I'm not gonna 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. Let's go to the, the, 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. The chart on the left-hand side, you know, 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, you know, eliminating plastic, the development of middle classes around the world means that, you know, the amount of plastic being produced is expected to double over that period of time. Even McKinsey's most sort of, kind of optimistic, forward-looking view in terms of what's gonna happen in terms of recycling says, "Yes, you do penetrate that, but you're catching up with the fact that this number's going ahead, which creates this enormous opportunity." You can see, you know, that they, they estimate somewhere between 14%-21% of total recycling in 2030. You get to 19%-30% by 2040.
The number down the bottom says this is how much money you need to spend in order to actually make that happen. More than $40 million in chemical recycling, that's not the amount in mechanical, just in the chemical recycling, the green part of that, over 90 by 2040. There is a huge opportunity here, and there is a direction of travel, which means that this is gonna happen, and it's going to happen, and technology is gonna be required to make that occur. There is a limiting factor right now. Do you wanna move on to the next page? As we've alluded to before, everybody got very, very excited about recycling, you know, 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 three or four years, that we recognize that the rate-limiting step is gonna be feedstock. How do you actually get the material in the right quantity, in the right quality, and at the right price? This chart is our take on sort of the lay of the landscape, if you like, out there, because whether you are trying 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 gonna be a major problem for you. If you wanna 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 pointing at.
That's what Cyclyx is addressing for all the different types of recycling. That is why ExxonMobil, LyondellBasell, others, so many more in the consortium, making more announcement recently, are focused on this. The CCC concept, which we were talking about, we'll come back to again, is a key element of that, but I really wanna emphasize it's just one element. There's lots of people out there that are now talking about processing capability. Processing capability without understanding the sourcing side of it, what we call 10- 90, is really not gonna 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. Let's turn to the recycling piece. 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, a synthetic crude, whatever you wanna call it. There's lots of different names out there, because this is the place where nearly 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. 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, the 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, with our technology, in partnership, go straight back to a fungible, tradable product. 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 the Cyclyx capability across all these different spaces. Will you go to the next page, please? Therefore, what we're really saying to you is that we are gonna focus our strategy on the areas where we have the strongest advantage, and that has become clearer and clearer over this period.
I'm gonna start with the Agilyx side and then move on to the Cyclyx. In terms of Agilyx, recognizing this sort of macroeconomic backdrop where, you know, 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. 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 TotalEnergies. TotalEnergies attacking one of our patents in court in France. They lost. Our patent was upheld.
We have very, very strong basis for our technology, in addition to the, the basis that we have with Technique, with TruStyrenyx, with BioBTX in the BTX space, and also in the PMMA space with Mitsubishi. That is where we're gonna focus. We're gonna focus on these circular pathways, the waste-to-product pathways, because that's where we have the key differentiation. We also need to recognize that, you know, the world is a tough place, and that these things have slowed down. 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 right-size our Agilyx team to reflect that.
What, in fact, we're gonna be doing is effectively right-sizing Agilyx in order to be able to right-size Cyclyx. 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. 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? The Cyclyx opportunity to service the entire plastic recycling market is absolutely huge. That's what we're gonna 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?
I'd love to talk to you more about it today, but what we are saying is that, as Joe alluded to, there are some things very close. He 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. With that, thank you very much. I think that we are on to the stage of Q&As. I appreciate your attention, and we'll open the floor to any questions that you might have.
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 from Adam for Slides. I think your mic's been open, so you should be free to go ahead, Adam.
Thanks. Morning, everybody. Hope you can hear me okay.
Yes.
I have a couple of questions, if I may. Firstly, just the, the mention there of a, a, a post-period cost true-up at, 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 timelines on, on, on, on projects strictly on Toyo, or, or do you think you might be out of the woods in that regard? On, on the maintenance scheduling at Cyclyx, is that something that could have an impact in the future, or, or is it something that as you get more, more projects, it effectively diversifies out? In, in, in other words, any one scheduling issue doesn't really become an issue going forward. Then on right-sizing, are you gonna see any one-off costs? Should we be expecting something at year-end?
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 specifically good. Thanks.
Right. I'm gonna try and make sure I we cover all of those. Let me go through. First one on Toyo, I think we're out of the woods on that one, so, you know, the, the, everything is being delivered. There might be a few sort of little things, but the big, the big sort of piece is over in terms of that threat. Let me go to the right-sizing. The, the right-sizing, we do not see having any sort of cost impact. This basically is predominantly, not uniquely, but it is predominantly in the, in the US, and it really relates to headcount reduction. We don't have contracts that require or have implications regarding costs there. Okay, I'm...
Cyclyx, the Cyclyx one, Louise, help me, sorry.
No, I, the next one I had was EPA.
EPA. Look, I, I think in general, you know, again, our, our footprint, the approach we have, the asset light approach, helps us to be flexible around opportunities and regulatory changes. You know, 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. 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 one region, the fact that we have got a very global footprint and 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. They really hit the sweet spot in terms of people who are worried about mass balance. There was a question on Cyclyx, which maybe Joe can answer.
Yeah. Yeah, happy to. Relative to the downgraded demand, we actually have been careful to structure our contracts to be as close to take or pay as possible. Even though we had lower revenue, we actually had guaranteed payments for the capacity that they've provided. 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 offtakers are guaranteed through a take or pay there.
Yeah, I might add, Joe, that, that I think from a diversification point of view, two things. I mean, the expectation is that there isn't one CCC. We have a lot of interest in these, so there, there is more opportunity. 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, of output opportunities. We do see de-risking 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 de-risking happening through those things as well.
