Q4 2023 PureCycle Technologies Inc Earnings Call

March 6, 2024

After 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 you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Christian Brewery corporate Communications manager. Please go ahead.

[music].

Yeah.

Good day, and thank you for standing by welcome to the pure cycle technologies fourth quarter 2023, corporate update conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to <unk>.

You're welcome to pure cycle technologies fourth quarter and fiscal year ended 2023, corporate update conference call I am personally really manager of corporate communications for pure cycle and joining me on the call today are dosing Olson, our Chief Executive Officer, Jamie Vazquez, our Chief Financial Officer.

Ask a question during this session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Good day, and thank you for standing by welcome to the pure cycle technologies fourth quarter 2023, corporate update conference call. At this time, all participants are in a listen only mode.

This morning, we will be highlighting our corporate developments for the fourth quarter and fiscal year ended 2023 of the presentation will be going through on this call can also be found on the investor tab on our website at pure cycle Dot com.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Christian Pruitt Corporate Communications manager. Please go ahead alright. Thank you D V. Welcome to pure cycle technologies fourth quarter and fiscal year ended 2023, corporate update conference call I Am Christian.

After the Speakers' presentation, there will be a question and answer session to ask a question. During this session you will need to press star one one on your telephone.

Any 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 uncertainties, many of which maybe beyond our control, including those set forth in our safe Harbor provisions and forward looking statements that can be found at the end of our fourth quarter.

Then here an automated message advising your hand is raised to withdraw your question. Please press star one again.

Brewing manager of corporate communications for pure cycle and joining me on the call today are gossiping Olson, our Chief Executive Officer, Jamie Vazquez, our Chief Financial Officer.

Please be advised that today's conference is being recorded.

2023, corporate update press release filed yesterday and our annual report on Form 10-K filed this morning as well as in other reports on file with the SEC that provides further detail about the risks related to our business.

I'd now like to hand, the conference over to your Speaker today Christian Brewery corporate Communications manager. Please go ahead alright. Thank you <unk> welcome to pure cycle technologies fourth quarter and fiscal year ended 2023 corporate update conference call.

This morning, we will be highlighting our corporate development for the fourth quarter and fiscal year ended 2023, the presentation will be going through on this call can also be found on the investor tab on our website at pure cycle Dot com.

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.

I'm Christian <unk> manager of corporate communications procure cycle and joining me on the call today are dusting Olson, our chief Executive Officer, and Jamie Vazquez, Our Chief Financial Officer.

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 uncertainties, many of which maybe beyond our control, including those set forth in our safe Harbor provisions and forward looking statements that can be found at the end of our fourth quarter.

Our remarks today May also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including among other things changes in connection with quarter end and year end adjustments any variation between pure cycle as actual results and the preliminary financial data set forth herein may be material.

Morning, we will be highlighting our corporate development for the fourth quarter and fiscal year ended 2023, the presentation will be going through on this call can also be found on the investors tab of our website at pure cycle 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.

2023, corporate update press release filed yesterday and our annual report on Form 10-K filed this morning as well as in other reports on file with the SEC provides further detail about the risks related to our business.

Welcome to follow along with our slide deck or are joining us by phone you can access it at anytime pure cycle Dot com. We are excited to share updates from the previous quarter with you I will now turn it over to Duston also fewer cycles Chief Executive Officer.

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 and forward looking statements that can be found at the end of our fourth quarter 2023, corporate update press release filed yesterday and our annual report on Form 10-K filed this morning as well as in other reports on.

It's a pleasure to join you today, we are in irons in Ohio. This morning, and excited to share our results. However, I would like to start the call by introducing our new CFO, Jamie Vazquez Jamie's resumes deep he comes with a lot of relevant experience and he is already adding value, Jamie if you'd like to introduce yourself to Florida.

Our remarks today May also include preliminary non-GAAP estimates that are subject to risks and uncertainties, including among other things changes in connection with quarter end and year end adjustments any variation between pure cycle actual results in the preliminary financial data set forth herein may be material.

File with the SEC that provides further detail about the risk related to our business.

Yours. Thank you Joseph while I'm, certainly excited to be here and working with a very talented and dedicated team and I've been very impressed with the collaboration.

Welcome to follow along with our slide deck or joining us by phone you can access it at anytime on pure cycle Dot Com. We are excited to share updates from the previous quarter with you I'll now turn it over to Duston also fewer cycles Chief Executive Officer.

Our remarks today May also include preliminary non-GAAP estimates that are subject to risks and uncertainties, including among other things changes in connection with quarter end and year end adjustments any variation between pure cycle as actual results and the preliminary financial data set forth herein may be material.

Processes and the execution of critical items that I've seen in my first three weeks of FERC pure cycle level.

I believe that my 30 years of experience in various financial roles public and industrial companies will complement this talented team and I look forward to talking with many of you on the phone near term.

You're welcome to follow along with our slide deck or are joining us by phone you can access it at anytime on pure cycle Dot Com. We are excited to share updates from the previous quarter with you I will now turn it over to Duston also pure cycles, Chief Executive Officer.

Thank you for the introduction, Jamie but more importantly, thank you for putting the Jersey honor joining our team.

Comes with a lot of relevant experience and he is already adding value Jamie if you'd like to introduce yourself. The floor is yours. Thank you Joseph while I'm certainly excited to be here and working with a very talented and dedicated team and I've been very impressed with the collaboration on.

Can tell you that I'm very excited to have Jamie on our team becomes the pure cycle with years of experience a wealth of core financial expertise and has navigated multiple dynamic business environment in prior services, Jamie will bring a balance point of view to our core decision, making process that will help us deliver strong business results. It has been.

It's a pleasure to join you today, we are in irons in Ohio. This morning, and excited to share our results. However, I would like to start the call by introducing our new CFO, Jamie Vazquez Jamie's resumes deep he comes with a lot of relevant experience and he is already adding value Jamie if you'd like to introduce yourself to the floor.

The processes and the execution of critical items I've seen in my first three weeks of FERC pure cycle.

And I believe that my 30 years of experience in various financial roles public and industrial companies will complement this talented team and I look forward to talking with many of you on the phone near term.

Pleasure getting to know Jamie over the last few weeks and I'm looking forward to the next years of partnership.

Or is yours. Thank you, while I'm certainly excited to be here and working with a very talented and dedicated team and I've been very impressed with the collaboration on processes and the execution of critical items I've seen in my first three weeks of FERC pure cycle.

This was a busy quarter for ironton operations. After the screen changer installation for the first time, we've been able to establish greater end to end production or we can monitor the entire process working together, we're starting to see tangible progress across all operations, we are focused exclusively.

Thank you for the introduction, Jamie but more importantly, thank you for putting the Jersey honor joining our team I can tell you that I'm very excited to have Jamie on our team. He comes to pure cycle with years of experience a wealth of core financial expertise and has navigated multiple dynamic business environment in prior servicer.

On PCR grade feedstock since the November outage, which has enabled us to final commission all aspects of the operation.

Jamie will bring a balance point of view to our core decision, making process that will help us deliver strong business results. It's been a pleasure getting to know Jamie over the last few weeks I'm looking forward to the next years of partnership.

While it has only been two months of running without feed Contaminations. We've already achieved numerous production milestones up to approximately 8000 pounds per hour of end to end processing successful production of co product, one and two pelletizing that reached rates between nine and 10000 pounds per hour.

This was a busy quarter for origin operations. After the screen changer installation for the first time, we've been able to establish greater end to end production or we can monitor the entire process working together, we are starting to see tangible progress across all operations. We are focused exclusively on.

Jamie will bring a balance point of view to our core decision, making process that will help us deliver strong business results. It's been a pleasure getting to know Jamie over the last few weeks I am looking forward to the next years of partnership.

And successful loading of numerous railcars with pellets and we have done all of this while consuming significantly less utilities than originally estimated the most important metric is our end to end production. This means that we run feed extruders at 8000 pounds in our process to feed through the entire plan.

On PCR grade feedstock since the November outage, which has enabled us to final commission all aspects of the operation.

This was a busy quarter for origin operations. After the screen changer installation for the first time, we've been able to establish a greater end to end production, where we can monitor the entire process working together, we're starting to see tangible progress across all operations. We are focused exclusively on.

While it has only been two months of running without bead Contaminations. We've already achieved numerous production milestones up to approximately 8000 pounds per hour of end to end processing successful production of co product one into pelletizing that reached rates between nine and 10000 pounds per hour.

