Q1 2025 PureCycle Technologies Inc Earnings Call
Unknown Executive, Jaime Vasquez, Christian Bruey, Unknown Executive, Jaime Vasquez,
Aadit Shrestha,
Unknown Executive: Hello and thank you for standing by, at this time I would like to welcome you to the Purecycle Technology's first quarter, 2025 corporate update call.
Unknown Executive: All lines has been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.
Unknown Executive: If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.
Unknown Executive: I would now like to turn the conference over to Eric Dinatale, Purecycle Director of Investor Relations. Please, go ahead.
Aadit Shrestha,
Thank you, Jericho.
Unknown Executive: Welcome to Purecycle Technologies' first quarter, 2025 Corporate Update Conference Call. I am Eric Dean Talley, Director of Investor Relations for Purecycle, and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Jaime Vasquez, our Chief Financial Officer.
Unknown Executive: This evening, we will be highlighting our corporate developments for the first quarter 2025.
Unknown Executive: The presentation will be going through on this call can also be found on the investor tab at our website at piercycled.com.
Unknown Executive: Many of the statements made today will be made forward looking and are based on management's beliefs and assumptions and information currently available to management at this time.
Unknown Executive: The statements are subject to known and unknown risks and uncertainties Andres Sheppard, Unknown Executive,
Unknown Executive: Many of which may be beyond our control, including those that forth in our safe harbor provisions and forward-looking statements that can be found at the end of our first quarter 2025 corporate update press release, filed this afternoon, as well as in other reports on file with the SEC to provide further detail about the risks related to our business.
Unknown Executive: Additionally, please note that the company's actual results may differ materially from those anticipated and accept as required by law. We undertake no obligation to update any for-looking statement.
Unknown Executive: 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.
Unknown Executive: 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 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.
Unknown Executive: With that, I will now turn it over to Dustin Olson, Purecycle's Chief Executive Officer.
Dustin Olson: Thank you, Eric. The first quarter was another period of significant progress across multiple aspects of the business and marked the first reported revenues in the company's history. This is a moment we've been waiting for and excited to finally get there.
Dustin Olson: The success we see with customers across numerous end markets and product types gives us confidence in our belief that we can successfully convert trials, ramp revenues, and sell out irons and production around your end. We have made continual operational improvements most notably with on-stream time.
Dustin Olson: On-stream time has been the biggest challenge for production, and we successfully targeted this metric for improvement over the last couple of months.
Dustin Olson: While we are not producing pellets at full rates during the month of April , the fact that we made pellets every single day and were online for almost 90% of the month is a major achievement and consistent with our goals.
Dustin Olson: To think that only a year ago, we were focused on working to get the plant online for more than 25 to 30% of the time shows the substantial improvements we have made.
Dustin Olson: Our operations and manufacturing team have showed incredible drive and determination to get us where we are today and should give confidence that we will continue to improve going forward and march toward main plate capacity.
Dustin Olson: The commercial efforts continue to show meaningful progress as well. We're currently engaged in over 30 trials of which 24 have progressed to industrial.
Dustin Olson: This represents an increase from our key four update just over two months ago. We continue to see progress through the sales funnel and saw three prior trials convert to purchase orders. Many of these discussions are for large potential orders. And while they can seem lumpy in the early stages, we're excited about where things stand.
Aadit Shrestha,
Dustin Olson: The announcement of our technical success with Drake in Q1 led to the development of an additional fiber demand that's beginning to ramp now. There are an increasing number of conversations going on and we're really excited about the pipeline and opportunity in front of us in
Speaker Change: The combination of improved operational reliability at Irton and the progress we are seeing on the commercial front gives us increased confidence in our path to generating meaningful EBITDA and cash flow.
Andres Sheppard,
And prior calls, we have spoken about our compounding strategy.
Speaker Change: and how it is both allowing us to better serve customers' needs while also providing us with more operational flexibility.
Speaker Change: As we ramp into the cyber market and have shown trial success in film, I think it's helpful to update the market on where we stand with compounding and why we are so excited by what it can offer pure cycle going forward.
Speaker Change: As the conversations with our customers have evolved over the past year, we have now segmented our production into two different brands under the Purecycle umbrella.
Speaker Change: First is PureFive Ultra, which is intended to be our flagship product that is nearly indistinguishable from Virgin. It is very favorable dynamics in the market and can be used in color sensitive applications.
Speaker Change: being able to use Ultra as a game-changing breakthrough for the plastic recycling industry and we believe that this product stands alone.
Speaker Change: Many customers, however, need more flexibility than just pure five ultra. Some customers need specific mechanical properties.
Some customers don't care about color sensitivity.
Speaker Change: Some customers target only 30% to 50% recycled content. However, almost all customers need strong molecular performance absent of what we call co-product 1 and co-product 2 contaminants.
Speaker Change: Purified Choice will give customers the opportunity to select the product that they need for their specific application.
