PureCycle Technologies, Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Production Milestones: Achieved three critical production milestones at Ironton, with improved production rates and quality after addressing CP2 removal issues.
• Feedstock Improvements: Denver sort facility started up, expanding feedstock flexibility by upgrading low-quality bales and improving PP concentration.
• Commercial Progress: Trials underway in fiber, injection molding, automotive, and film applications. Automotive customer approval expected in Q4 with orders starting in Q1 2025.
• Capital Raising: Raised over $105 million in net proceeds from Ironton revenue bonds and a capital raise in September, with plans to pursue financing for Augusta and Antwerp facilities.

Segment Performance

• Ironton Facility: Achieved three critical production milestones in Q3. Quarter-over-quarter production grew over 200%. Feedstock production improved with the start of the Denver, Pennsylvania, plastic sort facility and ramping of compounding operations. PP concentration increased from less than 85% to 95% and is expected to reach 97% in Q4.
• Denver, Pennsylvania, Plastic Sort Facility: Started up with a nameplate capacity of approximately 22,000 pounds per hour, upgrading low-quality bales and purifying PET, HDPE, and aluminum streams.
• Compounding Operations: Producing approximately $400,000 per week of sellable product, developing products for film, fiber, and injection molding applications with positive customer trials.

Guidance

• Production: Confident in ramping production to meet growing customer needs, with focus on aligning production with commercial demand.
• Commercialization: Expect revenue to begin showing materially in Q4 and ramp into 2025, driven by positive trial feedback across applications.
• Augusta Facility: Estimated 6 to 10 quarters for construction, with Augusta planned as a two-line operation initially.

Risks

• Regulatory and Market Uncertainties: Actual results may differ from projections due to regulatory changes and market fluctuations.
• Operational Constraints: Potential challenges in fully ramping production to nameplate capacity and issues with feedstock variability and CP2 removal if not managed properly.

Question and Answer

Q: How are the third quarter production milestones looking in early Q4?

A: Confident in reproducing results, focusing on establishing commercial lane and ramping production to meet demand.

Q: When can we expect meaningful revenue and EBITDA?

A: Revenue expected to start materially in Q4 and ramp into 2025, with EBITDA tied to production utilization and commercial adoption.

Q: Pipeline for joint ventures after SK termination?

A: Interest in growth remains high, with SK still a partner but focusing on opportunities outside South Korea.

Q: Confidence in ramping to full peak capacity?

A: Confident in ability to ramp production as needed, with improved product quality and commercial interest driving progress.

Q: Status of Augusta facility construction timeline?

A: Estimated 6 to 10 quarters for construction, with Augusta being a two-line operation initially.