Q1 2022 Purecycle Technologies Inc Earnings Call

May 12, 2022

Thank you for standing by and welcome to the PureCycle Technologies first quarter 2020 new corporate update conference call.

Thank you for standing by and welcome to the pure cycle technologies first quarter 2020, no corporate update conference call.

At this time, all participants are in a listen-only mode.

Time, all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad.

The speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone keypad. If you require any further assistance. Please press star zero.

If you require any further assistance, please press star zero.

As a reminder, today's conference call is being recorded. I will now turn the conference over to your host, Mr. Larry Soma, Chief Financial Officer, Pure Cycle Technologies. Sir, you may begin.

As a reminder, today's conference call is being recorded.

Now I'll turn the conference Silverberg to your host Mr. Larry <unk>, Chief Financial Officer Pure cycle technologies, Sir you may begin.

Thank you.

Welcome to PeerCycle Technologies first quarter earnings update conference call.

Welcome to pure cycle technologies first quarter earnings update conference call.

I am Larry Soma, Chief Financial Officer and joining me today are Chairman and Chief Executive Officer Mike Otworth and our Chief Operating Officer and Chief Manufacturing Officer Dustin Olson.

I am Larry Soma, Chief Financial Officer, and joining me today are chairman and Chief Executive Officer, Mike Wirth, and our Chief operating Officer, and Chief Manufacturing Officer Dustin Olson.

This morning we will be highlighting our corporate developments for Q1.

This morning, we will be highlighting our corporate development for Q1.

The presentation we will be going through on the call can also be found on the IR page of our website, PureCycle.com.

The presentation, we will be going through on the call can also be found on the IR page of our website.

<unk> cycled dot com.

Many of the statements made today will be forward looking and are based on management's beliefs and assumptions and information currently available to management at this time.

Many of the statements made today will be forward-looking and are based on management's beliefs and assumptions and information currently available to management at this time.

These statements are subject to known and unknown risks and uncertainty.

These statements are subject to known and unknown risks and uncertainties.

many of which may be beyond our control including those set forth in our safe harbor provisions for forward-looking statements that can be found at the end of our first quarter 2022 corporate update press release and in our filed quarterly report on form 10Q filed this morning as well as in our other reports on file with the SEC that provide further detail about the risks related to our business.

Many of which maybe beyond our control, including those set forth in our safe Harbor provisions for forward looking statements that can be found at the end of our first quarter 2022, corporate update press release and in our filed quarterly report on Form 10-Q filed this morning as.

Well as in our other reports on file with the SEC that provide further detail about the risks related to our business.

Additionally, please note that the company's actual results may differ materially from those anticipated and, except as required by law, we undertake no obligation to update any forward-looking statement.

Additionally, please note that the company's actual results may differ materially from those anticipated and except as required by law. We undertake no obligation to update any forward looking statement.

Our remarks today May also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including among others changes in connection with quarter end and year end adjustments.

Our remarks today may also include preliminary non-gap estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter end and year end adjustments.

Any variation between PCT's actual results and the preliminary financial data set forth herein may be material.

Any variation between Pct's actual results and the preliminary financial data set forth herein may be material.

You're welcome to follow along with our slide deck or if joining us by phone you can access it on at any time on PureCycle.com.

You're welcome to follow along with our slide deck or if joining us by phone you can access it on at any time on pure cycle Dot com.

We are excited to share updates from the previous quarter with you and I will now turn it over to Mike Wirth pure cycle, Chairman and Chief Executive Officer.

We are excited to share updates from the previous quarter with you, and I will now turn it over to Mike Otworth, PureCycle Chairman and Chief Executive Officer.

Thanks, Larry. Good morning. This is an exciting time for PureCycle as we pursue our mission of revolutionizing plastic waste into a renewable resource.

Thanks, Larry good morning.

It is an exciting time for pure cycle as we pursue our mission of revolutionizing plastic waste into a renewable resource.

We're facing a critical moment as the plastic pollution crisis plays out on the world stage.

We're facing a critical moment.

Plastic pollution crisis plays out on the world stage.

Now more than ever, we believe PureCycle offers a solution for companies looking to be genuine and deliberate when it comes to sustainability.

Now more than ever we believe pure cycle offers a solution for companies looking to be genuine and deliberate when it comes to sustainability.

We are making strong operational progress since our last update the first four of 26 recycling modules arrived in Ironton This past week.

We are making strong operational progress since our last update, the first four of 26 recycling modules arrived in Ironton this past week, and we expect a larger shipment to arrive over the summer.

And we expect a larger shipment to arrive over the summer.

We remain on track and expect to produce pure cycle plastic from our commercial facility in Q4 2022.

We remain on track and expect to produce pure cycled plastic from our commercial facility in Q4 2022.

We broke ground on Turcycle's Augusta facility, expanding our footprint into the southeast.

We broke ground on tour cycles Augusta facility, expanding our footprint into the southeast.

We're currently on track for a startup in Q4 2023.

We're currently on track for startup in Q4 2023.

In Q1, we secured feedstock LOI are expected to yield approximately 215 million pounds of recovered polypropylene to supply pure cycle Augusta purification facility.

In Q1, we secured feedstock LOIs that are expected to yield approximately 215 million pounds of recovered polypropylene to supply PureCycle's Augusta purification facility.

The offtake from the first two lines in Augusta is 70% allocated through multiyear commitments.

The offtake from the first two lines in August is 70% allocated through multi-year commitment.

We continue to expand our commercial agreement footprint across converters and compounds with two new signed sales agreements and non CPG channels.

We continue to expand our commercial agreement footprint across converters and compounders with two new signed sales agreements and non-CPG channels.

Our existing partnerships continue to generate exciting result, and as an example, we achieved a major testing milestone without power for Ns closures. The yield performance was on par with non recycled resin.

Our existing partnerships continue to generate exciting results, and as an example, we achieved a major testing milestone with Aptar for hinge closures that yield performances on par with non-recycled resin.

The Pure Cycle Pure Zero program continues to see momentum since launching, with our focus now expanded to include partnering with professional and collegiate sports leagues.

The pure cycle pure zero program continues to see momentum since launching with our focus now expanded to include partnering with professional and collegiate sports leagues.

We anticipate exciting announcements on new partners in the coming months.

We anticipate exciting announcements announcements on new partners in the coming months.

And I'm pleased to report that we ended Q1 2022 with 610 million in total cash and investments.

And I am pleased to report that we ended Q1 'twenty to 'twenty, two with $610 million in total cash and investments.

Moving to slide four.

Our goal is to produce 1 million pounds of our ultra pure recycled resin by 2025, and we are aggressively working towards that goal.

Our goal is to produce one million pounds of our ultra-pure recycled resin by 2025, and we are aggressively working toward that goal.

As we previously reported, we're thrilled that PureCycle's Augusta Purification Facility can support up to eight purification lines, which collectively are designed to produce approximately one billion pounds of PureCycle plastic annual.

As we previously reported we are thrilled that pure cycles Augusta purification facility can support up to eight purification lines, which collectively are designed to produce approximately 1 billion pounds of pure cycle plastic annually.

This facility can be a significant game changer when it comes to achieving this major milestone.

Further our relationship with SK geocentric continues to advance toward our goal of a completed facility in South Korea by Q4, 2024, and we're progressing toward a joint venture agreement with Mitsui for a facility in Japan.

Further, our relationship with SK Geocentric continues to advance toward our goal of a completed facility in South Korea by Q4 2024, and we're progressing toward a joint venture agreement with Mitsui for a facility in Japan.

Moving to slide five.

That's pure cycle continues to grow we work towards scaling our operations commercially our goal has been to add top tier talent across our business segments.

It's pure cycle continues to grow. We work towards scaling our operations commercially. Our goal has been to add top tier talent across our business sector.

We have worked hard to ensure different experiences within our industry are represented, and we're thrilled that two exceptional industry experts have joined our Board of Directors.

We have worked hard to ensure different experiences within our industry are represented.

We're thrilled that two exceptional industry experts have joined our board of directors.

Stephen Valk, former president of Waste Connections, Inc., and Alan Jacoby, chief strategy officer and senior vice president of corporate development for Millikan & Company, have joined the Recycles Board in March.

Steven <unk>, former President of waste connections, Inc, and Alan Jacobi, Chief strategy Officer, and senior Vice President of corporate development for Milliken and company have joined through recycled board in March.

These two independent directors are both proven and successful leaders to combined bring more than 50 years of relevant experience.

These two independent directors are both proven and successful leaders to combine, bring more than 50 years of relevant experience.

But Steven Alan will help pure cycle advance, our mission and business objectives, and I am confident they will serve us well.

Both Steve and Allen will help PureCycle advance our mission and business objectives, and I'm confident they will serve us well.

We have assembled the best talent here at pure cycle and to achieve our goals. We wanted to ensure everyone is in the right place for success.

We've assembled the best talent here at PureCycle and to achieve our goals, we wanted to ensure everyone is in the right place for success.

To that end, we've realigned some of our teams to help us better deliver our mission to revolutionize plastic waste into a renewable resource.

We most recently announced that Dustin Olson was appointed to the Chief operating officer position. In addition to his chief manufacturing officer responsibilities.

We most recently announced that Dustin Olson was appointed to the chief operating officer position in addition to his chief manufacturing officer responsibility.

as such, changes have been made internally to his current organization that emphasized the importance of Ironson, Augusta, and our feed prep strategy.

As such changes have been made internally to his current organization that emphasize the importance of irons in Augusta and our feed prep strategy.

Our CFO , Larry Thoma, has also expanded the finance team to bolster our financial operation.

Our CFO Larry Soma has also expanded the finance team to bolster our financial operations, bringing on top tier talent to round out. His team to include our Vice President of Finance senior director for revenue and director of analytics.

bringing on top-tier talent to round out his team to include a vice president of finance, senior director for revenue, and director of analytics.

With that I'd like to turn it over to our Chief operating officer, Dustin Olson to discuss our manufacturing commercial and feedstock updates.

With that, I'd like to turn it over to our Chief Operating Officer, Dustin Olson, to discuss our manufacturing, commercial, and feedstock updates.

Thank you, Mike. Our first facility in Ironton, Ohio, is well underway and is currently expected to be operational in Q4 of 2022. Just last week, the first four modules, designed by Koch Modular and constructed by Gulfspan, were delivered and lifted into place one month ahead of the anticipated delivery date. This is a significant moment for PureCycle, one that has been years in the making. The remaining 22 modules are in active construction at the Gulfspan facility and are expected to ship over the summer.

Thank you Mike.

Our first facility in Ironton, Ohio is well underway and is currently expected to be operational in Q4 of 2022, just last week. The first four modules designed by Coke modular and constructed by Gulf Spin were delivered and lifted into place. One month ahead of the anticipated delivery date. This is a significant moment for pure cycle, one that has been.

Years in the making the remaining 22 modules are in active construction at the Gulf spend facility and are expected to ship over the summer.

We have 98% of the feed prep equipment on-site with an anticipated start-up of Q3-22. We're targeting mechanical completion of our purification facility in Q4, with pellet production by the end of the year. As discussed during a previous update, the Ironton site was energized in March.

We have 98% of the feed prep equipment on site with an anticipated startup of Q3 'twenty two we're targeting mechanical completion of our purification facility in Q4 with pellet production by the end of the year as.

As discussed during our previous update the Ironton site was energized in March.

We have discussed how integral our work with Coch Modular Denim Blythe Gulfspan, Kraus-Mefai and Emerson are and we're seeing tremendous benefits from these partnerships. Our work together has improved safety, schedule compliance and cost efficiencies and created the foundation to successfully replicate our facilities both here and abroad.

We have discussed how integral our work with Coke modular denim <unk> Gulf spent krauss Maffei and Emerson are and we're seeing tremendous benefits from these partnerships. Our work together has improved safety scheduled compliance and cost efficiencies and created the foundation to successfully replicate our facilities both here and abroad.

Moving to slide seven, as mentioned, we broke ground on our second U.S. facility in Augusta, Georgia, on March 22. Not only has the work commenced on site, but engineering activities are on track and key construction contracts are in place. Long lead orders, such as high pressure vessels, precision machinery, and specialty instrumentation have been placed. We track the global supply chain very closely and believe that we can effectively manage the construction schedule through our partnership.

Moving to slide seven as mentioned, we broke ground on our second U S facility in Augusta, Georgia on March 22, not only has the work commenced on site, but engineering activities are on track and key construction contracts are in place long lead orders such as high pressure vessels precision machinery and special.

T instrumentation have been placed we track the global supply chain very closely and believe that we can effectively manage the construction schedule through our partnerships. We have made considerable progress developing feed prep operations that will supply Augusta phase one which includes the first two purification lines.

We have made considerable progress developing feed prep operations that will supply Augusta Phase 1, which includes the first two purification lines. And we expect a full plan rollout in Q3. As noted, we secured feedstock LOIs that are expected to yield approximately 215 million pounds of polypropylene to supply pure cycles Augusta facility.

And we expect a full planned rollout in Q3 as noted we secured feedstock LOI that are expected to yield approximately 215 million pounds of polypropylene to supply pure cycles Augusta facility.

As with Irton and all of our future facilities, our copy-paste design should allow us to build our facilities faster with minimal disruptions and schedule certain things.

As with Ironton in all of our future facilities, our copy paste design should allow us to build our facilities faster with minimal disruptions and schedule certainty.

With our partners in place, we know that we have the right team to help solve any challenge that may arise.

Moving to slide eight.

Next, we would like to share our progress on securing feedstock for our business plan. We are intently focused on securing feedstock for Augusta's first two purification lines. We continue to strengthen our relationships in the partnership and that has resulted in 933 million pounds of feedstock in active negotiations with approximately 215 million pounds under LOI for Augusta Lines 1 and Lines 2.

Next we would like to share our progress on securing feedstock for our business plan. We are intently focused on securing feedstock for our guests. This first two purification lines, we continue to strengthen our relationships and the partnership that has and that has resulted in 933 million pounds of feedstock in active negotiations.

With approximately 215 million pounds under LOI for Augusta lines, one in lines too.

A key component to our overall business plan is to remain at the forefront of innovative ideas and opportunities. In order to continuously diversify our feedstock strategy, we are investing in R&D to target more challenging and untapped waste

A key component to our overall business plan is to remain at the forefront of innovative ideas and opportunities in order to continuously diversify our feedstock strategy. We are investing in R&D to target more challenging and untapped waste streams.

The born digital strategy that we have outlined in previous quarters is also designed to optimize our feed management.

The born digital strategy that we have outlined in previous quarters is also designed to optimize our feed management. This includes helping us attract feedstock from the source to the final product. This level of transparency is important to our stakeholders and their customers.