Speaker Change: Because polypropylene is one of the most versatile types of plastics.
Speaker Change: It ends up being used in the widest set of applications, from carpet and furniture, to snack bags and beverage labeling, and even into automotive bumpers and FDA caps and closures. As a result, the feed that we process is often a mix of different types of consumer products.
Speaker Change: The therefore many applications, particularly more challenging ones like film and fiber and automotive, require mechanical properties outside of what the recycling industry traditionally produces.
Speaker Change: This is where our pure five choice comes into play. We blend our resin with varying qualities of other input streams and additives to produce a product that mimics the customer's current fossil-based supply.
Speaker Change: We believe our pure five choice blends will pave the way for our fiber segment, our film segment, and impact modified options like automotive for our customers.
Speaker Change: Unlike other recycling technologies in the industry, our ability to remove contaminants at the molecular level allow us to build a platform for pure five choice.
Speaker Change: This is why our product reaches customers that other technologies cannot and are early successes in fiber film and automotive show that.
Speaker Change: Our fiber application is approximately a 5050 blend that achieves an MFR or melt flow rate of 18 to 40.
depending on what the customer needs.
Speaker Change: Whereas our film production is approximately 30-50% PCT blend and will achieve an MFR as low as 2-3. Both of these application successes are huge breakthroughs in the industry, which we believe will open up significant demand for us.
Speaker Change: Purefive Choice is also available in Bright White products. The best way to envision this product is just imagine walking through a big box retailer or an appliance retailer and thinking about all the Bright White Durable Goods that you see.
Speaker Change: The next time you walk through a store, you'll be amazed by the quantity of plastic products that are bright white.
Speaker Change: Purefive Choice should give brand owners the opportunity to build their products out of recycled polypropylene.
Speaker Change: Overall, compounding has allowed us to give customers the product that they need for quicker adoption and can expand sales volumes beyond £107 million per year of nameplate capacity of Ironson.
Speaker Change: It's also nice that the unit economics propound of PCT material also increases relative to the non-blended material.
Speaker Change: We introduced our compounding strategy to the market in Q3 of 2024 and it's nice to see the operations streamlining into real solutions for customers including sales of compound material in the first quarter.
Speaker Change: Since our last update at the end of February , our backlog of potential trials and customers continue to grow.
Currently, we're engaged in 33 active trials.
Speaker Change: with 24 in the industrial stage and another nine pilot trials. The volume potential from the trials has increased since last quarter. This is a positive development. The trials continue to go well, and it gives us increased confidence in our ability to achieve our sales goals of 2025.
For instance,
Aadit Shrestha,
Speaker Change: And rigid packaging, we have increased the overall number of trials and now have 13 of those in the industrial phase.
Speaker Change: Versus Five from a prior quarter. This shows steady progress with multiple customers across the portfolio. Some examples include the products we showed last time with Procter & Gamble.
Speaker Change: Thermoform, Dairy Cups of the Large Converter, and several shampoo and beauty closures for large consumer brands.
Speaker Change: And while I can't speak to the exact details yet, we've also been engaged in detailed conversations with multiple large auto OEMs that could potentially procure a significant portion of volume across a global portfolio of plants and markets.
Speaker Change: I believe this interest will only continue to build in front of the recycled content regulations that go into effect in 2030 in both Europe and Japan.
There's a lot of interest in our product.
Speaker Change: We continue to broaden the addressable market, and we continue to push trials forward. We believe the market continues to surge for high quality products that they can drop into their operations, and each trial success provides Purecycle increased optionality for where we choose to sell the ironson production.
Aadit Shrestha,
Speaker Change: We believe the underpinning of Purecycle's future success is tied to proving that our product can work across numerous application segments, especially those currently that currently
Speaker Change: It's for this reason that we are excited to announce initial trial successes with Brookner.
Speaker Change: They are the industry leading supplier of equipment to manufactured stretch films and have nearly 90% market share and 30 billion pounds per year of the OP market.
Speaker Change: The ubiquitous nature of Brookner equipment in the industry should allow us to move into industrial trials with many of the large-end product customers in the near future.
Speaker Change: Brockner has over 1,000 machines operating in the market, and their latest single line edition has the capacity of almost 2X that of irons and nameplate capacity.
B.O.P.P. Film is a huge market for market opportunity for Purecycle.
Aadit Shrestha,
Speaker Change: The successful test with Bruckner resulted in film successfully stretched nine times without seeing any tearing and with ultra clear and transparent properties.
Speaker Change: So far the results we're seeing suggest that our film, Blend, can act as a drop-in replacement for Virgin.
Speaker Change: The BOPP film market is arguably the most exciting end market for us over the next few years for several reasons.
Speaker Change: This market has a higher concentration of single-use plastics versus durable plastics. It's very difficult to produce traditional recycling grades which leads to very low levels of penetration and brands are under significant pressure to find a sustainable solution.
