Q2 2024 PureCycle Technologies Inc Earnings Call

August 8, 2024

www.purecycle.com

Operator: Good day, and thank you for standing by. Welcome to the Purecycle Technology second quarter 2024 corporate update conference call.

Operator: Good day, and thank you for standing by. Welcome to the Pure Cycle Technology second quarter 2024 corporate update conference call.

Operator: Good day and thank you for standing by. Welcome to the Purecycle Technology second quarter 2024 corporate update conference call.

Operator: 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 ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Christian Bruey, Director of Corporate Communications. Please go ahead.

Operator: 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 ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 11 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 Bruey, Director of Corporate Communications. Please go ahead.

Operator: Good day and thank you for standing by. Welcome to the Purecycle Technology 2nd Quarter 2024 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 ask a question during this session, you will need to press star 1-1 on your telephone.

Operator: 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 ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, please press star 11 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 Bruey, Director of Corporate Communications. Please go ahead.

Operator: You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Christian Bruey, Director of Corporate Communications. Please go ahead.

Christian Bruey: Thank you, Michelle. Welcome to Purecycle Technology's second quarter 2024 Corporate Update Conference. I am Christian Bruey, Director of Corporate Communications for Purecycle, and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Jaime Vasquez, our Chief Financial Officer. This morning, we will be highlighting our corporate developments for the second quarter of 2024. The presentation we'll be going through on this call can also be found on the investor tab on our website at Purecycle.com.

Christian Bruey: Thank you, Michelle. Welcome to Purecycle Technology's second quarter 2024 Corporate Update Conference. I am Christian Bruey, Director of Corporate Communications for Purecycle, and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Jaime Vasquez, our Chief Financial Officer. This morning we will be highlighting our corporate developments for the second quarter 2024. The presentation we'll be going through on this call can also be found on the investor tab at our website at Purecycle.com.

Christian Bruey: Thank you, Michelle. Welcome to Purecycle Technology's second quarter 2024 corporate update conference call.

Christian Bruey: 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. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our Safe Harbor provisions and forward-looking statements that can be found at the end of our second quarter 2024 corporate update press release that was filed this morning, as well as in other reports on file with the SEC to provide further detail about the risks related to our business.

Christian Bruey: 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. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our Safe Harbor provisions and forward looking statements that can be found at the end of our second quarter 2024 corporate update press release that was filed this morning, as well as in other reports on file with the SEC to provide further detail about the risks related to our business.

Christian Bruey: Additionally, please note that the company's actual results may differ materially from those they anticipated, and except as required by law, we undertake no obligation to update any forward-looking statements. Our remarks today may also include preliminary non-GAAP estimates and are subject to risk and uncertainty, including, among other things, changes in connection with quarter-end and year-end adjustments. Any variation between Purecycle's actual results in the preliminary financial data set forth herein may be material.

Christian Bruey: Additionally, please note that the company's actual results may differ materially from those it anticipated, and except as required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including, among other things, changes in connection with quarter-end and year-end adjustments. Any variation between Purecycle's actual results and the preliminary financial data set forth herein may be material.

Christian Bruey: I am Christian Bruey, Director of Corporate Communications for Purecycle, and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Jaime Vasquez, our Chief Financial Officer.

Christian Bruey: This morning we will be highlighting our corporate developments for the second quarter 2024. The presentation we'll be going through on this call can also be found on the investor tab at our website at Purecycle.com.

Speaker Change: 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.

Speaker Change: The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our Safe Harbor provisions.

Speaker Change: and forward-looking statements that can be found at the end of our second quarter 2024 corporate update press release that was filed this morning, as well as in other reports on file with the SEC to provide further detail about the risks related to our business.

Speaker Change: Additionally, please note that the company's actual results may differ materially from those they anticipated, and except as required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties.

Speaker Change: including, among other things, changes in connection with quarter-end and year-end adjustments.

Speaker Change: Any variation between Purecycle's actual results in the preliminary financial data set forth herein may be material.

Christian Bruey: You're welcome to follow along with our slide deck, or if joining us by phone, you can access it at any time at Purecycle.com. We are excited to share updates from the previous quarter with you. I'll now turn it over to Dustin Olson, Purecycle's Chief Executive Officer. Thank you, Christian.

Christian Bruey: You're welcome to follow along with our slide deck or, if joining us by phone, you can access it at any time at Purecycle.com. We are excited to share updates from the previous quarter with you. I'll now turn it over to Dustin Olson, Purecycle's Chief Executive Officer. Thank you, Christian.

Christian Bruey: You're welcome to follow along with our slide deck or, if joining us by phone, you can access it at any time at PureCycle.com. We are excited to share updates from the previous quarter with you. I'll now turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Dustin Olson: Thank you, Christian. Thank you for joining us on our call today. It's always refreshing to update the market on our company's progress. Working at Purecycle is a privilege, as we get to see the impact we all have in the world every day. I've never been part of a team as committed, as hard-working, or as persistent in finding success. Every now and then, we have to remind ourselves that this is a novel, cutting-edge process, a real change, a world opportunity, and something that no one has ever done before. Q2 is a bit of a tale of two halves.

Dustin Olson: Thank you, Christian. Thank you for joining our call today. It's always refreshing to update the market on our company's progress. Working at Purecycle is a privilege, as we get to see the impact we all have in the world every day. I've never been part of a team as committed, as hard-working, or as persistent to find success. Every now and then we have to helicopter up to remind ourselves about that this is a novel cutting-edge process, a real change the world opportunity, and something that no one has ever done before. Q2 is a bit of a tale of two halves.

Dustin Olson: Thank you, Christian. Thank you for joining our call today. It's always refreshing to update the market on our company's progress.

Dustin Olson: Working at Purecycle is a privilege, as we get to see the impact we all have on the world every day. I've never been part of a team as committed, as hardworking, or as persistent to find success.

Dustin Olson: Every now and then, we have to helicopter up to remind ourselves that this is a novel, cutting-edge process, a real change in the world opportunity, and something that no one has ever done before. We achieved new high bars for feed at 8,000 pounds per hour and pelletization at 11,000 pounds per hour using curbside PCR with elevated levels of CP2. And to give you a little taste of our current activities, today we're running between 7,000 and 8,000 pounds per hour, pelletizing at the same rate, pulling CP1 rateably, and pulling CP2 batch-wise.

Dustin Olson: Every now and then, we have to helicopter up to remind ourselves that this is a novel, cutting-edge process, a real change to the world of opportunity, and something that no one has ever done before.

Dustin Olson: The first half was spent completing the outage that we started in April, and the second half, we spent commissioning the new improvements and testing the plant at new operational levels. We achieved new high bars for feed at 8,000 pounds per hour and pelletization at 11,000 pounds per hour using curbside PCR with elevated levels of CP2. And to give you a little taste of our current activities, today we're running between 7,000 and 8,000 pounds per hour, pelletizing at the same rate, pulling CP1 rateably, and pulling CP2 batch-wise.

Dustin Olson: The first half was spent completing the outage that we started in April. And the second half, we spent commissioning the new improvements and testing the plant at new operational levels. We achieved new high bars for feed at 8,000 pounds per hour and pelletization at 11,000 pounds per hour using curbside PCR with elevated levels of CP2. And to give you a little taste of our current activities, today we're running between 7,000 and 8,000 pounds per hour, pelletizing at the same rate, pulling CP1 rateably and pulling CP2 batch-wise.

Speaker Change: Q2 is a bit of a tale of two halves. The first half was spent completing the outage that we started in April , and the second half we spent commissioning the new improvements and testing the plant at new operational levels.

Dustin Olson: We achieved new high bars for feed at 8,000 pounds per hour and pelletization at 11,000 pounds per hour using curbside PCR with elevated levels of CP2.

Dustin Olson: And to give you a little taste of our current activities, today we are running between 7,000 and 8,000 pounds per hour, pelletizing at the same rate, pulling CP1 rateably and pulling CP2 batch-wise.

Dustin Olson: In June, we successfully achieved the highest production total to date using low CP2 feeds and then introduced higher CP2 feeds to the plant in July. These feeds allowed us to test the new CP2 improvements implemented during the outage. The production during Q2 has allowed us to be more active on the commercial front. We received an FDA letter of non-object for our process that covers all conditions of use when running food-grade PCR feedstocks.

Dustin Olson: In June, we successfully achieved the highest production total to date using low CP2 feeds and then introduced higher CP2 feeds to the plant in July. These feeds allowed us to test the new CP2 improvements implemented during the outage. As you may recall, a key learning from our outage was that the level indication in the high-pressure section of Co-Product 2 was not working properly. We fixed this problem during the outage, which helped us move forward and toward a new, more permanent solution for CP2.

Dustin Olson: In June, we successfully achieved the highest production total to date using low CP2 feeds and then introduced higher CP2 feeds to the plant in July. These feeds allowed us to test the new CP2 improvements implemented during the outage. As you may recall, a key learning from our outage was that the level indication in the high-pressure section of Co-Product 2 area was not working properly. We fixed this problem during the outage, which helped us move forward and toward a new, more permanent solution for CP2.

Dustin Olson: as you may recall a key learning from our outage was that the level indication in the high pressure section of co-product to area was not working properly

Dustin Olson: We fixed this problem during the outage, which helped us move forward.

Dustin Olson: I'm pleased to announce that these improvements appear to be working as hoped. We now see indications of removing greater than 20,000 pounds per day of CP2, which is substantially higher than our prior performance of 3,000 pounds per day. However, after removing the higher rates from the high-pressure system, we did see downstream bottlenecks in our low-pressure CP2 system.

Dustin Olson: I'm pleased to announce that these improvements appear to be working as hoped. We now see indications of removing greater than 20,000 pounds per day of CP2, which is substantially higher than our prior performance of 3,000 pounds per day. After removing the higher rates from the high-pressure system, we did see downstream bottlenecks in our low-pressure CP2 system.

Dustin Olson: and toward a new more permanitent solution for cptwo

Speaker Change: after removing the higher rates from the high pressure system we did see downstream boallennnex in our low pressure cptwo system

Dustin Olson: And just like the past Bollinex, our team continued to work in July to further improve our low-pressure CP2 handling operation. We know that redesigning commissioning is a long and painful activity, but we are also through the toughest part and now believe the CP2 removal is solved. Doing this work did impact our rates in July and the first part of this month, but we expect rates to improve after we implement the final handling equipment next week. This moment should reflect an inflection point in our production. The CP2 activities will not require an outage, nor do we anticipate another outage for the remainder of the year.

Dustin Olson: And just like past Bollinex, our team continued to work in July to further improve our low-pressure CP2 handling operation. We know that redesigning commissioning is a long and painful activity, but we are also through the toughest part and now believe the CP2 removal is solved. Doing this work did impact our rates in July and the first part of this month, but we expect rates to improve after we implement the final handling equipment next week. This moment should reflect an inflection point in our production. The CP2 activities will not require an outage, nor do we anticipate another outage for the remainder of the year.

Dustin Olson: And just like past Bollinex, our team continued to work in July to further improve our low-pressure CP2 handling operations. We know that redesigning commissioning is a long and painful activity, but we are also through the toughest part and now believe the CP2 removal is solved.

Dustin Olson: Doing this work did impact our rates in July and the first part of this month, but we expect rates to improve after we implement the final handling equipment next week. This moment should reflect an inflection point in our production.

Dustin Olson: The CP2 activities will not require an outage, nor do we anticipate another outage for the remainder of the year.

Dustin Olson: The production during Q2 has allowed us to be more active on the commercial front. We received an FDA letter of non-object for our process that covers all conditions of use when running food-grade PCR feedstocks. This should pave the way to supply the market with FDA-quality products. We continue to see strong demand from our customers. We completed numerous PIR and PCR trials with fiber applications and have seen very good results, some of which you've already seen through social media accounts.

Dustin Olson: This should pave the way to supply the market with FDA-quality products. We continue to see strong demand from our customers. We have completed numerous PIR and PCR trials with fiber applications and have seen very good results, some of which you've already seen on social media accounts.

Dustin Olson: We continue to see strong demand from our customers. We completed numerous PIR and PCR trials with fiber applications and have seen very good results, some of which you've already seen through social media accounts.

Dustin Olson: And remember, fiber is a notoriously challenging application even for virgin pellet production. Our team is actively working with these customers to map out our Purecycle resin to brand applications that can be introduced to the market. We also established a footprint with multiple compounders, which we will review in more detail later in this presentation. With compounding, we should be able to tailor our Pure5 product to specific customer application needs. These customizations should help reduce the adoption barriers to a new product, providing what the application requires and should expand the volume potential to the market. We will be offering a mixture of purified product with both recycle and virgin straw.

Dustin Olson: And remember, fiber is a notoriously challenging application, even for virgin pellet production. Our team is actively working with these customers to map out our Purecycle resin to brand applications that can be introduced to the market. We are proud to have the first POs in hand for the compounded material and expect first deliveries in August. Low-pressure improvements should be inherently easier to tackle than the high-pressure side. Low-pressure improvements do not require outages and should be improved, and should be improved much more quickly.

Dustin Olson: And remember, fiber is a notoriously challenging application, even for virgin pellet production. Our team is actively working with these customers to map out our Purecycle resin to brand applications that can be introduced to the market. We have also established a footprint with multiple compounders, which we will review in more detail later in this presentation. With compounding, we should be able to tailor our Pure5 product to specific customer application needs. These customizations should help reduce the adoption barriers to a new product, providing what the application requires and should expand the volume potential of the market. We will be offering a mixture of purified product with both recycled and virgin straw.

Dustin Olson: And remember, fiber is a notoriously challenging application even for virgin pellet production.

Dustin Olson: Our team is actively working with these customers to map out our Purecycle resin to brand applications that can be introduced to the market.

Dustin Olson: We also established a footprint with multiple compounders, which we will review in more detail later in this presentation. With compounding, we should be able to tailor our Pure5 product to specific customer application needs.

Dustin Olson: These customizations should help reduce the adoption barriers to a new product, providing what the application requires and should expand the volume potential to the market. We will be offering a mixture of Purify product with both Recycle and Virgin Streams.

Dustin Olson: We are proud to have the first POs in hand for the compounded material and expect first deliveries in August. On the financing side, we're executing our plan and making progress. We successfully marketed and sold $22.5 million of revenue bonds, intend to market the remaining bonds later this year, and are progressing conversations with multiple capital sources. Jaime will discuss this later.

Dustin Olson: We are proud to have the first POs in hand for the compounded material and expect first deliveries in August .

Dustin Olson: On the financing side, we're executing our plan and making progress. We successfully marketed and sold $22.5 million of revenue bonds, intend to market the remaining bonds later this year, and are progressing conversations with multiple capital sources. Jaime will discuss this.

Dustin Olson: Ironson operations are continuing to improve. Our focus has shifted from a startup and commissioning phase to steadily increasing production. In July, our focus was on CP2 removal and recovery. While we made strong improvements in removing the CP2 from the high-pressure system, our originally-designed low-pressure system did not work as expected. During this month, we made certain design changes to the system and will make what we expect the final change next week.

Dustin Olson: Ironson operations are continuing to improve. Our focus has shifted from a startup and commissioning phase to steadily increasing production. In July, our focus was on CP2 removal and recovery. While we made strong improvements in removing CP2 from the high pressure system, our originally designed low pressure system did not work as expected. During this month, we made certain design changes to the system and will make what we expect will be the final change next week.

Dustin Olson: later

Speaker Change: ironand operations are continuing to improve our focus has shifted from a startup and commissioning phase to steadily increasing production in sales

Dustin Olson: In July , our focus was on CP2 removal and recovery. While we made strong improvements in removing the CP2 from the high-pressure system, our originally designed low-pressure system did not work as expected.

Dustin Olson: During this month, we made certain design changes to the system and will make what we expect the final change next week.

Dustin Olson: As I just mentioned, the high-pressure system changes are working well. We have proven that the system has the capability to remove more than 20,000 pounds per day of CP2. And when we get the low-pressure system improvements installed next week, once installed, we should be able to test higher rates of the CP2 removal system and raise rates, according to our data. Low-pressure improvements should be inherently easier to tackle than the high-pressure side. Low-pressure improvements do not require outages, and should be improved, should be improved much more quickly.

Dustin Olson: As I just mentioned, the high-pressure system changes are working well. We have proven that the system has the capability to remove more than 20,000 pounds per day of CP2. And when we get the low-pressure system improvements installed next week, once installed, we should be able to test higher rates of the CP2 removal system and raise rates accordingly. Low-pressure improvements should be inherently easier to tackle than the high-pressure side. Low-pressure improvements do not require outages and should be improved, and should be improved much more quickly.

Dustin Olson: As I just mentioned, a high-pressure system changes are working well. We have proven that the system has the capability to remove more than 20,000 pounds per day of CP2. And when we get the low-pressure system improvements installed next week,

Dustin Olson: Once installed, we should be able to test higher rates of the CPT removal system and raise rates accordingly.

Dustin Olson: Low-pressure improvements should be inherently easier to tackle than the high-pressure side. Low-pressure improvements do not require outages and should be improved much more quickly.

Dustin Olson: Our team is working tirelessly to move this technology forward. While we are deeply engrossed in the daily activities, it's also important to state some benchmark goals. With our focus now moving beyond redesign and commissioning, we feel confident sharing our near-term goals with you. We are targeting continuous feed rate to 10,000 pounds per hour to produce more than 200,000 pounds in a single day and to produce 1 million pounds in one week. We believe this is within reach, and we won't stop pushing for it until we achieve it.

Dustin Olson: Our team is working tirelessly to move this technology forward. While we are deeply engrossed in the daily activities, it's also important to state some benchmark goals. With our focus now moving beyond redesign and commissioning, we feel confident sharing our near-term goals with you. We are targeting continuous feed rates of 10,000 pounds per hour to produce more than 200,000 pounds in a single day and to produce 1 million pounds in one week. We believe this is within reach, and we won't stop pushing for it until we achieve it.

Dustin Olson: Our team is working tirelessly to move this technology forward. While we are deeply engrossed in the daily activities, it's also important to state some benchmark goals.

Dustin Olson: With our focus now moving beyond redesign and commissioning, we feel confident sharing our near-term goals with you. We are targeting continuous feed rate of 10,000 pounds per hour to produce more than 200,000 pounds in a single day and to produce 1 million pounds in one week. In June, we produced pellets for 13 days in a row.

Dustin Olson: With our focus now moving beyond redesign and commissioning, we feel confident sharing our near-term goals with you. We are targeting continuous feed rate to 10,000 pounds per hour to produce more than 200,000 pounds in a single day and to produce 1 million pounds in one week.

Dustin Olson: And while these are only short-term goals, this is just the first, next step toward getting Ironton to nameplate capacity. Let's take a look at some of the metrics that show our progress. In June, we produced pellets for 13 days in a row.

Dustin Olson: We believe this is within reach, and we won't stop pushing for it until we achieve it. And while these are only short-term goals, this is just the first, next step toward getting Ironton to nameplate capacity.

Dustin Olson: Let's take a look at some of the metrics that show our progress.

Dustin Olson: We reached peak daily production of 134,000 pounds and produced pellets 25 days out of 30. Stretching days of production together like this gives us the confidence that we can raise rates and achieve significant production levels. Since our last communication, we increased our max continuous feed rate from 6,500 pounds per hour to 8,000 pounds per hour, and the max pelletization rate reached 11,000 pounds. The incremental steps show continuous progress. These are the headliners, the metrics that people focus on first. I understand that, and we keep it in focus, but I'm equally proud of the work we do in the trenches.