This includes helping us track feedstock from the source to the final product. This level of transparency is important to our stakeholders and their customers.

Moving to slide nine.

The commercial team continues to build our sales pipeline, and because of this work,

The commercial team continues to build our sales pipeline and because of this work.

Ironson is fully allocated and the first two lines at our Augusta Purification Facility are 70% allocated through various multi-year commitments.

Iron tenants fully allocated in the first two lines at our Augusta purification facility or 70% allocated through various multiyear commitments. We are currently seeing strong contracting momentum to fully allocate Augusta lines, one and two and we're also seeing interest from the compounds that create specialized materials for consumer goods.

We are currently seeing strong contracting momentum to fully allocate Augusta lines one and two. And we're also seeing interest in the compounders that create specialized materials for consumer goods and automotive.

And automotive.

As Irton and Augusta projects progress, we see our sales cycle shortening.

As higher tenant Augusta projects progress, we see our sales cycles shortening.

Our FDA letter of no objection is still under review and we are currently waiting for the FDA's response.

FDA letter of no objection is still under review and we are currently waiting for the Fda's response.

Purecycle is well positioned to connect brands with high quality resin to deliver products that are truly sustainable to the customers. We continue to execute the objectives we need to expand our pipeline and help companies achieve their top sustainability goals. I will now turn it over to our CFO , Larry Soma, for our financial update.

Pure cycle is well positioned to connect brands with high quality resin to deliver products that are truly sustainable to the customers. We continue to execute the objectives, we need to expand our pipeline and help companies achieve their top sustainability goals I will now turn it over to our CFO , Larry Soma for our financial.

<unk>.

Thank you Dustin.

Please turn to our first quarter liquidity and balance sheet on slide 10.

As of the end of March, we had approximately 610 million of liquidity.

As of the end of March we had approximately $610 million of liquidity.

As a reminder, we think about our liquidity in terms of restricted and unrestricted cash and investment.

As a reminder, we think about our liquidity in terms of restricted and unrestricted cash and investments.

our restricted cash total $191.9 million and our unrestricted liquidity was $418 million.

Our restricted cash totaled $191 9 million and our unrestricted liquidity was $418 million.

unrestricted increased by 217.2 million primarily driven by the 250 million dollar equity raise that was closed on March 17th.

Unrestricted increased by $217 2 million, primarily driven by the $250 million equity raise that was closed on March 17.

Offsetting that equity raise, we spent approximately $32 million of unrestricted cash during the quarter.

Offsetting that equity raise we spent approximately $32 million of unrestricted cash during the quarter.

included in that was 4.3 million spent on iron tin construction that is outside the bond cast.

Included in that was $4 3 million spent on iron can construction that is outside the bond cash.

Any overruns on the iron <unk> plant are paid for out of unrestricted operating cash instead of bond cash.

any overruns on the Ironton plant are paid for out of unrestricted operating cash instead of bond cash.

During the quarter, we also ramped up spending on our feed prep site in central Florida as well as made continued progress on the Augusta pre-engineering for lines one and two, which was a cash use of $11.6 million.

During the quarter, we also ramped up spending on our feed prep site in central Florida as well as made continued progress on the Augusta pre engineering for lines, one and two which was a cash use of $11 $6 million.

Finally, we spent $16.1 million on operating an SG&A cost.

Finally, we spent $16 $1 million on operating and SG&A costs.

These costs included payroll to support our growing needs related to ramp up of staffing as a public company to prepare for iron 10.

These costs included payroll to support our growing needs related to ramp up of staffing as a public company to prepare for Ironton.

Feed Prep, Augusta, and future Europe and Asia investors.

Feed prep.

Augusta and future Europe , and Asia investments.

We paid an annual cash bonus that is part of our short-term incentive plan and incurred cash tax payments related to equity compensation.

We paid an annual cash bonus that is part of our short term incentive plan and incurred cash tax payments related to equity compensation.

Also included in the spend where spike site specific and corporate investments in systems and technology corporate functions and various other needs.

also included in the spend were site-specific and corporate investments in systems and technology, corporate functions, and various other needs.

The other part of our liquidity position is our restricted cash.

The other part of our liquidity position is our restricted cash as a reminder, the restricted cash can be broken down into several buckets.

As a reminder, the restricted cash can be broken down into several buckets.

Arlington plant build.

future interest and principal payment reserves for Ohio Bonds, and equity and other reserves that are required to be set aside for the Ohio Bonds.

Future interest and principal payment reserves for our high yield bonds.

And equity and other reserves that are required to be set aside for the Ohio bonds.

As the iron can plant progressing towards completion in Q4. This year you can expect to see cash drawdowns related to that plant build.

As the Ironton plant progresses towards completion in Q4 this year, you can expect to see cash drawdowns related to that plant bill.

In Q1, we spent $41 $6 million on the plant.

In Q1, we spent $41.6 million on the plan.

With our current cash and investment position and our capital raise strategy. We believe there will be sufficient capital to execute our business plan.

With our current cash investment position and our capital raise strategy, we believe there will be sufficient capital to execute our business plan.

This includes the remaining build-out of Ironton, the future build plans in Augusta, our feed prep facilities, and investments in Asia and Europe .

This includes the remaining build out of iron Tim the future build plans in Augusta, our feed prep facilities and investments in Asia and Europe .

Please turn to slide 11.

On this slide, we highlight additional financial commentary that we think is useful for modeling purpose.

On this slide we highlight additional financial commentary that we think is useful for modeling purposes.

Our capital structure has been bolstered by the 250 million private placement that was announced in March.

Our capital structure has been bolstered by the $250 million private placement that was announced in March.

This influx of capital provides equity for Augusta Lines 1 through 4 as well as other strategic corporate purposes such as cash needed to seed our equity investment in South Korea.

This influx of capital provides equity Augusta lines, one through four as well as other strategic corporate purposes, such as cash needed to seed our equity investment in South Korea.

Furthermore, we have engaged Jefferies to lead the project debt financing for Augusta lines, one and two and 43 prep feed prep facilities.

Furthermore, we have engaged Jeffries to lead the project debt financing for Augusta lines one and two and for three prep feed prep facility.

While challenging, we have a high margin operating plan, which gives us confidence in the debt financing process.

While challenging we have a high margin operating plan, which gives us confidence in the debt financing process and we will be sure to announce details as soon as we are able.

and we will be sure to announce details as soon as we are able.

At our first commercial facility, Ironton's total cost in excess of the original budget will be 55 to 65 million dollars versus the previous guidance of 30 to 40 million dollars.

And our first commercial facility intends total cost in excess of the original budget will be $55 million to $65 million versus the previous guidance of $30 million to $40 million.

This should come as no surprise based on the high inflationary environment and supply chain challenges around the globe.

Of the excess approximately 50% is from manufacturing process improvements and the other 50% for inflation coverage.

Of the excess, approximately 50 percent is for manufacturing process improvements and the other 50 percent for inflation coverage.

The most inflated costs are driven by increases in transportation, which is two times the original cost, or $7 million to $9 million.

The most inflated costs are driven by increases in transportation, which is two times, the original cost or $7 million to $9 million the.

the electrical segment, which is two to three times the original cost, or $11 million.

The electrical segment, which is two to three times, the original cost or $8 million to $11 million.

and finally holding to schedule, which is costing us approximately three to five million dollars.

And finally holding to schedule, which is costing us approximately $3 million to $5 million.

We deem the extra cost to stay on schedule as a prudent economic decision.

we deem the extra cost to stay on schedule as a prudent economic decision.

Relative to Ironton, our Augusta facility cap exefficiency is expected to improve with each subsequent build.

Relative to Iron 10 are Gus debt facility Capex efficiency is expected to improve with each subsequent built.

Despite the current inflationary concerns, the learning from Ironton and the multi-lens scale efficiencies are expected to yield double-digit capital efficiency improvements.

Despite the current inflationary concerns the learnings from Iron 10, and the multi lane scale efficiencies are expected to yield double digit capital efficiency improvements.

The most important comment I can pass along is that the Augusta project ROIC remains on track.

The most important comment I can pass along is that the Augusta Project ROIC remains on track.

are revenue increases due to inflation and feedstock plus pricing strategy are expected to more than offset the CapEx and OpEx increases in the current global economy.

Our revenue increases due to inflation and feedstock plus pricing strategy are expected to more than offset the capex and opex increases in the current global economy.

With this in mind, the project Economic Estimates for Augusta are at 100 to 150% of pre-spec estimates and are currently expected to provide a simple payback of approximately three to four years. I will now pass it to you.

With this in mind the project economic estimates for our guests that are at 100% to 150% of pre spec estimates and are currently expected to provide a simple payback of approximately three to four years.

I will now pass it back to Mike Atworth to close.

Thanks Larry. We're now on slide 12.

Thanks, Larry we're now on slide 12.

We've outlined how PureCycle remains focused on executing against its strategic plan and how we continue to build operational momentum.

We've outlined health care cycle remains focused on executing against that strategic plan and how we continue to build operational momentum.

At PureCycle, we can help reverse the world's mounting plastics waste crisis through our innovative technology that is scalable and enables us to rapidly expand to meet global demand.

But pure cycle, we can help reverse the world's mounting plastics waste crisis through our innovative technology that is scalable and enables us to rapidly expand to meet global demand.

We are intently focused on launching commercial operations at our Ironton flagship facility, completing phase one of our second facility in Augusta, Georgia, and progressing expansion plans for Asia Pacific in Europe .

We are intently focused on launching commercial operations at our Ironton flagship facility completing phase one of our second facility in Augusta, Georgia, and progressing expansion plans for Asia Pacific and Europe .

We are also diversifying our feedstock acquisition strategy and bolstering R&D efforts to continue testing challenging waste.

We are also diversifying our feedstock acquisition strategy and bolstering R&D efforts to continue testing challenging waste streams.

PurePsycho continues to build operational momentum with...

Pure cycle continues to build operational momentum with <unk>.

Ironton on track for Q4 2022 pellet production. I guess the construction is underway.

Irons and on track for Q4, 2022 pellet production Augusta construction is underway.

Irons and offtake fully allocated and Augusta first two lines, 70% allocated.

Ironson offtake fully allocated and Augusta first two lines 70 percent allocated.

75% of Augustus first two lines are under LOI for feedstock overall feedstock discussions are on track.

75% of Augusta's first two lines are under LOI's for feedstock, overall feedstock discussions are on track.

feet prep strategy is progressing with planned rollout in Q3.

Feed prep strategy is progressing with planned rollout in Q3.

broadened our converter network and expanded applications for pure Cycle Reven.

We broadened our converter network and expanded applications for pure cycle resin.

Ironton in Augusta continue to show strong economics relative to original priest back estimates.

Ironton and Augusta continue to show strong economics relative to original pre-SPACF.

And as Larry said, we ended Q1 2022 was $610 million in total cash and investments.

And as Larry said, we ended Q1 2022 with 610 million in total cash and investments.

and added experienced independent members to our board while continuing to recruit top talent.

And added experienced independent members to our board, while continuing to recruit top talent.

With heightened expectations around the world, sustainability requirements are taking shape.

With heightened expectations around the world sustainability requirements are taking shape.

Rather than be a burden, companies should see this as an opportunity to make major environmental difference. We believe PureCycle can connect brands with high-quality recycled plastic in a way that meets the demands of consumers and regulatory bodies, but more importantly, helps society end our dependence on new plastic production.

Rather than be a burden companies should see this as an opportunity to make major environmental difference. We believe pure cycle can connect brands with high quality recycled plastic in a way that meets the demands of consumers and regulatory bodies, but more importantly help society and our dependence on new plastic production.

Thank you for your time. This morning, we will now open up the floor to questions.

Thank you for your time this morning. We'll now open up the floor to questions.

Thank you. And participants, as a reminder, to ask the question, you will need to press star one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. To withdraw your question, press the pound

Thank you and participants Asa reminder, Joe asked a question you will need to press star one on your telephone keypad again Thats Star then the number one on your telephone keypad to withdraw your question Brett.

Your first question comes from the line of Hassan Ahmed from Alembic Bluebell. Your line is now open.

Your first question comes from the line of Hudson Ahmed from Alembic Global Your line is now open.

Morning, guys.

A question around, obviously, you guys touched on the inflationary environment we're living through. In this sort of environment, I just wanted to dig a bit deeper into the raw material availability side of things, as you guys are sort of structuring.

A question around obviously, you guys touched on the inflationary environment, where we're living through.

In this sort of environment.

Just wanted to dig a bit deeper into.

The raw material availability side of things.

Thats sort of structuring.

newer contracts, you know, how should we be thinking about AD availability, you know, keeping in mind all the logistical constraints as well, and also pricing on a go-forward basis for the Roth.

<unk> contracts.

How should we be thinking about availability keeping in mind, all the logistical constraints as well and also price it in clinical forward basis for the road.

Thank you for the question I'll, let the dust and Olson address this.

Thank you for the question. I'll let Dustin Olson address this.

Yeah, thanks, Hasan. So on the project side, we're really tracking the overall, say, material supply conditions for all aspects of our operation. So we track steel and copper and different base materials like that just to keep an eye on where things are. The real concern is with production capacity.

Yes, Thanks Hassan so on the on the project side I mean, we're really tracking.

<unk>.

The overall, let's say material supply conditions for all aspects of our operation. So we track steel and copper and different base materials like that just to keep an eye on where things are the real concern is with production capacity.

And what we're doing to address that is looking to widen our global supply network. So where we may have been over indexed on receiving material from Europe now, we're looking to diversify our supply chain into either central South America or in Asia.

And what we're doing to address that is looking to widen our global supply network, so where we may have been over-indexed on receiving material from Europe .

now we're looking to diversify our supply chain into either Central South America or in Asia to diversify. And look, I mean, the world's going to be what the world is with respect to inflation concerns. And so what we're doing to address it is just to try to build as much optionality in the supply as possible.

To diversify and look I mean, the world is going to be what the world is with respect to inflation concerns and so what we're doing to address it is just to try to build as much optionality in the supply as possible.

Understood understood now now on the capital cost side, you know, I mean a bunch of moving parts, right?

Understood understood now on the capital cost side.

I mean bunch of moving parts right.

You know, on one side, all the inflationary pressures you guys are dealing with, but on the other side, you know, you talked about how the iron-ton experience, you know, you've learned sort of efficiencies from that as you think through Augusta and the like.

On one side all the inflationary pressure as you guys are dealing with but on the other side.

You've talked about how the.

Experience.

You've learned sort of efficiencies from that as you think through August and alike. So my question really is if I sort of drill it down on a greenfield replacement value basis call. It on a cents per pound basis.