Produced both co product want and co product too and Pelletize, the resulting product at the end of the plan. This was previously not possible as we ran into lengthy be plugging issues.

PCR grade feedstock since the November outage, which has enabled us to final commission all aspects of the operation.

The best part of the new face was watching the production of co product wanted too I still believe there is no. Greater example of our process working then by seeing the production of these co products remember, while our job is to make ultra pure recycled resin, we do it by removing contaminants. Therefore it is.

While it has only been two months of running without bead Contaminations. We've already achieved numerous production milestones up to approximately 8000 pounds per hour of end to end processes successful production of co product, one and two pelletizing that reached rates between nine and 10000 pounds per hour.

In fact critical to remove CB one in <unk> in order for us to make our final product.

On the commercial front, we're also starting to see momentum we achieved our first revenue through sales in Q4 and began sampling our products to customers for final application approval initial results are positive and we expect this progress to continue as we prepare for the rest of 2024, we intend to.

Produced both co product, one and co product too and Pelletize, the resulting product at the end of the plan. This was previously not possible as we ran into lengthy beat plugging issues.

And successful loading of numerous railcars with pellets and we have done all of this while consuming significantly less utilities than originally estimated.

The most important metric is our end to end production. This means that we run speeds extruders at 8000 pounds of our process to feed through the entire plan.

The best part of the new face was watching the production of Coproduct wanted too I still believe there is no. Greater example of our process working then by seeing the production of these co products remember, while our job is to make ultra pure recycled resin, we do it by removing contaminants. Therefore it is.

Execute a two to four week outage in early Q2, two advanced several reliability improvements. This small pause in production should help position the facility for stronger reliability.

Both core product, one and co product too and Pelletize, the resulting product at the end of the plan. This was previously not possible as we ran into link the bead plugging issues.

In fact critical to remove CPE wanted GP too in order for us to make our final product.

We're now entering a new phase for pure cycle, we've commissioned the plant identified areas, where we have opportunities and are now transitioning into traditional manufacturing processes, improving reliability optimizing the process and driving day to day improvements.

On the commercial front, we're also starting to see momentum we achieved our first revenue through sales in Q4 and began sampling our product to customers for final application approval initial results are positive and we expect this progress to continue as we prepare for the rest of 2024, we intend to.

We will focus on our core operations in order to achieve higher continuous plant rates and drive more consistent product quality. So we can deliver a superior product to customers.

In fact critical to remove <unk> in order for us to make our final product.

Execute a two to four week outage in early Q2, two advanced several reliability improvements. This small pause in production should help position the facility for stronger reliability.

While our progress was good over the past six months to 12 months. The pace of progress was limited by two critical challenges seal failures and absorb it at least.

Both of these events took significant time to diagnose and solve but more importantly, it's linked and our learning curve there were certain aspects of the operation that remain untested until we could establish a continuous and the operations. The last two months have been different running in this operational mode allow.

Execute a two to four week outage in early Q2, two advanced several reliability improvements. This small pause in production should help position the facility for stronger reliability.

We will focus on our core operations in order to achieve higher continuous plant rates and drive more consistent product quality. So we can deliver a superior product to customers.

US to test a wider range of PCR feedstocks, each of which has its own unique characteristics right test the plant two operational boundaries of each feedstock feedstocks have widely varying characteristics that require process optimization.

While our progress was good over the past six to 12 months the pace of progress was limited by two critical challenges seal failures and absorbent bed leaves.

We will focus on our core operations in order to achieve higher continuous plant rates and drive more consistent product quality. So we can deliver a superior product to customers.

These include differences like high end low melt flow indices.

Both of these events took significant time to diagnose and solve but more importantly, it lengthened our learning curve there were certain aspects of the operation that remain untested until we could establish continuous end to end operations. The last two months have been different running in this operational mode allow.

Low concentrations of co product wanted to and many other minor behaviors that impact the optimization of the plant.

While our progress was good over the past six months to 12 months. The pace of progress was limited by two critical challenges seal failures and absorbent bed leaves.

It also allowed us to develop better solvent purification expertise, while we learn how to run. This commercial scale facility. We are also proving our ability to solve new challenges every day and in doing so we're learning how to operate this plant more and more reliably everyday.

Good us to test a wider range of PCR feedstocks, each of which had its own unique characteristics right test the plant to operational boundaries of each feedstock feedstocks have widely varying characteristics that require process optimization.

Both of these events took significant time to diagnose and solve but more importantly, it lengthened our learning curve there were certain aspects of the operation that remain untested until we could establish continuous end to end operations. The last few months have been different running in this operational mode allow.

Ultimately our success has been defined by how quickly we integrate learnings into our operations.

No doubt that we will face new challenges with each new operational tier, but this is normal with normal manufacturing operations and we have the right team in place to solve the next challenge and achieve our goals.

These include differences like high and low melt flow indices.

US to test a wider range of PCR feedstocks, each of which has its own unique characteristics right test the plant operational boundaries of each feedstock feedstock have widely varying characteristics that require process optimization.

Low concentrations of coproduct wanted to and many other minor behaviors that impact the optimization of the plant.

Our metrics are not where we want them to be today, but they are getting better we have seen quarter over quarter progress on many of our key metrics.

These include differences liked high and low melt flow indices.

Pellet production has increased five times from 200000 pounds to one 3 million pounds.

Low concentrations of coproduct wanted to and many other minor behaviors that impact the optimization of the plant.

With a single day feed record of 102000 pounds in a single day pellet position record of 144000 pounds.

Ultimately our success has been defined by how quickly we integrate learnings into our operations.

No doubt that we'll face new challenges with each new operational tier, but this is normal with normal manufacturing operations and we have the right team in place to solve the next challenge and achieve our goals.

Our purge rates are one third of last quarter from 70% to 22% purging is a technical term that means.

<unk> are not running efficiently.

Our metrics are not where we want them to be today, but they are getting better we have seen quarter over quarter progress on many of our key metrics.

Ultimately our success has been defined by how quickly we integrate learnings into our operations.

We see steady and reliable increases in CP one in CPG.

No doubt that we will face new challenges with each new operational peer, but this is normal with normal manufacturing operations and we have the right team in place to solve the next challenge and achieve our goals.

<unk> production levels in fact after implementing reliability improvements in January our CPT production increased from 16000 pounds to 48000 pounds from January to February.

Our pellet production has increased five times from 200000 pounds to one 3 million pounds.

With a single day speed record of 102000 pounds in a single day pellet sensation record of 144000 pounds.

Our metrics are not where we want them to be today, but they are getting better we have seen quarter over quarter progress on many of our key metrics.

We've now exclusively run on PCR since November outage, and we've tested numerous new feedstocks, both produced internally and produced externally and our core support operations are reaching stronger reliability levels.

Our purge rates are one third of last quarter from 70% to 22% purging is a technical term that means are you sure.

Our pellet production has increased five times from 200000 pounds to one 3 million pounds.

Steam availability is at 99, 8% in Q1, and our solvent circulation reliability has increased from 71% to 98% in Q1.

<unk> are not running efficiently.

With a single day record of 102000 pounds in a single day pellet position record of 144000 pounds.

We see steady and reliable increases in CP one in CPG.

<unk> production levels in fact after implementing reliability improvements in January our CPG production increased from 16000 pounds. The 48000 pounds from January to February.

Our purge rates are one third of last quarter from 70% to 22% purging is a technical term that means.

Our overall uptime has been variable what our daily production performance when not impacted by reliability problems has been stronger we continue to focus on implementing incremental reliability improvements as well as expect a stepwise improvement when following the planned outage the metrics are improving every.

<unk> are not running efficiently.

We see steady and reliable increases in CP one in CPG.

<unk> production levels in fact after implementing reliability improvements in January our CPT production increased from 16000 pounds. The 48000 pounds from January to February.

And we let data to guide our actions shape, our behaviors and help us get better.

We arent satisfied with where we are but our team will not slow down.

Our team is excited about the future not just because of the tangible progress, but the but also because of the learned enhancements that we are applying to our base design. We are planning a small two to four week outage in Q2 that we expect will make significant impact positive impact to our operational performance.

And our solvent circulation reliability has increased from 71% to 98% in Q1.

Steam availability is at 99, 8% in Q1, and our solvent circulation reliability has increased from 71% to 98% in Q1.

<unk> during.

During this outage, we intend to tackle several key areas during the July and November outages, we implemented several key improvements during this upcoming outage, we will make further improvements to improve the extraction efficiency and therefore also to improve the recovery of co product one.

