PureCycle Technologies, Inc. (NASDAQ:PCT) Q1 2025 Earnings Call Transcript

PureCycle Technologies, Inc. (NASDAQ:PCT) Q1 2025 Earnings Call Transcript May 8, 2025

Operator: Hello and thank you for standing by. At this time I would like to welcome you to the PureCycle Technologies First Quarter 2025 Corporate Update Call. 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. [Operator Instructions] I would now like to turn the conference over to Eric DeNatale, PureCycle Director of Investor Relations. Please go ahead.

Eric DeNatale: Thank you, Jericho. Welcome to PureCycle Technologies first quarter 2025 corporate update conference call. I am Eric DeNatale, 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. This evening we will be highlighting our corporate developments for the first quarter 2025. The presentation we’ll be going through on this call can also be found on the Investor tab at our website at purecycle.com. 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. 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 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.

Additionally, please note that the company’s actual results may differ materially from those anticipated and except as required by law, we undertake no obligation to update any forward-looking statement. Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties including, among 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. 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. 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 Ironton production around year end. We have made continual operational improvements, most notably with onstream time. Onstream time has been the biggest challenge for production and we successfully targeted this metric for improvement over the last couple of months. While we’re 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.

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. Our operations and manufacturing team have shown 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 nameplate capacity. 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 and which represent over 300 million pounds of potential product sales. This represents an increase from our Q4 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. 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 fiber. The combination of improved operational reliability at Ironton and the progress we are seeing on the commercial front gives us increased confidence in our path to generating meaningful EBITDA and cash flow. In prior calls we have spoken about our compounding strategy and how it is both allowing us to better serve customers’ needs while also providing us with more operational flexibility.

As we ramp into the fiber 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 PureCycle going forward. 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. First is PureFive Ultra, which is intended to be our flagship product that is nearly indistinguishable from virgin. It has very favorable dynamics in the market and can be used in color sensitive applications. Being able to use Ultra is a game changing breakthrough for the plastic recycling industry and we believe that this product stands alone. Many customers, however, need more flexibility than just PureFive Ultra.

Some customers need specific mechanical properties. Some customers don’t care about color sensitivity. Some customers target only 30% to 50% recycled content. However, almost all customers need strong molecular performance absent of what we call coproduct 1 and coproduct two contaminants. This is where PureCycle differentiates itself from the market, and this is why PureCycle is introducing PureFive Choice product line which includes compounds that service as multiple applications like film, fiber and automotive. PureFive Choice will give customers the opportunity to select the product that they need for their specific application. Because polypropylene is one of the most versatile types of plastics, 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 enclosures.

As a result, the feed that we process is often a mix of different types of consumer products. Therefore, many applications, particularly more challenging ones like film and fiber and automotive, require mechanical properties outside of what the recycling industry traditionally produces. This is where our PureFive Choice comes into play. We blend our resin with varying quantities of other input streams and additives to produce a product that mimics the customers current fossil based supply. We believe our PureFive Choice blends will pave the way for our fiber segment, our film segment, and impact modified options like automotive for our customers. Unlike other recycling technologies in the industry, our ability to remove contaminants at the molecular level allow us to build a platform for PureFive Choice.

This is why our product reaches customers that other technologies cannot and our early successes in fiber, film and automotive show that. Our fiber application is approximately a 50-50 blend that achieves an MFR or melt flow rate of 18 to 40 depending on what the customer needs. Whereas our film production is approximately 30% to 50% PCT blend and will achieve an MFR as low as two to three. Both of these application successes are huge breakthroughs in the industry, which we believe will open up significant demand for us. 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.

The next time you walk through a store, you’ll be amazed by the quantity of plastic products that are bright white. PureFive Choice should give brand owners the opportunity to build their products out of recycled polypropylene. Overall, compounding has allowed us to give customers the product that they need for quicker adoption and can expand sales volumes beyond 107 million pounds per year of nameplate capacity of Ironton. It’s also nice that the unit economics per pound of PCT material also increases relative to the non-blended material. We introduced our compounding strategy to the market in Q3 of 2024 and it’s nice to see the operation streamlining into real solutions for customers, including sales of compounded material in the first quarter.

Since our last update at the end of February, our backlog of potential trials and customers continued to grow. Currently we’re engaged in 33 active trials 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, in rigid packaging, we have increased the overall number of trials and now have 13 of those in the industrial phase versus five from the prior quarter. This shows steady progress with multiple customers across the portfolio. Some examples include the products we showed last time with Procter & Gamble, thermoform dairy cups of a large converter, and several shampoo and beauty closures for large consumer brands.

And while I can’t speak to the exact details yet, we have 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. 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. We continue to broaden the addressable market and we continue to push trials forward. We believe the market continues to search 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 Ironton production. 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 do not have sustainable solutions.