Yeah.
That, that's great. Thank you very much.
Elliott?
Yes, hello.
Yeah.
Yes, hey, guys. Good morning. Congrats on the results. I suppose just kind of following on a bit from Adam's questions, but getting in more granular. On, just regardless of Cyclyx, yeah, it sounds like obviously, you could 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, you know, H2 last year? Are you, are you expecting the volumes to be a significant increase as, as your customer kind of, you know, alluded to potentially higher volumes? Then 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, in volumes, sorry, a downward path in volumes for H1, or has there been a change in pricing on the Cyclyx side as well?
There's been no change in pricing, and in fact, part of the de-risking, there's price adjustments that increase the price when the demand is lower. In that regard, it's, 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. Then on the, on the conversion side, I know it's tough, but is there any chance you can give any more color on maybe the, you know, the other projects, you've got in the oven right now? Like, for example, you know, could you foresee any other projects coming into construction this year? Or do you think it could be quite, you know, tricky given the, like you said, the macroeconomic backdrop?
Yeah, I think I would say that, you know, our focus is on license and construction around, we mentioned the two, Kumho and BioBTX. Those are the most likely in those next stages, and the timing of, you know, when the license, when construction is something that, that, you know, we talked about the licensing stage of that very soon, and we would anticipate that once you solve the license, construction comes fairly soon afterwards. There are other projects being worked on, but those are the two that 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.
Understood. Thank you.
Fabian, I think you had a question?
Yeah. Thank you. Could you give some color on your outlook for your cash flow? I mean, you have a lot of prepayments, both for your, the CCC, but also on net working capital here. Do you expect cash burn to, to be fairly stable going forward, to increase or, or, or come down and, and think maybe also you could- if you could comment on, on how you consider your liquidity at the moment?
Sure, Fabian, I can, I can start on that. I think you're gonna 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. I think for the second half of the year, we definitely see the cash burn improving. You can see for our first half cash burn, it was just under $1 million a month, and so we, we, we do believe that that will improve for the second half of the year.
The license revenue is, is, is really, you know, really nice cash inflow for us, as well as, you know, if we can get those licenses negotiated, in, 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. We believe with that said, you know, our position should be good if we can continue to convert those opportunities.
Yeah, thank you. Can you just remind me what the, a typical license sales inflow, the cash inflow would be on a 100 tons per day project?
Yeah, we've, we've, we've always given guidance that it's around $750,000 per 50 ton unit, and it is negotiable per, per, whichever we talk to. It's, it is negotiable and could be higher, could be lower, depending on the circumstances, but that's what we, we target.
Thank you.
Yeah, I would just- I would maybe just add to that for, for clarity, that, you know, $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. You know, that, that, that just gives you the, the, the, this number is... You know, 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, the royalty number that they want to pay, which can be anything from zero through to, you know, kind of a, a fairly standard royalty. That's why there's a, there's a window here, I would, I would just say.
Thank you. Finally, do you have any comments on the lead time between the license sale and when you would expect to report the core equipment sales to the most relevant projects, which you mentioned? Maybe also the construction period for these? I know it can vary between projects.
Carsten, do you want to take this?
Yeah, no, I, I'm happy.
I can see you coming off mute, so you wanted to.
I was unmuting myself because I'd like to do that.
Yeah.
Fabian, great question, but it really depends on the pathway that you, that you see. One of the projects that we have with INEOS has been a pretty standard project going through that kind of engineering phase, FEL one, two, three, the kind of traditional. In previous, you know, meetings, we talked about this capability of fast-tracking projects. One typical that you see here is the BioBTX, where we really fast-tracked that. You know, we announced that, I think, you know, in the last meeting we had with you, we announced it. Basically, we're already in the FEL three engineering that project. You can expect that the, what we're doing is trying to shorten that period of time.
Again, one advantage with the partnership with Technip that we have on TruStyrenyx, is that we really, you know, try and move that kind of license agreement upfront of the engineering. You typically have an initial negotiation phase, a license contract, then you will do some, some engineering, PDPs, et cetera. And then you'll have equipment. Count on the fact that what we're doing is trying to focus and narrow in on that waste-to-product space, and, you know, shortening that time.
Does that mean that it may take a quarter or two, between the license sale and the recognition of core equipment then?
What I would comment on is that the traditional kind of approach have been more like FEL2, FEL3, and that's been taking up to 24 months, and then you've done it. What we're doing right now is definitely much shorter than that, as you can see with the BioBTX.
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.
The advantage with the model is that once customers have signed a license, that you have the right to, you know, use the equipment, you would expect the equipment to come relatively soon after that because you, 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.
Very helpful. Thank you.
Thank you.
Are there any more questions? There's nothing in the chat, so...
Okay. Well, look, thank you very much, everyone. Really appreciate your attention. Really appreciate the questions. Obviously, we're available for follow-up offline. Look, I just want to reemphasize the fact that, you know, despite some headwinds on the conversion business, our conversion business remains sound. Our strategic focus is going to narrow and really aim in and target this waste-to-product space, where we know that we have competitive advantage. We know that, that actually, even against major strategics in their 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, a large consortium. We are very much looking forward to being able to tell you a lot more about this before the end of September. That gives you a sense of the imminence of timing and the expectations that we have. I think that for those of you who aren't already excited about the potential of Cyclyx, then that will further enhance your, your, your belief in it. Looking forward to that, you'll be hearing a lot more from Joe in that regard in due course. 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.
Have a good day.
Thank you. Bye-bye.