And we let data guide our actions shape, our behaviors and help us get better.

We arent satisfied with where we are but our team will not slow down.

The co product to discussion has already been disclosed publicly and we will discuss more later, but our efforts here are important work toward improving the settling performance and set the stage for CP to removal.

Our team is excited about the future not just because of the tangible progress, but the ALS, but also because of the learned enhancements that we are applying to our base design. We are planning a small two to four week outage in Q2 that we expect will make significant impact positive impact of our operational performance.

Everyday and we let data guide our actions shape, our behaviors and help us get better.

Our filtration has been a reliability challenge during Q1, it limited uptime, which impacted rates it forced us to stop and start operations. Many times. However, we were able to install bypass line, which improved uptime, but we will need to spend more time during the outage cleaning the system in order to reset operate.

We arent satisfied with where we are but our team will not slow down.

Farms during.

Our team is excited about the future not just because of the tangible progress, but the us but also because of the learned enhancements that we are applying to our base design. We are planning a small two to four week outage in Q2 that we expect will make significant impact positive impact to our operational performance.

<unk> back to baseline.

<unk> had been a consistent discussion and consistent challenge we have already implemented several system upgrades and improved operational monitoring which are providing improved performance, but in order to achieve the desired long term results, we will need to continue to upgrade key deals across our facilities.

<unk> during.

This process will not be completed during the outage and will likely require additional activity in the future.

Our digital foundation is very good.

We have a platform that should enable us to reap long term benefits across the entire digital ecosystem. However, it has also been temperamental. We've worked through hundreds of improved programming glitches and while it doesn't cost much to fix and is still getting better still the impact of <unk>.

<unk> back to baseline.

<unk> has been a challenge we have a talented digital team and we will continue to learn and improve and all of the learnings are directly applicable to future growth projects.

<unk> back to baseline.

This process will not be completed during the outage and will likely require additional activity in the future.

Co product too is the principal limitation at the current time.

We can run feed through the system purified through extraction and make co product one settle in the process and make co productivity and Pelletizing product. These fundamental processes work.

Our digital foundation is very good.

However, the capacity to remove CB two out of the system is limited it is.

This process will not be completed during the outage and will likely require additional activity in the future.

Not impacting our ability to make CP to its limiting our ability to purge CPT from the system and ultimately this limitation restricts the amount of rate we can push through the facility. We originally expected to only make the granular variety of CPG, but over the last two months as well.

Our digital foundation is very good.

<unk> has been a challenge we have a talent the digital team and we will continue to learn and improve and all of the learnings are directly applicable but future growth projects.

We have a platform that should enable us to reap long term benefits across the entire digital ecosystem.

Over it has also been temperamental, we've worked through hundreds of improved programming glitches and while it doesn't cost much to fix and is still getting better still the impact uptime has been a challenge we have a talented digital team and we will continue to learn and improve and all of the law.

Co product to is the principal limitation at the current time.

We can run feed through the system purified through extraction and make coproduct born settle in the process and make co productivity and Pelletizing products. These fundamental processes work.

Begun to run the plant with a variety of feedstocks, we started making lower density foam and higher density laws, which we call dinosaur bones and the process.

This variation ultimately conflicts with the original design and limits our ability to remove it from the system efficiently. We have several short term solutions in mind first we will continue to remove CPT manually through the trades at approximately 3% to 7000 pounds per day.

<unk> are directly applicable, but future growth projects.

However, the capacity to remove CP two out of the system is limited it is.

Productivity is the principal limitation at the current time.

Not impacting our ability to make CPU, it's limiting our ability to purge CPT from the system and ultimately this limitation restricts the amount of rate we can push through the facility. We originally expected to only make the granular variety of CPG, but over the last two months as well.

We can run feed through the system.

Purified through extraction and make co product one settle in the process and make co productivity and Pelletize the product these fundamental processes work.

We will continue to purchase lower CPT feedstocks. So we can raise feed rates and the current renewable capacity and third we are investigating a small project to flake sort the material produced from the prep wet line. So more post consumer curbside materials can be processed.

However, the capacity to remove CP two out of the system is limited it is not.

Begun to run the plant with a variety of feedstocks, we started making lower density film and higher density laws, which we call dinosaur bones and the process there.

Impacting our ability to make CPU, it's limiting our ability to purge CPT from the system and ultimately this limitation restricts the amount of rate we can push through the facility. We originally expected to only make the granular variety of CPG, but over the last two months as we've been.

For the longer term solution, we are using commercial data to design, a more robust continuous operational assets.

This variation ultimately conflicts with the original design and limits our ability to remove it from the system efficiently. We have several short term solutions in mind first we will continue to remove CPG manually through the trades at approximately $3 to 7000 pounds per day.

We have already started the early stage construction and design work and intend to make critical clients. During the Q2 outage ultimately our team is working to optimize the short term options in order to bridge to a longer term solution.

<unk> to run the plant with a variety of feedstocks, we started making lower density foam and higher density laws, which we call dinosaur bones and the process. This variation ultimately conflicts with the original design and limits our ability to remove it from the system efficiently. We have several short term solutions in mind first.

Second we will continue to purchase lower CPT feedstocks. So we can raise feed rates and the current renewable capacity and third we are investigating a small project to flake sort the material produced from the prep wet line. So more post consumer curbside material can be processed.

The change will take time and the final implementation should occur just after the Q2 outages completed we.

We do not expect the final implementation to impact plant production as the critical time points will be installed during the outage.

We will continue to remove CPG manually through the trades at approximately 3% to 7000 pounds per day.

For the longer term solution, we are using commercial data to design a more robust continuous operational asset we have already started the early stage construction and design work and intend to make critical hires during the Q2 outage ultimately our team is working to optimize the short term options and <unk>.

Our operations are improving it is a grind at times, but our team is unwavering in their pursuit to run the facility efficiently reliably and consistently it will take time, but we're making positive strides everyday we are driven by the mission, we have purpose and our every effort and we feel.

Order to bridge to a longer term solution.

Good about the impact that we're making around the world as we built a strong operations. We also see key unit economics trending positively.

For the longer term solution, we are using commercial data to design a more robust continuous operational asset we have already started the early stage construction and design work and intend to make critical clients. During the Q2 outage ultimately our team is working to optimize the short term options in order to.

The change will take time and the final implementation should occur just after the Q2 outages completed we do not expect the final implementations impact plant production as the critical time points will be installed during the outage.

Granted there are both positives and negatives when comparing our unit economics to earlier estimates three to five years ago, but we believe the net impact is positive.

To bridge to a longer term solution with.

For revenue, we see stronger demand for our products than we originally expected and a shorter supply of good quality competition.

This is true for both pure five as well as other higher color variants for energy, we see lower consumption of energy than originally expected for what we used to call waves. We now call co products. There is genuine interest in the alternative applications for this product, which is shifting a former.

About the impact that we're making around the world.

Our operations are improving it is a grind at times, but our team is unwavering in their pursuit to run the facility efficiently reliably and consistently.

As we built a strong operations, we also see key unit economics trending positively.

Four cents per pound cost into a current revenue stream.

Granted there are both positives and negatives when comparing our unit economics to earlier estimates three to five years ago, but we believe the net impact is positive.

Will take time, but we're making positive strides everyday we are driven by the mission, we have purpose and our every effort and we feel good about the impact that we're making around the world.

Okay.

Offsetting the positives, we also have higher than expected feedstock logistics costs and higher than expected SG&A costs, but the net impact is positive and is reliability continues to improve the economics will fall.

For revenue, we see stronger demand for our product than we originally expected and a shorter supply of good quality competition. This.

As we built a strong operations. We also see key unit economics trending positively Greg.

This is true for both pure five as well as other higher color variants for energy, we see lower consumption of energy than originally expected for what we used to call waste. We now call co products. There is genuine interest in the alternative applications for this product, which is shifting a former.

Granted there are both positives and negatives when comparing our unit economics to earlier estimates three to five years ago, but we believe the net impact is positive.

We are so proud of our energy performance. It serves the business and shareholders with two key messages one our overall variable cost should be lower and is expected to reduce electricity and natural gas usage. This should result in a $2 million to $4 million per year.

For revenue, we see stronger demand for our products than we originally expected and a shorter supply of good quality competition.

Four cents per pound cost into a current revenue stream.

This is true for both pure five as well as other higher color barriers for energy, we see lower consumption of energy than originally expected for what we used to call waves. We now call co products. There is genuine interest in the alternative applications for this product, which is shifting a former.