So my question really is, if I sort of drill it down on a green field replacement value basis, call it on a cent per pound basis,

you know, is Augusta tracking significantly higher than Ayrton at the same levels, I mean just some sort of directional guide would be

Is August tracking significantly higher.

And at the same levels I mean, just some some sort of directional guide would be appreciated.

Yeah. Thanks, So we're tracking that right now and going through a process to evaluate the so the apples to apples comparison between ironton in Augusta Theres a couple a couple of notable things first of all when we go back to the Ironton project remember I mean in this environment to be able to.

Yeah, thanks. So, you know, we're tracking that right now and going through our process to evaluate the, let's say the apples-to-apples comparison between Ironton and Augusta. There's a couple, a couple of notable things.

First of all, when we go back to the Ironton project,

Remember, I mean, in this environment, to be able to deliver that project on schedule with modest increases and cost relative to schedule hold is pretty good. And we believe that we've been able to do that because of our close partnerships with people like Coke Modular, Gulfspan, Denim and Blythe.

To deliver that project on schedule with modest increases in cost relative to schedule hold is pretty is pretty good and we believe that we've been able to do that because of our close partnerships with people like Coke modular Gulf span denim <unk>.

And so those, those have really helped us quite a lot on the schedule side for delivering Ironton. But in addition to that, because we're keeping the same partners from Ironton to Augusta, there's been tremendous lessons learned between the two phases. And so.

And so those those have really helped us quite a lot on the schedule side for delivering ironton, but in addition to that because we're keeping the same partners from ironton to Augusta Theres been tremendous lessons learned between the two phases and so.

So the Gulf spent operation as an example is not only going to deliver let's say certainty on scheduled for Ironton. It's also helping to deliver cost efficiency as we build into into Augusta and so from a overall capex per pound were not in a position to put.

So the Gulfspan operation, as an example, is not only going to deliver, let's say certainty on schedule for Irton, it's also helping to deliver cost efficiency as we build into Augusta.

And so, you know, from a overall cap X per pound, we're not in a position to put detailed numbers into the marketplace right now. But what we can say is that we are tracking better than Ironton cap X per pound for the Augusta build. And that comes because we're strong partnerships, but secondly, it comes from just the scale of Augusta.

Detailed numbers into the marketplace right now, but what we can say is that we are tracking better than ironton capex per pound for the Augusta build and that comes because of our strong partnerships, but secondly, it comes from just the scale of Augusta.

With Augusta, we have the capability to build a lot of lines, a billion pounds of capacity is potential in Augusta, and we're going to see pretty significant benefits.

With Augusta, we have the capability to build a lot of lines 1 billion pounds of capacity as potential in Augusta, and we're going to see pretty significant benefits.

by spreading out the infrastructure build, the utility build, et cetera, at that facility.

By spreading out the infrastructure build the utility build et.

Et cetera at that facility. So we expect the overall capex per pound to be improved relative to ironton.

So we expect the overall capex per pound to be improved relative to Ironton. Very helpful.

Very helpful. Thank you so much.

Your next question comes from the line of Eric Stein from Craig Hallum. Your line is now open. Good morning, everyone.

Your next question comes from the line of Eric Stine from Craig Hallum.

Line is now open.

Good morning, everyone. Thanks for taking the questions.

uh... erica you don't they do well uh... thanks so but just sticking with August uh...

Hey, Eric how are you doing hey.

Doing well, thanks, so just sticking with Augusta.

I think in the past you said your plan was to think about two lines every six months now that may, you know, curious if that's the case. And just wondering, you know, you just said that on a cost per pound basis that Augusta is looking like it'll come in lower.

I think in the past you've said your plan was to think about two lines every six months now that that May curious if thats. The case and just wondering you just said that on a cost per pound basis that Augusta is looking like it will come in lower.

you know, would that still be the plan given that level? How do increased materials cost potentially play into that when you're also balancing demand?

Would that still be the plan given that level, how to increase materials costs potentially play into that when you're also balancing demand.

Yeah, so that's a great question, Craig. Thank you for that. So, so, so basically

Yes, so thats a great question Craig Thank you for that so so so basically.

I'm sorry, Eric. Sorry, Eric. That's a good question, Eric. So we have built our entire system to be able to scale quickly.

Sorry, Eric sorry, Eric that's a good question Eric.

So we.

We have built our entire system to be able to scale quickly.

Okay, so everything that we've done with our partners will give us the ability to build on the schedule that you mentioned, which is two lines per six months. The driving factor for that schedule and holding that schedule will be securing the debt

So everything that we've done with our partners will give us the ability to to build on the schedule that you mentioned, which is two lines per six months the driving factor for.

For that schedule in holding that schedule will be.

Securing the debt the feedstock and the offtake to support that plan and we're currently on track for that we're not changing our guidance for that and we have the system built to achieve that if thats. The if that's the pace we want to maintain.

the feedstock and the offtake to support that plan. We're currently on track for that. We're not changing our guidance for that. And we have the system built to achieve that if that's the pace we want to maintain.

Got it okay.

And I'm just curious.

well i'm just curious you know it it obviously your you're seeing a lot of demand in the market you can you also obviously got a it got to uh... factor in the feedstock but i know i mean are you seeing demand-driven by scarcity value given the uniqueness of your process uh... you know how do you balance that would just

So youre seeing a lot of demand in the market.

And you also obviously you've got a got to factor in the feedstock, but I mean are you seeing.

Demand driven by scarcity value given the uniqueness of your process.

And how do you balance that with just <unk>.

bringing things online in a timely fashion and maybe not wanting to get ahead of that as well

Bringing things online in a timely fashion and maybe not wanting to get ahead of that as well.

Yes, I think that the drive for sustainability in general is very hot right now.

for sustainability in general is very hot right now.

So, you know, if you look across the board on sustainability reports, ESG reports and the commitments that brand owners are making to the market, I mean, it's very, very high a bar to hit in terms of delivering sustainable solutions to the marketplace. So that continues to drive a lot of what we're seeing. And then you pointed out the key part there. I mean, we deliver a product that is differential to the market in terms of color.

So if you look across the board on sustainability reports ESG reports and the commitments that brand owners are making to the market I mean, it's very very high.

A bar to hit in terms of delivering sustainable solutions to the marketplace. So that that continues to drive a lot of what we're seeing and then you pointed out the key the key part there I mean, we deliver a product that is differential to the market in terms of color odor consistency and the and the ability for.

odor, consistency, and the ability for a molder or tear compounder to use.

A molder or tier compounded to use and so because we offer let's say a no compromise solution for the consumer for the compound or or or converter.

And so because we offer, let's say, a no-compromise solution for the consumer or for the compounder or converter, they like our product quite a lot.

They like our product quite a lot.

And Eric I would add that we.

And Eric, I would add that, you know, we hear repeatedly from our customers that they don't have a quality backup plan to us. And so I think this speaks to your comment about the uniqueness of the product that we offer into the marketplace.

We hear repeatedly from our customers that.

They don't have a quality backup plan to us.

And so I think this speaks to your comment about the uniqueness of the product that we offer into the marketplace.

And, you know, many of these customers are big multinationals who really understand the landscape of possibilities in terms of all the resins that they buy.

And many of these customers are big multinationals, who who really understand the landscape of possibilities in terms of all the resins that they buy.

So, you know, that's been the case since we started signing off take agreements and that hasn't changed. And if anything, I see that we see the the level of concern from our customers increasing, not decreasing in terms of, you know, the lack of options for high quality recycle.

So that's been the case since we started.

Signing offtake agreements and that Hasnt changed and if anything I see that we see there.

The level of concern from our customers increasing.

Not decreasing in terms of.

The lack of options for high quality recycled.

Yes.

And Eric I think Theres a couple of other points one is that with respect to polypropylene specifically.

And, Eric, I think there's a couple other points. One is that with respect to polypropylene specifically, you know, we're seeing...

We are seeing.

Increased demand for polypropylene naturally anyway, just from the general growth of the market.

increased demand for polypropylene naturally, anyway, just for the general growth of the market.

We're also starting to see some deslection of other plastics into, let's say, more recyclable plastics. We view that as a positive story for polypropylene as well.

We're also starting to see some deselection of other plastics into let's say more recyclable plastics, we view that as a positive story for polypropylene as well and then just we're seeing our product demand going beyond CPG.

We're seeing our product demand going beyond CPG.

Okay, so we've obviously focused on the CPG market to start, but we're starting to see compounding, automotive and other applications like that that are starting to see value in the product that we produce.

Okay. So we've obviously focused on the CPG market to start, but we're starting to see compounding.

Automotive and other applications like that that are starting to see value in the product that we produce.

Okay, that's great. Thanks, everyone.

Thank you.

Again, participants, if you would like to ask the question, that's star, then the number one on your telephone keypad. Again, that's star, then the number one on your telephone keypad. Your next question comes from the line of Noah Kaye from Oppenheimer. Your line is

Again participants if you would like to ask a question Thats Star then the number one on your telephone keypad agenda Tomorrow, and then number one on your telephone keypad. Your next question comes from the line of Noah Kaye from Oppenheimer. Your line is now open.

Thanks for taking the questions. The first one's really about the increased plan spending and how that relates to ongoing process improvement. If I go back to, you know, the prior 30 to 40 million figure, which you discussed during 3Q last year, I think two-thirds of that was really designed around processing a higher percentage of feed contaminants and some process safety design improvements. It looks like you may have...

Thanks for taking the questions the first one.

About the increased plant spending and how that relates to ongoing process improvements.

Back to.

The prior $30 million to $40 million figure, which you discussed or <unk> of last year I think two thirds of that was really designed around processing a higher percentage of feed contaminants in some process safety design improvement it looks like you may have.

maybe nudge that spend up even a bit more here, but can you just talk about you know where these investments are focused and what you think the benefits are in terms of you know de-risking operations?

Maybe nudge that spend up even a bit more here, but can you just talk about.

Where these investments are focused and what you think the benefits are in terms of de risking operations.

Yeah, yeah, that's a great question. No, so it's it's it's exactly like you said I mean the original guidance was 30 to 40 million and two-thirds of that was plant improvements and one-third was inflationary concerns

Yes, yes, that's great question no. So it's exactly like you said I mean, the original guidance was $30 million to $40 million in two thirds of that was plant improvements and one third was inflationary concerns and basically what we're saying now is all of the second increase is due to inflationary concerns there is a little bit of them.

And basically what we're saying now is all of the second increase is due to inflationary concerns. There's a little bit of a lead over where the plant improvements may cost a little bit more today than we said originally because of inflation.

The lead over where the plant improvements may cost a little bit more today than when we set originally because of inflation.

But our guidance is really saying now, the first batch of increase was

Our guidance is really saying now the first batch of increase was two thirds plant improvements one thirds inflation and all of the second increases due to inflation and it's like we said in the prepared remarks, I mean transportation electrical and a little bit of holding schedule of the primary reasons.

two-thirds plant improvements, one-third inflation, and all of the second increases due to inflation. And it's like we said in the prepared remarks. I mean, transportation, electrical, and a little bit of holding schedule are the primary reasons for the increase.

For the increase.

So, in other words, at this point, the design, the process, it's all baked. You have something to do and what's going to be built is what's in the plan. Okay. Yeah, that's exactly it. Yeah, the plant improvement story, no, it hasn't changed at all. You know, that's the same story that we said before. And it is, as you said, it was to increase, let's say, process safety compliance.

So in other words at this point.

<unk>.

Process it all baked in.

Yes, and what's going to be is what's in the plan okay.

Yes.

The plant improvement story no it hasnt changed at all.

That's the same story that we've said before and it is as you said it was to increase let's say process safety compliance and security, but but the bigger portion of it was really to handle a wider.

and the security. But the bigger portion of it was really to handle a wider, let's say, contamination in the feed through the process. And that's 100% a consistent story from last time.

Let's say contamination in the feed.

Through the process and Thats, a 100% of consistent story from last time.

Great and then.

Great. And that actually ties into the second question around feedstock quality, you know, for us.

The second question around feedstock quality.

Gus.

If I add up what you have got under LOI, which you're hoping to get, I pencil that I think to about a 10% expected yield loss.

If I add up what you have got it under LOI, which youre hoping to get.

Pencils out I think to about a 10% expected yield loss. So can you just talk about the quality of the feedstock that you've got LOI in place for and clearly this 290 million pounds you needed is a net number which assumes some processing.

So can you just talk about the quality of the feedstock that you've got LOIs in place for and clearly this 290 million pounds you need is a net number, which assumes some processing at at your prep facility, but just talk a little about the quality.

At your prep facilities, but just talk a little about the quality of the feedstock that youre seeing out there at.

of the feedstock that you're seeing out there and how much you need to actually do in terms of preprocessing to get to that $290 million.

And how much do you need to actually do in terms of preprocessing to get to that $290 million.

Yes, so on the on the feed prep side Youre right. We are we are investing heavily into the feed prep for the Augusta project.

Yeah, so on the feed prep side, you're right, we are investing heavily into the feed prep for the Augusta project. That's a, quite frankly, that's a differential spend for us in Augusta than it was in Ironton because we are, let's say, backward integrating a bit more into sort. So that's going to get us into the ability to buy three to sevens.

Quite frankly, that's a differential spend for us and Augusta than it was in ironton, because we are let's say backward integrating a bit more into sort, so thats going to get us into the ability to buy three to seven.

and also let's say some secondary residual streams.

And also let's say some secondary residual streams as well as low quality number five.

as well as low quality number fives on top of the high quality fives that we've already discussed. So really what we're doing though is we're building optionality into feed prep. Okay because you know with respect to what kind of feed are we buying and we've got a really talented team out there canvassing the market and we're finding feed of all various shapes, sizes and concentrations.

On top of the high qualified so we've already discussed so really what we're doing though is we're building optionality into feed prep okay because.

With respect to what kind of fee to re buying and we've got a really talented team out there canvassing the market and we're finding feed of all various shapes sizes and concentrations and so when you aggregate that together you end up with our plan.

And so when you aggregate that together, you end up with our plan.

And so the way to think about it, I think, is more so around

And so the way to think about it I think is more so around.

the optionality built into the feed prep.

The optionality built into the feed prep.

and that giving us the ability to, let's say, pick up many different types of feed streams.

And that giving us the ability to let's say pick up.

Many different types of feed streams.

Which by the way as possible.

because of our technology. Our technology allows us to be, let's say, less selective.

<unk> of our technology, our technology allows us to be let's say.

Less selective in how we're buying feed because we can handle a varying levels of contamination and the feed stream and still make good product and so that puts us into a slightly different.

in how we're buying feed because we can handle varying levels of contamination in the feedstream and still make good product. And so that puts us into a slightly different

place to purchase, then we feel some of the others in the market.