Dustin Olson: We reached peak daily production of 134,000 pounds and produced pellets 25 days out of 30. Stretching days of production together like this gives us the confidence that we can raise rates and achieve significant production levels. Since our last communication, we increased our max continuous feed rate from 6,500 pounds per hour to 8,000 pounds per hour, and the max pelletization rate reached 11,000 pounds. The incremental steps show continuous progress. We were challenged moving forward because certain systems because these systems and others continue to create barriers to more consistent operations. We address these issues quickly.

Dustin Olson: In June , we produced pellets for 13 days in a row. We reached peak daily production of 134,000 pounds and produced pellets 25 days out of 30. Stretching days of production together like this gives us the confidence that we can raise rates and achieve significant production levels.

Dustin Olson: We reached peak daily production of 134,000 pounds and produced pellets 25 days out of 30. Stretching days of production together like this gives us the confidence that we can raise rates and achieve significant production levels. Since our last communication, we increased our max continuous feed rate from 6,500 pounds per hour to 8,000 pounds per hour, and the max pelletization rate reached 11,000 pounds. The incremental steps show continuous progress. These are the headlines, the metrics that people focus on first. I understand that, and we keep it in focus, but I'm equally proud of the work we do in the trenches.

Dustin Olson: Since our last communication, we increased our max continuous feed rate from 6,500 pounds per hour to 8,000 pounds per hour, and the max pelletization rate reached 11,000 pounds per hour.

Dustin Olson: the incremental steps show continuous progress

Dustin Olson: These are the headliners, the metrics that people focus on first. I understand that, and we keep it in focus, but I'm equally proud of the work we do in the trenches. And quite frankly, it's the trench work that creates the platform for headliner performance.

Dustin Olson: And quite frankly, it's the trench work that creates the platform for headliner performance. This time last year, our solvent circulation was 40%, and our utility plant reliability was 25%. We were challenged moving forward because certain systems because these systems and others continue to create barriers to more consistent operations. We address these issues quickly. And today, both our solvent circulation and our utility plant reliability are operating at greater than 98% efficiency when you exclude the outage challenge.

Dustin Olson: This time last year, our solvent circulation was 40%.

Speaker Change: and our in our utility plant reliability was twenty-five percent

Dustin Olson: we were challenged moving forward because certain systems because these systems and others continued to create barriers to more consistent operations

Dustin Olson: And today, both our solvent circulation and our utility plant reliability are operating at greater than 98% uptake when you exclude the outage challenge. For CP2, I would like to explain a little bit better the challenge that we faced and why it created problems for rates in Ireland. First, the plant was originally designed for approximately 95% PP in the feedstock stream to reach target performance. Secondly, with our original design, we had difficulty pulling CP2 out of the system.

Speaker Change: we address these issues quickly and today both our solvent circulation and our utility plant reliability are operating at greater than ninety eight percent up time

Dustin Olson: This is foundational progress, and quite frankly, the same can be said for our reliability efforts. While we have had challenges with numerous rotating equipment, we have completed several projects that have improved overall reliability, including the addition of backup power supply to two of our three key seal systems. We also upgraded our product transfer valve that moves polymer to our final product extruder. And while it still led to operational downtime in July, we worked through those, implemented the improvements, and it's working much better today. Co-Product 2 is today's primary challenge, and we've made tremendous progress. We've upgraded nearly every component in the system to improve reliability, and while it's been a grind, we're seeing signs of success.

Dustin Olson: This is foundational progress, and quite frankly, the same can be said for our reliability efforts. While we have had challenges with numerous rotating equipment, we have completed several projects that have improved overall reliability, including the addition of backup power supplies to two of our three key seal systems. We also upgraded our product transfer valve that moves polymer to our final product extruder. And while it still led to operational downtime in July, we worked through it, implemented the improvements, and it's working much better today.

Dustin Olson: when you exclude the outage downtime.

Dustin Olson: This is foundational progress.

Dustin Olson: And quite frankly, the same can be said for our reliability efforts.

Speaker Change: While we have had challenges with numerous rotating equipment, we have completed several projects that have improved overall reliability, including the addition of backup power supply to two of our three key seal systems.

Dustin Olson: We also upgraded our product transfer valve that moves polymer to our final product extruder. And while it still led to operational downtime in July , we worked through those, implemented the improvements, and it's working much better today.

Dustin Olson: Co-Product 2 is today's primary challenge, and we've made tremendous progress. We've upgraded nearly every component in the system to improve reliability, and while it's been a grind, we're seeing signs of success. With CP2, I would like to explain a little bit better the challenge that we faced and why it created problems for rates in Ireland.

Dustin Olson: Co-Product 2 is today's primary challenge, and we've made tremendous progress. We've upgraded nearly every component in the system to improve reliability. And while it's been a grind, we're seeing signs of success.

Dustin Olson: For CP2, I would like to explain a little bit better the challenge that we faced and why it created problems for rates and iron. First, the plant was originally designed for approximately 95 percent pp in the feedstock stream to reach target performance. And while we haven't had any problems finding enough feedstock supply, the reality is the number five bales available in the market typically only have 65% to 75% PP. Secondly, with our original design, we had difficulty pulling CP2 out of the system. The original design just didn't consider the type of polymer morphology, or in other words, shapes, sizes, density, and toughness.

Dustin Olson: For CP2, I would like to explain a little bit better the challenge that we faced and why it created problems for rates in Ironton.

Dustin Olson: First, the plant was originally designed for approximately 95% PP in the feedstock stream to reach target performance. And while we haven't had any problems finding enough feedstock supply, the reality is that number five bales available in the market typically only have 65 to 75 percent PP. Secondly, with our original design, we had difficulty pulling CP2 out of the system. The original design just didn't consider the type of polymer morphology, or in other words, shapes, sizes, density, and toughness.

Dustin Olson: First, the plant was originally designed for approximately 95% PP in the feedstock stream to reach target performance.

Dustin Olson: And while we haven't had any problems finding enough feedstock supply, the reality is the number 5 bales available in the market typically only have 65-75% PP.

Dustin Olson: Secondly, with our original design, we had difficulty pulling CP2 out of the system.

Dustin Olson: The original design just didn't consider the type of polymer morphology, or in other words, shapes, sizes, density, and toughness.

Dustin Olson: Our CP2 is more difficult to remove than expected, and the system initially could only pull 3,000 pounds per day. When you combine the PP concentration below 90% with the low CP2 removal capacity, the resulting production is below meaningful rates, approximately 26,000 pounds per day, or less than 10% of nameplate capacity. The table on this slide shows the importance of two separate activities.

Dustin Olson: Our CP2 is more difficult to remove than expected and the system initially could only pull 3,000 pounds per day. When you combine the PP concentration below 90% with the low CP2 removal capacity,

Dustin Olson: The resulting production is below meaningful rates, approximately 26,000 pounds per day, or less than 10% of nameplate capacity.

Dustin Olson: The table on this slide shows the importance of two separate activities. One, removing CP2 from the feedstock, and two, removing CP2 from the plant. The numbers on the table represent the possible daily production numbers resulting from each activity. By combining these two activities, the CP2 limitation should be eliminated. During the second quarter, we really focused on the CP2 system.

Dustin Olson: One, removing CP2 from the feedstock, and two, removing CP2 from the plant. The numbers on the table represent the possible daily production numbers resulting from each activity. As you move from the left to the right, the daily production numbers increase. As you move from the top to the bottom, the daily production numbers also go up. By combining these two activities, the CP2 limitation should be eliminated. During the second quarter, we really focused on the CP2 system.

Dustin Olson: One, removing CP2 from the feedstock, and two, removing CP2 from the plant. The numbers on the table represent the possible daily production numbers resulting from each activity. As you move from the left to the right, the daily production numbers increase. Similarly, as you move from the top to the bottom, the daily production numbers also go up. By combining these two activities, the CP2 limitation should be eliminated. During the second quarter, we really focused on the CP2 system.

Dustin Olson: We redesigned the high-pressure CP2 removal system, and initial commissioning results show that we can now remove more than 20,000 pounds per day of product. And we implemented several feedstock strategies to move PP concentration up to 97%. We are close to implementing the final design package for CP2's low-pressure system—we should complete this next week—which we believe will allow us to sit firmly in the green, no-bottleneck area. While we have always had the option to purchase higher concentrations of PP at a higher cost, we have also worked to implement two new operations where we increase the PP concentration of our bales and also of the washed flake from Ironton at a good cost base.

Dustin Olson: We are close to implementing the final design package for CPT low pressure system. We should complete this next week, which we believe will allow us to set firmly in the green no bottleneck area.

Dustin Olson: We should complete this next week, which we believe will allow us to sit firmly in the green, no-bottleneck area. For feedstock preparation, we made tangible changes to our overall operation. While we have always had the option to purchase higher concentration PP at a higher cost, we have also worked to implement two new operations where we increase the PP concentration of our bales and also of the washed flake from Ironton at a good cost-based, These two improvements should provide between 2,000 to 3,000 pounds per hour of high quality feed rate, which we currently estimate a total average cost of approximately $0.15 per pound, which is in line with our original expectations.

Dustin Olson: We should complete this next week, which we believe will allow us to sit firmly in the green no-bottleneck area. For feedstock preparation, we made tangible changes to our overall operation. While we have always had the options to purchase higher concentration PP at a higher cost, we have also worked to implement two new operations where we increase the PP concentration of our bales and also of the washed flake from Ironton at a good cost base.

Dustin Olson: For feedstock preparation, we made tangible changes to our overall operation while we have always had the option to purchase higher concentration PPE at our higher cost. We have also worked to implement two new operations, where we increased the PB concentration of our bells and also of the wash.

Dustin Olson: From ireton at a good cost basis.

Dustin Olson: These two improvements should provide between 2,000 to 3,000 pounds per hour of high quality feed rate, which we currently estimate a total average cost of approximately $0.15 per pound, which is in line with our original expectations.

Dustin Olson: These two improvements should provide between two to 3000 pounds per hour of high quality feed rate, which we currently estimate a total average cost of approximately <unk> 15 per pound, which is in line with our original expectations. During Q3, we will work to add another three to 5000.

Dustin Olson: During Q3, we will work to add another 3,000 to 5,000 pounds of sorting capacity to our bale purchases and another 2,000 to 6,500 pounds per hour of flake sorting capacity. These activities should help to minimize the overall impact of the CP2 in the system, but there is actually a more important impact created by this activity. By removing the low-quality CP2 from the feedstock, it should also improve the overall yield of high-quality recycled PP production in iron.

Dustin Olson: During Q3, we will work to add another 3,000 to 5,000 pounds of sorting capacity to our bale purchases and another 2,000 to 6,500 pounds per hour of flake sorting capacity. These activities should help to minimize the overall impact of CP2 in the system, but there is actually a more important impact created by this activity.

Speaker Change: The sorting capacity chart bell purchases and another 2% to 6500 pounds per hour afflict sorting capacity.

Dustin Olson: These activities should help to minimize the overall impact of CP2 in the system, but there is actually a more important impact created by these activities. For instance, shifting from an 85% TP feedstock to a 97% TP feedstock should improve the overall PP yield by 12% and production by 14%. Back to compounding. So we listen.

Dustin Olson: These activities should help to minimize the overall impact of the CPU in the system, but there is actually a more important impact created by this activity.

Dustin Olson: By removing the low-quality CP2 from the feedstock, it should also improve the overall yield of high-quality recycled PP production in irons. For instance, shifting from an 85% TP feedstock to a 97% TP feedstock should improve the overall PP yield by 12% and production by 14%. Back to compounding. Our compounding strategy is a direct result of actively engaging with and closely listening to our customers. We continue to receive overwhelming support for our company, our product, and our mission.

Dustin Olson: By removing the low quality CPT from the feedstock. It should also improve the overall yield of high quality recycled <unk> production in Ireland for instance, shifting from an 85% TP feedstock to a 97% TP feedstock should improve the overall PPE yield.

Dustin Olson: For instance, shifting from an 85% PP feedstock to a 97% PP feedstock should improve the overall PP yield by 12% and production by 14%. Back to compounding. Our compounding strategy is a direct result of actively engaging with and closely listening to our customers. We continue to find overwhelming support for our company, our product, and our mission. Simply put, our customers want to buy our product. But the current variability of our operation, the limitation of our customers' facilities, and the realities of their change management protocols added both time and complexity to every conversation. So we listen, adjusted our customer facing strategy and implemented a compounding strategy so that we can give the customers what they need to be successful. The pictures on slide 9 give me great joy.

Dustin Olson: By 12% and production by 14%.

Dustin Olson: Back to compounding now.

Speaker Change: Our compounding strategy is a direct result of actively engaging with and closely listening to our customers. We continue to find overwhelming support for our company our product and our mission simply put our customers want to buy our products, but the current variability of our operation.

Dustin Olson: Simply put, our customers want to buy our product, but the current variability of our operation, the limitations of our customers' facilities, and the realities of their change management protocols add both time and complexity to every conversation. So we listen, adjusted our customer-facing strategy, and implemented a compounding strategy so that we can give the customers what they need to be successful. The pictures on slide nine give me great joy.

Dustin Olson: Limitation of our customers' facilities and the realities of their change management protocols added both time and complexity to every conversation.

Speaker Change: So we listened.

Speaker Change: Adjusted our customer facing strategy and implemented a compounding strategy. So that we can give the customers what they need to be successful.

Dustin Olson: The pictures on slide nine give me great joy. These are rugs that were made from compounded materials from the Ironton facility. I can tell you that when we published these pictures on social media last month, we received a bunch of inquiries about where they could purchase them for personal use. Many customers have similar objectives and constraints. They like the Purecycle story, they need a higher quality product, and they want to use our product.

Speaker Change: The pictures on Slide nine gives me great Joy these.

Dustin Olson: These are rugs that were made from compounded materials from the Ironton facility. I can tell you that when we published these pictures on social media last month, we received a bunch of inquiries about where they could purchase these for personal use. This is a great example of how compounding can help us. In this case, it is made with 100% Pure5 material. No virgin blend, no other recycled materials, no other fillers, but it was augmented with a viscous breaking agent to change the melt flow index, or MFI. MFI is a way to describe the viscosity of plastic.

Dustin Olson: These are rugs that were made from compounded materials from the Ironton facility. I can tell you that when we published these pictures to social media last month, we received a bunch of inquiries about where can we purchase these for personal use. This is a great example of how compounding can help us. In this case, it is made with 100% Pure5 material. No virgin blend, no other recycled materials, no other fillers.

Dustin Olson: These are rugs that were made from compounded materials from the iron <unk> facility I can tell you that when we publish these pictures to social media last month, we received a bunch of inquiries about where can we purchase these for personal use.

Dustin Olson: This is a great example of how compounding can help us.

Speaker Change: In this case it is made with 100% pure five material no Virgin blend no other recycled materials no other fillers, but it was augmented with a vis breaking agent to change the melt flow index or MSI MSI is.

Dustin Olson: But it was augmented with a vis breaking agent to change the melt flow index, or MFI. MFI is a way to describe the viscosity of plastic, and we've taken our product from a low number to a high number. Many customers have similar objectives and constraints. They like the Purecycle story, they need a higher quality product, and they want to use our product. But the base product didn't quite fit for their application profile.

Speaker Change: The way to describe the viscosity of plastic and we've taken our product from a low number to a high number.

Dustin Olson: And we've taken our product from a low number to a high number. Many customers have similar objectives and constraints. They like the Purecycle story, they need a higher quality product, and they want to use our product. But the base product didn't quite fit their application profile. So with this product example, we worked with this customer to provide a one pellet solution that they could use directly in their facility. They didn't have to make physical changes to their plant. They didn't have to adjust their equipment.

Dustin Olson: But the base product didn't quite fit their application profile. So with this product example, we worked with this customer to provide a one pellet solution that they could use directly in their facility. They didn't have to make physical changes to their plant. They didn't have to adjust their equipment.

Dustin Olson: Many customers have similar objectives and constraints they liked the pure cycle story, they need a higher quality product and they want to use our products, but the base product didnt quite fit for their application profile. So with this product example, we worked with this customer to provide a one pellet solution, but they can use directly.

Dustin Olson: So with this product example, we worked with this customer to provide a one pellet solution that they can use directly in their facility. They didn't have to make physical change to their plant. They didn't have to adjust their equipment.

Dustin Olson: Their facility.

Dustin Olson: They didn't have to make physical changes to their plant they didn't have to adjust their equipment. They just had to run the material like a would've run the Virgin equivalent. This customer is very excited about the product the market potential and the ability to expand into numerous offerings and we are discussing which big brands to market the product too.

Dustin Olson: They just had to run the material like they would have run the Virgin equivalent. This customer is very excited about the product, the market potential, and the ability to expand into numerous offerings. We're very excited about the pellets produced at Ironton. It's not perfect yet, but as we have successfully removed CP1 and CP2 from the recycled feedstock, we believe it gives us inherent advantages in the market over other alternatives. We do see variations in product quality with the natural fluctuations in feedstock and in operation.

Dustin Olson: We get to see our resin in the world. We can buy it and then put it in our homes, and we know it's made of recycle high quality. We have many potential customers like this. The overall sales opportunities are positive, but they each come with their own set of circumstances given the variability of our system, product and their, By adding the compounding step to our operation, we should be able to accelerate the product development process for customer applications, open more market channels, and should also create enhanced unit economics for iron.

Speaker Change: I personally loved us we get the CR resident in the World, We can buy it and then put it in our homes and we know it's made of recycled high quality material.

Dustin Olson: We get to see our resin in the world. We can buy it and then put it in our homes. And we know it's made of recycle high quality.

Dustin Olson: We have many potential customers like this. The overall sales opportunities are positive, but they each come with their own set of circumstances given the variability of our system, product and their, By adding the compounding step to our operation, we should be able to accelerate the product development process for customer applications, open more market channels, and should also create enhanced unit economics for iron. We're very excited about the pellets produced at Ironton.

Dustin Olson: We have many potential customers like us the overall sales opportunities are positive, but they each come with their own set of circumstances, given the variability of our system product and their needs by adding the compounding step to our operation, we should be able to accelerate the product development process for customer applications.

Dustin Olson: Open more market channels and should also create enhanced unit economics for iron.

Dustin Olson: We're very excited about the pellets produced at Ironton. It's not perfect yet, but as we successfully removed CP1 and CP2 from the recycled feedstock, we believe it gives us inherent advantages in the market over other alternatives. We do see variations in product quality with the natural fluctuations in feedstock and in operation, but the mechanical properties are good.

Dustin Olson: We're very excited about the pellets produced at Ironton, it's not perfect yet, but as we successfully removed CP, one and CPP from the recycled feedstock. We believe it gives us an inherent advantages in the market over other alternatives, we do see variations in product quality with the natural fluctuations in feedstock and in operations.

Dustin Olson: It's not perfect yet, but as we successfully removed CP1 and CP2 from the recycled feedstock, we believe it gives us an inherent advantages in the market over other alternatives. We do see variations in product quality with the natural fluctuations in feedstock and in operations. But the mechanical properties are good.

Dustin Olson: But the mechanical properties are good our odor performance also continues to be good following changes made during the April outage, we still expect this to be a strong aspect of our customer value proposition.

Dustin Olson: Our odor performance also continues to be good following changes made during the April audit. We still expect this to be a strong aspect of our customer value proposition. Compounding as an independent operation is very well understood and as an active segment within the PPA. In fact, as we engaged various compounders near Ironton, we found 47 operations within a 400-mile radius of our facility. We vetted the different options and are selecting partners that are interested in Purecycle operations and have a strong quality and manufacturing competence. Most compactors focus on specific applications, and most also have their own customers.