<unk> savings to the business.

But what we're even more excited about is the impact on the environment.

Yes.

The improved energy performance should reduce our overall carbon footprint. This means one it should take less than half of the carbon to make our product as opposed to other produce fossil based equivalents.

Four cents per pound cost into a current revenue stream.

Our customers can show their sustainable product more confidently can showcase their sustainable product more confidently to the market.

Okay.

And finally final customers can feel good again about the about the plastic that they're purchasing we.

We still have more work to do and these are early estimates that should be validated externally soon but the early data looks really good.

These savings to the business.

But what we're even more excited about is the impact on the environment. The improved energy performance should reduce our overall carbon footprint. This means one it should take less than half of the carbon to make our product as opposed to other produce fossil based equivalents.

This is important for our customer base. It further differentiates us from the competition and ultimately improve the value proposition for sales. The net result is very positive for our business for our customers, but most importantly to our planet.

These savings to the business.

Our customers can show their sustainable product more confidently can showcase their sustainable product more confidently to the market and finally final customers can feel good again about the about the plastic that they're purchasing.

The market feedback for our product is positive because we are producing a true plastic plastic solution with benefits that other technologies do not provide remember most chemical recycling technologies deliver a plastic fuel solution with.

We still have more work to do and these are early estimates that should be validated externally soon but the early data looks really good.

Our customers can show their sustainable product more confidently can showcase their sustainable product more confidently to the market.

Low yields.

And most mechanical recycling technologies blend the feedstock into the process with limited ability to remove internal contaminants.

And finally final customers can feel good again about the about the plastic that they're purchasing.

Our technology is the only commercial option that has the ability to offer customers a true plastic plastic solution with high yield high quality and a low carbon footprint we.

We still have more work to do and these are early estimates that should be validated externally soon but the early data looks really good.

The market feedback for our product is positive.

We are producing a true plastic plastic solution with benefits that other technologies do not provide remember most chemical recycling technologies deliver a plastic to fuel solution with low yields.

We have made product out of both <unk> and PCR and while various pellet productions have varied with color even to higher color variants have strong demand due to superior mechanical processing properties.

While our goal will always be to improve the product consistency and quality across the feedstock slate. The reality is the customer appetite for recycled material coupled with the significant under supply of quality product is creating strong demand for pure cycle product.

And most mechanical recycling technologies blend the feedstock into the process with limited ability to remove internal contaminants.

Our technology is the only commercial option that has the ability to offer customers a true plastic plastic solution with high yield high quality and a low carbon footprint.

Low yields.

And most of the mechanical recycling technologies blend the feedstock into the process with limited ability to remove internal contaminants.

The initial product testing is truly exciting for our team we are testing commercial products across many customers to gain approval for the long term commercial supply.

We have made product out of both <unk> and PCR and while various pellet productions had varied with color even to higher color variance have strong demand due to superior mechanical processing properties.

Our technology is the only commercial option that has the ability to offer customers a true plastic plastic solution with high yield high quality and a low carbon footprint, we have made product out of both.

Want to highlight one specific application.

Fiber.

Fiber is produced when polypropylene, it's melted and stretched into long strands you can visually imagined it like it's dental floss.

While our goal will always be to improve the product consistency and quality across the feedstock slate. The reality is the end customer appetite for recycled material coupled with the significant under supply of quality product is creating strong demand for pure cycle product.

And PCR and while various pellet productions had varied with color even to higher color variance have strong demand due to superior mechanical processing properties.

This is used in many many many applications textiles apparel like watch bands roads carpet clothing, it could even be molded into semi rigid parts to provide additional strength.

Our goal will always be to improve the product consistency and quality across the feedstock slate. The reality is the customer appetite for recycled material coupled with the significant under supply of quality product is creating strong demand for pure cycle product.

The initial product testing is truly exciting for our team we are testing commercial products across many customers to gain approval for the long term commercial supply.

That's all very good.

But it's not the best part of the story.

Making fiber from fossil based PPE is among the most difficult manufacturing applications in the polypropylene industry, you can imagine hundreds of continuous yards of individual long strands of this product flying through the facility at high rates and through many highly sophisticated.

Want to highlight one specific application.

Fiber.

Fiber is produced when polypropylene has melted and stretched into long strands you can visually imagined it like it's dental floss. This.

The initial product testing is truly exciting for our team we are testing commercial products across many customers to gain approval for the long term commercial supply I want to highlight one specific application.

<unk> pieces of equipment.

This is used in many many many applications textiles apparel like watch spans roads carpet clothing, it could even be molded into semi rigid parts to provide additional strength.

And then you can also imagine you can also imagine the challenges that emerge when a single strand breaks during the production process.

Labor.

Cyber is produced when polypropylene, it's melted and stretched into long strands you can visually imagined it like it's dental floss.

This application is extremely difficult for traditional polypropylene recycling products because most of these products still have CP, one and <unk> two in the mixture.

That's all very good but it's not the best part of the story make.

This is used in many many many applications textiles apparel like watch bands roads carpet clothing, it could even be molded into semi rigid parts to provide additional strength.

The varying levels of contaminants with stretched to the surface caused the strands to break the industry has not been successful when running <unk> fiber with a recycled feedstock I am very proud to show a school of polypropylene fibre that was successfully made from our pure five material.

That's all very good but it's not the best part of the story.

Pieces of equipment.

And then <unk>.

Can am also imagine you can also imagine the challenges that emerge when a single strand breaks during the production process.

Ariel and applications that will come from this production.

This is yet another strong proof point that our product quality is superior and even in the most difficult applications and is a reasonable replacement for fossil based alternatives.

This application is extremely difficult for traditional polypropylene recycling products because most of these products still have CP, one and <unk> two in the mixture.

<unk> pieces of equipment.

And then you can I'm also imagine you can also imagine the challenges that emerge when a single strand breaks during the production process.

Another exciting step with the respect to the product development involves the collaboration between <unk> Zero program and our relationship with Churchill containers.

The varying levels of contaminants with stretch to the surface caused the strands to break the industry has not been successful when running PB fiber with a recycled feedstock I'm very proud to show a school of polypropylene fibre that was successfully made from our pure five material.

This application is extremely difficult for traditional polypropylene recycling products because most of these products still have CP, one and <unk> two in the mixture.

Churchill containers as a leader in manufactured service Ware and a key application lane involves the production of stadium cups to venues all over the nation.

Through the partnership Churchill has manufactured stadium cups out of our commercially produced EPR resin at the Iron and facility. We expect our peers zero partners to have these cup serving beverages of choice in the stadiums in the future.

The varying levels of contaminants with stretched to the surface caused the strands to break.

And applications that will come from this production.

This is yet another strong proof point that our product quality is superior and even in the most difficult applications and is a reasonable replacement for fossil based alternatives.

The industry has not been successful when running PB fiber with a recycled feedstock I'm very proud to show a school of polypropylene fibre that was successfully made from our pure five material and applications that will come from this production.

It is true circularity.

The opportunity to partner the opportunity to team with our peers zero partners and Churchill to create a true plastic the plastics circularity change it is exactly what the world is looking for in our industry.

Another exciting step with the respect to the product development involves the collaboration between <unk> Zero program and our relationship with Churchill containers.

This is yet another strong proof point that our product quality is superior and even in the most difficult applications and is a reasonable replacement for fossil based alternatives.

She'll containers as a leader in manufactured service layer and a key application lane involves the production of stadium cups to venues all over the nation.

The path for Ironton, it's clear and we believe we are on the right path. We will continue to focus on our operations here to achieve higher continuous plant rates drive more consistent product quality continued to improve our product to customers to make the final commercial qualifications and efficiently.

Another exciting step with the respect to the product development involves the collaboration between <unk> Zero program and our relationship with Churchill containers Churchill containers as a leader in manufactured service Ware and a key application lane involved with production of stadium cups to venues all over the nation.

Through the partnership Churchill has manufactured stadium cups out of our commercially produced EPR resin at the Irons and facility. We expect our peers zero partners to have these cups, serving beverages of choice in the stadiums in the future.

To execute the Q2 outage.

This is true circularity.

While today's focus is mostly ironton.

The opportunity to partner the opportunity to team with our peers zero partners and Churchill to create a true plastic plastics circularity change is exactly what the world is looking for in our industry.

Through the partnership Churchill has manufactured stadium cups out of our commercially produced EPR resin at the Ironton facility. We expect our peers. Your partners to have these cups, serving beverages of choice in the stadiums in the future.