Speaker Change: Quite simply, brands have been under intense pressure to find solutions for plastic film. And until now, the industry has not been able to provide a reliable solution.
Speaker Change: Our film product can be used in applications like candy and snack wrappers, pet food bags, beverage labeling, as well as adhesive tapes.
Speaker Change: Coming into the year, we did not expect film to drive a significant amount of revenue in the near term. But this success at Brookner has accelerated our plans and make it significant contribution to our sales in the second half of the year. This has been extremely exciting and a welcome development.
Speaker Change: Ironson continued to make operational progress in the quarter, producing 4.3 million pounds of resin.
Speaker Change: and we are currently holding approximately 14 million pounds of inventory.
Speaker Change: More importantly, after some small tweaks to the operations, we successfully ran the plant every day in the month of April , and achieved an on-stream time of almost 90%.
Speaker Change: This is the first time that we have come close to achieving the 90% on-screen target, which was referenced in our original engineering plans.
Speaker Change: The improvement in reliability over the last year has been tremendous. I have consistently talked about how the operational issues at Ironson have become smaller in scope and less frequent. And our performance in April is a testament to that.
Speaker Change: We have also continued to see improvements in quality supported by improvements in operations in Denver at our Flakes order and also a purification at Ironson.
Andres Sheppard, Unknown Executive,
Speaker Change: Overall, the first quarter showed excellent progress for our plan to commercially ramp Irons in through 2025. We generate our first reported revenues, made progress with key customers and trials, achieved our first success in an important film market, and made meaningful operational progress at Irons.
Speaker Change: Combined with what we're seeing with regards to pricing on realized branded sales, this gives us increased confidence in achieving our unity economics, our commercial and operational
Speaker Change: We continue to progress our capacity additions and growth plans, and there are a lot of exciting developments that we will be announcing in detail in more detail soon. I would like to give you a sneak peek of what it is to come.
Andres Sheppard, Unknown Executive,
Speaker Change: We have learned a tremendous amount about our foundational technology for the commercialization of Eirton and from the fundamental research and development out of our Durham facility.
Speaker Change: These learnings should enable us to scale the technology to much higher capacity per line, which will in turn allow us to reduce the Kepex and OptX of these facilities as well as improve overall facility economics.
Speaker Change: The economics we are beginning to realize that ironson are strong, but they should get even better on future lines. We also continue to see lots of opportunities to continue to optimize and improve ironson economics.
Speaker Change: For the last several years, we have continued to invest in the overall growth of this company.
Speaker Change: Through the purchase of prep equipment as well as long lead equipment for 230 million pound lines.
This has served us well.
Speaker Change: It has allowed us to move through Ironson challenges more quickly and improve the feed position of the early introduction of Denver. This should also allow us to improve speed to market with less inflated cost structure because of those early decisions.
Aadit Shrestha,
Speaker Change: Because of those intents, because of the intents, global interest in our product across the customer funnel.
Speaker Change: We are going to aggressively grow the capacity of future lines even more than what we have done so far.
Speaker Change: We are still in the early stages of engineering solutions, but given what we know about the technology today, we feel confident in our ability to scale to much higher levels.
Speaker Change: This should drive capital and operational efficiencies across facilities and ultimately improve the overall profitability and return on capital to our stakeholders.
Aadit Shrestha,
This will set the foundation for the future of Purecycle.
Speaker Change: We are currently pursuing multiple paths of financing for a plan and once finalized we intend to update the market with as many details as possible.
Speaker Change: We believe the lessons we have learned from Ironson have been foundational. And as we see increased operationally commercial successes, it gives us more confidence in the growth plan ahead. With that, I will turn it over to Jamie for the financial presentation.
Jaime Vasquez: Thank you, Dustin. As you see on slide 10, we ended the quarter with $37.5 million of cash on hand, including $22.5 million of unrestricted cash.
Jaime Vasquez: During the quarter, we raised just $155 million through a series of transactions, including $33 million through the sale of about 4 million shares of common stock and a private placement.
Jaime Vasquez: The sale of about $19 million face value of revenue bonds, as well as proceeds from the exercise of certain warrants.
Jaime Vasquez: Shortly after the quarterclose, we sold an additional $11.8 million face value of revenue bonds. And we still have about $85 million of revenue bonds remaining that will continue to sell.
Aadit Shrestha,
Speaker Change: Our operations and corporate spend was about $37 million for the quarter, which was in line with the first quarter a year ago, and about $9 million higher than the fourth quarter of 2024. The higher a spend compared to last quarter largely reflected spending at Augusta and the first full quarter of our Denver operations.
Jericho: I would now like to turn the call back to Jericho, who will open the call for your questions.
Aadit Shrestha,
Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in, I would like to ask a question. Again, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.
Andres Sheppard,
Speaker Change: Our first question comes from Andres Sheppard from Cantor Fitzgerald. Please go ahead.