Dustin Olson: Our odor performance also continues to be good following changes made during the April audit. We still expect this to be a strong aspect of our customer value proposition. Compounding, as an independent operation, is very well understood as an active segment within the PPA. In fact, as we engaged various compounders near Ironton, we found 47 operations within a 400-mile radius of our facility. We vetted the different options and are selecting partners that are interested in Purecycle operations and have strong quality and manufacturing competence. Most compactors focus on specific applications, and most also have their own custom design. This gives us an opportunity to not only compound our product but also sell our product to the community.

Dustin Olson: Compounding, as an independent operation, is very well understood as an active segment within the PPE industry. In fact, as we engaged various compounders near Ironton, we found 47 operations within a 400-mile radius of our facility. We vetted the different options and are selecting partners that are interested in Purecycle operations and have strong quality and manufacturing competence. Most compactors focus on specific applications, and most also have their own custom, Thank you, Dustin

Dustin Olson: Compounding as an independent operation is very well understood and as an active segment within the pp industry. In fact, as we engage various compounds <unk> near Ironton, We found 47 operations within a 400 mile radius of our facilities, we've added the different options and our <unk>.

Dustin Olson: <unk> partners that are interested in pure cycle operations and have.

Speaker Change: I have a strong quality and manufacturing competence.

Dustin Olson: Most <unk> focus on specific applications and most also have their own customers. This gives us an opportunity to not only compound our product, but also sell our product to the compounds. We started the compounding activities by partnering with three independent operations at around two to 3 million pounds per month.

Dustin Olson: This gives us an opportunity to not only compound our product, but also sell our product to the community. We started the compounding activities by partnering with three independent operations at around two to three million pounds per month targeted in Q4. This is a good start, but still only represents a small portion of our overall Ironton volume. Given Ironton's proximity to ample compounding capacity, We, and as we gain experience in this space, we will have the opportunity to grow as as, We should have the opportunity to grow as needed.

Dustin Olson: We started the compounding activities by partnering with three independent operations at around two to three million pounds per month, targeted in Q4. This is a good start, but it still only represents a small portion of our overall Ironton volume. Given Ironton's proximity to ample compounding capacity, we, and as we gain experience in this space, we will have the opportunity to grow as we should have the opportunity to grow as needed. For our customers, we think it will make the buying process easier for them.

Speaker Change: Targeted in Q4. This is a good start but still only represents a small portion of our overall ironton volume given ironton proximity to ample compounding capacity, we and as we gain experience in this space, we will have the opportunity to grow as as needed.

Dustin Olson: We should have the opportunity to grow as needed.

Dustin Olson: For our customers, we think it will make the buying process easier for them. Now they can simply define what characteristics that the application requires, and we will work with our partners to build it for them. This should allow us to expand the MFI index, make it fit better into their existing infrastructure, and reduce the magnitude of change to their operation. Put more simply, this is a one-pellet solution built to fit their purpose.

Speaker Change: For our customers, we think it will make the buying process easier for them now they can simply define what characteristics that the application requires and we will work with our partners to build it for them, but should allow us to expand the MSI index make it fit better into their existing infrastructure and reduce the magnitude of chi.

Dustin Olson: Now they can simply define what characteristics the application requires, and we will work with our partners to build it for them. This should allow us to expand the MFI index, make it fit better into their existing infrastructure, and reduce the magnitude of change to their operation. Put more simply, this is a single pellet solution built to fit their purpose.

Speaker Change: <unk> to their operation put more simply this is a one pellet solution built to fit their purpose at this point I will hand, it over to Jamie for a finance update. Thank you Boston turning to slide 11, which highlights our liquidity position. We ended June with just under $11 million of unrestricted cash.

Jaime Vasquez: At this point, I will hand it over to Jaime for a final. Thank you, Dustin. Turning to slide 11, which highlights our liquidity position, we ended June with just under $11 million of unrestricted cash. Our cash expenses were $34.7 million for the second quarter, which was about $9 million higher than the first, Our normalized run rate for cash outflows has been around $26 million per quarter. The increase reflected the timing of payments for accrued expenses incurred in the first quarter, as well as expenses incurred from the April planned outage and higher usage of outside services.

Jaime Vasquez: At this point, I will hand it over to Jaime for a final. Thank you, Dustin. Turning to slide 11, which highlights our liquidity position, we ended June with just under $11 million of unrestricted cash. Our cash expenses were $34.7 million for the second quarter, which was about $9 million higher than the first. Our normalized run rate for cash outflows has been around $26 million per quarter. The increase reflected the timing of payments for accrued expenses incurred in the first quarter, as well as expenses incurred from the April planned outage and higher usage of outside services.

Jaime Vasquez: Turning to slide 11, which highlights our liquidity position, we ended June with just under $11 million of unrestricted cash. Our cash expenses were $34.7 million for the second quarter, which was about $9 million higher than the first. Our normalized run rate for cash outflows has been around $26 million per quarter. The increase reflected the timing of payments for accrued expenses incurred in the first quarter, as well as expenses incurred from the April planned outage and higher usage of outside services.

Jaime Vasquez: Our cash expenses were $34 7 million for the second quarter, which was about $9 million higher than the first quarter, our normalized run rate for cash outflows has been around $26 million per quarter.

Jaime Vasquez: The increase reflected the timing of payments for accrued expenses incurred in the first quarter as well as expenses incurred from the April planned outage and higher usage of outside services.

Jaime Vasquez: Also this week, we reached agreement for the sale of $22.5 million face value of revenue bonds for total cash proceeds of $18 million to various investors. And as we continue to make progress at Ironton, I believe we'll be able to sell the remaining $118 million of revenue. I will now turn the call back to Michelle to open the call for questions. Thank you!

Jaime Vasquez: Also this week, we reached agreement for the sale of $22.5 million in base value of revenue bonds for total cash proceeds of $18 million to various investors. And as we continue to make progress at Ironton, I believe we'll be able to sell the remaining $118 million of revenue bonds. I will now turn the call back to Michelle to open the call for questions. Thank you.

Jaime Vasquez: Also this week, we reached agreement for the sale of $22 5 million face value of revenue bonds for total cash proceeds of $18 million to various investors.

Jaime Vasquez: And as we continue to make progress at Ireton I believe we will be able to sell the remaining $118 million of revenue bonds.

Jaime Vasquez: I will now turn the call back to Michelle to open the call for questions.

Operator: Thank you. As a reminder, to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for your first question. And our first question comes from the line of Hassan Ahmed with Olympic Global Advisors. Your line is open. Please go ahead.

Operator: Thank you.

Speaker Change: Thank you as a reminder to ask a question at this time. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for your first question.

Operator: And our first question comes from the line of Hassan Ahmed with Olympic Global Advisors. Your line is open. Please go ahead.

Speaker Change: And our first question comes from the line of Hassan Ahmed with Alembic Global Advisors. Your line is open. Please go ahead.

Hassan Ahmed: Morning, Dustin. You know, very happy to see the production rates going up and the sort of positive results emerging from all the good work that you guys have done. Look, my question is just around operating rates, first of all. You talked about how, in the near term, you could get to a million pounds per week, if I heard correctly, of production, which obviously on an annualized basis is around 52 million pounds, which again, maybe I'm being a little sort of greedy or whatever, but that's still significantly below nameplate capacity. So beyond the near term, and by near term, I'm assuming you meant between now and the end of the year, what gets us to sort of optimal operating rates?

Hassan Ahmed: Morning, Dustin. You know, very happy to see, you know, the production rates going up and.., the sort of positive results emerging from all the good work that you guys have done. Look, my question is just around operating rates, first of all. You talked about how in the near term you could get to a million pounds per week, if I heard correctly, of production, which obviously on an annualized basis is around 52 million pounds, which again, maybe I'm being a little sort of greedy or whatever, but that's still significantly below nameplate capacity. So beyond the near term, and by near term I'm assuming you meant between now and the end of the year, what gets us to sort of optimal operating rates?

Hassan Ahmed: Good morning Dustin.

Speaker Change: Very happy to see.

Dustin Olson: The production rates going up and.

Hassan Ahmed: The sort of positive results emerging from.

Dustin Olson: Sort of.

Speaker Change: All the good work that you guys have done.

Speaker Change: Look my question is just around operating rates first of all as you are.

Speaker Change: <unk> talked about how in the neck.

Hassan Ahmed: Could get to 1 million pounds per week, if I heard correctly of production.

Hassan Ahmed: So, which obviously on an annualized basis is around them.

Speaker Change: 2 million pounds.

Christian Bruey: Good day, and thank you for standing by. Welcome to the Purecycle Technology Second Quarter 24 Corporate Update Conference Call. I am Christian Bruey, Director of Corporate Communications for Purecycle, and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Jaime Vasquez, our Chief Financial Officer. This morning we will be highlighting our corporate developments for the second quarter of 2024. The presentation we'll be going through on this call can also be found on the Investor tab at our website at Purecycle.com.

Hassan Ahmed: Which again, maybe I'm being a little greedy or whatever.

Hassan Ahmed: But that's still significantly below nameplate capacity.

Hassan Ahmed: So beyond the near term and by near term I'm, assuming you meant between now and the end of the year, what gets us to the sort of optimal operating rates.

Dustin Olson: Yeah, so thanks for the question, Hassan, and good to talk to you again. Hey, look, the goals that I put out there are goals, okay? We have a goal, a near-term goal, to get to 10,000 pounds per hour of feed rate, to get to 200,000 pounds per day of production, and to get to a million pounds per week. We set intermediate short-term goals as milestones for us to achieve, which then raises the bar for the next step.

Dustin Olson: Yeah, so thanks for the question, Saan, and good to talk to you again. Hey, look, the goals that I put out there are goals, okay? We have a goal, a near-term goal, to get to 10,000 pounds per hour of feed rate, to get to 200,000 pounds per day of production, and get to a million pounds per week. We set intermediate short-term goals as milestones for us to achieve that then raises the bar for the next step.

Speaker Change: Yes, so thanks for the questions on <unk>.

Dustin Olson: Good to talk to you again.

Speaker Change: The goals that I put out there are goals okay.

Speaker Change: Our goal our near term goal to get to 10000 pounds per hour of feed rate to get to 200000 pounds per day of production and get to a million pounds per week, and we set intermediate short term goals as as milestones for us to achieve that then raises the bar for the next step this by no means impacts.

Dustin Olson: We set intermediate short-term goals as milestones for us to achieve that then raises the bar for the next step. This by no means impacts our desire or capability to get to nameplate capacity. We still see that very much in the sites and don't see, don't really see any constraints that will hold us back. The reality is that the Co-Product 2 removal system has constrained us on feed rates at the beginning. But now that that's behind us, we see a really nice lane going forward to see an inflection.

Dustin Olson: This by no means impacts our desire or capability to get to nameplate capacity. We still see that very much in the sites and don't really see any constraints that will hold us back. The reality is that the Co-Product 2 removal system constrained us on the feed rates at the beginning. But now that that's behind us, we see a real nice lane going forward to see an inflection

Dustin Olson: This by no means impacts our desire or capability to get to nameplate capacity. We still see that very much in the sites and don't see don't really see any constraints that will hold us back. The reality is that the Co-Product 2 removal system has constrained us on the feed rates at the beginning. But now that that's behind us, we see a real nice lane going forward to see an inflection.

Hassan Ahmed: understood. Very helpful.

Hassan Ahmed: Our desire or capability to get to nameplate capacity, we still see that very much in the sites and don't see.

Hassan Ahmed: Understood. Very helpful.

Christian Bruey: 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. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions, and forward-looking statements that can be found at the end of our second quarter, 2024 Corporate Update Press release, that was filed this morning, as well as another report on file with the SEC to provide further detail about the risks related to our business.

Hassan Ahmed: Don't really see any constraints at a hold us back the reality is that the co product to removal system.

Hassan Ahmed: Has constrained us on the feed rates at the beginning but now that thats behind us we see a real nice lange going forward to see an inflection in production.

Hassan Ahmed: And just moving on to the sort of blending slash compounding opportunity, um, could you dig a bit deeper into what this means in terms of maybe potentially unit economics or overall economics? I mean, you know, what sort of feedstock costs you'll pay for that? And what potentially the incremental opportunity may be, you know, starting with the iron turn and maybe beyond.

Hassan Ahmed: understood. Very helpful.

Hassan Ahmed: And just moving on to the sort of blending slash compounding opportunity, could you dig a bit deeper into what this means in terms of maybe potentially unit economics or overall economics? I mean, you know, what sort of feedstock costs you'll pay for that? You know, what potentially the incremental opportunity may be, you know, starting with Ironton and maybe beyond?

Speaker Change: Understood very helpful.

Hassan Ahmed: And just moving on to the sort of blending slash compounding opportunity could.

Hassan Ahmed: And just moving on to the sort of blending slash compounding opportunity, could you dig a bit deeper into what this means in terms of maybe potentially unit economics or overall economics? I mean, you know, what sort of feedstock costs you'll pay for that? And what potentially the incremental opportunity may be, you know, starting with Ironton and maybe beyond?

Hassan Ahmed: Could you dig a bit deeper into what this means in terms of maybe potentially unit economics, our overall economics.

Christian Bruey: Additionally, please note that the company's actual results may differ materially from those anticipated, and accept this required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include preliminary non-gap 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 Purecycle's actual results in the preliminary financial data set forth herein may be material. You're welcome to follow along with our slide deck, or if joining us by phone, you can access it at any time at Purecycle.com. We are excited to share updates from the previous quarter with you.

Hassan Ahmed: <unk>.

Speaker Change: What sort of feedstock cost.

Speaker Change: We'll pay for that.

Speaker Change: Potentially the incremental opportunity, maybe starting with <unk> and maybe beyond.

Dustin Olson: Yeah, I think that's a good question. So the first thing is... This is creating a platform for us to give the customer what they need and what they want without compromise. So in the past, when we would have a feedstock shift from a low MFI to a higher MFI, it was trying to find a way to make that work inside of the customer's platform. And it just made the conversation complicated.

Dustin Olson: Yeah, I think that's a good question. So the first thing is, this is creating a platform for us to give the customer what they need and what they want without compromise. So in the past, when we would have a feedstock shift from a low MFI to a higher MFI, it was trying to find a way to make that work inside of the customer's platform, and it just made the conversation complicated.

Hassan Ahmed: Yes, I think that's a good question. So the first thing is.

Dustin Olson: Yeah, I think that's a good question. So the first thing is...

Dustin Olson: This is creating a platform for us to give the customer what they need and what they want without compromise. So in the past, when we would have a feedstock shift from a low MFI to a higher MFI, it was trying to find a way to make that work inside of the customer's platform, and it just made the conversation complicated.

Dustin Olson: This is creating a platform for us to give the customer what they need and what they want without compromise so in the past.

Dustin Olson: When we would have a feedstock shift from a low MSI to a higher MSI. It was trying to find a way to make that work inside of the customers' platform and it just made the conversation complicated. Okay. So what this allows us to do is have a clear lane to our customers to give them exactly that.

Dustin Olson: I'll now turn it over to Dustin Olson, Purecycle's chief executive office. Thank you, Christian. Thank you for joining our call today. It's always refreshing to update the market on our company's progress. Working at Purecycle is a privilege, as we get to see the impact we'll have in the world every day. I've never been part of a team as committed as hardworking or as persistent to find success. Every now and then, we have to helicopter up to remind ourselves about this is a novel cutting-edge process, a real change the world opportunity, and something that no one has ever done before.

Dustin Olson: Okay, so what this allows us to do is have a clear path to our customers to give them exactly the type of product that they need in their system, which we believe will give us a much quicker adoption rate for the product into their facility. The second piece is really the value creation for the customer. Now, remember, I mean, the market is woefully undersupplied with recycled material. Okay, and there is no shortage of appetite for customers to use recycled material.

Dustin Olson: Okay, so what this allows us to do is have a clear path to our customers to give them exactly the type of product that they need in their system, which we believe will give us a much quicker adoption rate for the product into their facility. When it comes to the economics, I mean, you've got to look at it in two ways. For sure, the extra compounding step will add some incremental cost. However, given the number of compounders around Ironton in close proximity, we see this as a very competitive opportunity. And quite frankly, we see the compounding capacity in the market is pretty long right now, so I think it's a good opportunity for us to step into this. But that's the first.

Dustin Olson: Okay, so what this allows us to do is have a clear lane to our customers to give them exactly the type of product that they need in their system, which we believe will give us a much quicker adoption rate for product into their facility. When it comes to the economics, I mean, you've got to look at it in two ways. For sure, the extra compounding step will add some incremental cost. Although, given the amount of compounders around Ironton in close proximity, we see this as a very competitive opportunity, and quite frankly, we see the compounding capacity in the market is pretty long right now. So I think it's a good opportunity for us to step into this. But that's the first.

Dustin Olson: Type of product that they need in their system, which we believe will give us.

Dustin Olson: A much quicker adoption rate for product into their facility. When it comes to the economics I mean, you've got to look at it in two ways.

Speaker Change: Sure the extra compounding step will add some incremental costs, although given the amount of compounds around irons in close proximity.

Dustin Olson: Q2 is a bit of a tale of two halves. The first half was spent completing the outage that we started in April, and the second half we spent commissioning the new improvements and testing the plant at new operational levels. We achieved new high bars for feed at 8,000 pounds per hour and pelletization at 11,000 pounds per hour using curbside PCR with elevated levels of CP2, and to give you a little taste of our current activities, today we're running between 7,000 and in June we successfully achieved the highest production total today using low CP2 feeds and then introduced higher CP2 feeds to the plant in July.

Dustin Olson: We see this as a very competitive opportunity and quite frankly, we see the compounding capacity in the market is pretty long right. Now so I think it's a good opportunity for us to step into this but that's but that's the first piece. The second piece is really the value creation for the customer.

Dustin Olson: The second piece is really the value creation for the customer. I mean, not only are we able to get our product into their system faster, we're also able to get higher value products and supply into their system as well. And so I think there's an opportunity to, you know, control the costs on the front end because of the, let's just say the status of the industry, but also push the revenue up on the customer side because we're gonna be creating a product that has higher value to them.

Dustin Olson: The second piece is really the value creation for the customer. I mean, not only are we able to get our product into their system faster, but we're also able to get higher-value products and supplies into their system as well. And so I think there's an opportunity to, you know, control the costs on the front end because of the, let's just say, status of the industry, but also push the revenue up on the customer side because we're gonna be creating a product that has higher value for them.

Dustin Olson: Not only are we able to get our product into their system faster. We're also able to get higher value products and supply into their system as well and so I think there is an opportunity to.

Dustin Olson: Control the costs on the front end because of the let's just say the status of the industry.

Dustin Olson: But also pushed the revenue up on the customer side, because we're going to be creating a product that.

Dustin Olson: These feeds allowed us to test the new CP2 improvements implemented during the outage. As you may recall, a key learning from our outage was that the level indication in the high pressure section of co-product 2 area was not working properly. We fixed this problem during the outage, which helped us move forward and toward a new, more permanent solution for CP2. I'm pleased to announce that these improvements appear to be working as hoped.

Dustin Olson: That has higher value to them now.

Dustin Olson: Now, remember, I mean, the market is woefully undersupplied in recycled material. Okay, and there is no shortage of appetite for customers to use recycled material. So we feel like if we focus more on giving the customer what they need to be successful, the customers will compensate us and reward us for that activity. And so we actually see strong support for the economics of this activity. And remember also, I mean, we will be expanding the volume potential of sales as well, okay?

Dustin Olson: Now, remember, I mean, the market is woefully undersupplied with recycled material. Okay, and there is no shortage of appetite for customers to use recycled material. So we feel like if we focus more on giving the customer what they need to be successful, the customers will compensate us and reward us for that activity. And so we actually see strong support for the economics of this activity. And remember also, I mean, we will be expanding the volume potential of sales as well, okay?

Dustin Olson: Now remember I mean.