We want you to know that we are still working diligently with our partners to prepare our growth at <unk>.

Each project is in a slightly different position, but also have the primary focus.

Integrate ironton learnings into the Capex plan find efficiencies to reduce the overall project stack prepare the engineering to ensure strong project deliveries. These efforts combined with the improved unit economics should result in strong projects with reliable cost and schedule performance and excellent rich.

It is true circularity.

Opportunity to partner the opportunity to team with our peers zero partners and Churchill to create a true plastic plastics circularity change is exactly what the world is looking for in our industry.

<unk> at this point I turn over the presentation to Jamie Vazquez to provide a financial update.

<unk> executed in Q2 outage.

While today's focus is mostly ironton.

We want you to know that we are still working diligently with our partners to prepare our growth at each.

Thank you Justin we have a few financial highlights starting on slide 16, which shows the change in unrestricted and restricted cash from the end of the third quarter to the end of the fourth quarter. As you can see unrestricted cash declined by just under $90 million during that period and the single largest driver of the change was a $50 million increase.

Each project is in a slightly different position, but also have the primary focus integrate ironton learnings into the Capex plan find efficiencies to reduce the overall project stack prepare the engineering to ensure strong project deliveries. These efforts combined with the improved unit economics.

To execute the Q2 outage.

While today's focus is mostly ironton.

We want you to know that we are still working diligently with our partners to prepare our growth at.

The general liquidity Reserve. This was required as part of the second amendment to the Iron return revenue Bond adventure that was executed in early November 23.

Should result in strong projects with reliable cost and schedule performance and excellent returns at this point I turn over the presentation to Jamie Vazquez to provide a financial update.

Operating and corporate related expenses were $27 5 million for the fourth quarter and adjusted for severance which was associated with our previously announced December reduction in force and the timing of certain payments. This level of expense was in line with expectations in the third quarter.

Thank you Justin we have a few financial highlights starting on slide 16, which shows the change in unrestricted and restricted cash from the end of the third quarter to the end of the fourth quarter. As you can see unrestricted cash declined by just under $90 million during that period. The single largest driver of the change was a $50 million increase.

Should result in strong projects with reliable cost and schedule performance and excellent returns at this point I turn over the presentation to Jamie Vazquez to provide a financial update.

Turning to slide 17, which is not a fourth quarter event, but a very important action that occurred this week and the reason we are highlighting it in our fourth quarter discussion.

The general liquidity Reserve. This was required as part of the second amendment to the Iron retained revenue bond adventure that was executed in early November 23.

Thank you Justin we have a few financial highlights starting on slide 16, which shows the change in unrestricted and restricted cash from the end of the third quarter to the end of the fourth quarter. As you can see unrestricted cash declined by just under $90 million during that period. The single largest driver of the change was a $50 million increase.

On March 5th we purchased just around 99% $249 million Southern Ohio power revenue bonds. This was an important step as it virtually removed all restrictive covenants, which allows us to better focus on working through operational startup challenges by finding solutions that are best.

Operating and corporate related expenses were $27 $5 million for the fourth quarter and adjusted for severance, which was associated with our previously announced reduction in force and the timing of certain payments. This level of expense was in line with expectations and the third quarter.

The general liquidity Reserve. This was required as part of the second amendment to the Iron retained revenue bond adventure that was executed in early November 23.

Long term for the Ironton operations as opposed to running the plant to meet short term volume goals and other short term milestones. Additionally, the purchase of the bonds should provide accrued cash cycles for the company as we become commercialized through the termination of the operating revenue escrow account.

Turning to slide 17, which is not a fourth quarter event, but a very important action that occurred this week and the reason we are highlighting it in our fourth quarter discussion.

Operating and corporate related expenses were $27 5 million for the fourth quarter and adjusted for severance, which was associated with our previously announced reduction in force and the timing of certain payments. This level of expense was in line with expectations and the third quarter.

On March 5th we purchased just around 99% $249 million.

And we did not retire the revenue bonds. So that gives us the potential to re market revenue bonds, Opportunistically, which we believe remain attractive given its tax free status and first priority lien on a valuable asset.

Southern Ohio.

Revenue bonds. This was an important step as it virtually removed all restricted covenants, which allows us to better focus on working through operational startup challenges by finding solutions that are best long term for the ironton operations as opposed to running the plant to meet short term volume goals and.

Turning to slide 17, which is not a fourth quarter event, but a very important action that occurred this week and the reason we are highlighting it in our fourth quarter discussion.

On slide 18, we show our pro forma change in liquidity as a result of the bond purchase using our year end 'twenty three liquidity position.

On March 5th we purchased just around 99% $249 million southern on a hydro power revenue bonds. This was an important step as it virtually removed all restrictive covenants, which allows us to better focus on working through operational startup challenges by finding solutions that are best.

You can see that the purchase included the use of $74 $5 million of unrestricted cash and just under $185 million of restricted funds or nearly 75% of the total issue.

Other short term milestones. Additionally, the purchase of the bonds should provide accrued cash cycles for the company as we become commercialized through the termination of the operating revenue escrow account.

We're in revenue bond escrow accounts and again, we have the opportunity to improve liquidity with the remarketing of the revenue bonds. In addition, we're also working to obtain that.

Long term for the iron retain operations as opposed to running the plant to meet short term volume goals and other short term milestones. Additionally, the purchase of the bonds should provide accrued and cycles for the company as we become commercialized through the termination of the operating revenue escrow account.

And we do not retired or revenue bonds. So that gives us potential to re market revenue bonds, Opportunistically, which we believe remain attractive given its tax free status and first priority Lee unbounded asset.

Release of funds still held in escrow, including our pro rata share of the debt service pump for the bonds that were purchased this could potentially free up about $20 million of liquidity.

On Slide 18, we show pro forma change in liquidity as a result of the bond purchase using our year ends in 'twenty three liquidity position.

And we did not retire the revenue bonds. So that gives us potential to re market revenue bonds, Opportunistically, which we believe remain attractive given its tax free status and first priority lien on a valuable asset.

Lastly, we increased our line of credit from $150 million to $200 million to rebuild some of the liquidity post the bond repurchase.

You can see that the purchase included use of $74 $5 million unrestricted cash and just under $185 million of restricting earns really 75% of the total issue.

Now I'll turn impacted us.

Thank you Jamie we are excited about the progress we have achieved this quarter.

On slide 18, we show a pro forma change in liquidity as a result of the bond purchase using our year ends in 'twenty three liquidity position.

We're in revenue bond escrow accounts and again, we have the opportunity to improve liquidity with the remarketing of the revenue bonds. In addition, we're also working to obtain the release of bonds still held in escrow, including our pro rata share debt service fund for the bonds that were purchased this could potentially free up.

We successfully produced and then production runs across the core purification assets has achieved 8000 pounds per hour rates.

You can see that the purchase included the use of $74 $5 million unrestricted cash and just under $185 million.

We produced significant quantities of co product one in coproduct too at the commercial scale and successfully implemented a series of small projects to improve our month over month production of pure productivity.

Nearly 75% of the total issue.

We have delivered commercial grade samples to our customers for file application approval and received strong feedback on the product quality, we repurpose we purchased <unk>.

$20 million of liquidity.

We're in revenue bond escrow accounts and again, we have the opportunity to improve liquidity with the remarketing of the revenue bonds. In addition, we're also working to obtain the release of funds held in escrow, including our pro rata share and sort of respond to the bonds that were purchased this could potentially free up.

Lastly, we increased our line of credit and $150 million to $200 million.

To rebuild some of the liquidity post the bond repurchase.

Almost all of their origin revenue bonds, which should provide a mechanism for additional liquidity.

Now I'll turn it back to us.

Thank you Jamie we are excited about the progress we have achieved this quarter.

We are prepping for Q2 outage that we expect to transform the reliability of our operations.

We successfully produced edited production runs across the core purification assets and achieved 8000 pounds per hour rates.

$20 million of liquidity.

At this time I would like to hand over to our moderator for Q&A.

Lastly, we increased our line of credit and $150 million to $200 million.

We produced significant quantities of coproduct wanted coproduct too at the commercial scale and successfully implemented a series of small projects to improve our month over month production of pure productivity.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

To rebuild some of the liquidity post the bond repurchase.

Now I'll turn it back to dose.

Thank you Jamie we are excited about the progress we have achieved this quarter.

We have delivered commercial grade samples to our customers for file application approval and received strong feedback on the product quality.

We successfully produced ended production runs across the core purification assets has achieved 8000 pounds per hour rates.