Andrew Shepard: Hi everyone, hey Dustin, hey Eric, good afternoon, congratulations on the quarter and more importantly congratulations on the first recorded revenue. Very, very exciting indeed.
Just a quick question.
Speaker Change: Touched on this briefly on the call, I see you guys have about 14 million pounds of inventory. So just curious kind of what the strategy is, you know, which you want to sell more of this product into the market this year or perhaps are you holding back, I guess, for a specific reason. Thank you.
Aadit Shrestha,
Speaker Change: Yeah, hey, thanks, Andres. I appreciate the question. I appreciate the compliments as well. Yeah, you know, as we entered 2025 we knew that there would be a ramp and some time required for customer trials.
Speaker Change: and so we knew at the beginning of the year we probably need to push some of the material through distribution.
Speaker Change: The Quite Frankly, as we got into the customer trials and the performance of the customer trials was proceeding a bit faster than what we expected, and somebody early realized pricing that we were seeing out of the sales coming from those trials from Fiber.
Speaker Change: We basically decided to hold back on some of the inventory for some of the branded sales later in the year and so this is a this is really just a decision to build the inventory now into the channels we discussed so we can sell them for higher values in the second half of the year.
Aadit Shrestha,
Speaker Change: I see. Got it. That makes actually perfect tense. Thanks for clarifying that. Maybe just a quick follow up.
Speaker Change: I want to touch on maybe the growth plans. So obviously you provided a lot of detail, particularly slide-by, very helpful.
Speaker Change: Just curious if you can maybe provide us with a little more color as to, you know, what is the thinking around here in terms of the growth as we get closer and closer to the second facility. Thank you.
Aadit Shrestha,
Speaker Change: Yeah, that's a great quite a look. I mean, we are we are really excited about the plan that we're building for growth. We've talked about this quite a bit over the last couple of years in terms of
Speaker Change: locations that we were excited to be initiating discussions on whether it be Georgia or Belgium or some of our JD partnerships, like the one with Mitsui.
Speaker Change: and we've also talked about the interest in taking the learnings from Iron Ten and rolling those into future designs. So that's kind of a two-part question. The first part is, there's a lot of things we learned at Iron Ten from a reliability perspective.
Speaker Change: Joseph, by this piece of equipment, not that, or arrange this piece of equipment this way, not that, and we've gone through a lot of those learnings and that's why you see the up time at like 90% today.
Speaker Change: What's even more exciting than that is that our fundamental understanding of the technology is also growing exponentially.
Speaker Change: I mean, the more we run, the steadier we run, the more up time we have, the better clarity that we have into how our process is working, and quite frankly,
Speaker Change: It's more efficient than what we expected when we started this journey.
Speaker Change: How we can design improvements into these plants. So the idea is that the deeper technology enables us to know that we can build much bigger plants. So we reference in the slides something like 200 to 500, we haven't narrowed that down yet, although we've got some ideas.
Speaker Change: But the point is, it's much, much bigger. And when you have bigger plants, you lower your overop access, both fixed and variable, which leads to higher EBITDA.
Speaker Change: And then you also lower your capex per pound, because as you scale facilities like this...
Speaker Change: The CapEx does not scale linearly, and so you're able to drop the CapEx pretty substantially. And ultimately, the higher the lower CapEx leads to higher returns, and that's really the plan that we're building for the future. We've got a great footprint built for the future.
Speaker Change: We know where we want to build the plant, and we know there is tremendous demand in those regions for our product. And this now gives us the opportunity to build plants more cost-effectively, which will ultimately lead to faster growth, better projects, faster financing in the future.
That's a good question, Andres. Thank you.
Andres: Awesome. Thank you, Dustin, for the answer, very thorough and detailed, appreciate it. Congrats again. I'll pass it on.
Thank you, sir.
Aadit Shrestha,
Or next question comes from Hassan Ahmed, from Alembic Global.
Unknown Speaker 00.00.00
Arthur Lunduskin, Apologies for the background noise and actually travelling.
Speaker Change: Look, it seems like you guys have made solid progress relative to even the last quarter.
Speaker Change: So two part question, I guess, as I compare, you know, what you guys sort of shared with us last quarter to this, you know, starting first with just the trials.
Speaker Change: I mean, am I thinking about things correctly that as I sort of take a look at the backlog, first of all, it seems the backlog has increased.
Speaker Change: The Iran after as I sort of sit there and look at the conversion of that backlog call it from pilot.
Speaker Change: To industrial, to potentially eventually commercialization, it seems that has been gaining more momentum, momentum in terms of...
You know, more mobility of projects from that sort of pilot stage to the industrial stage. And it seems it's imminent that, you know, a couple of these sort of...
In that field, sort of, there's...
Speaker Change: Will sort of convert into lumpy sort of commercial opportunities to you. Is that the right way of thinking about the momentum from Q424 to Q125?