Dustin Olson: The market is woefully under supplied and recycled material.

Dustin Olson: And there is no shortage of appetite for customers to use recycled material. So we feel like if we focus more on giving the customer what they need to be successful the customers will compensate us and reward us for that activity and so we actually see strong support for the economics of this.

Dustin Olson: So we feel like if we focus more on giving the customer what they need to be successful, the customers will compensate us and reward us for that activity. And so we actually see strong support for the economics of this activity. And remember also, I mean, we will be expanding the volume potential of sales as well, okay? When we either purchase virgin material or purchase other post-industrial recycled material and blend it in with our product, I mean, that's volume expansion.

Dustin Olson: We now see indications of removing greater than 20,000 pounds per day of CP2, which is substantially higher than our prior performance of 3,000 pounds per day. After removing the higher rates from the high pressure system, we did see downstream bottlenecks in our low pressure CP2 system. And just like past bottlenecks, our team continued to work in July to further improve our low pressure CP2 handling operations. We know that redesigning commissioning is a long and painful activity, but we are also through the toughest part and now believe the CP2 removal is solved. Doing this work did impact our rates in July and the first part of this month, but we expect rates to improve after we implement the final handling equipment next week.

Dustin Olson: Activity and remember also I mean, we will be expanding the volume potential of sales as well okay. When we.

Dustin Olson: When we either purchase virgin material or purchase other post-industrial recycled material and blend it in with our product, I mean, that's a volume expansion. And while those numbers can move around quite a bit in terms of, you know, what does it cost to buy that material to blend it in, we feel pretty confident in our ability to keep the cost of that material in line with the cost to produce our material at Ironton. So we feel good on both sides.

Dustin Olson: When we either purchase virgin material or purchase other post-industrial recycled material and blend it in with our product, I mean, that's volume expansion. And while those numbers can move around quite a bit in terms of, you know, what it costs to buy that material to blend it in, we feel pretty confident in our ability to keep the cost of that material in line with the cost to produce our material at Ironton. So we feel good on both sides.

Dustin Olson: Either purchase Virgin material or purchased other postindustrial recycled material and blended in with our product I mean, thats, a volume expansion and while those numbers can move around quite a bit in terms of what does it cost to buy that material to blend. It in we feel pretty confident in our ability to.

Dustin Olson: And while those numbers can move around quite a bit in terms of, you know, what it costs to buy that material to blend it in, we feel pretty confident in our ability to keep the cost of that material in line with the cost to produce our material at Ironton. So we feel good about both.

Dustin Olson: Keep.

Dustin Olson: The cost of that material in line with the cost to produce our material at irons and so so we feel good on both fronts.

Hassan Ahmed: Very helpful, Dustin. Thank you so much.

Speaker Change: Very helpful. Thank you so much.

Operator: Thank you, and one moment for our next question. And our next question is going to come from the line of Eric Stine with Craig Hallam, Capital Mark. Your line is open, please go ahead.

Operator: Thank you, and one moment for our next question. And our next question is going to come from the line of Eric Stine with Craig Hallam, Capital Mark. Your line is open. Please go ahead.

Operator: Thank you and one moment for our next question. And our next question is going to come from the line of Eric Stine with Craig Hallam, Capital Mark. Your line is open. Please go ahead.

Speaker Change: Thank you and one moment for our next question.

Dustin Olson: This moment should reflect an inflection point in our production. The CP2 activities will not require an outage, nor do we anticipate another outage for the remainder of the year.

Operator: And our next question is going to come from the line of Eric Stine with Craig Hallum Capital Mark. Your line is open. Please go ahead.

Eric Stine: Good morning, everyone.

Eric Stine: Hey, so just wondering when you think about compounding and I know you've said that it's got superior physical properties. I mean, is this something that we should think about ultimately? The vast majority of your production would go to compounding because that's just required by the market, or are you saying that there are just certain applications, such as what you showed online and in your presentation, certain end products that really need those superior properties? I mean, how should we think about the ultimate mix that compounding will make when you're up and running at full strength?

Eric Stine: Hey so just wondering when you think about compounding and I know you know you've said that it's got superior physical properties I mean is this something that we should think about ultimately? The vast majority of your production would go to compounding because that's just required by the market, or are you saying that there are just certain applications, such as what you showed online and in your presentation, certain end products that really need those superior properties? I mean, how should we think about the ultimate mix that compounding will make when you're up and running at full?

Eric Stine: Hey, so, just wondering, when you think about compounding, and I know you've said that it's got superior physical properties, is this something that we should think about ultimately?

Dustin Olson: The production during Q2 has allowed us to be more active on the commercial front. We received an FDA letter of non-object for our process that covers all conditions of use when running food grade PCR feedstocks. This should pave the way to supply the market with FDA quality product. We continue to see strong demand from our customers. We completed numerous PIR and PCR trials with fiber applications, and that seemed very good results, some of which you've already seen through social media accounts.

Eric Stine: Good morning, Hey, good morning, Hey, So just wondering when you think about compounding and I know you've said that it's got superior physical.

Eric Stine: Physical properties I mean is this something that we should think about ultimately.

Speaker Change: Vast majority of your production would go to compounding.

Speaker Change: Because that's just required by the market or are you, saying that there are just certain applications such as what you showed online and in your presentation certain end products that really need those superior properties I mean, how should we think about the ultimate mix that compounding will make when you're up and running at full.

Dustin Olson: And remember, fiber is a notoriously challenging application even for virgin pellet production. Our theme is actively working with these customers to map out our pure cycle resin to brand applications that can be introduced to the market. We also established a footprint with multiple compounders, which we will review in more detail later in this presentation. With compounding, we should be able to tailor our PIR-5 product to specific customer application needs. These customizations should help reduce the adoption barriers to a new product, providing what the application requires, and should expand the volume potential to the market. We will be offering a mixture of pure-5 product with both recycle and virgin strains. We are proud to have the first PO's in hand for the compounded material and expect first deliveries in August.

Dustin Olson: Yeah, so I definitely see this being a, let's say, a portfolio view of our overall sales streams. We will have some products that will be sold directly to the market. We'll have other products that will be sold as a blend. In some cases, it's going to be opportunistic to blend them to get to the right properties for the customer. And so we'll do that for specific applications. But in other cases, the customers have more flexibility, and they can take it directly.

Dustin Olson: Yeah, so I definitely see this being a, let's say, a portfolio view of our overall sales streams. We will have some product that will be sold neat to the market. We'll have other products that will be sold as a blend. In some cases, it's going to be opportunistic to blend it to get to the right properties for the customer. And so we'll do that for specific applications. But in other cases, the customers have more flexibility, and they can take a direct.

Speaker Change: Yes, so I definitely see this being a let's say a portfolio view of our overall sales streams. We will have some product that will be sold to the market. We will have other products that will be sold as a blend in some cases.

Dustin Olson: Going to be opportunistic to blend it to get to the right properties for the customer.

Dustin Olson: And so we will do that for specific applications, but in other cases, the customers have more flexibility and they can take a direct so as we step into this at the end of the day, we're going to find the lane that has the highest value to.

Dustin Olson: So as we step into this, at the end of the day, we're going to find the lane that has the highest value to the customer and, ultimately, then the highest value to Purecycle. And I think that what compounding really does for us is it creates flexibility. It gives us some options for how to manage customers' requests and manage the opportunity to move a product into the market more effectively. So I think all options are on the table, Eric.

Dustin Olson: So as we step into this, at the end of the day, we're going to find the lane that has the highest value to the customer and, ultimately, then the highest value to Purecycle. And I think that what compounding really does for us is it creates flexibility. It gives us some options for how to manage customers' requests and manage the opportunity to move the product into the market more effectively. So I think all options are on the table, Eric.

Dustin Olson: So as we step into this, at the end of the day, we're going to find the lane that has the highest value to the customer, and ultimately, then the highest value to Purecycle. And I think that what compounding really does for us is it creates flexibility. It gives us some optionality for how to manage customers' requests and manage the opportunity to move a product into the market more effectively. So I think all options are on the table, Eric.

Dustin Olson: To the customer and ultimately then the highest value to pure cycle in and I think that what compounding really does for US is it creates flexibility. It gives us some optionality for how to manage customers' request and manage the opportunity to move product into the market more effectively.

Dustin Olson: On the financing side, we're executing our plan and making progress. We successfully marketed and sold $22.5 million of revenue bonds, and tend to market through remaining bonds later this year, and our progressing conversations with multiple capital sources.

Dustin Olson: I think that we have building the platform with partners will give us, let's say, the experience compounding. And we're going to start at a relatively low number to begin with, with a target of 2 to 3 million pounds per month by the end of the fourth quarter. But depending on the success we find with it, the interest in the customers, the desire to grow their recycle volume more quickly, you know, I think we're gonna have a really nice opportunity to grow that as.

Dustin Olson: <unk>.

Dustin Olson: All options are on the table, Eric I think that we have.

Dustin Olson: I think that building the platform with partners will give us, let's say, experience compounding. And we're going to start at a relatively low number to begin with, with a target of 2 to 3 million pounds per month by the end of the fourth quarter. But depending on the success we find with it, the interest from the customers, the desire to grow their recycling volume more quickly, you know, I think we're gonna have a really nice opportunity to grow that as well.

Speaker Change: Building the platform with partners will give us, let's say the the experience compounding and we're going to start at a relatively low number to begin with with a target of two to 3 million pounds per month by the end of the fourth quarter.

Dustin Olson: Jamie will discuss this later. Ironson operations are continuing to improve. Our focus has shifted from a startup and commissioning phase to steadily increasing production.

Dustin Olson: Sales. In July, our focus was on CP2 removal and recovery. While we made strong improvements in removing the CP2 from the high-pressure system, our originally designed low-pressure system did not work as expected. During this month, we made certain design changes to the system and will make what we expect the final change next week. As I just mentioned, a high-pressure system changes our working well. We have proven that the system has the capability to remove more than 20,000 pounds per day of CP2.

Speaker Change: But depending.

Dustin Olson: Depending on the success, we find with the interest and the customers the desire to grow their recycle volume more quickly.

Dustin Olson: I think we're going to have a really nice opportunity to grow that as well.

Eric Stine: Yep. And then, obviously, magnifies your volume potential quite a bit, depending on how much that mix is. When we think about economics, and I know, I mean, look, it's still, to an extent, to be determined, it's early days, but do you think that you'll be able to command the same premium pricing for the compounded output, you know, as compared to, say, the Pure 5? Well, I think I think

Eric Stine: Yep. And then, obviously, magnifies your volume potential quite a bit, depending on how much that mix is. When we think about the economics, and I know, I mean, look, it's still, to an extent, to be determined, it's early days, but do you think that you'll be able to command the same premium pricing for the compounded output as compared to, say, the Pure 5? Well, I think

Dustin Olson: Yes.

Dustin Olson: And then.

Speaker Change: Obviously magnified as your volume potential quite a bit depending on how much that mix is when we think about economics and I know I mean look it's still and to an extent to be determined and it's early days.

Speaker Change: But do you think that you'll be able to command the same premium pricing for the compounded.

Dustin Olson: And when we get the low-pressure system improvements installed next week, once installed, we should be able to test higher rates of the CP2 removal system and raise rates accordingly. Low-pressure improvements should be inherently easy to tackle easier to tackle than the high-pressure side. Low-pressure improvements do not require outages and should be improved much more quickly. Our team is working tirelessly to move this technology forward. While we are deeply engrossed in the daily activities, it's also important to state some benchmark goals.

Dustin Olson: Put.

Dustin Olson: As.

Eric Stine: Fair to say the pure five.

Dustin Olson: Well, I think the way I'd answer that is the compounding industry has been a successful enterprise because of the value creation through compounding, and the traditional compounding industry has done that with just virgin material.

Dustin Olson: Well, I think the way I'd answer that is the compounding industry has been a successful enterprise because of the value creation through compounding. And the traditional compounding industry has done that with just virgin material.

Dustin Olson: Well, I think I think

Speaker Change: Well I think I think the way I would answer that is the compounding industry has made has been a successful enterprise because the value creation through compounding.

Dustin Olson: In the traditional compounding industry has done that with just Virgin materials.

Dustin Olson: So I think we will be able to tap into the compounding value creation that's already there in the market. And quite frankly, I think we're going to be able to add to that because we're going to bring a high-quality recycling stream to the market that the market hasn't seen. And so I feel very good about our opportunity to maintain our pricing potential in the market and then also potentially expand it with volume. Look, at the end of the day.

Dustin Olson: So I think we will be able to tap into the compounding value creation that's already there in the market. And quite frankly, I think we're going to be able to add to that because we're going to bring a high quality recycle stream to the market that the market hasn't seen. And so I feel very good about our opportunity to maintain our pricing potential in the market and then also potentially expand it with the volume, Look, at the end of the day, at the end of the day.

Dustin Olson: So I think we will be able to tap into the compounding value creation, that's already there in the market and quite frankly, I think we're going to be able to add to that because we're going to bring a high quality recycled streams of the market, but the market hasnt seen and so I feel very good about our opportunity to.

Dustin Olson: With our focus now moving beyond redesigning commissioning, we feel confident sharing our near-term goals with you. We are targeting continuous feed rate to 10,000 pounds per hour to produce more than 200,000 pounds in a single day and to produce 1 million pounds in one week. We believe this is within reach and we won't stop pushing for it until we achieve it. And while these are only short-term goals, this is just the first next step toward getting Ironson to name plate capacity.

Dustin Olson: Maintain our.

Dustin Olson: Pricing potential in the market.

Dustin Olson: And then also potentially expand it with the volume potential look at the end of the day at the end of the day.

Dustin Olson: Your value depends on how much value you create for our customers. And so our focus, after listening to customers a lot over the last six months, has shifted so that we can now give the customer exactly what they want. And I think that that's going to be valued and viewed very well by the market.

Dustin Olson: Your value depends on how much value you create for our customers. And so our focus, after listening to customers a lot over the last six months, our focus has shifted so that we can now give the customer exactly what they want. And I think that that's going to be valued and viewed very well by the market.

Dustin Olson: Your value depends on how much value you create for our customer.

Dustin Olson: Let's take a look at some of the metrics that show our progress. In June, we produce pilots for 13 days in a row. We reach peak daily production of 134,000 pounds and produce pellets 25 days out of 30. Stretching days of production together like this gives us the confidence that we can raise rates and achieve significant production levels. Since our last communication, we increased our max continuous feed rate from 6,500 pounds per hour to 8,000 pounds per hour and the max pelletization rate reached 11,000 pounds per hour.

Dustin Olson: So our focus after listening to customers a lot over the last six months. Our focus has shifted so that we can now give the customer exactly what they want and I think that that's going to be valued and viewed very well.

Dustin Olson: By the market.

Stephanie: Alright, Thanks Stephanie.

Operator: Thank you, and one moment for our next question. And our next question is going to come from the line of Brian Butler with Cecil. Your line is open. Please go ahead.

Operator: Thank you and one moment for our next question. And our next question is going to come from the line of Brian Butler with Cecil. Your line is open. Please go ahead.

Speaker Change: Okay. Thank you and one moment for our next question.

Dustin Olson: And our next question is going to come from the line of Brian Butler with Stifel. Your line is open. Please go ahead.

Brian Butler: Thank you for taking my question. Hey, Abraham. Nice to meet you.

Eric Stine: Thank you for taking my question. Hey, Abraham. Nice to meet you.

Dustin Olson: The incremental steps show continuous progress. These are the headliners, the metrics that people focus on first. I understand that and we keep it in focus, but I'm equally proud of the work we do in the trenches. And quite frankly, it's the trench work that creates the platform for headliner performance. This time last year, our solvent circulation was 40 percent and our utility plant reliability was 25 percent. We were challenged moving forward because certain systems, because these systems and others, continued to create barriers to more consistent operations.

Dustin Olson: Thank you for taking my questions.

Speaker Change: Hey, Brian Nice to meet you.

Dustin Olson: Maybe on the feedstock, or not feedstock, but on the offtake agreements, when you think about what was in place for the production of iron tin, the agreements, you know, at one point, the facility was fully kind of sold out. How does compounding impact those offtake agreements, especially when you think about what's going to be delivered to P&G? I mean, has that been renegotiated, and they're taking a compounded product, or are they still kind of taking the recycled? How do we think about that as you move forward with the compounding strategy?

Dustin Olson: Maybe on the feedstock, or not feedstock, but on the offtake agreements, when you think about what was in place for the production of iron tin, the agreements, you know, at one point, the facility was fully kind of sold out. How does compounding impact those offtake agreements, especially when you think about what's going to be being delivered to P&G? I mean, has that been renegotiated and they're taking a compounded product, or are they still kind of taking the recycled? How do we think about that kind of as you move forward with the compounding strategy?

Eric Stine: Maybe on the feedstock, or not feedstock, but on the offtake agreements, when you think about what was in place for the production of Ironton, the agreements, you know, at one point, the facility was fully kind of sold out. How does compounding impact those offtake agreements, especially when you think about what's going to be delivered to P&G? I mean, has that been renegotiated, and they're taking a compounded product, or are they still kind of taking the recycled?

Eric Stine: Yes.

Eric Stine: Maybe on the feedstock.

Speaker Change: But on the off take agreements when you think about what was in place for the production of iron in the agreement at one point that facility was fully kind of sold out how does compounding.

Eric Stine: Impact those offtake agreements, especially when you think about what's going to be being delivered to P&G. I mean has that been renegotiated and theyre, taking a compounded product or are they still kind of taking the recycle how do we think about that kind of as you move forward with the compounding strategy.

Dustin Olson: We addressed these issues quickly and today both our solvent circulation and our utility plant reliability are operating at greater than 98 percent uptime, when you exclude the outage downtime. This is foundational progress. And quite frankly, the same can be said for our reliability efforts. While we have had challenges with numerous rotating equipment, we have completed several projects that have improved overall reliability, including the addition of backup power supplies to two of our three key seal systems.

Dustin Olson: Look, I mean, I think it's the same with all customers. You really have to think about the organization and how they work internally. I mean, first of all, our big customers, like Procter & Gamble and L'Oreal, and some of the people that have been with us for a long time, their interest is really about getting as much recycled content into their applications as they can, because they've got very forward-looking, strong, and quite frankly, admirable sustainability goals. So our responsibility is to help them achieve that. When you peel back just one layer of the onion, then you have to see how that process works internally.

Dustin Olson: Look, I mean, I think it's the same with all customers. I mean, you really have to think about the organization and how they work internally. I mean, first of all, our big customers, like Procter & Gamble and L'Oreal, and some of the people that have been with us for a long time, I mean, their interest is really about getting as much recycled content into their applications as they can, because they've got very forward-looking, strong, and quite frankly, admirable sustainability goals. So our responsibility is to help them do that. When you peel that onion back just one layer, then you have to see how that process works internally.

Speaker Change: Look I mean, I think it's the same with all customers. I mean, you really have to think about the organization and how they work internally I mean first of all our big customers like Procter and Gamble and l'oreal and some of the people that have been with us for a long time I mean their interest is really about getting us.

Dustin Olson: We also upgraded our product transfer valve that moves polymer to our final product extruder. And while it's still led to operational downtime in July, we work through those, implement the improvements and it's working much better today, today. Go Product 2 is today's primary challenge, and we've made tremendous progress. We've upgraded nearly every component in the system to improve reliability, and while it's been a grind, we're seeing signs of success. For CP2, I would like to explain a little bit better the challenge that we faced, and why it created problems for rates in Ironson.

Speaker Change: Much recycled content into their applications as they can because they've got very forward looking strong in.

Speaker Change: And quite frankly admirable our sustainability goals. So our responsibility is to help them do that when you Peel that onion back just one layer. Then you have to see how that process works internally and look look like world class brands like Procter and l'oreal.