<unk> to purchased then then we feel some of the others in the market.

And quality for us really has more to do with the percentage of polypropylene in the feedstock than it does actual quality. We're less sensitive to contaminants and dirt than mechanical recyclers or chemical recyclers. But we do look for feedstocks that contain a high percentage of polypropylene, obviously.

Quality for us really has more to do with that.

Percentage of polypropylene in the feedstock than it does actual quality, we're less sensitive to contaminants in dirt.

And then mechanical recyclers or chemical recycler.

But we do look for feedstocks.

Contain a high percentage of polypropylene obviously.

I think that's a good point, Mike. I mean, the point is that the higher the polypropylene percentage that we find and we can feed to Augusta that will lead to higher yields and higher profitability, but the feed prep system that we're building allows us to upgrade even low quality number five bales to a higher concentration so we can maximize the capacity of purification.

Great. Thanks.

Yes, I think thats.

I think thats a good point Mike.

The point is that the higher the polypropylene percentage that we find and then we can feed to Augusta that will lead to higher yields and higher profitability, but the feed prep system that we're building allows us to upgrade even low quality number five sales to a higher concentration. So we can maximize.

The capacity of purification.

Perfect. Thanks, so much I'll take the rest offline.

Your next question comes from the line of Thomas Boyce from Coven & Cove. Your line is now open.

Your next question comes from the line of Thomas Boyce from Cowen and co. Your line is now open.

Yes.

Thanks for taking my questions. Obviously, great to see the progress.

Thanks for taking my questions.

Questions, obviously, great to see the progress.

You know, selling out the first two lines in Augusta. Do you still think that you'll have that capacity fully sold out by the end of two Q and then for the additional offtake agreements that were done this quarter, you know, how much was done under that feed stock pricing model, or is that still something that's developing?

Selling out the first two lines and I guess do you still think that Youll have the capacity fully sold out by the end of <unk> and then for the additional offtake agreements that we have done this quarter. How much was done under that feedstock pricing model or is that still something thats developing.

Yeah, so we're seeing good growth in our offtake commitments to put a timeline on it and a percentage on it. I probably don't want to get that specific, but we don't see any concern there from a financing perspective or project perspective with our offtake.

Yes, so we were seeing good.

Growth in our offtake commit.

Commitments.

To put a timeline on it in a percentage on it probably don't want to get that specific but we don't see any concern there.

Financing perspective, or project perspective, with our with our offtake.

And I would just, before Dustin continues, I would say that while, you know, we want to have a significant percentage of offtake allocated in advance, given the market demand and the rising market demand and corresponding changes in price.

And I would just I would guess before Dustin continues I would say that while we want to have a significant.

Percentage of offtake allocated.

In advance.

Given the market demand and the rising market market demand and corresponding changes in price.

We're a bit walking a line between having off-take pre-allocated and letting the market further develop to our advantage. I'll just put it that way. So the goal isn't necessarily to sell all of the off-take at the earliest possible date. There's some balance in our strategy.

We were a bit walking aligned between.

Having.

Take pre allocated in and letting the market further developed our advantage I'll just put it that way. So so the goal isn't necessarily to to to sell all of the off take at the earliest possible date.

There are some there is some balance and our strategy.

Yeah, and with respect to your second question, Thomas, around feedstock plus, I mean, when we watched the market last year, the number five price volatility was really high. And so as we evaluated our overall strategy for contracting offtake,

Yes.

With respect to your second question Thomas around feedstock plus when we when we watched the market last year.

Number five price volatility was really high and so as we evaluated our overall strategy for contracting offtake.

we shifted part of our portfolio into Feedstock Plus. And so I would say that the majority of the conversations that we're having with offtake today are based on Feedstock Plus. And that's really just not, that's very consistent with the way most markets like this work, where it's always the base Feedstock

We shifted part of our portfolio into feedstock plus and so I would say that the majority of the conversations that we're having with offtake today are based on feedstock plus and Thats really just not that's very consistent with the way most markets like this work where it's always been.

The base feedstock.

raw material, that is the reference point for the offtake, so there's good coverage across volatility in the market. We're seeing good adoption to that.

Raw material that is the reference point for the offtake So theres good.

There's good there's good coverage across volatility in the market and we're seeing good adoption to that.

I'd also add that the Feast.Plus being prevalent

I would also add.

The feedstock plus being prevalent.

in Augusta is what drives the profitability for the Augusta complex to be higher than we saw in Ironton.

In Augusta is what drives the profitability for the Augusta complex to be higher than we saw in iron.

And we put together, I think in the last quarterly, Thomas, there's a slide we put together that showed.

We've put together I think in the last quarterly Thomas serves a slide we put together that showed.

some of the impact of that and also some of the resiliency of the portfolio.

Some of the impact of that and also some of the resiliency of the portfolio to different pricing moments over the last couple of years.

And that still holds pretty true I mean, we're not we're not advocating for one specific pricing model, we're flexible and we're building a portfolio around let's say multiple pricing mechanisms, but today, especially given the high volatility in the global marketplace, we're really anchoring more to the feedstock clubs than anything.

But today, especially given a high volatility in just the global marketplace, we're really anchoring more to the Featstock Plus than anything else at this point.

At this point.

That makes sense.

And then, you know, maybe I just wanted to get a bit more insight into the CAPEX expectations for the year because it, you know, it seems like you have a pretty good handle on what's going on in the next, you know, three to six months is how much spending kind of remains an aggregate for Ironton to get it up and running and then, you know, how much do you think you have to commit to Augusta this year to keep on schedule.

Sure.

I just wanted to get a bit more insight into the capex expectations for the year.

We'll give a pretty good handle on what's going on in the next three to six months is how much spending kind of remains in aggregate for iron tend to get it up and running and then how much do you think you'd have to commit to Augusta this year to keep on schedule.

So I actually don't know the exact number for how much spending is left for Ironton as far as cash spent versus...

So.

I actually don't know the exact number for how much spending is left for ironton.

As far as cash spent versus.

versus total project, I think it's in the $155 to $175 million range of remaining capital to spend to finish Ironton, and that gets us to the numbers that we put in the presentation.

Versus total project I think it's in the $155 million to $175 million range of remaining capital to spend to finish ironton and that gets us to the numbers that we put in the in the presentation.

With respect to Augusta, we've allocated approximately $75 million so far to continue spending for the project that takes us through the end of June , I believe, and then we will continue to allocate probably on the order of $5 million.

With respect to Augusta.

Allocated approximately $75 million so far to.

To continue spending for the project that takes us through the end of June I believe.

And then we will continue to allocate probably on the order of.

five to ten million dollars per month through the rest of the year to hold Augusta schedule, but that's an estimate and I want to probably come back at some point and clean up those numbers to be sure they're accurate. But as far as basic guidance, 75 million through the end of June and probably five to ten million per month thereafter, it's a little bit difficult to say on average because there's different milestone payments across the Augusta project.

$5 million to $10 million per month through the rest of the year to hold Augusta schedule, but that's an estimate and I want to probably come back at some point and clean up those numbers to be sure they're accurate, but as far as basic guidance.

$75 million through the end of June and probably $5 million to $10 million per month thereafter, it's a little bit difficult to say on average because they are different milestone payments across the Augusta project.

No, it's very helpful color and then if I just squeeze one last one here, because you know, I appreciate the update on the FDA letter of no objection, you know, do you still intend to submit applications for the categories A, B, and H, and there is the idea that you would probably hold off on doing so until you receive approval for the, for the kind of the other categories. Are those coming, you know, hopefully, you know, ahead of our entrance, starting at the end of the year without the expectation.

Very helpful color.

Just squeeze one last one in here because I appreciate the update on the FDA letter of no objection do you still intend to submit applications perfect categories <unk> and <unk>.

There is the idea that you would probably hold off on doing so until you receive approval for the for the kind of the other categories are those coming hopefully ahead of our engine starting at the end of the year is that the expectation.

No look I mean with respect to the FDA I mean, we're very.

No, look, I mean, with respect to the FDA, I mean, we're very, very excited about this process. Actually, we've obviously submitted the first letter and are just awaiting information back from the FDA, so we expect that anytime, but that's out of our control.

Very excited about this process actually we.

We've obviously submitted the first letter and are just awaiting information back from the FDA. So we expect that any time, but thats out of our control.

With respect to the remaining sensitivities, there's getting qualification for the A, B, and H, but then there's also getting qualifications on different feedstocks that would bring into the system. And so this FDA LNO process is not a one-and-done type activity. This will be an ongoing activity as we find new feeds, test new feeds globally.

With respect to the remaining sensitivities.

There is no getting qualification for the a b and H, but then theres also getting qualifications on different feedstocks that we bring into the system and so we will.

SBA <unk> process is not a one and done type activity. This will be a ongoing activity as we find new feeds test new feeds globally.

as well as start up the commercial plant.

As well as startup the commercial plant and so.

And so that activity is actually scheduled. One of the,

That activity is actually scheduled one of the.

One of the let's.

let's say constraints that we have today that we won't have when Ironson is up and running or will have less of when Ironson is up and running is just the utilization of the FDU.

Let's say constraints that we have today that we won't have when ironton is up and running or will have less of when ironton is up and running is just the utilization of the <unk>.

You know, we talk all the time about the F.E.U. is really built to do three things. It's built for process design, product design, and also production.

Talk all the time about the <unk> is really built to do three things. It's built for process design product design and also production and the production is important because we will use that with customers do molding trials to get different specific products qualified and so really getting the next FDA.

And the production is important because we will use that with customers to do molding trials to get different specific products qualified. And so really getting the next FDA test is more of a function of building it into the schedule amongst all of the other things that we're using the F.E.U. for right now. When the commercial plan is up and running and we're making many, many, many more pounds of product, a lot of these constraints will go away, but this is just something that we're managing right now.

Tests is more of a function of building it into the schedule amongst all of the other things that were using <unk> for right now when the commercial plan is up and running and we're making many many many more pounds of product a lot of these constraints will go away, but this is just something that we're managing right now.

Got it that's very helpful I'll hop back in the queue.

Thanks a lot.

Thanks, a lot.

Your next question comes from the line of Steve Byrne from Bank of America. Your line is now open.

Yes. Thank you.

I'm curious as to what is the level of tolerance

I'm curious as to what is the level of tolerance for other plastics other than polypropylene.

for other plastics other than polypropylene, not in your front-end sorting, but once you enter into the solvent-based products

Not in your front end sorting, but once you enter into the.

The solvent based.

process. How much other than polypropylene can you tolerate? And as I understand, you separate those polymers and those resins out from the polypropylene during the process. What is the quality of those? Do those become just waste products or do they have value?

Process, how much other other than polypropylene can you tolerate.

And as I understand you separate those polymers and those resins out from the polypropylene during during the process.

What is the quality of those do those become just waste products.

Or do they have value.

Yes, that's a great. That's a great question. So there's a couple of aspects here so.

Yeah, that's a great question. So there's a couple aspects here. So first of all, the feed that comes into our purification plant, so this is after the sorting, the washing, the agglomeration, just the purification plant, let's just take some examples. Let's say it comes in at 90% polypropylene, it will have 10% of other stuff.

First of all the feed that comes into our purification plant. So this is after the sorting the washing deglomeration just pure purification plant.

Let's just let's just take some examples let's say it comes in at 90% polypropylene. It will have 10% of other stuff.

That 10% of other stuff will break down into what we call co-product one and co-product two.

That 10% of other stuff will break down into what we call co product, one and co product too.

So when we actually originally modeled this commercial plant, we assumed that the 10% of other stuff would be a cost. It would go to a landfill. It would be a cost that would go somewhere else. Actually, what we're finding is that there's very good markets for those two co-products.

So when we actually originally modeled this commercial plant, we assumed that the 10% of other stuff would be a cost. It would go to a landfill it will be a cost that would go somewhere else actually what we're finding is that there's very good markets for those two co products.

Co-product one is effectively a organic type compound, which is, I would say, similar to a pyrolysis oil or could, you know, could sell into a refined feedstock or olefins feedstock type plan. And then the co-product two depends a bit on the concentration of materials that are coming in with the feed, but it's primarily polyethylene and inorganic inert.

Co product one is effectively a organic type compound, which is I would say similar to a pyrolysis oil or could it could sell into a refined feedstock or olefins feedstock type plan.

And then the co product too depends a bit on the concentration of materials that are coming in with the feed but it's primarily polyethylene.

Inorganic alerts.

Okay and so that product actually resembles a let's say mechanically recycled polyethylene product very nicely and so there's good value on both co-product one and co-product two that we've let's say under modeled in the process but we think has really good upside in the future.

And so that product actually resembles a let's say mechanically recycled polyethylene product very nicely and so so theres good value on both co product, one and co product too.

That we've let's say under modeled in the process, but we think has really good upside in the future.

With respect to the let's say technical aspect of your question.

with respect to the, let's say, technical aspect of your question, this is probably the source of

This is probably the source of <unk>.

Most of the confusion with respect to the technology and the original report that we issued on the technology there was a bit of a

Most of the confusion with respect to the technology and the original report that we issued on the technology there was a bit of a miss.

misunderstanding on a let's say a binary work or not work for the technology and it was interpreted that anything under a 91 to 93% polypropylene it just wouldn't work in the process and that's just that's really just not true. We've actually run you know much lower percentages of polypropylene feeding the process and had very successful runs.

Misunderstanding on on a let's say a binary work or not work for the technology and it was interpreted that anything under a 91% to 93% polypropylene. It just wouldn't work in the process and that's just that's really just not true we've actually run.

Much lower percentages of polypropylene seeding the process.

And had very successful runs.

And so with respect to what can we handle and how much?

And so with respect to what can we handle and how much.

You know, we are really effectively managing the solubility of polypropylene in our process.

We are really effectively managing the solubility of polypropylene in our process and so we can take polypropylene and separated from just about any other plastic out there. Okay. So whether it's nylon or ABS, our polycarbonates or polyethylene.

And so we can take polypropylene and separate it from just about any other plastic out there. Okay, so whether it's nylon or ABS or polycarbonates or polyethylene or polystyrene, we can accept those as contaminants.

Or polystyrene like we can we can we can accept those as contaminants and then they will purge out of the system and either co product Warner co products too.

and then they will purge out of the system in either co-product one or co-product two. Okay.

And so.

It's not really a concern for us with respect to Ironton or Augusta because the feed prep work that we're doing will remove most of those contaminants prior to purification but we're doing it for an economic reason more so than a technical reason.

It's not really a concern for us with respect to ironton or Augusta, because the feed prep work that we're doing will remove most of those contaminants prior to purification, but we're doing it for an economic reason more so than a technical reason, we want the highest level of <unk>.