We've repurposed we repurchased.

We produced significant quantities of co product, one and cohort two at the commercial scale and successfully implemented a series of small projects to improve our month over month production of pure productivity.

And our first question comes from Gerry Sweeney of Roth.

Almost all of their origin revenue bonds, which should provide a mechanism for additional liquidity.

And.

And we are prepping for Q2 outage that we expect to transform the reliability of our operations at this time I would like to hand over to our moderator for Q&A.

Good morning, Jamie Jamie welcome aboard Thanks for taking my call.

We have delivered commercial grade samples to our customers for final application approval and received strong feedback on the product quality.

Yeah. Thanks, Jerry Thanks for the call thanks for listening.

Hey, listen just starting with CFP two obviously it sounds like this is the sort of the bigger bottleneck that youre working on.

Thank you.

We've repurposed we purchased.

Reminder, to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Almost all of their ireton revenue bonds, which should provide a mechanism for additional liquidity.

As Youre looking at the engineering challenges around this.

And we are prepping for Q2 outage that we expect to transform the reliability of our operations at this time I would like to hand over to our moderator for Q&A.

How difficult is it to engineer around this I know you went into a little bit of detail on the <unk>.

Please standby, while we compile the Q&A roster.

On the call but.

It sounds like as though its a multi step process, but.

Thank you.

And our first question comes from Gerry Sweeney of Roth.

To ask a question. Please press star one on your telephone and wait for your name to be announced twin try. Your question. Please press star one again.

Overall, how challenging do you think it will be to complete.

Hey, Ann.

Good morning, Jamie Jamie welcome aboard Thanks for taking my call.

Yes, that's a good question Jerry I mean look the good news is that we are producing <unk> <unk> in the process.

Please standby, while we compile the Q&A roster.

Yeah. Thanks, Jerry Thanks for the call by <unk>.

Hey, listen just starting with TP two obviously it sounds like this is.

They are producing the <unk> and it's getting to the bottom of our of our system is a proof positive that the core technology works.

And our first question comes from Gerry Sweeney of Roth.

The sort of the bigger bottleneck that youre working on.

As Youre looking at the engineering challenges around this.

Hey, Ann.

We've had several challenges like this across other areas.

Good morning, Jamie Jamie welcome aboard Thanks for taking my call.

How difficult is it to engineer around this I know you went into a little bit of detail on the.

Always successfully been able to work through them. This is not unique when bringing new tech to the market with respect to the CP two in particular.

Yeah. Thanks, Jerry Thanks for the call thanks for listening.

On the call, but it.

Hey, listen just starting with TP two obviously it sounds like this is.

It sounds like as though its a multi step process, but.

It is.

The sort of the bigger bottleneck that youre working on.

It's a challenging technical problem, but we think that we have a good design solution in place.

Overall, how challenging do you think it will be to complete.

As Youre looking at the engineering challenges around us.

Yes.

Yes, that's a good question Jerry I mean look the good news is that we are producing <unk> <unk> in the process.

And we think that will have a good.

How difficult is it to engineer around that so I know you went into a little bit of detail on the.

Development of that in Q2.

Got it and then Alternatively, you discuss getting pursuing I think sort of feedstock that had less of a CP to content to it.

On the call, but it.

They are producing the <unk> and it's getting to the bottom of our of our system is a proof positive that the core technology works.

It sounds like as though its a multi step process, but.

Overall, how challenging do you think it will be to complete.

Admittedly not sure exactly what the co product two is but.

We've had several challenges like this across other areas.

Sure.

Yes, that's a good question Jerry I mean look the good news is that we are producing <unk> one <unk> two in the process.

Does that sort of supply chain or ability to go out and get.

Always successfully been able to work through them. This is not unique when bringing new tech to the market with respect to the CB two in particular.

Material yes.

Yes.

They are producing the <unk> and it's getting to the bottom of our of our system is a <unk>.

<unk> waste with lower with <unk> content is that a challenge more expensive for how do we think about that.

It is.

It's a challenging technical problem, but we think that we have a good design solution in place.

Proof positive that the core technology works.

Yes, I think so.

We've had several challenges like this across other areas of always successfully been able to work through them. This is not unique when bringing new tech to the market with respect to the <unk> two in particular.

The CP two that were primarily discussing is polyethylene.

And we think that will have a good.

Development of that in Q2.

You are harvesting polypropylene feedstocks from the market.

Got it and then Alternatively, you discussed getting pursuing I think sort of feedstock that had less <unk>.

The bales will come with varying levels of polyethylene contamination inside and so the higher the polyethylene.

It is.

<unk> content to it.

It's a challenging technical problem, but we think that we have a good design solution in place.

Admittedly not sure exactly what.

The higher the polyethylene and the bel than the higher the CPT removal required and so what we're doing now is really.

Co product two is but.

<unk>.

Does that sort of supply chain or ability to go out and get.

And we think that will have a good.

Development of that in Q2.

Shifting it from multiple angles, one is looking for already available.

Got it and then Alternatively, you discussed getting.

Material yes.

PCR waste with lower with <unk> content is that a challenge more expensive for how do we think about that.

Assuming I think some feedstock that had less CP to content to it.

Products that are out there that we can purchase and they come at various price points. We think they are still makes sense inside of our purification economics, but we're also.

Admittedly I not sure exactly what the co product two is but.

Yes.

<unk>.

The CP two that were primarily discussing is polyethylene.

Does that.

You are harvesting polypropylene feedstocks from the market.

Supply chain or ability to go out and get.

Proving the operation of the current CPT removal and we're looking to a small project too.

Material.

The bales will come with varying levels of polyethylene contamination inside and so the higher the polyethylene.

PCR waste with lower with <unk> content is that a challenge more expensive for how do we think about that.

Effectively sort the polyethylene out of our process prep material.

Yes.

The higher the polyethylene and the bel than the higher the CPT removal required and so what we're doing now is really attacking it from multiple angles. One is looking for already available.

No.

So that we can reduce the amount of CB two that we put into the feed.

The CP two that were primarily discussing is polyethylene.

Got it okay, but suffice to say there is enough.

You are harvesting polypropylene feedstocks from the market.

Raw material <unk>.

The bales will come with varying levels of polyethylene contamination inside and so the higher the polyethylene.

Waste with CP two characteristics that a good few out there that you can okay.

Products that are out there that we can purchase and they come at various price points. We think they all still makes sense inside of our purification economics, but we're also.

We believe so I mean, we've got a pretty good feedstock network now we're always turning over new rocks to find new supply sources as we tested through the purification plant we find.

The higher the polyethylene and the Bel and the higher the CP two removal required and so what we're doing now is really attacking it from multiple angles. One is looking for already available.

Proving the operation of the current CPT removal and we're looking to a small project too.

Newer and newer opportunities to bring new feedstocks in so we don't we don't expect this to be a long term constraint.

Effectively sort the polyethylene out of our process prep material.

Products that are out there that we can purchase and they come at various price points. We think they are still makes sense inside of our purification economics, but we're also.

Got it Super helpful and then just.

So that we can reduce the amount of CB two that we put into the feed.

What should we be thinking about SG&A. The one thing that caught me off.

Got it okay, but suffice to say theres enough.

Improving the operation of the current CPT removal and we're looking to a small project too.

A little bit off guard and I'm, just not sure if it's a change in reporting it.

Raw materials <unk> waste with CP two characteristics that are good for you out there.

R&D was up I think SG&A was.

Effectively sort the polyethylene out of our process prep material.

29 million don't hold me to that for the quarter, but just obviously lots of noise in the fourth quarter.

Okay.

We believe so I mean, we've got a pretty good feedstock network now we're always turning over new rocks to find new supply sources as we test it through the purification plant we find.

So that we can reduce the amount of <unk> that we put into the feed.

What would be a good type of idea of run rates.

For SG&A. Thank you.

Got it okay, but suffice to say there is enough.

Yes, so when we were talking about SG&A around the unit economics, we're specifically talking about the portion of corporate overhead that is specifically used to support irons in operations and we show that to be a bit higher than the estimates that we had three to five years ago. You can understand why that happened given us really volatile.

Raw materials <unk> waste with CP two characteristics that are good for you out there that you can.

Newer and newer opportunities to bring new feedstocks and so we don't we don't expect this to be a long term constraint.

Got it Super helpful and then just.

We believe so I mean, we've got a pretty good feedstock network now we're always turning over new rocks to find new supply sources as we test it through the purification plant we find.