Dustin Olson: And look, look, like world-class brands like Procter & L'Oreal. Become world-class brands because they have an extremely high expectation for product quality. They do things the right way. They are very particular with how they evaluate the product and how they integrate the product.

Dustin Olson: And look, look, like world-class brands like Procter & L'Oreal, Become world-class brands because they have an extremely high expectation for product quality. They do things the right way. They are very particular with how they evaluate the product and how they integrate the product. And they don't want to take undue risk into their operation either. And so, as we've talked to both of those operations... Um, uh, uh, It's our belief that the compounding piece of this will help them adopt the product into a wider variety of applications within their operation than what they potentially could have before. So, they view this very well.

Eric Stine: How do we think about that, kind of, as you move forward with the compounding strategy? become world-class brands because they have an extremely high expectation for product quality, they do things the right way, they are very particular with how they evaluate the product and how they integrate the product, and they don't want to take undue risk in their operation either.

Speaker Change: Become world class brands, because they have been extremely high expectation for product quality. They do things the right way they are.

Eric Stine: Very.

Speaker Change: They are very particular with how they evaluate the product and how they integrate the product in and and I don't want to take undue risk into their operation either and so as we've talked to both of those operations.

Dustin Olson: And they don't want to take undue risks in their operation either. And so, as we've talked to both of those operations... Proud.

Dustin Olson: First, the pilot was originally designed for approximately 95% BP in the feedstock stream, to reach target performance. And while we haven't had any problems finding enough feedstock supply, the reality is, the number 5 bales available in the market typically only have 65% to 75% BP. Secondly, with our original design, we had difficulty pulling CP2 out of the system. The original design just didn't consider the type of polymer morphology, or in other words, shapes, sizes, density, and toughness.

Dustin Olson: And so, as we've talked to both of those operations, it's our belief that the compounding piece of this will help them adopt the product into a wider variety of applications within their operations than they potentially could have before. So they view this very well. With respect to the original contracts, I think that the game on the contracts is relatively the same. I mean, there's enough language in the contracts to be able to manage through this effectively. And I think we're going to be in good shape there.

Dustin Olson: [inaudible] It's our belief that the compounding piece of this will help them adopt the product into a wider variety of applications within their operation than they potentially could have before. So they view this very well. With respect to the original contracts, I think that the game on the contracts is relatively the same. I mean, there's enough language in the contracts to be able to manage through this effectively, and I think we're going to be in good shape there.

Dustin Olson: It's our belief that the compounding piece of this will help them adopt the product into.

Dustin Olson: A wider variety of applications within their operation than what they.

Brian Butler: With respect to the original contracts, I think that the game on the contracts is relatively the same. I mean, there's enough language in the contracts to be able to manage through this effectively, and I think we're going to be in a good shape there. Okay, and then on the logistics of compounding, just so I understand this, you're going to produce the purify from iron tin, and then those pellets are delivered to the compounders who you pay a fee and then they want once it's compounded and you have a compounded product that then shifts from the compounder to your customers.

Dustin Olson: <unk> potentially could have before so they view this very well with respect to the original contracts.

Dustin Olson: I think that the the game on the contracts is relatively the same I mean theres enough language in the contracts to be able to manage through this effectively and.

Dustin Olson: Our CP2 is more difficult to remove than expected, and the system initially could only pull 3,000 pounds per day. When you combine the PP concentration below 90%, with the low CP2 removal capacity, the resulting production is below meaningful rates, approximately 26,000 pounds per day, or less than 10% of its nameplate capacity. The table on this slide shows the importance of two separate activities, one, removing CP2 from the feedstock, and two, removing CP2 from the plant.

Dustin Olson: I think we're going to be in a good shape there as well.

Eric Stine: Okay, and then on the logistics of compounding, just so I understand this, you're going to produce Purify from Irontan, and then those pellets are delivered to the compounders, who you pay a fee for, and then once it's compounded and you have a compounded product that then shifts from the compounder to your customers. Is that the right way to think of the logistics? Yeah, look, I mean, if you think about the base Ironton operations, we have, you know, rail cars that leave our facility, go to a packaging facility, and then they'll be packaged down into trucks and or boxes.

Dustin Olson: Okay, and then on the logistics of compounding, just so I understand this, you're going to produce the purified material from iron tin, and then those pellets are delivered to the compounders, who you pay a fee for, and then they want once it's compounded, and you have a compounded product that then shifts from the compounder to your customers. Is that the right way to think of the logistics? Yeah, look, I mean, if you think about the base Ironton operations, we have, you know, rail cars that leave our facility, go to a packaging facility, and then they'll be packaged down into trucks and or boxes.

Speaker Change: Okay, and then on the logistics of compounding just so I understand that you're going to produce the purified from IR intern and then those pilots are delivered to the compound or who you pay a fee and then they want once it's compounded and you have the compounded product then shifts from the compound or to your cup.

Speaker Change: <unk> is that the right way to think of the logistics.

Brian Butler: Is that the right way to think of the logistics? Yeah, look, I mean, if you think about the base Ironton operations, we have, you know, rail cars that leave our facility, go to a packaging facility, and then we'll be packaged down to truck and or boxes. That's our base operation. So what this will do is it will allow us to move those railcars, instead of to break down in bulk, we'll move them to a compounder where they will be, compounded, and then boxed out at that facility.

Eric Stine: That's our base operation. So what this will do is it will allow us to move those railcars instead of breaking them down in bulk; we'll move them to a compounder where they will be compounded and then boxed out at that facility. That's right. And then you're right; we will pay the compounder a fee for that activity. Okay, and then on the Ironson production target of that 1 million per week, you know, when you hit that target, is, you know, let's say you hit that at the end of the third quarter. How should we think of the next step?

Eric Stine: Yes look I mean, if you think about the base iron 10 operations we have.

Dustin Olson: That's our base operation. So what this will do is it will allow us to move those railcars instead of breaking them down in bulk; we'll move them to a compounder where they will be compounded and then boxed out at that facility. That's right. And then you're right; we will pay the compounder a fee for that activity. Okay, and then on the Ironson production target of that one million per week, you know, when you hit that target, is, you know, let's say you hit that at the end of the third quarter. How should we think of the next step?

Dustin Olson: The numbers in the table represent the possible daily production numbers, resulting from each activity. As you move from the left to the right, the daily production numbers increase. As you move from the top to the bottom, the daily production numbers also go up. By combining these two activities, the CP2 limitation should be eliminated. During the second quarter, we really focused on the CP2 system. We redesigned the high-pressure CP2 removal system, and initial commissioning results show that we can now remove more than 20,000 pounds per day of product, and we implemented several feedstock strategies to move PP concentration up to 97%.

Eric Stine: Railcars that leave our facility go to a packaging facility and there will be packaged down to truck and or boxes. That's our base operation. So what this will do is it will allow us to move those railcars instead of two breakdown in bulk we'll move them to a compound or where they will be.

Eric Stine: Compounded and then box out at that facility Thats right and then you are right, we will pay the compound or a fee for that activity.

Brian Butler: That's right. And then you're right, we will pay the compounder a fee for that activity. Okay, and then on the Ironson production target of that one million a week, you know, when you hit that target is, is, you know, let's say you hit that at towards the end of the third quarter, how should we think of the next step?

Eric Stine: Okay, and then on the iron production target of that $1 million a week.

Eric Stine: When you hit that target.

Speaker Change: Let's say you hit that towards the end of the third quarter. How should we think of the next step up is that it moves to $1 5 million a week. When you think about fourth quarter or is there a big stair step up as you kind of hit that.

Brian Butler: Office. That, you know, it moves to one and a half million a week when you...

Eric Stine: Off. Is that, you know, it moves to one and a half million a week when you...

Brian Butler: Office. Is that, you know, it moves to one and a half million a week when you...

Dustin Olson: We are close to implementing the final design package for CP2 low-pressure system. We should complete this next week, which we believe will allow us to sit firmly in the green no-bottle neck area. For feedstock preparation, we made tangible changes to our overall operation. While we have always had the option to purchase higher concentration PP at a higher cost, we have also worked to implement two new operations where we increased the PP concentration of our bales, and also of the washed flake from Irton at a good cost basis.

Dustin Olson: in a week when you think about the fourth quarter, or is there a big stair step up as you kind of hit that you know target of a million and then you can really ramp much faster once meeting that? Yeah, that's a great question. I mean, look, we really believe that we are at an inflection point. All right, so we see a lot of the redesign and commissioning work that we've had to do across numerous systems. I mean, it was adsorbent beads, and it was a screen changer, and then it was sealed.

Dustin Olson: You know, is it about a million a week when you think about the fourth quarter, or is there a big stair step up as you kind of hit that, you know, target of a million, and then you can really ramp much faster once you meet that? I'll remind you, though, that when it comes to predicting where we'll be in overall operations, you know, what we've done over the course of the last quarter is we've really pushed ourselves to higher production levels and learned how the plant operates at that level.

Dustin Olson: when you think about fourth quarter? Or is there a big stair step up as you kind of hit that, you know, target of a million and then you can really ramp much faster once meeting that. Yeah, that's a that's a great question. I mean, look, we really believe that we are at an inflection point. Okay, so we see a lot of the redesign and commissioning work that we've had to do across numerous systems. I mean, it was adsorbent beads, and it was screen changer, and then it was sealed.

Dustin Olson: Target of a $1 million and then you can really ramp much faster once meeting that.

Dustin Olson: And we can go on and on and on about the things that we've discussed that we've had to work through in the past. And by the way, we've worked through all of those successes. I mean, a trademark of this company is our ability to solve problems. At the end of the day, the faster you find, the faster you solve, the faster you move. And so we're very proud of our team from that perspective.

Dustin Olson: And we can go on and on and on about the things that we've discussed that we've had to work through in the past. And by the way, we've worked through all those successes, I mean, a trademark of this company is our ability to solve problems. At the end of the day, the faster you find, the faster you solve, the faster you move.

Speaker Change: Yes, that's a great question I mean look we really believe that we are at an inflection point. Okay. So we see a lot of the redesign of commissioning work that we've had to do across numerous systems I mean it was.

Speaker Change: Assortment beads in it with screen changer, and then it was sealed and we can go on and on and on about the things that we've discussed that we've had to work through in the past and by the way we've worked through all of those successfully.

Dustin Olson: These two improvements should provide between 2 to 3,000 pounds per hour of high quality feed rate, which we currently estimate a total average cost of approximately 15 cents per pound, which is in line with our original expectations. During Q3, we will work to add another 3 to 5,000 pounds of sorting capacity to our bales purchases, and another 2 to 6,500 pounds per hour of flake sorting capacity. These activities should help to minimize the overall impact of the CP2 in the system.

Dustin Olson: A a trademark of this company is our ability to solve problems at the end of the day. The faster you find the faster you solve the faster you move and so we're very proud of our team from that from that perspective, but but then when you start to get past a lot of that commissioning then you've eliminated.

Dustin Olson: And so we're very proud of our team from that from that perspective. But then, when you start to get past a lot of that commissioning, then you've eliminated a lot of the constraints that are straight in front of you, which will allow you to raise rates and get the production up. And that's where we believe we are right now. We've got a little bit more work to do next week to, let's say, automate the CP2 low-pressure system to really pull that material out, but then, really, we've got an open path to see higher production.

Dustin Olson: But then, when you start to get past a lot of that commissioning, then you've eliminated a lot of the constraints that are straight in front of you, which will allow you to raise rates and get production up. And that's where we believe we are right now. We've got a little bit more work to do next week to, let's say, automate the CP2 low-pressure system to really pull that material out.

Speaker Change: <unk> a lot of the constraints that are straight in front of you, which will allow you to raise rates and get the get the production up and Thats, where we believe we are right now we've got a little bit more work to do next week to let's say automate the CPT low pressure system to really pull that material out, but then but then really really we've got a.

Dustin Olson: But then, really, we've got an open path to see higher production. I'll remind you, though, that when it comes to predicting where we'll be in overall operations, you know, what we did over the course of the last quarter is we've really pushed ourselves to higher production levels and learned how the plant operates at that level. So we get there, we see how things operate. There might be some tweaks we need to make to make it more steady.

Speaker Change: Open path to see higher production rates I'll remind you, though that when it comes to predicting where it will be on overall operations.

Dustin Olson: I'll remind you, though, that when it comes to predicting where we'll be on overall operations, You know, what we've done over the course of the last quarter is we've really pushed ourselves to higher production levels and learned how the plant operates at that level. So we get there, we see how things operate, there might be some tweaks we need to make to make it more steady, and then we move the ball back up again. And we continue to do that over and over and over until we get to nameplate or beyond capacity. Okay, that's the name of the game right now.

Dustin Olson: Sweeney. To a 97% PP feedstock, should improve the overall PP yield by 12% and production by 14%. Back to compounding now. Our compounding strategy is a direct result of actively engaging with and closely listening to our customers. We continue to find overwhelming support for our company, our product and our mission. Simply put, our customers want to buy our product. But the current variability of our operation, the limitation of our customer facilities, and the realities of their change management protocols added both time and complexity to every conversation.

Dustin Olson: What we've done over the course of the last quarter as we've really pushed ourselves to higher production levels and learned how the plant operates at that level. So we get there we see how things operate there might be some tweaks, we need to make to make it more steady and then we moved the ball back up again and we.

Dustin Olson: So we get there, we see how things operate, there might be some tweaks we need to make to make it more steady, and then we move the ball back up again. And we continue to do that over and over and over until we get to nameplate or beyond capacity. Okay, that's the name of the game right now.

Dustin Olson: And then we move the ball back up again. And we continue to do that over and over and over until we get to the nameplate or beyond capacity. Okay, that's the name of the game right now.

Dustin Olson: To do that over and over and over until we get to nameplate or beyond capacity. Okay. That's the name of the game right now.

Dustin Olson: It's moving the plant to higher tiers of production so that you can learn how the plant operates at that place and then ultimately make operating at that place more reliable. And that's what we've been successful doing over the last quarter. Okay, and then maybe just one quick last one.

Brian Butler: It's moving the plant to higher tiers of production so that you can learn how the plant operates at that place and then ultimately make operating at that place more reliable. And that's what we've been successful doing over the last quarter. Okay, and then maybe just one quick last one.

Eric Stine: It's moving the plant to higher tiers of production so that you can learn how the plant operates at that place and then ultimately make operating at that place more reliable. And that's what we've been successful doing over the last quarter. Okay, and then maybe just one quick last one.

Dustin Olson: It's moving the plant to higher tiers of production so that you can.

Eric Stine: Learn how the plant operates at that place and then ultimately make operating at that place more reliable and that's what we've been successful doing over the last quarter.

Dustin Olson: So we listened, adjusted our customer facing strategy and implemented a compounding strategy so that we can give the customers what they need to be successful. The pictures on slide 9 give me great joy. These are rugs that were made from compounded materials from the Ironson facility. I can tell you that when we published these pictures to social media last month, we received a bunch of inquiries about where can we purchase these for personal use.

Brian Butler: You know, is this the third quarter, and those targets, are those going to be sampled, you know, kind of test production volumes? Or should we think about the third quarter being revenue, having positive revenue? Now, look, we mentioned that we're already starting to see POs come into the system for applications from the compounded product. That's a positive sign.

Dustin Olson: You know, is this the third quarter, and those targets, are those going to be sampled, you know, kind of test production volumes? Or should we think about the third quarter being revenue, having positive revenue? Now, look, we mentioned that we're already starting to see POs come into the system for applications from the compounded product. That's a positive sign.

Dustin Olson: You know, does this is the third quarter and those targets, are those going to be sampled, you know, kind of test production volumes? Or should we think about third quarter being revenue, having positive revenue? Now, look, we mentioned that we're already starting to see POs come into the system for applications from the compounded product. That's a positive sign.

Eric Stine: Okay, and then maybe just one quick last one.

Dustin Olson: Does this is the third quarter and those targets are those going to be sample test production volumes or should we think about third quarter being revenue.

Dustin Olson: Having positive revenue.

Speaker Change: No look we mentioned that we're already starting to see come into the system for.

Dustin Olson: Applications from the compounded product that's a positive sign and we think that the compounding operation that's going to give us the opportunity to get the product to the customers in a more effective way. So we see it as a positive indication for revenue ultimately.

Dustin Olson: We think that the compounding operation is going to give us the opportunity to get the product to customers in a more effective way, so we see it as a positive indication of revenue. Ultimately, revenue will be defined by how quickly customers can adopt our product into their systems and then start buying it at a rateable basis. So we see that coming, and we think that compounding will help us get there.

Dustin Olson: We think that the compounding operation is going to give us the opportunity to get the product to customers in a more effective way, so we see it as a positive indication for revenue. Ultimately, revenue will be defined by how quickly customers can adopt our product into their systems and then start buying our product on a rateable basis. So we see that coming, and we think that compounding will help us.

Brian Butler: We think that the compounding operation is going to give us the opportunity to get the product to the customers in a more effective way. So we see it as a positive indication for revenue. Ultimately, the revenue will be defined by how quickly customers can adopt our product into their systems, and then start buying our product at rateable basis. So we see that coming, and we think the compounding will help us.

Dustin Olson: This is a great example of how compounding can help us. In this case, it is made with 100% pure five material. No virgin blend, no other recycled materials, no other fillers. But it was augmented with a this breaking agent to change the melt flow index or MFI. MFI is a way to describe the viscosity of plastic. And we've taken our product from a low number to a high number. Many customers have similar objectives and constraints.

Dustin Olson: Revenue will be defined by how quickly customers can adopt our products into their systems, and then start buying our product that ratable basis. So we see that coming and we think the compounding will help us get there.

Eric Stine: Okay, thank you; I'll get back in the queue.

Brian Butler: Okay, thank you, I'll get back in the queue.

Brian Butler: Okay, thank you. I'll get back in the queue.

Dustin Olson: Okay. Thank you I'll get back in the queue.

Operator: Thanks, Brian. Thank you. One moment for our next question, and our next question comes from the line of Thomas Boyes with TD Cowan. Your line is open. Please go ahead.

Operator: Thanks, Brian. Thank you. One moment for our next question. And our next question comes from the line of Thomas Boyes with TD Cowen. Your line is open. Please go ahead.

Speaker Change: Thanks, Brian. Thank you one moment for our next question.

Speaker Change: And our next question comes from the line of Thomas Boyes with TD Cowen. Your line is open. Please go ahead.

Dustin Olson: They like the pure cycle story. They need a higher quality product and they want to use our product. But the base product didn't quite fit for their application profile. So with this product example, we worked with this customer to provide a one pellet solution that they can use directly in their facility. They didn't have to make physical changes to their plant. They didn't have to adjust their equipment. They just had to run the material like they would have run the virgin equivalent.

Thomas Boyes: Appreciate you taking the questions.

Thomas Boyes: Appreciate you taking the question.

Eric Stine: I appreciate you taking the questions first maybe just given the sortation capabilities that you asked coupled with kind of the.

Thomas Boyes: Solutions. First, maybe just, you know, given the sortation capabilities that you have coupled with kind of the CP2 removal that you're able to do.

Thomas Boyes: And first, maybe just, you know, given the sortation capabilities that you have coupled with the kind of CP2 removal that you're able to do.

Eric Stine: The CP two removal.

Thomas Boyes: Achieve Now. You know, do you think that there is a need

Thomas Boyes: Achieve Now. You know, do you think that there is a need to implement the

Speaker Change: To achieve now.

Eric Stine: Do you think that there is a need to implement the originally contemplated CPT fix.

Thomas Boyes: implement the originally contemplated CP2-6, where you have tie-ins that are already, you know, kind of available. Kind of from the chart, it looks like that really would only be necessary at feedstock CP2 content levels above 10%.