We want the highest level of polypropylene percentage because it maximizes the economics of the unit. Not because the technology...

Polypropylene percentage because it maximizes the economics of the unit.

Not because the technology won't work.

So we're hitting both, but we really don't have a concern on the technology front for the contaminants coming in.

So we're hitting both but we really don't have a concern on the technology front for the contaminants coming in.

And that co product one that as you did.

And that co-product one that is described as being like paralysis oil, has that ever been run through a cracker and could be effective feedstock? And do you have a view on how your costs of producing that paralysis oil compares to some of the other efforts at developing paralysis oil?

Scribed as being like paralysis oil.

Has that ever been run through.

Tracker.

Could be could be effective feedstock and do you have a view on how your cost of producing that.

For our us oil compares to.

Some of the other.

But developing paralysis oil.

Well, to be clear, I mean, the amount of volume in that material is pretty low in our overall process. And when I say it is akin to pyrolysis oil, I'm not speaking to it chemically at all. I'm speaking to it in terms of potential value.

Well to be clear I mean the.

The amount of volume in that material is pretty low and our overall process and when I say it is akin to pyrolysis oil I'm not speaking to it chemically at all I'm speaking to it in terms of.

Potential value.

Because this product, I think, we have not, let me be clear, we have not tested that product in refineries.

This product I think we have not let me be clear, we have not tested that product in refineries or in olefins plants as of yet and we have not tested that product relative to.

or in Olsen's plants as of yet and we have not tested that product relative to any sort of pyrolysis oil. So this is more work that's ongoing on the commercial side to see where it's best going to fit.

Any sort of pyrolysis oil. So this is more work that's ongoing on the commercial side to see where its best going to sit quite frankly, I think that the value for that product could be better than like a number six oil for reserves or.

Quite frankly, I think that the value for that product could be better than like a number six oil for Resid or a or a shale gas equivalent to an orphan's plan or something like that, because it is fully recycled post-consumer waste product.

Our shale gas equivalent to an olefins plant or something like that because it is fully recycled post consumer waste product and so everybody in the market once defined recycled product kind of.

And so everybody in the market wants to find recycled product kind of.

in whatever form shape that they can. And this one is a good, niche project that we'll develop over time to start placing it into, let's say, different and hopefully uplifted market.

And whatever form shape that they can and this one is a good niche project that will develop over time to start placing it into let's say different and hopefully uplifted markets.

That's helpful and just one more for me so the.

helpful and just one more for me so the

The process.

The process at Ironson and Augusta are both essentially the same all based off of scaling up the pilot plan at Ironson is it fair to say.

In Augusta are essentially the same mall based off of.

Scaling up the pilot plant.

Aronson.

Is it fair to say.

the value to you to get commercially larger, faster, more than all sets, the risk that maybe there's something being overlooked in that scale-up that you don't learn from by bringing one on before the other.

The value to you too.

<unk> get commercially larger faster more than offsets the risk that maybe there is something being overlooked in the scale up that you don't learn from by bringing one on before the other one.

Yeah, I think the way you characterize it is is right. I mean, we believe that the opportunity for us to scale outweighs the risk of the scale up.

Yes, I think the way you characterized it is right I mean, we believe that the opportunity for us to scale outweighs the risk of the scale up.

But I'll also say that as we start up Ironton and we learn from it and there will no doubt be learnings from it. You know, this doesn't necessarily mean a complete redesign or you have to completely rebuild. Some of these are just tweaks to the operation. And so adding components to the secondary or tertiary designs, those are things that we can handle on the run if needed. But...

But I'll also say that as we startup irons and we learned from it and there will no doubt be learnings from it.

This doesn't necessarily mean, a complete redesign or you have to completely rebuild some of these are just tweaks to the operation and so adding components to the secondary or tertiary designs.

Those are things that we can handle on the run if needed but look we're not really overly concerned about that because our confidence level and the scale is very high we've done a lot of testing on the process side with the FAU to test the boundaries of this operation to know that we are let's say building.

Look, we're not really overly concerned about that because our confidence level in the scale is very high. We've done a lot of testing on the process side with the FEU to test the boundaries of this operation to know that we are, let's say, building it with the right, let's say, contingency and capacity in the right areas. So we feel very confident in our ability to scale. Very good.

It with the right, let's say contingency and capacity in the right areas. So we feel very confident in our ability to scale.

Very good thank you.

I want that.

Sorry, I just wanted to come back to a question that Thomas asked earlier about cost because I I

Sorry, I just wanted to come back to a question that Thomas asked earlier about cost because.

I want to correct what Dustin said. He admitted that he didn't have information with the coming back, but I think you mentioned five to 15 per month. It's going to be closer to 25 million a month. The spend through June is accurate, but our spend on a monthly basis will be more than five to 15. I don't know if Dustin was thinking of only one of the lines, but it will be closer to 25 million per month.

I want to correct what.

<unk> said he admitted that he didn't have information would be coming back, but I think you mentioned $5 15 per month.

It's going to be closer to $25 million a month okay.

But the spend through June is accurate, but our spend on a monthly basis will be more than 5% to 15, I don't know if thats and was thinking of only one of the lines, but it'll be closer to $25 billion per month.

But of course, as we go along, we'll be refining that. So I don't want anyone to think of...

But of course as we go along we'll be refining that so I don't want anyone to think of.

That is final.

Okay.

And again participants if you would like to ask a question Thats Star then the number one on your telephone keypad.

And again, participants, if you would like to ask the question, that's stored in the number one on your cell.

And speakers, we don't have any questions over the phone, please continue.

And speakers, we don't have any questions so very different.

Thank you.

Okay.

Thank you everyone. Thank you for your time.

And speakers, we have a follow up.

Sorry, and ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now.

I am sorry, and ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect. Thank you.

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Thank you for standing by and welcome to the PureCycle Technologies' first quarter 2020 new corporate update conference call.

Thank you for standing by and welcome to the Bureau cycle technologies first quarter 2020, no corporate update conference call.

At this time, all participants are in a listen-only mode.

Time, all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1 on your telephone keypad.

The speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone keypad.

If you require any further assistance, please press star zero.

Require any further assistance please press star zero.

As a reminder, today's conference call is being recorded. I will now turn the conference over to your host, Mr. Larry Soma, Chief Financial Officer of Pure Psycho Technologies. Sir, you may begin.

As a reminder, today's conference call is being recorded I would now.

I'll now turn the conference over to your host Mr. Larry <unk>, Chief Financial Officer, Peter cycle Technologies, Sir you may begin.

Thank you.

Welcome to PeerCycle Technologies' first quarter earnings update conference call.

Welcome to pure cycle technologies first quarter earnings update conference call.

I am Larry Soma, Chief Financial Officer and joining me today are Chairman and Chief Executive Officer Mike Otworth and our Chief Operating Officer and Chief Manufacturing Officer Dustin Olson.

I am Larry Soma, Chief Financial Officer.

Joining me today are chairman and Chief Executive Officer, Mike outward.

Our chief operating officer, and Chief manufacturing Officer and Alison.

This morning we will be highlighting our corporate developments for Q1.

This morning, we will be highlighting our corporate developments for Q1.

The presentation we will be going through on the call can also be found on the IR page of our website, PureCycle.com.

The presentation, we will be going through on the call can also be found on the IR page of our website.

<unk> cycled dot com.

Many of the statements made today will be forward-looking and are based on management's beliefs and assumptions and information currently available to management at this time.

Many of the statements made today will be forward looking and are based on management's beliefs and assumptions and information currently available to management at this time.

These statements are subject to known and unknown risks and uncertainty.

These statements are subject to known and unknown risks and uncertainties, many of which maybe beyond our control, including those set forth in our safe Harbor provisions for forward looking statements that can be found at the end of our first quarter 2022, corporate update press release and in our <unk>.

Filed quarterly report on Form 10-Q filed this morning as well as in our other reports on file with the SEC that provide further detail about the risks related to our business.

Our remarks today may also include preliminary non-gap estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter end and year end adjustments.

Our remarks today May also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including among others changes in connection with quarter end and year end adjustments.

any variation between PCT's actual results and the preliminary financial data set forth herein may be material.

Any variation between Pct's actual results and the preliminary financial data set forth herein may be material.

You're welcome to follow along with our slide deck or if joining us by phone you can access it on at any time on PureCycle.com.

You're welcome to follow along with our slide deck or if joining us by phone you can access it on at any time on pure cycle Dot com.

We are excited to share updates from the previous quarter with you and I will now turn it over to Mike Otworth, pure cycle chairman and chief executive officer.

We are excited to share updates from the previous quarter with you and I will now turn it over to Mike Atworth pure cycle, Chairman and Chief Executive Officer.

Thanks Larry. Good morning. This is an exciting time for PureCycle as we pursue our mission of revolutionizing plastic waste into a renewable resource.

Thanks, Larry good morning.

This is an exciting time for pure cycle as we pursue our mission of revolutionizing plastic waste into a renewable resource.

We're facing a critical moment as the plastic pollution crisis plays out on the world stage.

We are facing a critical moment.

Plastic pollution crisis plays out on the world stage.

Now more than ever, we believe PureCycle offers a solution for companies looking to be genuine and deliberate when it comes to sustainability.

Now more than ever we believe pure cycle offers a solution for companies looking to be genuine and deliberate when it comes to sustainability.

We are making strong operational progress since our last update, the first four of 26 recycling modules arrived in Ironton this past week, and we expect a larger shipment to arrive over the summer.

We are making strong operational progress since our last update the first four of 26 recycling modules arrived in Ironton This past week.

And we expect a larger shipment to arrive over the summer.

We remain on track and expect to produce pure cycled plastic from our commercial facility in Q4 2022.

We remain on track and expect to produce pure cycle plastic from our commercial facility in Q4 2022.

We broke ground on tour cycles, a gust of facility expanding our footprint into the southeast.

We broke ground on tour cycles Augusta facility, expanding our footprint into the southeast.

are currently on track for a startup in Q4 2023.

We're currently on track for startup in Q4 2023.

In Q1, which secured feedstock LOIs that are expected to yield approximately 215 million pounds of recovered polypropylene to supply purified cycles against the purification facility.

In Q1, we secured feedstock LOI are expected to yield approximately 215 million pounds of recovered polypropylene to supply pure cycles Augusta purification facility.

The offtake from the first two lines in August is 70% allocated through multi-year commitment.

The offtake from the first two lines in Augusta is 70% allocated through multiyear commitments.

We continue to expand our commercial agreement footprint across converters and compounders with two news sign sales agreements and non-CPG channels.

We continue to expand our commercial agreement footprint across converters and compound or with two new signed sales agreements and non CPG channels.

Our existing partnerships continue to generate exciting result, and as an example, we achieved a major testing milestone without power for hinge closures. The yield performance is on par with non recycled resin.

The PureCycle PureZero program continues to see momentum since launching with our focus now expanded to include partnering with professional and collegiate sports league.

The pure cycle peers zero program continues to see momentum since launching with our focus now expanded to include partnering with professional and collegiate sports leagues.

We anticipate exciting announcements on new partners in coming months.

We anticipate exciting announcements announcements on new partners in coming months.

And I'm pleased to report that we ended Q1 2022 with 610 million in total cash and investments.

And I am pleased to report that we ended Q1 2022 with $610 million in total cash and investments.

Moving to slide four.

Our goal is to produce one million pounds of our ultra-pure recycled resum by 2025, and we are aggressively working toward that goal.

Our goal is to produce 1 million pounds of our ultra pure recycled resin by 2025, and we are aggressively working towards that goal.

The facility can be a significant game changer when it comes to achieving this major milestone.

This facility can be a significant game changer when it comes to achieving this major milestone.

Further our relationship with SK geocentric continues to advance toward our goal of a completed facility in South Korea by Q4 of 2024, and we are progressing toward a joint venture agreement with Mitsui for a facility in Japan.

Moving to slide five.

It's pure cycle continues to grow. We work towards scaling our operations commercially. Our goal has been to add top tier talent across our business sector.

It's pure cycle continues to grow we work towards scaling our operations commercially our goal has been to add top tier talent across our business segments.

We have worked hard to ensure different experiences within our industry are represented. And we're thrilled that two exceptional industry experts have joined our board of directors.

We have worked hard to ensure different experiences within our industry are represented.

We're thrilled that two exceptional industry experts have joined our board of directors.

Steven Valk, former president of Waste Connections, Inc. And Alan Jacoby, chief strategy officer and senior vice president of corporate development for Millican and company have joined your Cycles board in March.

Stephens <unk>, former president of waste connections zinc and Alan Jacobi, Chief strategy Officer, and senior Vice President of corporate development for Milliken and company have joined <unk> Board in March.

These two independent directors are both proven and successful leaders to combine, bring more than 50 years of relevant experience.

These two independent directors are both proven and successful leaders to combined bring more than 50 years of relevant experience.

But Steve and Alan will help your cycle advance our mission and business objectives and I'm confident they will serve as well.

But Steven Alan will help pure cycle advance, our mission and business objectives, and I am confident they will serve us well.

We have assembled the best talent here at PureCycle and to achieve our goals, we wanted to ensure everyone is in the right place for success.

We have assembled the best talent here at pure cycle and to achieve our goals. We wanted to ensure everyone is in the right place for success.

To that end, we've realigned some of our teams to help us better deliver our mission to revolutionize plastic waste into a renewable resource.

We most recently announced that Dustin Olsen was appointed to the chief operating officer position in addition to his chief manufacturing officer responsibility.

We most recently announced that Dustin Olson was appointed to the Chief operating officer position. In addition to his chief manufacturing officer responsibilities.

as such, changes have been made internally to his current organization that emphasized the importance of Ironson, Augusta, and our feed prep strategy.

As such changes have been made internally to his current organization that emphasize the importance of irons in Augusta and our feed prep strategy.

Our CFO , Larry Soma, has also expanded the finance team to bolster our financial operation.

bringing on top-tier talent to round out his team to include a vice president of finance, senior director for revenue, and director of analytics.

With that, I'd like to turn it over to our Chief Operating Officer, Dustin Olson, to discuss our manufacturing, commercial, and feedstock updates.

With that I'd like to turn it over to our Chief operating officer, Justin Olson to discuss our manufacturing commercial and feedstock updates.

Thank you Mike.

Thank you, Mike. Our first facility in Ironton, Ohio is well underway and is currently expected to be operational in Q4 of 2022. Just last week, the first four modules designed by Koch Modular and constructed by Gulfspan were delivered and lifted into place one month ahead of the anticipated delivery date. This is a significant moment for PureCycle, one that has been years in the making. The remaining 22 modules are in active construction at the Gulfspan facility and are expected to ship over the summer.