Aadit Shrestha,
Speaker Change: Yeah, I mean, look, it's only been a few weeks since we had the last quarterly update. I think it's like nine weeks or something, but even in that short amount of time
Speaker Change: You know, we've been able to show continued progress with the trials. And so, yeah, I think that's right, Hassan. I mean, 2025 has always been done as a transformative year for us.
Speaker Change: You know, we're really building for the second half of the year, being kind of a revenue ramp period for us. We've shown really good progress across the customer trials and a lot of continued interest to test and trial in different applications.
Speaker Change: Well, I think it's equally important to the things that you mentioned.
Speaker Change: is just the optionality that we're starting to build. I mean, when you can qualify your product in film, fiber, automotive, you know, dairy cups, et cetera, et cetera, that also totally puts a lot of...
Aadit Shrestha,
Speaker Change: Flexibility and optionality into Purecycle's hands, as though where do we want to allocate the production that we have for Ironton? Look, at the end of the day, the demand for this product, far outstrips supply, Ironton is a nameplate of 107 million pounds. We'll be able to expand that a bit through compounding.
Speaker Change: But, but this customer funnel is more than just Iortin.
Speaker Change: This customer funnel is also planting the foundation for every growth project that we have in the future.
Speaker Change: And so when we start talking about growing in Europe and growing in Asia and growing in Augusta, the conversations are just fundamentally different and with fundamentally different people as well.
Speaker Change: Like we'll be able to show them product that has been tested, qualified, and proven to work before we ask them to sign the contracts. And that's just a great position to be in as we start talking about the future.
Speaker Change: Tina. So just that one sort of customer of yours, or potential customer of yours could actually be a huge sort of commercial opportunity for you. Is that the right way of thinking about it?
Speaker Change: But there's a new wants to the discussion on Brookner that I need to clarify here. Brookner is the premier equipment supplier to the market.
And so they have an enormous market share percentage.
Speaker Change: in the market for equipment supplies to brands that then make the film. And so what what what customers will traditionally do is they will see a new product brought to the market and then they will look to Brockner to say doesn't work.
Speaker Change: and if Brockner says, hey, it works on our machines, then the customer then also knows that it will work on their machines and so the the discussion with Brockner and the trial at Brockner is really important because it's a window into what every other customer is going to be able to do.
Speaker Change: And that's very, very, very strong. And so this is going to open the door and conversations with a lot of brand owners down the road.
Film Like I Mentioned Is A Just A Andres Sheppard, Unknown Executive,
Speaker Change: A very difficult topic for brand owners from a sustainability perspective. It's a lot of single use plastic so it gets a lot of attention there. There really hasn't been a technical solution to bring recycled content in because
Speaker Change: Because Hassan, if you think about other technologies product coming into this, into the film
If you have a heavy contaminant load,
in the products.
Speaker Change: Then when you stretch it, it will stretch irregularly, it'll tear, it'll have fish eyes, it'll be discolored.
Speaker Change: It's just a look hazy. It won't work. And so there's been a lot of problems.
Speaker Change: Trying to introduce recycled products in the BOPP. And that's why Brueckner says this could be a complete game changer for the industry and an opportunity to close the loop. So we're really excited about what we're doing with Brueckner. We're not there yet. We've got more work to do. We've got trials going with a couple people outside of Brueckner. We've got more work to do. We've got more work to do. We've got more work to do.
Speaker Change: that will give us additional insights and hopefully progress toward commercializing it, but the early success is just
Speaker Change: I can just, it's just so exciting, Hassan. I mean, it's just really, this is just one of those things when you look back, you're going to remember it because it's like the industry really needs a film solution.
Speaker Change: And I made the comment about walking through the stores and thinking about all the white products. Well, we'll do the same thing with film. I mean, it's everywhere. I mean, I probably shouldn't admit it, but I ate a couple candy bars today. And every time I open, warm up, I'm thinking that's B-O-P-P-P film.
Speaker Change: And I just think that this is going to be a solution that the industry is super excited about when they see it come to commercialization.
Unknown Executive, Jaime Vasquez, Christian Bruey, Unknown Executive, Jaime Vasquez,
Aadit Shrestha,
Speaker Change: Very helpful, Dustin, and the fact that you're talking about fish eyes and really enjoying those candy bars, you know, testament to you being spending too much time around polypropylene recycling. So, good luck to you.
Speaker Change: It's true that I eat, breathe, and sleep, polysolvent, quite little amount of energy in that zone. Thank you. Thank you.
Unknown Executive, Jaime Vasquez, Christian Bruey, Unknown Executive, Jaime Vasquez,
Andres Sheppard,
Our next question comes from Thomas Boyes from KDKL.
Aadit Shrestha,
Aadit Shrestha,
Speaker Change: I appreciate you taking the questions. Maybe the first one around the commercialization is kind of gaining traction.