Thomas Boyes: The Originally Contemplated CP2-6, where you have tie-ins that are already kind of available. Kind of from the chart, it looks like that really would only be necessary at Feedstock.

Eric Stine: Where you have tie ins that are already kind of available.

Dustin Olson: This customer is very excited about the product, the market potential, and the ability to expand into numerous offerings. And we are discussing which big brands to market the product to. I personally love this. We get to see our resin in the world. We can buy it and put it in our homes. And we know it's made of recycled high quality material. We have many potential customers like this. The overall sales opportunities are positive.

Eric Stine: The chart it looks like that really would only be necessary.

Eric Stine: Feedstock.

Thomas Boyes: content levels above 10%. I mean, this rotation does not even need to happen.

Speaker Change: Two content levels above 10% I mean, this rotation is uneven even need to happen.

Dustin Olson: I mean, this rotation does not even need to happen. Yeah, that's a I mean, I think that's a great point, Thomas. I mean, you know, that's a good memory. Also, if you recall, prior to the outage, Our goal was to install tie-ins to the outage, whereby we could install a long-term CP2 removal capacitor. When we got into the outage, we learned things about our high-pressure system that we didn't expect to see. I mean, we opened a couple of vessels. We were like, wow, that's not what we thought.

Dustin Olson: Yeah, I mean, I think that's a great point, Thomas. I mean, that's a good memory also.

Eric Stine: Yes.

Eric Stine: That's a great point Thomas I mean.

Speaker Change: That's a good memory also if you recall prior to the outage our goal was to install tie ins to the outage.

Dustin Olson: If you recall, prior to the outage... Our goal was to install tie-ins to the outage, whereby we could install a long-term CP2 removal capacitor. When we got into the outage, we learned things about our high-pressure system that we didn't expect to see. I mean, we opened a couple of vessels. We were like, wow, that's not what we thought.

Dustin Olson: whereby we could install a long-term CP2 removal capacitor.

Speaker Change: Whereby we could install a long term CPT removal capacity when we got into the outage, we learn things about our high pressure system that we didn't expect to see I mean, we opened a couple of vessels were like Wow thats not what we thought we learned from that we fixed it we made the level much more reliable and from that learning.

Dustin Olson: But they each come with their own set of circumstances, given the variability of our system, product, and their needs. By adding the compounding steps to our operation, we should be able to accelerate the product development process for customer applications. Open more market channels and should also create enhanced unit economics. Martin. We're very excited about the pellets produced at Irton. It's not perfect yet, but as we successfully removed CP1 and CP2 from the recycled feedstock, we believe it gives us an inherent advantages in the market over other alternatives.

Dustin Olson: We learned from that. We fixed it. We made the level much more reliable. And from that learning, we were able to add another, very, very low-cost project to the outage, which enabled us to have a chance to remove CP2 at higher rates. And we did that, and it works. And what that means for the longer-term, more expensive fix is that we do not see any need to implement it at this point.

Dustin Olson: We learned from that. We fixed it. We made the level much more reliable. And from that learning, we were able to add another very, very low-cost project, to the outage, which enabled us to have a chance to remove CP2 at higher rates. And we did that, and it works. And what that means for the longer-term, more expensive fix is that we do not see any need to implement it at this point.

Dustin Olson: We were able to add another very very low cost projects to the outage, which enabled us to have a chance to remove <unk> at higher rates.

Speaker Change: And we did that and it works and what that means for the longer term more expensive fixed is that we do not see any need to implement it at this point, we made the tie ins, we made the steps necessary to be able to do it without an outage, but we didn't spend the bulk of the money.

Dustin Olson: We do see variations in product quality with the natural fluctuations in feedstock and in operations, but the mechanical properties are good. Our odor performance also continues to be good following changes made during the April outage. We still expect this to be a strong aspect of our customer value proposition. Compounding, as an independent operation, is very well understood as an active segment within the PP industry. In fact, as we engage various compounders near Irton, we found 47 operations within a 400 mile radius of our facility.

Dustin Olson: We made the tie-ins. We made the steps necessary to be able to do it without an outage. But we didn't spend the bulk of the money, because we felt like, through the outage, we had another opportunity to do it in a more cost-effective and, quite frankly, a more efficient way. So that project now is off the, Great, and I appreciate the color there. And then, you know, with the sale of the 22.5 million bonds, you had the 18 million in cash. You know, how should we think about the...

Dustin Olson: We made the tie-ins. We made the steps necessary to be able to do it without an outage. But we didn't spend the bulk of the money because we felt like, with the outage, we had another opportunity to do it in a more cost-effective and, quite frankly, a more efficient way. So that project is now off the table. Great, and I appreciate the color there. And then, you know, with the sale of...

Speaker Change: Because we felt like through the outage, we had another opportunity to do it in a more cost effective and quite frankly, a more efficient way. So that project now is off the table.

Dustin Olson: Great and I appreciate the color there and then.

Dustin Olson: to 22.5 million in bonds; you have 18 million in cash.

Speaker Change: With the sale of the $22 5 million bonds, you have the $18 million of cash.

Dustin Olson: How should we think about the discount rate going forward if the...

Thomas Boyes: The 22.5 million in bonds, you have 18 million in cash. How should we think about the discount rate going forward if the... The goal is to re-market the balance of the bonds heading into the end of the year. You know, given the kind of planned performance metrics for Ironton, heading into the end of the year, could you improve to, say, a 10% discount rate? Do you have expectations there on what kind of discount you're going to have to command when re-marketing those bonds heading into the end of the year?

Thomas Boyes: Discount Week going forward.

Speaker Change: How should we think about the discount rate going forward.

Dustin Olson: We've added the different options and are selecting partners that are interested in pure cycle operations and have a strong quality and manufacturing competence. Most compactors focus on specific applications and most also have their own customers. This gives us an opportunity to not only compound our product, but also sell our product to the compounders. We started the compounding activities by partnering with three independent operations at around 2 to 3 million pounds per month targeted in Q4.

Thomas Boyes: Sweeney. [inaudible] The goal is to remarket the balance of the bonds heading into the end of the year.

Speaker Change: So if the goal is to remodel the market the balance of the bonds heading into the end of the year.

Thomas Boyes: and the Planned Performance metrics for Ironton heading into the end of the year. Could you improve to, say, a 10% discount rate? Do you have expectations there on what kind of discount you're going to have to—you could command when remarketing those bonds?

Speaker Change: Given kind of the planned performance.

Speaker Change: The metrics for irons and heading into the end of the year.

Speaker Change: Could you improve to stay at 10% discount rate do you have expectations, there and what kind of discount you're going after you could command when remarketing those bonds between end of the year.

Thomas Boyes: on until the end of the year.

Jaime Vasquez: Hey Thomas, it's Jaime. Um, yeah, you know, we're

Jaime Vasquez: Hey Thomas, it's Jaime. Yeah, you know, we're constantly

Jaime Vasquez: Hey Thomas, it's Jaime. Yeah, you know, we're kind of...

Jamie: Hey, Thomas it's Jamie.

Jaime Vasquez: We're constantly talking with investors, and I think as Ironton continues to show good progress,

Jaime Vasquez: We're constantly talking with investors, and I think as Ironton continues to show good progress, I'd like to think that we're de-risking the bonds and perhaps selling them at a better price than what we've been selling at. The last two transactions have gone off at 80 points. So yeah, I think as we continue to de-risk it, we can see better value in the bond. I appreciate it. If I could squeeze one more in, just on, you know, how do you think about balancing some of the sortation capabilities between some of your suppliers and then doing it in-house? I mean, just looking at slides.

Jaime Vasquez: Yes.

Jaime Vasquez: We're constantly talking with investors and I think as Iron 10 continues to show good progress.

Dustin Olson: This is a good start, but still only represents a small portion of our overall Irton volume. Given Irton's proximity to ample compounding capacity, we, and as we gain experience in the space, we will have the opportunity to grow as needed. We should have the opportunity to grow as needed. For our customers, we think it will make the buying process easier for them. Now they can simply define what characteristics that the application requires and we will work with our partners to build it for them.

Jaime Vasquez: You know, I'd like to think that we're de-risking the bonds and perhaps sell at a better price than what we've been selling at. You know, the last two transactions...

Jaime Vasquez: Like to think that we're derisking, the bonds and perhaps sell at a better price than what we've been selling it.

Jaime Vasquez: The last two transactions have gone off at 80 points, so I think as we continue to de-risk it we can see better value in the bond. Appreciate it. If I could squeeze one more in, just on, you know, how do you think about balancing some of the sortation capabilities between some of your suppliers and then doing it in-house? I mean, just looking at slide seven.

Jaime Vasquez: The last two transactions have gone off at 80 point.

Thomas: So I think as we continue to derisk. It we can see better value in the bonds.

Thomas Boyes: I appreciate it. If I could squeeze one more in, just on, you know, how do you think about balancing some of the sortation capabilities between some of your suppliers and then doing it in-house? I mean, just looking at slide seven.

Speaker Change: I appreciate it if I could squeeze one more in just on.

Thomas Boyes: How do you think about balancing some of the soft tissue capabilities between some of your suppliers and then doing it in <unk>.

Thomas Boyes: Looking at slide seven, certainly, self-sortation seems to be a bit more cost-effective, so I'm just kind of wondering how you think about that.

Thomas Boyes: Mind Seven, certainly the self-sortation seems to be a bit more cost-effective, so I'm just kind of wondering how you think about that. Yeah, I know.

Dustin Olson: and certainly, self-sortation seems to be a bit more cost-effective, so I'm just kind of wondering how you think about that.

Dustin Olson: This should allow us to expand the MFI index, make it fit better into their existing infrastructure and reduce the magnitude of change to their operation. Put more simply, this is a one pellet solution built to fit their purpose.

Speaker Change: House, when you're just looking at slide seven certainly the self sortation seems to be a bit more cost effective. So I'm just kind of wondering how you think about that.

Dustin Olson: Yeah, no, we agree with you. We implemented a, during the course of Q2, actually a couple of weeks ago, we implemented the first flake sorting activity, which is, let's just say, PCT owned operation. We implemented that, started it up, and are seeing really good performance out of that machine. We expect to implement a higher capacity machine in the course of Q3 and get that operational in Q4. So, we see this as a, first of all, a very good technology that serves the purpose in an efficient way, but also a pretty low maintenance technology that we should be able to implement inside the PCT boundaries. With respect to third party sorting and bail sorting and things like that. I think this is a, This is a this is a flexibility moment for us.

Dustin Olson: Yeah, no, we agree with you. We implemented a, during the course of Q2, actually a couple of weeks ago, we implemented the first flake sorting activity, which is, let's just say, a PCT-owned operation. We implemented that, started it up, and are seeing really good performance out of that machine. We expect to implement a higher capacity machine in the course of Q3 and get that operational in Q4. We see this as, first of all, a very good technology that serves the purpose in an efficient way, but also a pretty low maintenance technology that we should be able to implement inside the PCT boundaries. With respect to third party sorting and bail sorting and things like that. I think this is a, This is a moment of flexibility for us.

Dustin Olson: Yes, we agree with you we implemented.

Speaker Change: During the course of Q2 actually a couple of weeks ago, we implemented the first flight sorting activity, which is lets just say TCT owned operation. We implemented that started it up and are seeing really good performance out of that machine, we expect to implement a higher capacity machine in the <unk>.

Jaime Vasquez: At this point, I will hand it over to Jamie for a finance update. Thank you, Dustin. Turning to slide 11, which highlights our liquidity position, we ended June with just under $11 million of unrestricted cash. Our cash expenses were $34.7 million from the second quarter, which was about $9 million higher than the first quarter. Our normalized run rate for cash outflows has been around $26 million per quarter. The increase reflected the timing of payments for accrued expenses incurred in the first quarter, as well as expenses incurred from the April planned outage and higher usage of outside services.

Dustin Olson: Course of Q3 and get that operational in Q4 so.

Speaker Change: We see this as a.

Speaker Change: First of all a very good technology that serves the purpose in an efficient way, but also a pretty low maintenance technology that we should be able to implement.

Speaker Change: Inside the PCT boundaries with respect to.

Jaime Vasquez: Also this week, we reached agreement for the sale of $22.5 million base value of revenue bonds for total cash proceeds of $18 million to various investors. And as we continue to make progress at Irton, I believe we'll be able to sell the remaining $118 million of revenue bonds.

Speaker Change: With respect to third party sorting and avail sorting and things like that.

Speaker Change: This is a.

Dustin Olson: I mean, in some cases, it may make sense for us to spend capital to bring sortation inside. In other cases, it may make sense for us just to use excess sortation capacity with other partners. And there's been quite a bit of capacity added to the system over the last two to three years to create higher quality bales. So there are higher quality bales out there. And there's a lot of excess capacity. And so we're working on all fronts there in order to try to find the right balance between insourcing and outsourcing. At the end of the day, it becomes a question of capital versus excess.

Dustin Olson: This is a moment of flexibility for us. I mean, in some cases, it may make sense for us to spend capital to bring sortation inside. In other cases, it may make sense for us just to use excess sortation capacity with other partners. And there's been quite a bit of capacity added to the system over the last two to three years to create higher quality bales. So there are higher quality bales out there.

Speaker Change: This is this is a flexibility moment for us I mean in some cases, it may make sense for us to spend capital to bring sortation inside.

Dustin Olson: In other cases, it may make sense for us just to use excess sortation capacity with other partners and theres been quite a bit of.

Michelle: I will now turn the call back to Michelle to open the call for questions. Thank you. As a reminder to ask a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment for your first question.

Dustin Olson: Capacity added to the system over the last two to three years to create higher quality bail there are higher quality barrels out there.

Dustin Olson: And there's a lot of excess capacity. And so we're working, let's say, on all fronts there in order to try to find the right balance between insourcing and outsourcing. At the end of the day, it becomes a question of capital versus excess.

Thomas Boyes: And there's a lot of excess capacity. And so we're working, let's say, all fronts there in order to try to find the right balance between insource and outsource. At the end of the day, it becomes a question of capital versus excess. Great, appreciate it. Oh, I hope I can keep things together.

Dustin Olson: And there's a lot of excess capacity and so we're working let's say all fronts there in order to try to.

Hassan Ahmed: And our first question comes from the line of Assad Ahmed, with Olympic Global Advisors, Your Line of Open, please go ahead. Morning Dustin, you know, very happy to see, you know, the production rates going up and, you know, the sort of positive results emerging from the sort of all the good work that you guys have done. Look, my question is just around operating rates, first of all, you know, you talked about how in the near term, you could get to a million pounds per week, if I heard correctly, of production.

Dustin Olson: Find the right balance between in source and outsource at the end of the day it becomes a question of.

Dustin Olson: Capital versus expense.

Thomas Boyes: Great. I appreciate it. I'll hop back in queue. Thanks again.

Speaker Change: Great I appreciate it I'll hop back in queue. Thanks again.

Operator: Thank you. And again, ladies and gentlemen, if you have a question at this time, please press star 11 on your telephone. And our next question is going to come from the line of Gerard Sweeney with Roth Capital. Your line is open. Please go ahead.

Chris: Thanks, Chris lifestyles.

Operator: And again, ladies and gentlemen, if you have a question at this time, please press star 1-1 on your telephone. And our next question is going to come from the line of Gerard Sweeney with Roth Capital. Your line is open. Please go ahead.

Operator: And again, ladies and gentlemen, if you have a question at this time, please press start 1-1 on your telephone. And our next question is going to come from the line of Gerard Sweeney with Roth Capital. Your line is open. Please go ahead.

Speaker Change: And again, ladies and gentlemen, if you have a question at this time. Please press star one on your telephone.

Operator: And our next question comes from the line of Gerard Sweeney with Roth Capital. Your line is open. Please go ahead.

Gerard Sweeney: Good morning, Dustin and Jaime. Thanks for taking my call.

Gerard Sweeney: Good morning, gentlemen, thanks for taking my call.

Dustin Olson: Hey, nice to see you again. Thanks for calling in. Um, um, um, there are just a couple questions that I want to get clarification on. On the compounding side, should we look at that as strictly a tolling?

Gerard Sweeney: Hey, nice to see you again. Thanks for calling in, um Just a couple of questions that you wanted to clarification on. On the compounding side, should we look at that? That is strictly a tolling.

Gerard Sweeney: Hey, nice to see you again, thanks for calling in.

Gerard Sweeney: Just a couple questions that I want to get clarification on. On the compounding side, should we look at that?

Hassan Ahmed: You know, so which obviously on an annualized basis is around, you know, 52 million pounds, which, again, you know, maybe I'm being a little sort of greedy or whatever, but, you know, that's still significantly below nameplate capacity.

Gerard Sweeney: Just a couple of questions that I wanted to get clarification on the compounding side should we look at that is strictly a tolling agreement or will you be partnering with the compound very simple they be selling some of the material in the back end as well because that changes the economics.

Gerard Sweeney: Is that strictly a tolling agreement, or will you be partnering with the compounders?

Gerard Sweeney: Agreement, or will you be partnering with?

Gerard Sweeney: Agreement for Will You Be? [inaudible]

Dustin Olson: Partnering with the compounders, and will they be selling some of the material on the back end as well? Because that changes the...

Gerard Sweeney: with the compounders, and will they be selling some of the material in the back end as well?

Gerard Sweeney: back end as well because that changes the economics.

Dustin Olson: that Changes the Economics.

Dustin Olson: Yeah, look, I think that the way to look at it is more like a service agreement. We will work with the compounder to build what we want. So we'll have a direct relationship with the customer. We'll send the materials to the compounder, they will compound it, and then we will sell it to the customer. That's the primary view.

Dustin Olson: Yeah, look, I think that the way to look at it is more like a service agreement. We will work with the compounder to build what we want. So we'll have the direct relationship with the customer. We'll send the materials to the compounder, they will compound it, and then we will sell it to the customer. That's the primary view.

Dustin Olson: So, you know, beyond the near term, and by near term, I'm assuming you meant between now and the end of the year, what gets us to sort of optimal operating rates? Yeah, so thanks for the questions on and good to talk to you again. And look, the goals that I put out there are goals, okay? We have a goal, a near term goal, to get to 10,000 pounds per hour of feed rate, to get to 200,000 pounds per day of production, and get to a million pounds per week.

Speaker Change: Yes look I think that the way to look at it as more like a service agreement, we will work with the compound or to build what we want so we will have the direct relationship with the customer we'll send the materials to the compound or they will compound. It and then we will sell it to the customer and that's the primary the primary if you kind of there are some.

Dustin Olson: There are some nuances in that activity. One, compounders are very active in the recycle and virgin purchasing markets. There might be some opportunities to buy some of the blend from them. And quite frankly, many compounders also have direct relationships with customers. And as they get to know our product, they see the value on the recycled material, there's probably going to be a tangential opportunity to sell some of the product to them as well to introduce it into their channel. Okay, that's fair.

Speaker Change: Nuances in that activity one compounds are very active in the recycle and Virgin purchasing markets there might be some opportunities to buy some of the blend from them and quite frankly, many compounds also have direct relationships with customers.

Dustin Olson: There are some nuances in that activity. For example, compounders are very active in the recycling and virgin purchasing markets. There might be some opportunities to buy some of the blend from them. And, quite frankly, many compounders also have direct relationships with customers. And as they get to know our product, they see the value in the recycled material, there's probably going to be a tangential opportunity to sell some of the product to them as well to introduce it into their channel. Okay, that's fair.

Dustin Olson: And we set intermediate short term goals as milestones for us to achieve, but then raises the bar for the next step. Just by no means impacts our desire or capabilities to get to nameplate capacity. We still see that very much in the sides, and don't see, don't really see any constraints that will hold us back. The reality is that the co-product to removal system has constrained us on the feed rates at the beginning, but now that that's behind us, we see a real nice lane going forward to see an inflection in production.