Our first facility in Ironton, Ohio is well underway and is currently expected to be operational in Q4 of 2022, just last week. The first four modules designed by Coke modular and constructed by Gulf spend were delivered and lifted into place. One month ahead of the anticipated delivery date. This is a significant moment for pure cycle, one that has been.

Years in the making the remaining 22 modules are in active construction at the Gulf spend facility and are expected to ship over the summer.

We have 98% of the feed prep equipment on site with an anticipated startup of Q3-22. We're targeting mechanical completion of our purification facility in Q4 with pellet production by the end of the year.

We have 98% of the feed prep equipment onsite with an anticipated startup of Q3 'twenty two we're targeting mechanical completion of our purification facility in Q4 with pellet production by the end of the year as.

As discussed during our previous update, the Ironson site was energized in March.

As discussed during our previous update the Ironton site was energized in March.

We have discussed how integral our work with Coch Modular Denim Blythe Gulfspan, Kraus-Mefai, and Emerson are, and we're seeing tremendous benefits from these partnerships. Our work together has improved safety, scheduled compliance, and cost efficiencies, and created the foundation to successfully replicate our facilities both here and abroad.

Moving to slide seven, as mentioned, we broke ground on our second U.S. facility in Augusta, Georgia on March 22. Not only has the work commenced on site, but engineering activities are on track and key construction contracts are in place. Long lead orders such as high-pressure vessels, precision machinery, and specialty instrumentation have been placed. We track the global supply chain very closely and believe that we can effectively manage the construction schedule through our partnership.

Long lead orders such as high pressure vessels precision machinery and specialty instrumentation had been placed we track the global supply chain very closely and believe that we can effectively manage the construction schedule through our partnerships. We have made considerable progress developing feed prep operations that will supply Augusta.

One which includes the first two purification lines and we expect a full plan rollout in Q3 as noted we secured feedstock Lois that are expected to yield approximately 215 million pounds of polypropylene to supply pure cycles Augusta facility.

As with Ironton and all of our future facilities, our copy-paste design should allow us to build our facilities faster with minimal disruptions and schedule certain things.

As with Ironton in all of our future facilities, our copy paste design should allow us to build our facilities faster with minimal disruptions and schedule certainty with our partners in place. We know that we have the right team to help solve any challenge that may arise.

With our partners in place, we know that we have the right team to help solve any challenge that may arise.

Moving to slide eight.

Next we would like to share our progress on securing feedstock for our business plan. We are intently focused on securing feedstock for Augustus first two purification lines, we continue to strengthen our relationships and the partnership that has and that has resulted in 933 million pounds of feedstock in active negotiations.

With approximately 215 million pounds under LOI for Augusta lines, one in lines too.

The born digital strategy that we have outlined in previous quarters is also designed to optimize our feed management.

Born digital strategy that we have outlined in previous quarters is also designed to optimize our feed management. This includes helping us attract feedstock from the source to the final product. This level of transparency is important to our stakeholders and their customers.

This includes helping us track feed stock from the source to the final product. This level of transparency is important to our stakeholders and their customers.

Moving to slide nine.

The commercial team continues to build our sales pipeline, and because of this work,

The commercial team continues to build our sales pipeline and because of this work iron tenants fully allocated in the first two lines at our Augusta purification facility or 70% allocated through various multiyear commitments. We are currently seeing strong contracting momentum to fully allocate Augusta lines, one and two.

Ironson is fully allocated and the first two lines at our Augusta Purification Facility are 70% allocated through various multi-year commitments.

We are currently seeing strong contracting momentum to fully allocate Augusta Lines 1 and 2, and we're also seeing interest in the compounders that create specialized materials for consumer goods and automotive.

And we're also seeing interest from the compounds that create specialized materials for consumer goods and automotive.

As Irton and Augusta projects progress, we see our sales cycle shortening.

As iron attendant Augusta projects progress, we see our sales cycle shortening.

Our FDA letter of no objection is still under review and we are currently waiting for the FDA's response.

Our SBA letter of no objection is still under review and we are currently waiting for the Fda's response.

<unk> is well positioned to connect brands with high quality resin to deliver products that are truly sustainable to the customers. We continue to execute the objectives, we need to expand our pipeline and help companies achieve their top sustainability goals I will now turn it over to our CFO , Larry Soma for our financial update.

<unk>.

Thank you Dustin.

Please turn to our first quarter liquidity and balance sheet on slide 10.

As of the end of March, we had approximately 610 million of liquid.

As of the end of March we had approximately $610 million of liquidity.

As a reminder, we think about our liquidity in terms of restricted and unrestricted cash and investment.

As a reminder, we think about our liquidity in terms of restricted and unrestricted cash and investments.

our restricted cash total $191.9 million and our unrestricted liquidity was $418 million.

Our restricted cash totaled $191 9 million and our unrestricted liquidity was $418 million.

unrestricted increased by 217.2 million primarily driven by the 250 million dollar equity raise that was closed on March 17th.

Unrestricted increased by $217 2 million, primarily driven by the $250 million equity raise that was closed on March 17.

While setting that equity raise, we spent approximately $32 million of unrestricted cash during the quarter.

Offsetting that equity raise we spent approximately $32 million of unrestricted cash during the quarter.

included in that was 4.3 million spent on iron tin construction that is outside the bond cast.

Included in that was $4 3 million spent on iron can construction that is outside the bond cash.

any overruns on the Ironton plant are paid for out of unrestricted operating cash instead of bond cash.

Any overruns on the iron <unk> plant are paid for out of unrestricted operating cash instead of bond cash.

Finally, we spent $16.1 million on operating and SG&A costs.

Finally, we spent $16 1 million on operating and SG&A costs.

These costs included payroll to support our growing needs related to ramp up of staffing as a public company to prepare for Ironton.

These costs included payroll to support our growing needs related to ramp up of staffing as a public company to prepare for iron 10 feet.

Feed Prep, Augusta, and future Europe and Asia investors.

Feed prep.

Ah Gastar and future Europe and Asia investments.

We paid an annual cash bonus that is part of our short-term incentive plan and incurred cash tax payments related to equity compensation.

We paid an annual cash bonus that is part of our short term incentive plan and incurred cash tax payments related to equity compensation.

also included in the spend were site-specific and corporate investments in systems and technology, corporate functions, and various other needs.

Also included in the span of our Spike site specific and corporate investments in systems and technology corporate functions and various other needs.

The other part of our liquidity position is our restricted cash.

The other part of our liquidity position is our restricted cash as a reminder, the restricted cash can be broken down into several buckets.

As a reminder, the restricted cash can be broken down into several buckets.

Arlington plant build.

future interest and principal payment reserves for Ohio Bonds, and equity and other reserves that are required to be set aside for the Ohio Bonds.

Future interest and principal payment reserves for our high yield bonds.

And equity and other reserves that are required to be set aside for the Ohio bonds.

As the Ironton plant progresses towards completion in Q4 this year, you can expect to see cash drawdowns related to that plant build.

As the Ironton plant progresses towards completion in Q4. This year you can expect to see cash drawdowns related to that plant build.

In Q1, we spent $41.6 million on the plan.

In Q1, we spent $41 $6 million on the plant.

With our current cash investment position and our capital raise strategy, we believe there will be sufficient capital to execute our business plan.

With our current cash and investment position and our capital raise strategy. We believe there will be sufficient capital to execute our business plan.

This includes the remaining build-out of Ironton, the future build plans in Augusta, our feed prep facilities, and investments in Asia and Europe .

This includes the remaining buildout of Iron 10, the future build plans in Augusta, our feed prep facilities and investments in Asia and Europe .

Please turn to slide 11.

On this slide, we highlight additional financial commentary that we think is useful for modeling purpose.

On this slide we highlight additional financial commentary that we think is useful for modeling purposes.

Our capital structure has been bolstered by the 250 million private placement that was announced in March.

Our capital structure has been bolstered by the $250 million private placement that was announced in March.

This influx of capital provides equity for Augusta Lines one through four as well as other strategic corporate purposes such as cash needed to seed our equity investment in South Korea.

This influx of capital provides equity Augusta lines, one through four as well as other strategic corporate purposes, such as cash needed to seed our equity investment in South Korea.

Furthermore, we have engaged Jeffries to lead the project debt financing for Augusta lines one and two and for three prep feed prep facility.

Furthermore, we have engaged Jefferies to lead the project debt financing for our guests that lines, one and two and four three prep feed prep facilities.

While challenging, we have a high margin operating plan, which gives us confidence in the debt financing process.

While challenging we have a high margin operating plan, which gives us confidence in the debt financing process and we will be sure to announce details as soon as we're able.

and we will be sure to announce details as soon as we are able.

At our first commercial facility, Ironton's total cost in excess of the original budget will be 55 to 65 million dollars versus the previous guidance of 30 to 40 million dollars.

And our first commercial facility intense total cost in excess of the original budget will be $55 million to $65 million versus the previous guidance of $30 million to $40 million.

This should come as no surprise based on the high inflationary environment and supply chain challenges around the globe.

Of the excess, approximately 50% is for manufacturing process improvements and the other 50% for inflation coverage.

Of the excess approximately 50% is from manufacturing process improvements and the other 50% for inflation coverage.

The most inflated costs are driven by increases in transportation, which is two times the original cost or seven to nine million dollars.

The most inflated costs are driven by increases in transportation, which is two times, the original cost or $7 million to $9 million.

the electrical segment, which is two to three times the original cost, or $8 to $11 million.

The electrical segment, which is two to three times, the original cost or $8 million to $11 million.

and finally holding to schedule, which is costing us approximately three to five million dollars.

And finally holding to schedule, which is costing us approximately $3 million to $5 million.

we deem the extra cost to stay on schedule as a prudent economic decision.

We deem the extra cost to stay on schedule as a prudent economic decision.

Relative to Ironton, our Augusta facility cap ex-efficiency is expected to improve with each subsequent bill.

Relative to Iron 10, our <unk> debt facility Capex efficiency is expected to improve with each subsequent built.

Despite the current inflationary concerns, the learning from Ironton and the multi-lens scale efficiencies are expected to yield double-digit capital efficiency improvements.

Despite the current inflationary concerns the learnings from Iron 10, and the multi Lang scale efficiencies are expected to yield double digit capital efficiency improvements.

The most important comment I can pass along is that the Augusta Project ROIC remains on track.

The most important comment I can pass along is that the Augusta project ROIC remains on track.

are revenue increases due to inflation and feedstock plus pricing strategy are expected to more than offset the CAPEX and OPEX increases in the current global economy.

Our revenue increases due to inflation and feedstock plus pricing strategy are expected to more than offset the capex and opex increases in the current global economy.

With this in mind, the Project Economic Estimates for Augusta are at 100 to 150% of pre-SPAC estimates and are currently expected to provide a simple payback of approximately 3 to 4 years.

I will now pass it back to Mike <unk> to close.

Thanks, Larry. We're now on slide 12.

Thanks, Larry.

Now on slide 12.

We've outlined how PureCycle remains focused on executing against its strategic plan and how we continue to build operational momentum.

We've outlined health care cycle remains focused on executing against that strategic plan and how we continue to build operational momentum.

At PureCycle, we can help reverse the world's mounting plastics waste crisis through our innovative technology that is scalable and enables us to rapidly expand to meet global demand.

A pure cycle, we can help reverse the world's mounting plastics waste crisis through our innovative technology that is scalable and enables us to rapidly expand to meet global demand.

We are also diversifying our feedstock acquisition strategy and bolstering R&D efforts to continue testing challenging waste.

We are also diversifying our feedstock acquisition strategy and bolstering R&D efforts to continue testing challenging waste streams.

PurePsycho continues to build operational momentum with...

Pure cycle continues to build operational momentum with.

Ironton on track for Q4 2022 pellet production. I guess the construction is underway.

Irons and on track for Q4, 2022 pellet production Augusta construction is underway.

Ironson offtake fully allocated and Augusta first two lines 70 percent allocated.

Irons and offtake fully allocated and Augusta first two lines, 70% allocated.

75% of Augusta's first two lines are under LOIs for feedstock. Overall feedstock discussions are on track.

75% of Augustus first two lines are under LOI for feedstock overall feedstock discussions are on track.

Feed prep strategy is progressing with planned rollout in Q3.

broadened our converter network and expanded applications for pure cycle resin.

We broadened our converter network and expanded applications for pure cycle resin.

Ironton and Augusta continue to show strong economics relative to original pre-spacus.

Ironton in Augusta continue to show strong economics relative to original priest back estimates.

And as Larry said, we ended Q1 2022 with 610 million in total cash and investment.

And as Larry said, we ended Q1 2022 was $610 million in total cash and investments.

and added experienced undependent members to our board while continuing to recruit top talent.

And added experienced independent members to our board, while continuing to recruit top talent.

With heightened expectations around the world, sustainability requirements are taking shape.

With heightened expectations around the world sustainability requirements are taking shape.

Rather than be a burden, companies should see this as an opportunity to make major environmental difference. We believe PureCycle can connect brands with high-quality recycled plastic in a way that meets the demands of consumers and regulatory bodies. But more importantly, help society end our dependence on new plastic production.

Other than be a burden company should see this as an opportunity to make major environmental difference. We believe pure cycle can connect brands with high quality recycled plastic and a.

A way that meets the demands of consumers and regulatory bodies, but more importantly help society and our dependence on new plastic production.

Thank you for your time this morning. We'll now open up the floor to questions.

Thank you for your time. This morning, we will now open up the floor to questions.

Thank you and participants as a reminder, so asked a question you will need to press star one on your telephone keypad again Thats Star then the number one on your telephone keypad.

So we withdraw your question Bruce.

Yes.

Your first question comes from the line of Hassan Ahmed from Alembic Global. Your line is now open.

Your first question comes from the line of Hudson Ahmed from Alembic Global Your line is now open.

Good morning, guys.

You know, a question around, you know, obviously you guys touched on the inflationary environment we're living through. You know, in this sort of environment, you know, I just wanted to dig a bit deeper into the raw material availability side of things, you know, as you guys are sort of structuring

A question around.

Obviously, you guys touched on the inflationary environment, we are living through.

In this sort of environment.

Just wanted to dig a bit deeper into.

The raw material availability side of things.

Is this sort of structuring.

newer contracts, how should we be thinking about A-B availability, keeping in mind all the logistical constraints as well, and also pricing on a go-forward basis for the road.

Newer contracts.

How should we be thinking about availability keeping in mind, all the logistical constraints as well and also pricing on a go forward basis for the road.

Thank you for the question. I'll let Dustin Olson address this.

Thank you for the question I'll, let the dust and Olson address this.