Speaker Change: Do you have a better sense of what the pricing structure looks like for the business? I know when we were.
Speaker Change: At the Ironson, we talked about maybe the lower bound on what pricing could look like and not too long ago, the company used to talk about perhaps for something a feedstock plus pricing model relative to fixed pricing. So just wondering if you could give any insight, maybe to how that's evolving over time.
Aadit Shrestha,
Speaker Change: Yeah, I think that the discussion's largely the same and we're still sticking to the numbers that we said last year around the expected ASP. We still see that as in the game for us, the pound of PCT products.
both on the feedstock and the Virgin market perspective.
They recognize that Featsuck plus Bryzing is...
Speaker Change: is really required for this industry, and they're starting to embrace it. So, I think that's still pretty strong. You'll still find some customers that are
Speaker Change: You know, really try to anchor in to a fixed price or something.
Speaker Change: You know, that touches Virgin, you know, like a Virgin plus type mechanism, but I think that
Speaker Change: You know, especially given the supply demand imbalance, I think that
Speaker Change: The conversation pretty quickly goes to Feedstock Plus because quite frankly, it just makes the most sense. That is the market. This is a specialty product. It's very different than virgin polypropylene. And it's tied to a different Feedstock source. So I think people understand that and are okay with it.
Aadit Shrestha,
Aadit Shrestha,
Unknown Executive: Excellent, and I appreciate the color there. And then I would also like to just get your thoughts on the community moving forward. Obviously, the burn rate still remains relatively high.
Unknown Executive: And some just curious on how you maybe think that trends through the year.
Unknown Executive: and how they're potentially it's in the cash runway and then, you know, to that end.
Unknown Executive: You know, given where your presentation is now, and the revenue bonds still have remaining, do you see the need to raise an additional capital? You know, sort of project, maybe project that financing for future facilities.
Aadit Shrestha,
Speaker Change: Yeah, let me take the first crack and I'll pass it to Jaime to finish it off. I mean, one of the side benefits of steadier operation is also steadier cost management. So when you look at some of the the bumpier quarters that we've had over the last year and a half, I mean we've done a lot of work at Irton in terms of. [inaudible]
Speaker Change: You know, you know, putting a screen changer in or doing some work on the absorber beads or seal improvements those those things cost money and we spent we spent quite a bit of money over the last you know 12 to 18 months improving that.
Speaker Change: So I think that as we run steadier, you start to see your maintenance cost profile become more in line. You also start to see your variable cost become steadier because you're not moving the plant around as much.
Speaker Change: And that's going to be really good for us. It's been good so far this year. It'll continue to improve as we raise rates and run increasingly better throughout the year. You know, when it comes to the overall cash position, remind everybody that...
Speaker Change: That we have the revenue bonds on the balance sheet. We also have the $200 million line of credit.
Speaker Change: and the longer and better that the Ironton facility continues to operate, and also the progress that we're making on customer trials, that makes the Ironton bonds more and more valuable.
Speaker Change: and so we see increasing demand for those and better pricing for those over time. So you know from a cash burn perspective, we're putting some cash into inventory right now. We'll be able to pull that back out as we get the customer trials done and we start pulling inventory down. So I see it improving over the second half of the year.
Speaker Change: Jamie? Yeah, I think it does. Thomas, we have a very good steady rate of costs. They don't vary too much now from month to month.
Speaker Change: And I think with kind of the sale of the inventory plus future sales in the second half of the year combined with the sale of the revenue bonds, the cash burn is going to be minimized.
Speaker Change: And I think we mentioned this in the call also, but our goal is to, let's say, first get to break even at Ironson.
Speaker Change: You know, Q3 is time frame and then as we start to exit and exit.
Speaker Change: The year get into early 26, you know, start to, you know, really chew into some of the corporate costs as well. And so I think that what you'll see over the second half of the year is a, is a pretty significant reduction in overall cash burn from operations.
Andres Sheppard,
Aadit Shrestha,
Speaker Change: Excellent. And I appreciate the kind of the updated thoughts they're on, we're given at Iainton, the corporate breguid, or how I can keep.
Unknown Executive, Jaime Vasquez, Christian Bruey, Unknown Executive, Jaime Vasquez,
Aadit Shrestha,
Speaker Change: Hey, Thomas, you broke up there at the end, did you? Okay, so next question. Thank you. Thanks, Thomas.
Speaker Change: Art Expression comes from Eric Stine, from Craig Hall and Capitol Crew.
Aadit Shrestha,
Hi everyone.
Aadit Shrestha,
Hey, Eric, how you doing? Doing well, you.
Doing great, doing great. Good, good.
Speaker Change: So, I guess first thing, obviously great to see that you have increased the number of active trials, and I guess it.
as you said, you're reported nine weeks ago.
Speaker Change: I know at that time you had, I believe, ten in later stage and you, you know, I had some level of confidence that those trials would be...