Speaker Change: As they get to know our product they see the value in the recycled material. There is probably going to be a tangential opportunity to sell some of the product to them as well to introduce it into their channels.

Dustin Olson: I understand, very helpful.

Gerard Sweeney: And then on the south side, it sounds like we do.

Gerard Sweeney: And then on the on the sales side, it sounds like we do have some POs.

Speaker Change: That's fair and then on the.

Speaker Change: On the sales side it.

Gerard Sweeney: P.O.'s, and you do have some orders, but you also mentioned the term rateable sales. I mean, are there any specific steps that you need to go through to sort of get to measurable sales, i.e., sales in higher volumes, and, you know, what are they and what are the timelines to achieve? Yeah, it's this thing we struggle with quite a lot to find the right balance with the customer because every customer that we talk to, maybe not every customer, but the large majority of customers that we talk to are extremely interested in our product and our process and our carbon footprints and our value proposition. I mean, they like what we're doing. And then it comes to just the tactical operations of how do you make it happen?

Gerard Sweeney: and you do have some orders, but you also mentioned the term rateable.

Speaker Change: It sounds like you had some <unk> had some orders, but you also mentioned the term ratable sales are there any specific steps that you need to go through to sort of get to ratable sales I E.

Gerard Sweeney: I mentioned the term rateable sales. Are there any specific steps that you need to go through to sort of get to rateable sales, i.e., sales in higher volumes and

Gerard Sweeney: and are there any specific steps that you need to go through to sort of get to the rateable cell by e. It fails in higher volumes and, you know,

Dustin Olson: and, you know, what are they and what are the timelines to achieve them. Yeah, it's this thing we struggle with quite a lot to find the right balance with the customer because every customer that we talk to, maybe not every customer, but the large majority of customers that we talk to are extremely interested in our product and our process and our carbon footprint and our value proposition. I mean, they like what we're doing. And then it comes to just the tactical operations of how do you make it happen?

Speaker Change: On higher volumes and what are they and what are the timelines to retrieve that yes.

Dustin Olson: And just moving on to the sort of blending, flash-compounding opportunity, could you dig a bit deeper into what this means in terms of maybe potentially unit economics or overall economics? I mean, you know, what sort of feedstock costs you'll pay for that, you know, what potentially the incremental opportunity may be, yeah, I think that's a good question. So the first thing is, this is creating a platform for us to give the customer what they need, and what they want without compromise.

Dustin Olson: Yeah, it's this thing we struggle with quite a lot to find the right balance with the customer because every customer that we talk to, maybe not every customer, but the large majority of customers that we talk to are extremely interested in our product and our process and our carbon footprint and our value proposition. I mean, they like what we're doing.

Speaker Change: Yes, it's this thing we struggle with quite a lot.

Dustin Olson: To define the right balance with the customer because every customer that we talked maybe not every customer but the large majority of customers that we've talked to are extremely interested in our product and our process and our carbon footprint and our value proposition I mean, they like what we're doing.

Dustin Olson: And then it comes to just the tactical operations.

Dustin Olson: And to get to measurable sales, you've got to make it easier for the customer to buy your material. And that's what compounding does. So look, I'm not going to give guidance at this point on how many sales or what the revenue projection is or anything like that yet, okay? But as we see the compounding operation come forward, and as customers see our ability to make it work for them, we expect the revenue and the orders to follow right by. Okay, that's fair. And then this is probably a little bit for Jaime, just cash requirements, and CapEx requirements for the end of this year. Thanks.

Speaker Change: How do you make it happen.

Speaker Change: And to get to a ratable sales you've got to make it easier for the customer to buy your material and Thats. What compounding does so look I'm not going to give guidance at this point on how many sales are what the revenue projection is or anything like that yet.

Gerard Sweeney: And to get to rateable sales, you've got to make it easier for the customer to buy your material. And that's what compounding does. So look, I'm not going to give guidance at this point on how many sales or what the revenue projection is or anything like that yet, okay? But as we see the compounding operation come forward, As customers see our ability to make it work for them, we expect the revenue and the orders to follow right by. Okay, that's fair. And then this is probably a little bit for Jamie, just cash requirements, capex requirements into the end of this year. Thanks.

Dustin Olson: So in the past, you know, when we would have a feedstock shift from a low MFI to a higher MFI, it was trying to find a way to make that work inside of the customer's platform, and it just made the conversation complicated. Okay, so what this allows us to do is have a clear lane to our customers to give them exactly the type of product that they need in their system, which we believe will give us a much quicker adoption rate for product into their facility.

Dustin Olson: Hey.

Speaker Change: But but as we see the compounding operation come forward.

Dustin Olson: As customers see our ability to make it work for them, we expect the <unk>.

Dustin Olson: Revenue in the orders just to follow right behind.

Dustin Olson: Okay. That's fair and then this is probably a little bit for Jamie just.

Dustin Olson: When it comes to the economics, I mean, you've got to look at it in two ways. For sure, the extra compounding step will add some incremental cost, although given the amount of compounders around Irton and close proximity, we see this as a very competitive opportunity, and quite frankly, we see the compounding capacity in the market is pretty long right now. So I think it's a good opportunity for us to step into this, but that's the first... First piece.

Speaker Change: Cash requirements capex requirements into the political share. Thanks.

Gerard Sweeney: Yeah, Thomas, I don't see it.

Jaime Vasquez: Thomas, I don't see anything too unusual. This past quarter we had the April planned outage, so that was really the reason, one of the reasons for the large increase in cash outlays. Expectation is outside of interest payments that are due, cash outlays should be more normalized.

Thomas Boyes: Yes Thomas.

Jaime Vasquez: Two unusual things this past quarter we have the April planned outage so, you know, that was really the reason, one of the reasons for the large increase in cash outlays. Expectation is, you know, outside of interest payments that are due, cash outlays should be more normalized.

Speaker Change: I don't see anything too unusual this past quarter, we have the April planned outage so that.

Dustin Olson: That was really the reason one of the regions for the large increase in cash outlays.

Speaker Change: Expectation is youre outside of interest payments that are due.

Speaker Change: Cash outlays should be more normalized.

Gerard Sweeney: Okay, I appreciate it. I'll jump back in line. Thank you.

Dustin Olson: The second piece is really the value creation for the customer. I mean, not not only are we able to get our product into their system faster, we're also able to get higher value products and supply into their system as well. And so I think there's an opportunity to, you know, control the costs on the front end because of the, let's just say the status of the industry, but also push the revenue up on the customer side because we're going to be creating a product that has higher value to them.

Speaker Change: Okay I appreciate it I'll jump back in line. Thank you.

Christian Bruey: Thank you, and I would like to turn the conference back over to Christian Bruey for any further remarks.

Christian Bruey: Thank you and I would like to turn the conference back over to Christian Bruey for any further remarks.

Gerard Sweeney: Thank you and I would like to turn the conference back over to Christian Brule for any further remarks.

Christian Bruey: Thank you, Michelle. We did ask for questions via email, and we got a couple of those that we want to get to real quick before we wrap up. First one from Mark Castle: What is the most likely percentage of a mixture of recycled PP and virgin resin that Purecycle produces?

Christian Bruey: Alright, thank you Michelle. We did ask for questions via email and so we got a couple of those that we want to get to real quick before we wrap up. The first one from Mark Castle, what is the most likely percentage of a mixture of recycled PP and virgin resin that Purecycle

Michelle: Alright. Thank you Michelle we did ask for questions via E Mail and so we've got a couple of those that we want to get too real quick before we wrap up the first one for Mark Castle, what is the most likely percentage of a mixture of recycled and Virgin resin tier cycle claims to sell.

Dustin Olson: Yeah, that's a good question. I appreciate the email questions also from some of our supporters online.

Christian Bruey: Yeah, that's a good question. Appreciate the email questions also from some of our some of our supporters online.

Speaker Change: That's a good question appreciate the email questions also from some of our.

Dustin Olson: Now, remember, I mean, the market is woefully under supply and recycled material. Okay, and there is no shortage of appetite for customers to use recycled material. So we feel like if we focus more on giving the customer what they need to be successful, the customers will compensate us or reward us for that activity. And so we actually see strong support for the economics of this activity. And remember, also, I mean, we will be expanding the volume potential of sales as well.

Gerard Sweeney: Some of our supporters online look.

Dustin Olson: I think the best way to think about what we're doing on the sales side is creating optionality to give the customers what they want. And just like every individual has a different taste when they go to a restaurant and buy something different on the menu, the same can be said for customers that want specific polypropylene. This is, again, one of the reasons polypropylene is so valuable because it can be used in so many different applications.

Christian Bruey: I think the best way to think about what we're doing on the sales side is creating optionality to give the customers what they want. And just like every individual has a different taste when they go to the restaurant and buy something different on the menu, the same can be said for customers that want specific polypropylene. This is, again, one of the reasons polypropylene is so valuable is it can be used in so many different applications.

Speaker Change: The best way to think about what we're doing on the sales side is creating optionality to give the customers what they want and and just like every individual has a different pace when they go to the restaurant and buy something different on the menu. The same can be said for customers that want specific polypropylene.

Dustin Olson: Again, one of the reasons polypropylene is so so valuable as it can be used in so many different applications.

Dustin Olson: But when you do that, you have to give the customer what they want. And so, you know, with the blend of virgin versus recycled versus neat sales, it really just depends on the customer. I see some customers that only want post-consumer recycling. I see some customers that only care that it's 100% recycled. I see some customers that just want to get started. They want to bring a little bit of recycling material in, but they don't want to take a lot of risk with their operation by doing something new.

Christian Bruey: But when you do that, you have to give the customer what they want. And so, you know, with with the blend of virgin versus recycle versus neat sales, it really just depends on the customer. I see some customers that only want post consumer recycle. I see some customers that only that only care that it's 100% recycle. I see some customers that just want to get started. They want to bring a little bit of recycle material in, but they don't want to take a lot of risk on their operation by doing something new.

Dustin Olson: When you do that you have to give the customer what they want and so.

Dustin Olson: With the blend of Virgin versus recycled versus need sales. It really just depends on the customer I see some customers that only want post consumer recycled I see some customers that only that only care that it's 100% recycle I see some customers that just want to get.

Dustin Olson: Okay, when we either purchase virgin material or purchased other post industrial recycle material and blended in with our product, I mean, that's a volume expansion. And while those numbers can move around quite a bit in terms of, you know, what does it cost to buy that material? Well, to blend it in, we feel pretty confident in our ability to keep the cost of that material in line with the cost to produce our material at irons. And so, so we feel good on both fronts.

Dustin Olson: Very helpful, Dustin. Thank you so much.

Dustin Olson: Started they want to bring a little bit of recycled material in but they don't want to take a lot of risk on their operation by doing something new and so they might start at 10%.

Dustin Olson: And so, they might start at 10% recycled content and 90% virgin, and they will like that because it still gives them a foothold into the overall market. And so, I just think that as we gain more confidence in our production and running the plant more reliably, making the volumes of product with certain product specifications, we're going to be able to work with the compounders to make it to be what they need it to be. I mean, look, a great example are the rugs that we talked about in the slideshow. I mean, those rugs were not blended with anything.

Dustin Olson: And so they might start at 10% recycled content and 90% virgin. And they will like that because it still gives them a foothold into the overall market. And so I just think that as we gain more confidence in our production and running the plant more reliably, making the volumes of product with certain product specifications, we're going to be able to work with the compounders to augment it to be what they need it to be. I mean, look, a great example are the rugs that we talked about in the slideshow.

Dustin Olson: Recycled content and 90% Virgin and they will like that because it still gives them a tiptoe into the overall market and so I just think that as we get gain more confidence in our production and running the plant more reliably making the volumes of product with certain product specs, we're going to be able to work with the <unk>.

Eric Stein: Thank you in one moment for our next question. And our next question is going to come from the line of Eric Stein with Craig, how I'm capital mark your line is open. Please go ahead.

Dustin Olson: Good morning, everyone. Good morning. Hey, so just wondering, when you think about compounding, and I know, you've said that it's got superior physical properties. I mean, is this something that we should think about ultimately the vast majority of your production would go to compounding because that's just required by the market. Or are you saying that there are just certain applications, such as what you showed online and in your presentation, certain end products that really need those superior properties?

Dustin Olson: Compounds to augment it to be what they needed to be I mean look great.

Dustin Olson: Great example, or the rugs that we've talked about.

Dustin Olson: I mean, those rugs were not blended with anything other than an agent that changed its viscosity so that the customer could not take a low-viscosity product. That customer needed a higher-viscosity product. We compounded the material, made a higher-viscosity product, and then they were extremely happy with the result. And so I think that that's a microcosm of one customer that I think can be pretty widely adopted across many other customers.

Dustin Olson: In the slide show.

Dustin Olson: Those rugs were not blended with anything.

Speaker Change: Other than <unk>.

Speaker Change: <unk>, an agent that changed its viscosity that customer could not take a low viscosity product that customer needed a higher viscosity product, we compounded the material made a higher viscosity product and then they are extremely happy with the results and so I think that thats.

Dustin Olson: I mean, how should we think about the ultimate mix that compounding will make when you're up and running at full? Yeah, so I definitely see this being a, let's say a portfolio view of overall sales streams. We will have some product that will be sold neat to the market will have other products that will be sold as a blend. In some cases, it's going to be opportunistic to blend it to get to the right properties for the customer.

Dustin Olson: As a microcosm into one customer that I think can be pretty widely adopted across.

Dustin Olson: The next one came from Rob. Compounding provides a faster path to commercial revenues, but also notes the plant does not consistently meet specs for color, opacity, or MFI. How should we look at this?

Christian Bruey: The next one came from Rob. Compounding provides a faster path to commercial revenues, but also notes the plant does not consistently meet specs for color, opacity, or MFI. How should we look at this? Yeah.

Dustin Olson: Across many other customers.

Speaker Change: Excellent came from Rob compounding provides a faster path to commercial revenues, but also notes the plant does not consistently meet specs for color opacity or MSI, how should we look at this I wouldn't look at it that way the way I would look at it as the plant is consistently removing CP one in CPE two out of the feed.

Christian Bruey: I wouldn't look at it that way. The way I would look at it is, the plant is consistently removing CP1 and CP2 out of the feed. And by definition, the product resulting from that is a higher quality than what the market has to offer. Okay, what we're seeing are more natural fluctuations in the feeds, natural fluctuations in the operations. I mean, quite frankly, when the operations are up and down and less continuous, it creates variability in the ops, which also creates variability in the product quality.

Dustin Olson: I wouldn't look at it that way. The way I would look at it is, the plant is consistently removing CP1 and CP2 out of the equation... And by definition, the product resulting from that is of higher quality than what the market has to offer. Okay, what we're seeing are more natural fluctuations in the feeds, natural fluctuations in the operations. I mean, quite frankly, when the operations are up and down and less continuous, it creates variability in the operations, which also creates variability in product quality.

Dustin Olson: And so we'll do that for specific applications. But in other cases, the customers have more flexibility and they can take with direct. So as we step into this at the end of the day, we're going to find the lane that has the highest value to the customer and ultimately the highest value to pure cycle. And I think that what compounding really does for us is it creates flexibility. It gives us some optionality for how to manage customer requests and manage the opportunity to move product into the market more effectively.

Speaker Change: And by definition, the product, resulting from that is a higher quality than what the market has to offer okay. What we're seeing are more natural fluctuations in the feeds natural fluctuations in the operations, let me quite frankly, when the operations are up and down and less continuous it creates variability.

Dustin Olson: Okay, what we're seeing are more natural fluctuations in the feeds, natural fluctuations in the operations. I mean, quite frankly, when the operations are up and down and less continuous, it creates variability in the operations, which also creates variability in product quality. So what we're doing is managing through the variability in the feedstocks that come in, getting to continuous operation so that we can fine-tune the product on the backend to achieve higher and higher product quality ratings and more consistency. I'll remind you, though, that our product is good.

Dustin Olson: City in the ops, which also creates variability in the product quality. So what we're doing is managing through the variability in the feedstocks that come in getting to continuous operation. So we can fine tune the product on the backend to achieve higher and higher product quality ratings and more consistency.

Dustin Olson: So what we're doing is managing through the variability in the feedstocks that come in, getting to continuous operation so that we can fine-tune the product on the backend to achieve higher and higher product quality ratings and more consistency. I'll remind you though, like our product is good. Okay, our product, absent CP1 and CP2, has very good mechanical properties.

Christian Bruey: So what we're doing is managing through the variability in the feedstocks that come in, getting to continuous operations so that we can fine tune the product on the backend to achieve higher and higher product quality ratings and more consistency. I'll remind you though, like our product is good. Okay, our product, absent of CP1 and CP2, has very good mechanical properties.

Dustin Olson: So, you know, I think all options are on the table, Eric, I think that we have building the platform with partners will give us, let's say, the experience compounding. And we're going to start at a relatively low number to begin with with a target of 2 to 3 million pounds per month by the end of the fourth quarter. But depending on the success we find with the interest and the customers, the desire to grow their recycle volume more quickly, I think we're going to have a really nice opportunity to grow that as well.

Dustin Olson: And then obviously magnifies your volume potential quite a bit depending on how much that mix is. When we think about economics, and I know I mean, look, it's still to an extent to be determined. It's early days, but do you think that you'll be able to command the same premium pricing for the compounded output, you know, as compared to say the, the, the pure five. Well, I think, I think the way I'd answer that is the compounding industry has made, has been a successful enterprise because the value creation through compounding.

Dustin Olson: Consistency.

Dustin Olson: I'll remind you, though our product is good.

Dustin Olson: Our product absence of CP one in <unk> has very good mechanical properties customers like that it also has very good odor and remember the odor performance of our product is it's a difference maker to some customers. There are a lot of customers that really care of law that the odor threshold in the reset.

Christian Bruey: Customers like that. It also has very good odor. And remember, the odor performance of our product is a difference maker to some customers. There are a lot of customers that really care a lot that the odor threshold in the recycle material is low, and quite frankly, that's something that's very difficult to do on the recycle front.

Dustin Olson: Customers like that. It also has a very low odor. And remember, the odor performance of our product is a difference maker for some customers. There are a lot of customers that really care a lot that the odor threshold in the recycled material is low, and quite frankly, that's something that's very difficult to do on the recycling front.

Christian Bruey: So we're very excited about where we are. We're not satisfied. We're not done. I mean, again, the trademark of pure cycle is to always push the ball forward, grit and grind our way to higher levels of production, higher levels of quality, higher levels of customer service. And that's what we are focused on doing today. Thank you very much.

Dustin Olson: Material is low and quite frankly, thats something thats very difficult to do on the recycle front. So we're very excited about where we are we're not satisfied we're not done I mean again the trademark of pure cycle is to always push the bulk forward grit and grind our way to higher levels of production higher level of quality higher LOE.

Dustin Olson: So, we're very excited about where we are. We're not satisfied. We're not done. I mean, again, the trademark of Purecycle is to always push the ball forward, grit, and grind our way to higher levels of production, higher levels of quality, higher levels of customer service, and that's what we are focused on doing today.

Speaker Change: Loss of customer service and that's what we are focused on doing today.

Dustin Olson: And the final one is for Jaime. What is your plan to raise additional liquidity for the balance of...

Jaime Vasquez: And the final one is for Jaime, what is your plan to raise additional liquidity for the balance of...

Dustin Olson: The final one is for Jamie what is your plan to raise additional liquidity for the balance of the year.