Yeah, thanks Asan. So on the on the project side, I mean, we're really tracking the the overall say material supply conditions for all aspects of our operation. So we track steel and copper and different based materials like that just to keep an eye on where things are the real the real concern is with production capacity.

Yes, Thanks Hassan so on the on the project side I mean, we're really tracking.

<unk>.

And what we're doing to address that is looking to widen our global supply network, so where we may have been over-indexed on receiving material from Europe .

Understood understood now now on the capital cost side, you know, I mean a bunch of moving parts, right?

Understood understood now.

On the capital cost side.

I mean bunch of moving parts right.

You know, on one side, all the inflationary pressures you guys are dealing with, but on the other side, you know, you talked about how the ironed and experienced, you know, you've learned sort of efficiencies from that as you think through Augusta and the like.

On one side all the inflationary pressures you guys are dealing with but on the other side.

You've talked about how the.

Experience.

So my question really is, if I sort of drill it down on a green field replacement value basis, call it on a cent per pound basis,

you know, is Augusta tracking significantly higher than Ayrton at the same levels? I mean, just some sort of directional guide would be helpful.

Is tracking significantly higher.

And then at the same levels I mean, just some some sort of directional guide would be appreciated.

Yeah. Thanks, So we're tracking that right now and going through our process to evaluate the let's say the apples to apples comparison between ironton in Augusta Theres a couple a couple of notable things first of all when we go back to the Ironton project remember I mean in this environment to be able to.

First of all, when we go back to the Ironton project,

To deliver that project on schedule with modest increases in cost relative to schedule holds.

Pretty is pretty good and we believe that we've been able to do that because of our close partnerships with people like Coke modular Gulf span denim blind.

And so those those have really helped us quite a lot on the schedule side for delivering ironton, but in addition to that because we are keeping the same partners from ironton to Augusta Theres been tremendous lessons learned between the two phases and so.

So the Gulfspan operation as an example is not only going to deliver, let's say certainty on schedule for Ironton, it's also helping to deliver cost efficiency as we build into Augusta.

The Gulf spent operation as an example is not only going to deliver let's say certainty on scheduled for Ironton. It's also helping to deliver cost efficiency as we build into into Augusta and so from a overall capex per pound were not in a position to put dita.

<unk> numbers into the marketplace right now, but what we can say is that we are tracking better than ironton capex per pound for the Augusta build and that comes because of our strong partnerships, but secondly, it comes from just the scale of Augusta.

With Augusta we have the capability to build a lot of lines a billion pounds of capacity is potential in Augusta and we're going to see pretty significant benefits.

With Augusta, we have the capability to build a lot of lines 1 billion pounds of capacity as potential in Augusta, and we're going to see pretty significant benefits.

by spreading out the infrastructure build, the utility build, et cetera, at that facility.

By spreading out the infrastructure build the utility build et.

Et cetera at that facility. So we expect the overall capex per pound to be improved relative to ironton.

So we expect the overall capex per pound to be improved relative to iron tin.

Very helpful. Thank you so much.

Your next question comes from the line of Eric Fine from Craig Hallum. Your line is now open. Good morning, everyone. Thanks.

Your next question comes from the line of Eric Stine from Craig Hallum. Your line is now open.

Good morning, everyone. Thanks for taking the questions.

Yes.

Hey Eric, how are you doing? Hey, doing well, thanks. So just sticking with Augusta.

Hey, Eric how are you doing hey.

Doing well, thanks, so just sticking with Augusta.

uh... i think in the past you said your plan was to uh... to think about two lines every six months now that that may uh... you know curious if that's the case and just wondering i you know you just said that on a cost per pound basis that i'll got August is looking like it'll come in lower uh... you know with that still be the plan given that level you know how to increase materials cost potentially play into that when you're also balancing demand

I think in the past you've said your plan was to think about two lines every six months now that that may Im curious if thats. The case and just wondering you just said that on a cost per pound basis that Augusta is looking like it will come in lower.

Would that still be the plan given that level, how do increase materials costs potentially planned in that when you're also balancing demand.

Yes, so thats a great question Craig Thank you for that so so so basically.

Yeah, so that's a great question, Craig. Thank you for that. So, so, so basically

I'm sorry, Eric. Sorry, Eric. That's a good question, Eric. So we have built our entire system to be able to scale quickly.

Sorry, Eric sorry, Eric that's a good question Eric.

So we we.

We have built our entire system to be able to scale quickly.

So everything that we've done with our partners will give us the ability to to build on the schedule that you mentioned, which is two lines per six months the driving factor for.

For that schedule in holding that schedule will be.

Got it okay.

Well, and I'm just curious, you know, and obviously you're seeing a lot of demand in the market, and you also, obviously, you've got to factor in the feedstock, but I mean, are you seeing demand driven by scarcity value given the uniqueness of your process, you know, and how do you balance that with just

And I'm just curious.

So youre seeing a lot of demand in the market.

And you also obviously, you've got a got to factor in the feedstock, but I mean.

Are you seeing.

Demand driven by scarcity value given the uniqueness of your process.

And how do you balance that with just.

bringing things online in a timely fashion and maybe not wanting to get ahead of that as well

Bringing things online in a timely fashion and maybe not wanting to get ahead of that as well.

Yes, I think that the drive for sustainability in general is very hot right now.

for sustainability in general is very hot right now.

So if you look across the board on sustainability reports ESG reports and the commitments that brand owners are making to the market. I mean, it's very very high bar to hit in terms of delivering sustainable solutions to the marketplace. So that that continues to drive a lot of what we're seeing and then you pointed out.

The key the key part there I mean, we deliver a product that is differential to the market in terms of color odor consistency and the and the ability for a molder or tier compounded to use and so because we offer let's say a no compromise solution for the consumer for the.

odor, consistency, and the ability for a molder or tear compounder to use.

And so because we offer, let's say, a no-compromise solution for the consumer or for the compounder or converter, they like our product quite a lot.

Compounds or converter, they like our product quite a lot.

And Eric I would add that we.

We hear repeatedly from our customers that they.

They don't have a quality backup plan to us.

And so I think this speaks to your comment about the uniqueness of the product that we offer into the marketplace.

And, you know, many of these customers are big multinationals who really understand the landscape of possibilities in terms of all the resins that they buy.

And many of these customers are big multinationals.

Who really understand the landscape of possibilities in terms of all the resins that they buy.

So, that's been the case since we started signing offtake agreements, and that hasn't changed. And if anything, we see the level of concern from our customers increasing, not decreasing in terms of the lack of options for high quality recycled.

So.

That's been the case since we started.

Signing offtake agreements and that Hasnt changed and if anything I see the we see the the law.

Level of concern.

Our customers increasing.

Not decreasing in terms of.

The lack of options for high quality recycled.

And, Eric, I think there's a couple other points. One is that with respect to polypropylene specifically, you know, we're seeing

And Eric I think Theres a couple of other points one is that with respect to polypropylene specifically we're seeing.

increased demand for polypropylene naturally, anyway, just for the general growth of the market.

Increased demand for polypropylene naturally anyway, just from the general growth of the market.

We're also starting to see some deslection of other plastics into, let's say, more recyclable plastics. We view that as a positive story for polypropylene as well. And then

We're seeing our product demand going beyond CPG.

Okay, so we've obviously focused on the CPG market to start, but we're starting to see compounding, automotive, and other applications like that that are starting to see value in the product that we produce.

So we've obviously focused on the CPG market to start, but we're starting to see compounding.

Automotive and other applications like that that are starting to see value in the product that we produce.

Okay, that's great. Thanks, everyone.

Again, participants, if you would like to ask the question, that's far than the number one on your telephone keypad. Again, that's far than the number one on your telephone keypad. Your next question comes from the line of NOVA-K from Oppenheimer. Your line is

Thank you.

Thanks for taking the questions. The first one's really about the increased plan spending and how that relates to ongoing process improvement. If I go back to, you know, the prior 30 to 40 million figure, which we discussed during 3Q last year, I think two-thirds of that was really designed around processing a higher percentage of feed contaminants and some process safety design improvements. It looks like you may have.

Thanks for taking the questions the first one.

About the increased plant spending and how that relates to ongoing process improvements.

Back to.

The prior $30 million to $40 million figure, which you discussed or <unk> last year I think two thirds of that was really designed around processing a higher percentage of fee contaminants in some process safety design improvement it looks like you may have.

maybe nudge that spend up even a bit more here, but can you just talk about, you know, where these investments are focused and what you think the benefits are in terms of, you know, de-risking operations?

Maybe.

Pent up even a bit more here, but can you just talk about.

Where these investments are focused and what you think the benefits are in terms of de risking operations.

Yeah, that's a great question, though. So it's exactly like you said. I mean, the original guidance was 30 to 40 million, and two-thirds of that was plant improvements, and one-third was inflationary concern.

and basically what we're saying now is all of the second increase is due to inflationary concerns. There's a little bit of a lead over where the plant improvements may cost a little bit more today than we said originally because of inflation.

The lead over where the plant improvements may cost a little bit more today than when we set originally because of inflation.

But our guidance is really saying now, the first batch of increase was

Our guidance is really saying now the first batch of increase was two thirds plant improvements one third inflation and all of the second increases due to inflation and it's like we said in the prepared remarks, I mean transportation electrical and a little bit of holding schedule of the primary reasons.

two-thirds plant improvements, one-third inflation, and all of the second increases due to inflation. And it's like we said in the in the prepared remarks. I mean transportation, electrical, and a little bit of holding schedule are the primary reasons for the increase.

For the increase.

Great. So in other words, at this point, the design, the process, it's all baked, you have something finished, and what's going to be built is what's in the plan. Okay. Yeah, that's exactly, yeah. The plant improvement story, no, it hasn't changed at all. You know, that's the same story that we said before. And it is, as you said, it was to increase, let's say, process safety compliance.

So in other words at this point.

<unk>.

Process it all baked in.

Yes, and what's going to be is what's in the plan okay.

Yes.

The plant improvement story no it hasnt changed at all.

That's the same story that we said before and it is as you said it was to increase let's say process safety compliance and security, but but the bigger portion of it was really to handle a wider.

and the security, but the bigger portion of it was really to handle a wider, let's say, contamination in the feed through the process, and that's 100% a consistent story from last time.

Let's say <unk>.

Lamination and the feed.

Through the process and Thats, a 100% of consistent story from last time.

Great and that actually ties into the second question around feedstock quality.

Gus.

And if I add up what you have got under LOI, which you're hoping to get, I pencil that I think to about a 10% expected yield loss.

If I add up what you have got it under LOI, which youre hoping to get.

Penciled out I think to about a 10% expected yield loss. So can you just talk about the quality of the feedstock that you've got LOI in place for <unk>.

So can you just talk about the quality of the feedstock that you've got LOI's in place for and and clearly this 290 million pounds you need is a net number, which assumes some processing at at your prep facility, but just talk a little about the quality.

And clearly this 290 million pounds, you need is a net number which assumes some processing at.

<unk> facility, but just talk a little about the quality of the feedstock that youre seeing out there.

of the feedstock that you're seeing out there and how much you need to actually do in terms of preprocessing to get to that $290 million.

And how much you need to actually do in terms of pre processing to get to that $290 million.

Yeah. So on the feed prep side, you're right. We are investing heavily into the feed prep for the Augusta project. Quite frankly, that's a differential spend for us in Augusta than it was in Ironton because we are, let's say, backward integrating a bit more into sort. So that's going to get us into the ability to buy three to sevens.

Yes, so on the on the feed prep side Youre right. We are we are investing heavily into the feed prep for the Augusta project.

And quite frankly, that's a differential spend for us and Augusta than it was in ironton, because we are let's say backward integrating a bit more into sort, so thats going to get us into the ability to buy three to seven.

and also let's say some secondary residual streams.

And also let's say some secondary residual streams as well as low quality number five.

as well as low quality number fives on top of the high quality fives that we've already discussed. So really what we're doing now is we're building optionality into feed prep. Okay because you know with respect to what kind of feed are we buying and we've got a really talented team out there canvassing the market and we're finding feed of all various shapes, sizes and concentrations.

On top of the high qualified so we've already discussed so really what we're doing though is we're building optionality into feed prep okay because.

And so when you aggregate that together, you end up with our plan.

And so the way to think about it, I think, is more so around the optionality built into the feed prep.

And so the way to think about it I think is more so around.

The optionality built into the feed prep.

and that giving us the ability to, let's say, pick up many different types of feed streams. Which, by the way...

And that giving us the ability to let's say pick up.

Many different types of feed streams.

Which by the way is possible because of our technology, our technology allows us to be let's say.

because of our technology. Our technology allows us to be, let's say, less selective.

Less selective in how we're buying feed because we can handle a varying levels of contamination and the feed stream and still make good product and so that puts us into a slightly different place to purchase than then we feel some of the others in the market.

in how we're buying feed because we can handle varying levels of contamination in the feedstream and still make good product. And so that puts us into a slightly different

place to purchase, then we feel some of the others in the market.

And quality for us really has more to do with the percentage of polypropylene in the feedstock than it does actual quality. We're less sensitive to contaminants and dirt than mechanical recyclers or chemical recyclers. But, you know, we do look for feedstocks that contain a high percentage of polypropylene, obviously.

And quality for us really has more to do with the <unk>.

Percentage of polypropylene in the feedstock than it does actual quality, we're less sensitive to.

<unk> and dirt.

Then mechanical recyclers or chemical recyclers.

We do look for feedstocks that contain a high percentage of polypropylene obviously.

Great. Thanks.

Yes, I think thats.

That's a good point Mike.

Point is that the higher the polypropylene percentage that we find and then we can feed to Augusta that will lead to higher yields.

And higher profitability, but the feed prep system that we're building allows us to upgrade even low quality number five bales to a higher concentration. So we can maximize the capacity of purification.

Perfect. Thanks, so much I'll take the rest offline.

Your next question comes from the line of Thomas Boyce from Coven & Cove. Your line is now over.

Your next question comes from the line of Thomas Boyce from Cowen and co. Your line is now open.

Thanks for taking my questions. Obviously, great to see the progress, you know, selling out the first two lines in Augusta. Do you still think that you'll have that capacity fully sold out by the end of 2Q? And then for the additional offtake agreements that were done this quarter, you know, how much was done under that feedstock pricing model, or is that still something that's developing?

Yes.

Thanks for taking my questions.

Questions, obviously, great to see the progress.

Selling out the first two lines in Augusta do you still think that Youll have that capacity fully sold out by the end of <unk> and then four.

The additional offtake agreements that were done this quarter, how much was done under that feedstock pricing model or is that still something that's developing.

Yes, so we are seeing good growth in our offtake commit.

Commitments.

To put a timeline on it in a percentage on I, probably don't want to get that specific but.