Speaker Change: Largely Complete, or some of them would be in Q2, so you know just wondering kind of where things stand in terms of how far along are these trials.
Speaker Change: You know, as you look at these trials, what are kind of the steps and, you know, as you look at the 33 that are active, would you expect that you would be through these trials by the end of 2025? Or is it something that could come quite a bit sooner?
Aadit Shrestha,
Speaker Change: Yeah, so, you know, first of all, appreciate the question. Yeah, we've made really good progress. It's only been a few weeks since the last call, but we continue to see ramp there with respect to Q2. Yeah, I think some leads are going to start.
Commercializing inside of Q2, and starting to ramp up.
Speaker Change: We're already starting to see that a bit with the fiber trials, so I think that will continue.
Speaker Change: And then I definitely believe that the second half of 25 looks really positive from a commercial perspective. So, I think, you know, it's hard to say, like, how many of the 33 or which ones will? Because, because, frankly, every customer is different.
Speaker Change: and every customer has a different qualification, period and qualification, let's say procedure.
Speaker Change: And so what we're doing is we're putting a lot of lures in the water and we're qualifying as many different application segments as possible.
Speaker Change: So it provides us, let's just say, great optionality and flexibility for our sales team. And so, yeah, I think in the course of 25, for sure, we're going to start to see ramp.
Speaker Change: We're going to see some of these commercial trials move from, you know, pilot to industrial and into ramp. And I feel really good about, you know, getting the production up in the sales up in the second half of the year.
Andres Sheppard,
Andres Sheppard,
Speaker Change: Got it. That is good to hear. And then maybe last one for me, just on compounding and I apologize. Yeah, I've jumped around on calls and may have missed this earlier. But
As you think about that, I mean…
Go.
Speaker Change: Do you find or do you expect that you'll get a premium?
Speaker Change: For that product, on all of the compounded volume, is it something where you would get a pricing that's consistent with the specific blend of your recycled polypropylene, or is it just too early to tell what that looks like?
Aadit Shrestha,
Speaker Change: Now, I think the way to look at compounding is this is a service that we're providing you the customer. I mean, a lot of the customers that we deal with
You know, they have, let's say, pre-compounding steps coming into their facility.
Speaker Change: with our customers, and they definitely see it as a service ad.
Speaker Change: You know, you're driving different mechanical performances across different applications, and in some cases, you know, you're the only game in town for supply. And so I think the supply demand balance is going to drive most of the pricing discussions.
Speaker Change: Base Plan for Purecycle. And I see it as a real enabler to get the qualifications done more quickly.
Speaker Change: If we hadn't had compounding, we wouldn't be able to do film in fiber, and so I think that this is just a real practical near term example of how this is going to play in our favor.
Aadit Shrestha,
Okay, thanks a lot.
Thank you.
Aadit Shrestha,
Our next question comes from Jerry Sweeney from Roth Capital.
Good afternoon, Dustin and Jamie, thanks for taking my call.
Speaker Change: Hey, Jerry. Good to talk to you again.
Aadit Shrestha,
Speaker Change: I took one of my questions on the compounding side. So I'm not sure how much you want to address this, but Gen1 in the presentation, you have 2027 sort of commissioning target. But separately, with that, we've also talked about some investments being made in in Augusta.
Speaker Change: You know, putting those two together, how much work has actually been done in Augusta?
and is that really sort of…
I hope you jumpstart to hit that 2027.
You know, assuming Project Financing or-
or other funding opportunities coming up.
on the wall.
Aadit Shrestha,
Speaker Change: Yeah, I mean, look, we feel really good about the Gen 1 design. It's an improvement to Ironson. The improvements from Ironson are baked into that design.
Speaker Change: and we've bought the majority of the long lead equipment for that activity to proceed. I think that that's one of the real value points.
Speaker Change: from having the 2130s say already on site and ready to go because we'll be able to accelerate that pretty quickly once we decide to do so. So I think that's still in play, we're excited about it.
Speaker Change: God, that's helpful. And then obviously a lot of questions that are around the trials. But I'm just curious, you know, is there, um,
Anything that's-
Andres Sheppard, Unknown Executive,
Speaker Change: I don't want to, I want to praise this the correct way. Anything that...
Speaker Change: Impediments that are slowing down trials or what I'm really trying to say is...
Speaker Change: You know, is this just a matter of time and testing and iteration that your partners have to go through? And...
Once we get a couple large orders or...
Speaker Change: Rebels. Does that naturally speed up the process for people behind us?
Aadit Shrestha,
Well, I think that...
Speaker Change: Every customer is different and every customer has different requirements for what it takes to commercialize the product and I think you need to look at it in a couple of different ways
Speaker Change: So the first way is, does the product work in the general application? So, can you make fiber check?