What should we be thinking about SG&A. The one thing that caught me off.

A little bit off guard and I'm, just not sure if it's a change in reporting that.

And inflation across the world over the last several years.

R&D was up I think SG&A was.

Newer and newer opportunities to bring new feedstocks in.

The primary reason with respect to the overall corn.

29 million don't hold me to that for the quarter, but just obviously lots of noise in the fourth quarter.

So we don't we don't expect this to be a long term constraint.

Corporate SG&A. This is an area of <unk>.

Got it Super helpful and then just.

Consistent focus we're always looking for ways to optimize our overall cost position. That's just good business sense and something that we pay attention to routinely.

What would be a good type of idea of run rates.

What should we be thinking about SG&A. The one thing that caught me off a little.

For SG&A.

Thank you.

A little bit off guard and I'm, just not sure if it's a change in reporting it.

Yes, so when we were talking about SG&A around the unit economics, we're specifically talking about the portion of corporate overhead that is specifically used to support irons in operations and we show that to be a bit higher than the estimates that we had three to five years ago. You can you can understand why that happened given us really volatile.

R&D was up I think SG&A was.

Got it.

That's it I'll jump back in line I'm sure. There's a bunch of other questions I appreciate it I'll see you guys tomorrow as well.

29 million don't hold me to that for the quarter, but just obviously lots of noise in the fourth quarter.

Yeah. Thanks, Jerry I look forward to seeing a normal.

Thank you one moment for our next question.

What would be a good type of idea of run rates.

For SG&A.

Thank you.

And inflation across the world over the last several years.

Yes, so when we were talking about SG&A around the unit economics, we're specifically talking about the portion of corporate overhead that is specifically used to support ironton operations and we show that to be a bit higher than the estimates that we had three to five years ago. You can understand why that happened given us really volatile.

That's the primary reason with respect to the overall corn.

And our next question comes from Eric Stine of Craig Hallum.

Corporate SG&A. This is an area of <unk>.

Consistent focus we're always looking for ways to optimize our overall cost position. That's just good business sense and something that we pay attention to routinely.

And that's in that Jamie.

Hey, Eric how are you doing hey.

Doing well thanks.

So I'm curious can you just talk a little bit about the off takers at iron Tim I know you in the past and I get it don't disclose a lot about specific contracts, but just curious are there dates embedded in these offtake agreements.

And inflation across the world over the last several years.

Got it.

That's it I'll jump back in line I'm sure. There's a bunch of other questions I appreciate it I'll see you guys tomorrow as well.

That's the primary reason with respect to the overall corn.

Corporate SG&A. This is an area of <unk>.

Yeah, Thanks, Jerry I look forward to seeing it in our own.

Consistent focus we're always looking for ways to optimize our overall cost position. That's just good business sense and something that we pay attention to routinely.

Thank you one moment for our next question.

And then if you don't reach them.

The customers can get out of the contract or renegotiate the contract just trying to get at kind of where the customer or the ultimate off takers patients levels are.

Got it.

That's it I'll jump back in line I'm sure. There's a bunch of other questions I appreciate it I'll see you guys tomorrow as well.

And our next question comes from Eric Stine of Craig Hallum.

Given that iron 10 has taken longer than you would have liked certainly longer than the customers would've liked as well.

Yeah, Thanks, Jerry I look forward to seeing it around.

Hi, Good afternoon, Hi, Jamie.

Thank you one moment for our next question.

Hey, Eric how are you doing hey.

Yes look we don't see any concern there we've got very strong demand for the product and all of our core customers are still they're testing commercial scale products right now for the final application and ready to receive the volume at scale.

Doing well thanks.

So I'm curious could you just talk a little bit about the off takers at iron Tim I know you in the past and I get it don't disclose a lot about specific contracts, but just curious are there dates embedded in these offtake agreements.

And our next question comes from Eric Stine of Craig Hallum.

Additionally, if you remember we've got a pretty good portfolio of customers with the Augusta project and many of them are also interested in taking early material from ironton in order to jump start the sales process for them out of Augusta.

Hi, Jamie.

Hey, Eric how are you doing hey doing.

And then if you don't reach them.

Doing well thanks.

The customers can get out of the contract or renegotiate the contract.

So I'm curious could you just talk a little bit about the off takers at iron Tim I know you in the past and I get it don't disclose a lot about specific contracts, but just curious are there dates.

Trying to get at kind of where the customer or the ultimate off takers patients levels are.

Got it so I guess the follow up there is it really hasnt impacted.

Given that ironton has taken longer than you would have liked certainly longer than the customers would've liked as well.

Embedded in these offtake agreements.

Prospects at future plants, as well I mean, I know Youre, obviously planned for it to help you in terms of building those plants, but it's not it's not hurting you at all with potential customers.

And then if you don't reach them.

The customers can get out of the contract or renegotiate the contract just trying to get at kind of where the customer or the ultimate off takers patients levels are.

No no in fact, I would say it is just the opposite I mean, the commercial product that we produced off of Biogen has accelerated the appetite for our products.

Given that iron 10 has taken longer than you would have liked certainly longer than the customers would've liked as well.

Additionally, you remember we've got a pretty good portfolio of customers with the Augusta project and many of them are also interested in taking early material from ironton in order to jump start the sales process for them out of Augusta.

Have a lot of new customers that are testing our products through the <unk> contract and through our distribution channel and the results that they see a very positive and so that brings them back to us very quickly.

Got it so I guess the follow up there is it really hasnt impacted.

<unk>, let's say new customer sales.

Prospects at future plants, as well I mean, I know, you're obviously planned for it to help you in terms of building those plants, but it's not it's not hurting you at all with potential customers.

Inside of the already strong portfolio.

Got it good.

Good to hear on that and maybe.

And just to confirm something and then a question. So did you say so I know in Q4, you produce 200000 pounds.

No no in fact, I would say it is just the opposite I mean, the commercial product that we produced Alpha Biogen has accelerated the appetite for our products and we have a lot of new customers that are testing our products through the <unk> contracts and through our distribution channel and the results that they see a very positive and so.

Got it so I guess the follow up there is it really hasnt impacted.

Of pellets and did you say I think it was $1 3 million.

Prospects at future plants, as well I mean, I know Youre, obviously planned for it to help you in terms of building those plants, but it's not it's not hurting you at all with potential customers.

Just curious is that quarter to date.

Is that a cumulative number.

I guess that would be first.

Yes.

The production number in.

No no in fact, I would say it is just the opposite I mean, the commercial product that we produced off of Biogen has accelerated the appetite for our products.

So that brings them back to us very quickly.

Quarter to date.

For let's say new customer sales.

Okay.

It is let me grab the number here.

Inside of the already strong portfolio.

It's quarter to date.

Have a lot of new customers that are testing our products through the <unk> contracts and through our distribution channel and the results that they see a very positive and so that brings them back to us very quickly.

Got it.

$2 million this quarter to date.

Good to hear on that and maybe.

Got it and then I guess the follow up.

And just to confirm something and then a question. So did you say I know in Q4, you produce 200000 pounds.

Great News that you no longer have to meet the milestones as dictated Eric.

Clarify one portion of your question you mentioned $1 3 billion slide showed one one so that's point.

Of pellets and did you say I think it was $1 3 million pounds, just curious is that quarter to date.

For let's say new customer sales.

Inside of the already strong portfolio.

One 1 billion pounds quarter to date.

Got it good.

And does that a cumulative number.

Okay got it alright, and I guess I was just going to say that the it's good that you don't have to meet the milestones by specific dates that or.

Good to hear on that and maybe.

I guess that would be first.

And just to confirm something and then a question. So did you say so I know in Q4, you produce 200000 pounds.

Yes.

The production number in.

Quarter to date.

Of pellets and did you say I think it was $1 3 million pounds, just curious is that quarter to date.

Dictated under the Bondholder agreement, but just curious I mean, where you stand now how you feel in terms of I mean, you are still obviously shooting for those milestones on the way to ultimate.

Okay.

It is let me grab the number here.

It's quarter to date.

$2 million this quarter to date.

And does that a cumulative number.

Got it and then I guess the follow up.

I guess that would be first.

Great News that you no longer have to meet the milestones as dictated Eric just to clarify one portion of your question you mentioned $1 3 billion. The slide showed $1 one point.

Commercial production at levels.

Yes.

That would be at scale. So maybe I mean do you have or are you willing to share. When you think you might be at that I think $4 5 million pound level on the way to the $9 million and I think in there you've also got that seven day continuous.