But we don't see any concern there.

Financing perspective, or project perspective, with our with our offtake.

And I would just, I would just, before Dustin continues, I would say that while, you know, we want to have a significant percentage of offtake allocated in advance, given the market demand and the rising market demand and corresponding changes in price,

And I would just I would guess it before it doesn't continues I would say that while we want to have a significant.

Percentage of offtake allocated.

In advance.

Given the market demand.

The rising the market market demand and corresponding changes in price.

You know, we're a bit walking a line between, you know, having off-take pre-allocated and letting the market further develop to our advantage, I'll just put it that way. So the goal isn't necessarily to sell all of the off-take at the earliest possible date. You know, there's some balance in our strategy.

We were a bit walking aligned between.

Having.

Ill take pre allocated in.

And letting the market further developed our advantage I'll just put it that way. So so the goal isn't necessarily to to to sell all of the off take at the earliest possible date.

There are some there is some balance and our strategy.

Yes.

And with respect to your second question Thomas around feedstock plus I mean, when we when we watched the market last year.

Number five price volatility was really high and so as we evaluated our overall strategy for contracting offtake.

The base feedstock.

Um, raw material, that is the reference point for the offtake. So there's good, um, there's good, there's good coverage across volatility in the market. We're seeing good adoption to that.

Raw material that is the reference point for the offtake So theres good.

There is good coverage across volatility on the market and we're seeing good adoption to that.

I'd also add that the feet stock plus being prevalent

I'd also add that the feedstock plus being prevalent.

in Augusta is what drives the profitability for the Augusta complex to be higher than we saw in Ironton.

In Augusta is what drives the profitability for the Augusta complex to be higher than we saw in iron Tim.

And we put together, I think in the last quarterly, Thomas, there's a slide we put together that showed.

And we've put together I think in the last quarterly Thomas There was a slide we put together that showed.

some of the impact of that and also some of the resiliency of the portfolio.

Some of the impact of that and also some of the resiliency of the portfolio to different pricing moments over the last couple of years.

to different pricing moments over the last couple of years, and that still holds pretty true. I mean, we're not advocating for one specific pricing model, we're flexible, and we're building a portfolio around, let's say, multiple pricing mechanisms. But today, especially given a high volatility in just the global marketplace, we're really anchoring more to the Feepstock Plus than anything else at this point.

Else at this point.

And then, you know, maybe I just wanted to get a bit more insight into the CAPEX expectations for the year, because it, you know, it seems like you have a pretty good handle on what's going on in the next, you know, three to six months, is how much spending kind of remains an aggregate for Ironton to get it up and running, and then, you know, how much you think you have to commit to Augusta this year to keep on schedule.

That makes sense.

And maybe just wanted to get a bit more insight into the capex expectations for the year.

Seems like you have a pretty good handle on what's going on in the next three to six months is how much spending kind of remains in aggregate for iron tend to get it up and running and then how much do you think you'd have to commit to Augusta this year to keep on schedule.

So I actually don't know the exact number for how much spending is left for Ironton as far as cash spent versus...

So.

I actually don't know the exact number for how much spending is left for ironton as far as cash spent versus.

versus total project, I think it's in the $155 to $175 million range of remaining capital to spend to finish Ironton, and that gets us to the numbers that we put in the presentation.

Versus total project I think it's in the 155 million to $175 million range of remaining capital to spend to finish ironton and that gets us to the numbers that we put in the in the presentation.

With respect to Augusta, we've allocated approximately $75 million so far to continue spending for the project. That takes us through the end of June , I believe, and then we will continue to allocate, probably on the order of,

With respect to Augusta.

Allocated approximately $75 million so far to.

To continue spending for the project that takes us through the end of June I believe.

And then we will continue to allocate probably on the order of.

No, it's very helpful color and then if I just squeeze one last one in here, because you know, I appreciate the update on the FDA letter of no objection, you know, do you still intend to submit applications for the categories A, B, and H, and there is the idea that you would probably hold off on doing so until you receive approval for the kind of the other categories, are those coming, you know, hopefully, you know, ahead of Ironson starting at the end of the year, is that the expectation?

Very helpful color.

Just squeeze one last one in here because I appreciate the update on the FDA letter of no objection do you still intend to submit applications for big categories, <unk> and <unk>.

No look I mean with with respect to the FDA I mean we're very very excited about this process actually we we've obviously submitted the first letter and are just awaiting information back from the FDA so we expect that anytime but that's out of our control.

No look I mean with respect to the FDA I mean, we're very very excited about this process actually we.

We've obviously submitted the first letter and are just awaiting information back from the FDA. So we expect that any time, but thats out of our control.

With respect to the remaining sensitivities.

There is no getting qualification for the ABN H, but then Theres also getting qualifications on different feedstocks that we bring into the system and so we will.

SBA, Illinois process is not a one and done type activity. This will be a ongoing activity as we find new feeds test new feeds globally.

as well as start up the commercial plant.

As well as startup the commercial plant and so.

And so that activity is actually scheduled. One of the...

That activity is actually scheduled one of the.

One of the let's.

let's say constraints that we have today that we won't have when Ironson is up and running or will have less of when Ironson is up and running is just the utilization of the FEU. We talk all the time about the FEU is really built to do three things. It's built for process design, product design, and also production.

Let's say constraints that we have today that we won't have when ironton is up and running or will have less of when ironton is up and running is just the utilization of the <unk>.

Test is more of a function of building it into the schedule amongst all of the other things that were using <unk> for right now when the commercial plan is up and running and we're making many many many more pounds of product a lot of these constraints will go away, but this is just something that we're managing right now.

Got it that's very helpful I'll hop back in the queue.

Thanks a lot.

Thanks, a lot.

Your next question comes from the line of Steve Byrne from Bank of America. Your line is now open.

Yes. Thank you.

I'm curious as to what is the level of tolerance

Im curious as to what is the level of tolerance for other plastics other than polypropylene.

for other plastics other than polypropylene, not in your front end sorting, but once you enter into the solvent base,

Not in your front end sorting, but once you enter into the.

The solvent based.

process how much other other than polypropylene can you tolerate and and as I understand you separate those polymers and those resins out from the polypropylene during during the process what is the quality of those do those become just waste products or do they have value?

How much other other than polypropylene can you tolerate in.

And as I understand you separate those.

<unk> and those resins out from the polypropylene.

During the process.

What is the quality of those do those become just waste products or do they have value.

Yeah, that's a great question. So there's a couple aspects here. So first of all, the feed that comes into our purification plant, so this is after the sorting, the washing, the agglomeration, just the purification plant. Let's just take some examples. Let's say it comes in at 90% polypropylene, it will have 10% of other stuff.

Yes, that's a great. That's a great question. So there's a couple aspects here so.

First of all the feed that comes into our purification plants. So this is after the sorting the washing deglomeration just pure purification plant.

Let's just let's just take some examples let's say it comes in at 90% polypropylene. It will have 10% of other stuff.

that 10% of other stuff will break down into what we call co-product one and co-product two.

That 10% of other stuff will break down into what we call co product, one and co product too.

So when we actually originally modeled this commercial plant, we assumed that the 10% of other stuff would be a cost that would go to a landfill. It will be a cost that would go somewhere else actually what we're finding is that there's very good markets for those two co products.

Co-product one is effectively a organic type compound, which is, I would say, similar to a pyrolysis oil or could, you know, could sell into a refined feedstock or olefin feedstock type plan. And then the co-product two depends a bit on the concentration of materials that are coming in with the feed, but it's primarily polyethylene and inorganic inert.

Co product one is effectively a organic type compound, which is I would say similar to a pyrolysis oil or could it could sell into a refined feedstock or olefins feedstock type plan.

And then the co product too depends a bit on the concentration of materials that are coming in with the feed but it's primarily polyethylene.

And inorganic alerts.

Okay and so that product actually resembles a let's say mechanically recycled polyethylene product very nicely and so so there's good value on both co-product one and co-product two that we've let's say under modeled in the process but we think has really good upside in the future.

And so that product actually resembles a let's say mechanically recycled polyethylene product very nicely and so so theres good value on both co product, one and co product too.

That we've let's say under modeled in the process, but we think has really good upside in the future.

With respect to the, let's say, technical aspect of your question, this is probably the source of

With respect to the let's say technical aspect of your question.

This is probably the source of <unk>.

Most of the confusion with respect to the technology in the original report that we issued on the technology there was a bit of a

Most of the confusion with respect to the technology and the original report that we issued on the technology there was a bit of a miss.

misunderstanding on a, let's say, a binary work or not work for the technology, and it was interpreted that anything under 91 to 93 percent polypropylene, it just wouldn't work in the process. And that's just, that's really just not true. We've actually run, you know, much lower percentages of polypropylene feeding the process and had very successful runs.

Much lower percentages of polypropylene seeding the process.

And had very successful runs.

And so with respect to what can we handle and how much?

And so with respect to what Ken we handle and how much.

You know, we are really effectively managing the solubility of polypropylene in our process.

We are really effectively managing the solubility of polypropylene in our process and so we can take polypropylene and separated from just about any other plastic out there. Okay. So other it's nylon or ABS, our polycarbonates or polyethylene.

And so we can take polypropylene and separate it from just about any other plastic out there. Okay, so whether it's nylon or ABS or polycarbonates or polyethylene or polystyrene, like we can accept those as contaminants and then they will purge out of the system in either co-product one or co-product two, okay?

Or polystyrene like we can we can we can accept those as contaminants and then they will purge out of the system and either co product Warner co products too.

And so.

It's not really a concern for us with respect to Ironton or Augusta because the feed prep work that we're doing will remove most of those contaminants prior to purification, but we're doing it for an economic reason more so than a technical reason.

We want the highest level of polypropylene percentage because it maximizes the economics of the unit, not because the technology is not good enough to do that.

Polypropylene percentage because it maximizes the economics of the unit.

Not because the technology won't work.

So we're hitting both, but we really don't have a concern on the technology front for the contaminants coming in.

So we're hitting both but we really don't have a concern on the technology front for the contaminants coming in.

And that co-product one that you described as being like paralysis oil, has that ever been run through a cracker and could be effective feedstock? And do you have a view on how your costs of producing that paralysis oil compares to some of the other efforts at developing paralysis oil?

And that co product one that as you described as being like paralysis oil.

Has that ever been run through our cracker in <unk>.

Could be could be effective feedstock and do you have a view on how you are costs of producing.

For our CIS oil compares to.

Some of the other.

But developing paralysis oil.

Well to be clear I mean the.

The amount of volume in that material is pretty low and our overall process and when I say it is akin to pyrolysis oil I'm not speaking to it chemically at all I'm speaking to it in terms of <unk>.

Potential value because this product.

Because this product, I think, we have not, let me be clear, we have not tested that product in refineries.

We have not let me be clear, we have not tested that product in refineries or in olefins plants as of yet and we have not tested that product relative to.

or in olefins plants as of yet and we have not tested that product relative to any sort of pyrolysis oil. So this is more work that's ongoing on the commercial side to see where it's best going to fit.

Any sort of pyrolysis oil. So this is more work that's ongoing on the commercial side to see where its best going to fit quite frankly, I think that the value for that product could be better than like a number six oil for reserves or.

Our shale gas equivalent to an olefins plant or something like that because it is fully recycled post consumer waste product and so everybody in the market wants to find recycled product kind of.

And so everybody in the market wants to find recycled product kind of.

in whatever form shape that they can. And this one is a good, niche project that we'll develop over time to start placing it into, let's say, different and hopefully uplifted markets.

And whatever form shape that they can and this one is a good niche project that will develop over time to start placing it into let's say different and hopefully uplifted markets.

helpful and just one more for me so the

That's helpful and just one more for me so the.

The process at Ironson and Augusta are both essentially the same all based off of scaling up the pilot plant at Ironson is it fair to say.

The process Ironton in Augusta are essentially the same mall based off of.

Scaling up the pilot plant.

Aronson.

Is it fair to say.

The value to you to get commercially larger, faster, more than all sets the risk that maybe there's something being overlooked in that scale up that you don't learn from by bringing one on before the other.

The value to you too to get commercially larger faster more than offsets the risk that maybe there is something being overlooked in the scale up that you don't learn from by bringing one on before the other one.

Yeah, I think the way you characterize it is right. I mean, we believe that the opportunity for us to scale outweighs the risk of the scale up.

Yes, I think the way you characterize it as right I mean, we believe that the opportunity for us to scale outweighs the risk of the scale up.

But I'll also say that as we start up Ironton and we learn from it, and there will no doubt be learnings from it, you know, this doesn't necessarily mean a complete redesign or you have to completely rebuild. Some of these are just tweaks to the operation. And so adding components to the secondary or tertiary designs.

But I'll also say that as we startup irons and we learned from it and there will no doubt be learnings from it.

This doesn't necessarily mean, a complete redesign or you have to completely rebuild some of these are just tweaks to the operation and so adding components to the secondary or tertiary designs.

Those are things that we can handle on the run if needed.

Those are things that we can handle on the run if needed but look we're not really overly concerned about that because our confidence level in the scale up is very high we've done a lot of testing on the process side with the FAU to test the boundaries of this operation to know that we are let's say.

Look, we're not really overly concerned about that because our confidence level in the scale is very high. We've done a lot of testing on the process side with the FAU to test the boundaries of this operation to know that we are, let's say, building it with the right, let's say, contingency and capacity in the right areas. So we feel very confident in our ability to scale.

Building it with the right, let's say contingency and capacity in the right areas. So we feel very confident in our ability to scale.

Very good thank you.

I want that.

Sorry, I just wanted to come back to a question that Thomas asked earlier about cost because I

Sorry, I just wanted to come back to a question that Thomas asked earlier about cost because.

I want to correct, what duston said he admitted that he didn't have information would be coming back, but I think you mentioned $5 15 per month.

It's going to be closer to $25 million a month okay.

The spend through June is accurate, but our spend on a monthly basis will be more than 5% to 15, I don't know if thats and was thinking of only one of the lines, but it will be closer to $25 billion per month.

But of course as we go along we'll be refining that so I don't want anyone to think of

But of course as we go along we'll be refining that so I don't want anyone to think of.

That is final.

Okay.

And again, participants, if you would like to ask the question, that's stored in the number one on your telephone.

And again participants if you would like to ask a question Thats Star then the number one on your telephone keypad.

And speakers, we don't have any questions over the phone, please continue.

And speakers, we don't have any questions. So very different please continue.

Okay.

Thank you everyone. Thank you for your time.

And speakers, we have a follow up.

Okay, I'm, sorry, and ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect. Thank you.

Sorry. And ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now take a seat.

Q1 2022 Purecycle Technologies Inc Earnings Call

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