Speaker Change: Can you make film? Parcel check, not 100% there yet, but dog on it looks really good. Can you make a dairy cup check?
Speaker Change: Okay, and then it gets to the specific customer timelines and they're all different, okay, they all have different requirements timelines to go. I think that the industry is seeing now that we can successfully make a lot of things.
Speaker Change: and now it's just working through the individual customer application periods.
Speaker Change: To bring those things to commercialization and so we can't control the timeline but what we can is continue to perform well in all the trials which is going to give us the optionality to move when it moves and I think that that's going to based on the timeline and the progress that we're seeing right now in all these trials.
Speaker Change: I think that this, this looks really good for the second half of 25.
Speaker Change: Got it. I know it's a question that's probably different iterations that I appreciate it. I'll jump back and queue.
Yeah, thanks, Sherry.
Aadit Shrestha,
Our next question comes from Amar Tuwana.
from Imperial Capital. Please go ahead.
Aadit Shrestha,
Agora, for now guys.
First of all, congratulations on achieving your first revenue.
My question is around your nameplate capacity.
Speaker Change: You mentioned in the presentation that you're on the path to getting to that, what are the impediments to getting to full name plate capacity?
Aadit Shrestha,
Speaker Change: Yeah, hey, thanks, thanks to the question, Mir, it's nice to meet you, by the way, and I appreciate you jumping into the queue to participate on this call.
Speaker Change: Look, in the last quarter we announced that we were able to touch 12,500 pounds per hour which is nearly 90% of the nameplate capacity.
Speaker Change: Okay, and what we've said before is every time you bump that limit up, you basically test a plant.
Speaker Change: To see how it operates there, to see if you hit any constraints. And when we got to 12-5, we ran pretty well. We ran pretty steady. And so it gave us confidence at that level.
Speaker Change: We haven't tested it above that yet, but honestly 90% to 100% is pretty close, and we still feel really really good about that operation.
Random Reliability Events, and we were able to...
Speaker Change: to improve the reliability. You see that now in uptime. And then the other piece is just a fundamental understanding of how the point operates, so that we can get steady and steady on the operation.
Speaker Change: and so I think that we're in a really good place to run the plant as we need to run the plant when the demand comes in.
Speaker Change: The one point I want to make, I'm here, I mentioned the 12,500 and you're speaking to name plate capacity, the 12,500 actually is with respect to feed, not final production, that's a nuance, it's...
Speaker Change: Fairly small difference, but I want to make sure you got your numbers right.
Speaker Change: Understood. No, that's good. One clarification, this also says that 87% on-stream time in April is that the average for April or is that the number that you achieved in April .
Aadit Shrestha,
Speaker Change: That's the number that we achieved in April and the way the way to think about it time because there are a couple other questions about this before is that's effectively like a percentage of time that the feed was on by minute.
Speaker Change: So, 87% of the minutes in the month we were running feed into the plant. Now, the rest of the plant, the circulation and the other ancillary operations, they run all the time. I mean, their reliability is...
Speaker Change: 99% nearly every month, but what we're tracking right now is the percent of time that feed is on, and that's what the 87% represents.
Aadit Shrestha,
Undisturbed.
Last question, you know you've talked about.
Your Expansion and Building Future Plans
Speaker Change: Any plans on putting some capex for the rest of the year for growth purposes are given the liquidity position. You just want to make sure you're focused on Arrington at this point.
Speaker Change: No, we're very judicious with where we spend the capital. We're very targeted on our activities there. The majority of the effort has been spent on...
Speaker Change: Getting the engineering right and implementing some of the things that I talked about before.
Speaker Change: We have done some work at Agusta to get the civil work ready to go for that facility. And, and like we said before also like we put some CapEx into Denver sort of facility last year which was really part of the Agusta project. So we continue to spend capital on growth because we know that that's the
Speaker Change: That's the that's the food for the future and we want to be ready when it's when it's here.
Aadit Shrestha,
Thank you so much.
Thanks a man.
Andres Sheppard,
Aadit Shrestha,
Unknown Executive: There are no further questions at this time. I'll now turn a call back over to Dustin Olson, Purecycle CEO .
Aadit Shrestha,
Dustin Olson: Alright, thank you again everyone for the change in time, this time for a quarterly review, and also for your continued support. This is another good quarter for PCT.
Speaker Change: We're very pleased with the momentum that is building behind this company. Our performance on first revenue and steady-oriented performance and advancements on film, that gives us a lot of confidence and I hope it gives you confidence and well as the path that we're on as the right one.
Speaker Change: I mentioned before that 2025 would be a transformative year for PCT, and our performance Q1 keeps us right on track. So we look forward to talking to you next time. Thanks for the great questions, the continued support.
Talk next time. Thank you.
Unknown Executive, Jaime Vasquez, Christian Bruey, Unknown Executive, Jaime Vasquez,
Aadit Shrestha,
This concludes the meeting. You may now disconnect.