The production number in.

Quarter to date.

Okay.

It is let me grab the number here.

One 1 billion pounds quarter to date.

It's quarter to date.

Okay got it alright.

$2 million this quarter to date.

Alright, and I guess I was just going to say that the it's good that you don't have to meet the milestones by specific dates that were.

Got it and then I guess the follow up.

Production goal as part of that.

Great News that you no longer have to meet the milestones as dictated Eric.

Yes, as you can imagine when you are.

Starting with the new technology running the equipment for the first time.

Clarify one portion of your question you mentioned $1 3 billion slide showed $1 one.

Dictated under the Bondholder agreement, but just curious I mean, where you stand now how you feel in terms of I mean, you are still obviously shooting for those milestones on the way to ultimate.

Predicting the S curve for the production is very difficult. Okay. Our focus is less about hitting specific milestones and more about incrementally getting better every day, we will see continued improvement across the production everyday and at times, we'll see step change improvements we view.

One 1 billion pounds quarter today.

Okay got it alright.

Alright, and I guess I was just going to say that the it's good that you don't have to meet the milestones by specific dates that or.

Commercial production at levels that would be at scale. So maybe I mean do you have or are you willing to share. When you think you might be at that I think $4 5 million pound level on the way to the $9 million and I think in there you've also got that seven day continuous.

Dictated under the Bondholder agreement, but just curious I mean, where you stand now how you feel in terms of I mean, you are still obviously shooting for those milestones on the way to ultimate.

The outage that we have planned in Q2 as a as a pretty important moment for us because as we've run continuously over the last couple of months.

Production goal as part of that.

Commercial production at levels that.

We found new items that we need to address we've engineered them are ready to implement them and we know that they'll make improvements or operation. After the outage. So one of the things with the bond that was challenging was so focused on the milestone.

Yes, as you can imagine when you're <unk>.

Starting with the new technology running the equipment for the first time.

Predicting the S curve for the production is very difficult okay.

Our focus is less about hitting specific milestones and more about incrementally getting better every day, we will see continued improvement across the production every day and and at times, we'll see step change improvements we view the.

Sometimes you took your focus off of the fundamentals that gets you. There. We're now very focused on building the right Foundation for the plant. So we can build a long term productivity of the facility.

Production goal as part of that.

Yes, as you can imagine when you are.

Starting with the new technology running the equipment for the first time.

Predicting the S curve for the production is very difficult. Okay. Our focus is less about hitting specific milestones and more about incrementally getting better every day, we will see continued improvement across the production every day and and at times, we'll see step change improvements we view.

Got it that's very helpful. Thank you.

<unk> that we have planned in Q2 is that as a pretty important moment for us because as we've run continuously over the last couple of months, we found new items that we need to address we have engineered them are ready to implement them and we know that they'll make improvements our operation after the outage. So one of the things with the ball.

Thank you.

We did invite questions in our press releases this is Christian religion.

Our E mail investor questions that pure cycle Dot com and we wanted to get to a few of those.

First one is from Vishal boxy at Morgan Stanley Dustin on your previous updates you mentioned that you ran various feedstocks to test the limits of your technology. Following the co product to fix your planning in Q2, how confident argue that you can run many different feedstocks or do you anticipate long term challenges on availability, if you will be eliminated in Europe.

The outage that we have planned in Q2 as a as a pretty important moment for us because as we've run continuously over the last couple of months, we found new items that we need to address we've engineered them are ready to implement them and we know that they'll make improvements our operation after the outage. So one of the things.

<unk> that was challenging was so focused on the milestone.

Sometimes you took your focus off of the fundamentals that gets you. There. We're now very focused on building the right Foundation for the plant. So we can build the long term productivity of the facility.

Yes. Thank you for the question Vishal.

Got it that's very helpful. Thank you.

With the bond that was challenging was so focused on the milestone.

I think it's really important to remember the scale of the opportunity that we are engaging and here. There are literally billions of pounds of feeds available we have already run the key feeds for origin, which is traditionally rasia as well as post consumer curbside Richards and they've run successfully.

Thank you.

We did invite questions in our press releases this is Christian religion.

Our email investor questions that pure cycle Dot com and we wanted to get to a few of those.

First one is from Vishal boxy at Morgan Stanley Dustin on your previous updates you mentioned that you ran various feedstocks to test the limits of your technology. Following the co product to fix your planning in Q2, how confident are you that you can run many different feedstocks or do you anticipate long term challenges on availability. If you will be limited in Europe.

So I'm not at all concerned about the availability of feed.

Theres plenty of feed to fill ireton with those two key streams alone, but I also think it's important to remind you that our technology gives us the ability to buy what others cannot because we have a fundamental process that washes the molecule from the inside out.

Yes. Thank you for the question Michelle.

I think it's really important to remember the scale of the opportunity that we are engaging in here. There are literally billions of pounds of feeds available we have already run the key feeds for origin, which is traditionally rossiya as well as post consumer curbside Richards and they've run successfully.

We can buy things that others can't and so I think there's always going to be a cycle of testing.

Around.

The feedstocks. So we can find newer and newer feeds that provide newer economic opportunities for us, but in terms of the base load for ironton in Augusta and our early projects I think we have ample feed to do what we need to do.

So I'm not at all concerned about the availability of feed.

Theres plenty of feed to fill ireton with those two key streams alone, but I also think it's important to remind you that our technology gives us the ability to buy what others.

The next question.

We received was from James Graham you mentioned sampling, but have any actual products being made from the resin produced at the commercial plant and if so what are they yes. So I think it's important to.

Walk through the process for qualifying projects across plants like this we have made actual progress products you can see those in the earnings packet. They have not been made at commercial scale, yet because of the first step is to test them in the operations to see how they run before we.

Allocating larger volumes to that operation once they pass the initial testing then they'll get scaled up for commercial sales and we're doing this across a number of fronts with a number of.

With a number of customers.

The next one is from Spencer more is the screen changer still necessary. If you successfully purge the beads from the system.

Yes, probably not.

But but maybe a little I remember there are really two.

There are really two purposes for the screen changer. The first is to remove the initial beads that contaminated the system.

And I must say that following the outage in November we were able to do that do it successfully it did take longer than we expected because there were a higher number of visa assistant to what we thought but that allowed us to get back on our feet, but but once the beads are gone.

There is still going to be an opportunity.

For us to use the screen changer too.

Our final filtration step for the product and that very often has a positive impact on color and opacity.

There were two questions that came in from John David The first one what is the latest on the Augustus site.

We're really excited about our path for.

Four gusto.

We've really taken a step back and reset our base engineering's through the collaboration with KBR.

They are turning out to be a really good partner for us on how to better engineer our base facilities.

Also integrating the learnings that we've taken from ironton into that design and don't forget.

We've already spent a sizable amount of money around $85 million and preconstruction.

Instruction engineering and long lead purchases. So that project is very much still moving forward.

Second question from John what is the expected market price for pure cycles resin changed since it was discussed in 2020.

Yes look I think that the market pricing is a very dynamic discussion will probably not talk too specifically about pricing levels for the pure cycle product I think what's important to note is that there is very strong customer demand across many application lanes.

Even with iron tenant in Augusta at Max rates.

It still only represents a small fraction of production and a small portion of sustainability commitments from even just our core customers. So so we see a lot of runway here.

Haven't tested the full market.

We will do so as we continue to test new applications to our.

Two hour process.

Finally E Mail question comes from Michael Graham, So given the increased production and the commentary around high demand for the product what is the revenue outlook for Q1 2020.

We're very optimistic about the future fundamentals of the business I think coming out of the Q2 outage.

Optimism is going to continue.

But we don't want to set the precedent right now providing mid quarter guidance.

I think the important thing as Duston said in the press.

Location the original economics, we feel very good about.

That is all of the email questions I will toss it back over to the meeting.

Thank you if you have a question. Please press star one one on your Touchtone telephone.

One moment for our next question.

Actually I am showing no further questions I would now like to hand, it back to Duston Olson.

Look thank you for everyone's time today and dedicating your special times, our <unk> business into our operations. This is a very important week for pure cycle.

And quite frankly, I've never been more excited about our progress our potential and our future. Thank you for your time today for believing in our mission of pure cycle and our team. We look forward to seeing you tomorrow at our Ironton showcase that.

This concludes today's conference call. Thank you for participating and you may now disconnect.

Q4 2023 PureCycle Technologies Inc Earnings Call

Request a DemoDemo

PCT

PureCycle

Earnings