Dustin Olson: We've been successful in raising capital through the sales of the revenue bonds, and we're constantly talking with potential investors. We have a good line of sight on raising additional capital. Our preference is going to be non-dilutive capital.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Jaime Vasquez: You know, we've been successful in raising capital through the sales of revenue bonds, and we're constantly talking with potential investors. We have a good line of sight on raising additional capital. Our preference is going to be

Jaime Vasquez: You know, we've been successful in raising capital through the sales of the revenue bonds and we're constantly

Speaker Change: We've been successful in raising capital through sales of the revenue bonds and we're constantly talking with potential investors.

Dustin Olson: And the traditional compounding industry has done that with just virgin materials. So I think we will be able to tap into the compounding value creation that's already there in the market. And quite frankly, I think we're going to be able to add to that because we're going to bring a high quality recycle stream to the market that the market hasn't seen. And so I feel very good about our opportunity to maintain our pricing potential in the market, and then also potentially expand it with the volume potential.

Operator: We have good line of sight on raising additional capital our preference is going to be non dilutive capital and as long as we continue to make good progress at iron and I believe we will have the opportunity to raise additional capital near term.

Jaime Vasquez: Non-dilutive Capital. And as long as we continue to make good progress at Ironton, I believe we will have the opportunity to raise additional capital near term. Once again, thank you to everyone who emailed in questions and thanks everyone for hopping on. I'll turn it over to Dustin for some final comments.

Operator: Once again, thank you for everyone, who E mailed in questions and thanks, everyone for hopping on I'll turn it over to Dustin for some final comments look I really appreciate the opportunity to spend an hour with you every quarter. It's refreshing to do it every time, we enjoy it gives us an opportunity to really explain what's happening.

Dustin Olson: Hey, look, I really appreciate the opportunity to spend an hour with you every quarter. It's refreshing to do it every time. We enjoy it because it gives us an opportunity to really explain what's happening inside the Purecycle Circle. Hey, look; we are very proud of our progress. We continue to demonstrate higher feed and pelletization rates. We've seen a lot of improvement with our CP2 removal, both in terms of removing it from the feed and removing it from the process.

Dustin Olson: Look, at the end of the day, at the end of the day, your value depends on how much value you create for our customer. And so our focus, after listening to customers a lot over the last six months, our focus has shifted so that we can now give the customer exactly what they want. And I think that that's going to be valued and do very well by the market.

Speaker Change: Inside the pure cycle circle and look we are very proud of our progress we continued to demonstrate higher feed and pellets as Asian rates we've seen.

Speaker Change: A lot of improvement with our CPT removal, both in terms of removing it from the feed and removing it from the process. We've been very active on actually doing things to improve the overall performance of the site and we're at an inflection point.

Dustin Olson: We've been very active in actually doing things to improve the overall performance of the site, and we're at an inflection point. I mean, we see this as the moment where we see open lanes in the future for production and pellet production. We're very excited about our opportunities in compounding. For us, that gives us the necessary lever to create the product that our customers need, which we believe will unlock our ability to move the product into the market more quickly.

Dustin Olson: All right. Thanks, Justin.

Operator: We see this as the moment, where we see open lanes in the future for production and pellet pellet production.

Brian Butler: Thank you. One moment for our next question. And our next question is going to come from the line of Brian Butler with Cecil. Your line is open. Please go ahead. Thank you for taking my questions. Hey, Abraham. Nice to meet you.

Operator: We're very excited about our opportunities in compounding for us that gives us the necessary lever to create the product that our customer needs, which we believe will unlock our ability to move the market move the product into the market.

Dustin Olson: Maybe on the feedstock or not feedstock, but on the off take agreements, when you think about what was in place for the production of iron tin, the agreements, you know, the at one point, the facility was fully kind of sold out. How does compounding impact those off take agreements, especially when you think about what's going to be being delivered to PNG. I mean, has that been renegotiated and they're taking a compounded product or are they still kind of taking the recycle?

Dustin Olson: So thank you again for your time, your effort, and your interest in Purecycle. We're here to serve. We're here to listen. We're here to get better every day. And that is our mission on a day-to-day basis. Thank you so much.

Speaker Change: More quickly so thank you again for your time your effort and your interest in pure cycle. We're here to serve we're here to listen we're here to get better every day and that is our <unk>.

Speaker Change: Mission on a day to day basis. Thank you so much.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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

Dustin Olson: How do we think about that kind of as you move forward with the compounding strategy? Look, I mean, I think it's the same with all customers. I mean, you really have to think about the organization and how they work internally. I mean, but first of all, our big customers, like the boxer and gamble and Lori and some of the people that have been with us for a long time. I mean, their interest is really about getting as much recycled content into their applications as they can because they've got very forward looking strong and and quite frankly admirable sustainability goals.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Yes.

Operator: [music].

Dustin Olson: So our responsibility is to help them do that. When you peel that onion back just one layer, then you have to see how that process works internally. And look, look, like world class brands, like proctor and Lori Al become world class brands, because they have an extremely high expectation for product quality. They do things the right way. They are very particular with how they evaluate the product and how they integrate the product and and and then I want to take undue risk into their operation either.

Dustin Olson: And so as we've talked to both of those operations. It's our belief that the compounding piece of this will help them adopt the product into a wider variety of applications within their operation than what they potentially could have before. So, they view this very well with respect to the original contracts. I think that the game on the contracts is relatively the same. I think we're going to be in a good shape there as well.

Dustin Olson: Okay, and then on the logistics of compounding, just so I understand this, you're going to produce the tier 5 from Iron 10 and then those pellets are delivered to the compounders who you pay a fee and then they once, once it's compounded and you have a compounded product that then shipped from the compounder to your customers, is that the right way to think of the logistics. Yeah, look, I mean, if you think about the base Iron 10 operations, we have rail cars that leave our facility, go to a packaging facility and then we'll be packaged down to truck and or boxes.

Dustin Olson: That's our base operation. So what this will do is it will allow us to move those rail cars instead of to break down and bulk will move them to a compounder where they will be compounded and then box out at that facility. That's right. And then you're right, we will pay the compounder a fee for that activity.

Dustin Olson: Okay, and then on the Iron 10 production target of that one million a week, you know, when you hit that target is, you know, let's say you hit that it towards the end of the third quarter. How should we think of the next step up is that, you know, it moves to one and a half million a week when you think about fourth quarter or is there a big stair step up as you kind of hit that, you know, you know, target of a million and then you can really ramp much faster once meaning that.

Dustin Olson: Yeah, that's a great question. I mean, look, we really believe that we are at an inflection point. Okay, so we see a lot of the redesigning commissioning work that we've had to do across numerous systems. I mean, it was adsorbent beads and it was screen changer and then it was sealed and you can go on and on and on about the things that we've discussed that we've had to work through in the past.

Dustin Olson: And by the way, we've worked through all those successfully. I mean, a trademark of this company is our ability to solve problems. At the end of the day, the faster you find the faster you solve the faster you move. And so we're very proud of our team from that from that perspective. But then when you start to get past a lot of that commissioning, then you've eliminated a lot of the constraints that are straight in front of you, which will allow you to raise rates and get the production up.

Gerard Sweeney: Dr. Blaney, Dr. Jeremy, can I actually take your recall. [inaudible]

Dustin Olson: And that's where we believe we are right now. We've got a little bit more work to do next week to say automate the CP2 low pressure system to really pull that material out. But then, but then really, really, we've got an open path to see higher production rates. I'll remind you, though, that when it comes to predicting where will be on overall operations, you know, what we've done over the course of the last quarter is we've really pushed ourselves to higher production levels and learn how to plant operates at that level.

Dustin Olson: So we get there. We see how things operate. There might be some tweaks we need to make to make it more steady. And then we move the ball back up again. And we continue to do that over and over and over. And so we get to name plate or beyond capacity. That's the name of the game right now. It's moving the plant to higher tiers of production so that you can learn how the plant operates at that place. And then ultimately make operating at that place more reliable. And that's what we've been successful doing over the last, and the last quarter.

Dustin Olson: Okay, and then maybe just one quick last one. You know, is the third quarter in those targets? Are those going to be sample, you know, kind of test production volumes? Or should we think about third quarter being revenue, having positive revenue? Now look, we mentioned that we're already starting to see POs come into the system for applications from the compounded product. That's a positive sign. We think that the compounding operation is going to give us the opportunity to get the product to the customers in a more effective way.

Dustin Olson: So we see it as a positive indication for revenue. Ultimately, the revenue will be defined by how quickly customers can adopt our product into their systems and then start buying our product at a rateable basis. So we see that coming and we think the compounding will help us get there. Okay, thank you. I'll get back in the queue. Thanks Brian. Thank you. One moment for our next question.

Thomas Boyes: On our next question comes from the line of Thomas Boyes with TD Cowan. Your line is open. Please go ahead. Appreciate you taking the questions. First, maybe just, you know, given the certification capabilities that you have coupled with kind of the CP2 removal, the charity achieve now, you know, do you think that there is a need to implement the originally contemplated CP2 fix? Where you have tie-ins that are already, you know, kind of available, it kind of from the chart, it looks like there really would only be necessary.

Thomas Boyes: It feeds up CP2 contact levels above 10%. I mean, the sortation is not even even need to happen. Yeah, that's a, I mean, I think that's a great point Thomas. I mean, you know, that's a good memory also. If you recall, prior to the outage, our goal was to install tie-ins to the outage. Whereby we could install a long term CP2 removal capacity. When we got into the outage, we learned things about our high pressure system that we didn't expect to see.

Thomas Boyes: I mean, we, we opened a couple of vessels, really, wow, that's not what we thought. We learned from that. We fixed it. We made the level much more reliable. And from that learning, we were able to add another very, very low cost project to the outage, which enabled us to have a chance to remove CP2 at higher rates. And we did that. And it works.

Dustin Olson: And what that means for the longer term, more expensive fix is that we do not see any need to implement it at this point. We made the tie-ins. We made the steps necessary to be able to do it without an outage. But we didn't spend the bulk of the money because we felt like through the outage, we had another opportunity to do it in a more cost effective and quite frankly, a more efficient way.

Jamie Vasquez: So that project now is off the table. Great. Now, I appreciate the color there. And then, you know, with the sale of the 22.5 million bonds, you have the 18 million cash. How should we think about the discount rate going forward if the goal is to remark at the balance of the bonds, heading into the end of the year, you know, given kind of the plan performance metrics for ironton, you know, heading into the end of the year.

Jamie Vasquez: Could you improve to say a 10% discount rate? Do you have expectations there on what kind of discount you're going after you could command when remarketing those bonds in the end of the year? Thomas, it's Jamie. Yeah, you know, we're constantly talking with investors and I think as Ironton continues to show good progress, you know, I'd like to think that we're de-risking the bonds and perhaps sell at a better price than what we've been selling at.

Jamie Vasquez: The last two transactions have gone off at an 80 point. So, you know, I think as we continue to de-risk it, we can see better value in the bonds. Appreciate it. If I get to squeeze one more in, just on, you know, how do you think about balancing some of the sortation capabilities between some of your suppliers and then doing it in-house? I mean, just looking at slide seven, certainly the self-sortation seems to be a bit more cost-effective.

Jamie Vasquez: So, I'm just kind of wondering how you think about that. Yeah, I know. We agree with you. We implemented a, during the course of Q2, actually a couple of weeks ago, we implemented the first flake sorting activity, which is, let's just say, TCT owned operation. We implemented that, started it up and are saying really good performance out of that machine. We expect to implement a higher capacity machine in the course of Q3 and get that operational in Q4.

Jamie Vasquez: So, we see this as a, first of all, a very good technology that serves the purpose in an efficient way, but also a pretty low maintenance technology that we should be able to implement inside the TCT boundaries. With respect to third-party sorting and bail sorting and things like that, I think this is a, this is a, this is a flexibility moment for us. I mean, in some cases, it may make sense for us to spend capital to bring sortation inside.

Jamie Vasquez: In other cases, it may make sense for us just to use excess sortation capacity with other partners. And there's been quite a bit of capacity added to the system over the last two to three years to create higher quality bail. So, there are higher quality bail out there. And there's a lot of excess capacity. And so, we're working, let's say, all fronts there in order to try to find the right balance between in-source and outsource.

Thomas Boyes: At the end of the day, it becomes a question of capital versus expense. Great. Appreciate it. Oh, I hope I can keep it. Thanks again. Thank you.

Michelle: And again, ladies and gentlemen, if you have a question at this time, please press star 11 on your telephone.

Gerard Sweeney: And our next question is going to come from the line of Gerard Sweeney with Ross Capital. Your line is open. Please go ahead.

Dustin Olson: Back to morning, Dr. Jeremy. Thanks for taking my call. Hey, nice to see you again. Thanks for calling in. Just a couple questions that I want to get clarification on. On the compounding side, should we look at that? That is strictly a tolling agreement, or will you be partnering with the compounders? And will they be selling some of the material in the back end as well? That changes the economics. Yeah, look, I think that the way to look at it is more like a service agreement.

Dustin Olson: We will work with the compounder to build what we want. So we'll have the direct relationship with the customer. We'll send the materials to the compounder. They will compound it and then we will sell it to the customer. That's the primary, the primary view. There are some nuances in that activity. One, compounders are very active in the recycle and virgin purchasing markets. There might be some opportunities to buy some of the blend from them.

Dustin Olson: And quite frankly, many compounders also have direct relationships with customers. Sommers. And as they get to know our product, they see the value on the recycled material, there's probably going to be a tangential opportunity to sell some of the product to them as well, to introduce it into their channels.

Dustin Olson: Okay, that's fair.

Dustin Olson: And then on the on the shell side, it sounds like we've you have some POs and you do have some orders, but you also mentioned the term rateable sales. Are there any specific steps that you need to go through to sort of get to the rateable sales i.e, sales and higher volumes and what are they and what are the timelines to achieve that? Yeah, it's the thing we struggle with quite a lot to define the right balance with the customer because every customer that we talk, maybe not every customer, but the large majority of customers that we talk to are extremely interested in our product and our process and our carbon footprint and our value proposition.

Dustin Olson: I mean they like what we're doing. And then it comes to just the tactical operations of how do you make it happen? And to get to rateable sales, you've got to make it easier for the customer to buy your material. And that's what compounding does.

Dustin Olson: So look, I'm not going to give guidance at this point on how many sales or what the revenue projection is or anything like that yet. Okay, but as we see the compounding operation come forward as customers see our ability to make it work for them, we expect the revenue and the orders just to follow it right behind.

Dustin Olson: Okay, that's fair.

Jamie Vasquez: And then this is probably a little bit for Jamie. Just cash requirements, catbacks, requirements into the end of this year. Thanks. Yeah, Thomas, I don't see anything too unusual. You know, this past quarter we had the April planned outage. So that was really the reason, one of the reasons for the large increase in cash outlays. Expectation is outside of interest payments that are due. Cash outlays should be more normalized.

Thomas Boyes: Okay, I appreciate it. I'll jump back in line. Thank you.

Christian Bruey: And I would like to turn the conference back over to Christian Brewery for any further remarks. Thank you, Michelle. We did ask for questions via email. And so we got a couple of those that we want to get to real quick. Before we wrap up, the first one from Mark Castle, what is the most likely percentage of a mixture of recycled PP and Virgin resin, if your cycle plans to sell? Yeah, that's a good question.

Christian Bruey: Appreciate the email questions also from some of our supporters online. Look, I think the best way to think about what we're doing on the sales side is creating optionality to give the customers what they want. And just like every individual has a different taste when they go to the restaurant and buy something different on the menu, the same can be said for customers that want specific polypropylene. This is again, one of the reasons polypropylene is so valuable is it can be used in so many different applications.

Christian Bruey: But when you do that, you have to give the customer what they want. And so with the blend of Virgin versus recycle versus neat sales, it really just depends on the customer. I see some customers that only want post-consumable recycle. I see some customers that only care that it's 100% recycled. I see some customers that just want to get started. They want to bring a little bit of recycled material in, but they don't want to take a lot of risk on their operation by doing something new.

Christian Bruey: And so they might start at 10% recycled content and 90% virgin. And they will like that because it still gives them a tiptoe into the overall market. And so I just think that as we get gain more confidence in our production and running the plant more reliably making the volumes of product with certain products specs, we're going to be able to work with the compounders to augment it to be what they need it to be.

Christian Bruey: I mean, look, a great example are the rugs that we talked about in the slideshow. I mean, those rugs were not blended with any... Stine. Other than an agent that changed its viscosity, that customer could not take a low viscosity product. That customer needed a higher viscosity product. We compounded the material, made a higher viscosity product, and then they're extremely happy with the results. And so I think that that's a microcosm into one customer that I think can be pretty widely adopted across many other customers.

Christian Bruey: The next one came from Rob. Compounding provide the faster path to commercial revenues, but also notes the plant does not consistently meet extra color opacity or MFI. How should we look at this? Yeah, I wouldn't look at it that way. The way I would look at it is the plant is consistently removing CP1 and CP2 out of the feed. And by definition, the product resulting from that is a higher quality than what the market has to offer.

Christian Bruey: Okay, what we're seeing are more natural fluctuations in the feeds, natural fluctuations in the operations. Let me quite frankly, when the operations are up and down and less continuous, it creates variability in the ops, which also creates variability in the product quality. So what we're doing is managing through the variability in the feed stocks that come in, getting to continuous operation so we can fine tune the product on the back end to achieve the higher and higher product quality ratings and more consistency.

Christian Bruey: I'll remind you, though, like our product is good. Okay, our product absence of CP1 and CP2 has very good mechanical properties, customers like that. It also has very good odor. And remember, the odor performance of our product is the difference maker to some customers. There are a lot of customers that really care a lot that the odor threshold in the recycle material is low. And quite frankly, that's something that's very difficult to do on the recycle front.

Christian Bruey: Now, we've been successful in raising capital through the sales of the revenue bonds and we're constantly talking with potential investors. We have good line of sight on raising additional capital. Our preference is going to be non-delutive capital. And as long as we continue to make good progress at Irons and I believe we will have the opportunity to raise additional capital in your term. Once again, thank you for everyone who emailed in questions and thanks everyone for hopping on.

Christian Bruey: I'll turn it over to Dustin for some final comments. Look, I really appreciate the opportunity to spend an hour with you every quarter. It's refreshing to do it every time. We enjoy it. It gives us an opportunity to really explain what's happening inside the pure cycle circle. Look, we are very proud of our progress. We continue to demonstrate higher feed and pelletization rates. We've seen a lot of improvement with our CP2 removal, both in terms of removing it from the feed and removing it from the process. We've been very active on actually doing things to improve the overall performance of the site.

Dustin Olson: And we're at an inflection Boyes. I mean, we see this as the moment where we see open lanes in the future for production and pellet production. We're very excited about our opportunities and compounding. For us, that gives us the necessary lever to create the product that our customer needs, which we believe will unlock our ability to move the product into the market more quickly. So, thank you again for your time, your effort and your interest in Purecycle. We're here to serve, we're here to listen, we're here to get better every day, and that is our mission on a day-to-day basis. Thank you so much.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Christian Bruey: And so they might start at 10% recycle content and 90% virgin and they will like that because it still gives them a tiptoe into the overall market. And so I just think that as we get gain more confidence in our production and and running the plant more reliably, making the volumes of product with certain products specs, we're going to be able to work with the compounders to augment it to be what they need. I mean, look, a great example are the rugs that we talked about in the slide show.

Christian Bruey: I mean, those rugs were not blended with any, other than an agent that changed its viscosity. That customer could not take a low-viscosity product. That customer needed a higher-viscosity product. We compounded the material, made a higher-viscosity product, and then they're extremely happy with the result. And so I think that that's a that's a microcosm into one customer that I think can be pretty widely adopted across, across many other customers.

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