It’s for this reason that we are excited to announce initial trial successes with Bruckner. 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 BOP market. The ubiquitous nature of Bruckner equipment in the industry should allow us to move into industrial trials with many of the large end product customers in the near future. Bruckner has over 1,000 machines operating in the market and their latest single line additionally has the capacity of almost 2 times that of Ironton nameplate capacity. BOPP film is a huge market for — market opportunity for PureCycle. The successful test with Bruckner resulted in film successfully stretched 9 times without seeing any tearing and with ultra clear and transparent properties.

So far the results we’re seeing suggest that our film blend can act as a drop in replacement for Virgin. The BOPP film market is arguably the most exciting end market for us over the next few years for several reasons. This market has a higher concentration of single use plastics versus durable plastics. It’s very difficult to produce with traditional recycling grades which leads to very low levels of penetration and brands are under significant pressure to find a sustainable solution. 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. Our film product can be used in applications like candy and snack wrappers, pet food bags, beverage labeling as well as adhesive tapes.

Coming into the year, we did not expect film to drive a significant amount of revenue in the near term, but the success at Bruckner 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. Ironton continued to make operational progress in the quarter producing 4.3 million pounds of resin and we are currently holding approximately 14 million pounds of inventory. More importantly, after some small tweaks to the operations, we successfully ran the plant every day in the month of April and achieved an onstream time of almost 90%. This is the first time that we have come close to achieving the 90% onstream target which was referenced in our original engineering plans.

The improvement in reliability over the last year has been tremendous. I have consistently talked about how the operational issues at Ironton have become smaller in scope and less frequent and our performance in April is a testament to that. We have also continued to see improvements in quality supported by improvements in operations in Denver at our Flake Sorter and also at Purification at Ironton. Overall, the first quarter showed excellent progress for our plan to commercially ramp Ironton 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 Ironton. Combined with what we’re seeing with regards to our pricing on realized branded sales, this gives us increased confidence in achieving our unit economics and our commercial and operational ramp.

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 is to come. We have learned a tremendous amount about our foundational technology from the commercialization of Ironton and from the fundamental research and development out of our Durham facility. These learnings should enable us to scale the technology to much higher capacity per line, which will in turn allow us to reduce the CapEx and OpEx and of these facilities as well as improve overall facility economics. The economics we are beginning to realize at Ironton 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 Ironton economics.

For the last several years we have continued to invest in the overall growth of this company through the purchase of prep equipment as well as long lead equipment for two 130 million pound lines. This has served us well. It has allowed us to move through Ironton 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. Because of those intense — because of the intense global interest in our product across the customer funnel, we are going to aggressively grow the capacity of future lines even more than what we have done so far. We are still in the early stages of engineering these solutions, but given what we know about the technology today, we feel confident in our ability to scale to much higher levels.

This should drive capital and operational efficiencies across facilities and ultimately improve the overall profitability and return on capital to our stakeholders. This will set the foundation for the future of PureCycle. We are currently pursuing multiple paths of financing for our plan and once finalized we intend to update the market with as many details as possible. We believe the lessons we have learned from Ironton have been foundational and as we see increased operational and 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. During the quarter we raised just under $55 million through a series of transactions, including $33 million through the sale of about 4 million shares of common stock in a private placement, the sale of about $19 million face value of revenue bonds, as well as proceeds from the exercise of certain warrants. Shortly after the quarter closed, 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. 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 spend compared to last quarter largely reflected spending at Augusta and the first full quarter of our Denver operations. I would now like to turn the call back to Jericho who’ll open the call for your questions.

Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Andres Sheppard from Cantor Fitzgerald. Please go ahead.

Q&A Session

Andres Sheppard: 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. You 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. Would 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.

Dustin Olson: Yes. Hey, thanks, Andres. Appreciate the question. Appreciate the compliments as well. Yes, as we entered 2025, we knew that there would be a ramp and some time required for customer trials, okay? And so we knew at the beginning of the year, we’d probably need to push some of the material through distribution. But 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 some of the early realized pricing that we were seeing out of the sales coming from those trials from fiber, 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 really just a decision to build the inventory now into the channels that we discussed so we can sell them for higher values in the second half of the year.

Andres Sheppard: I see. Got it. That makes actually perfect sense. Thanks for clarifying that. And maybe just as a quick follow-up, I want to touch on maybe the growth plans. So obviously you provided a lot of detail, particularly Slide 5, very helpful. Just curious if you can maybe provide us with a little more color as to what is the thinking around here in terms of the growth as we get closer and closer to the second facility? Thank you.

Dustin Olson: Yes. Hey, that’s a great question. Look, I mean, 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 locations that we were excited to be initiating discussions on, whether it be Georgia or Belgium or some of our JV partnerships like the one with Mitsui. And we’ve also talked about the interest in taking the learnings from Ironton and rolling those into future design. So that’s kind of a two part question. The first part is there’s a lot of things we learned at Ironton from a reliability perspective, okay, like buy 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 uptime at like 90% today.

What’s even more exciting than that is that our fundamental understanding of the technology is also growing exponentially. I mean, the more we run, the steadier we run, the more uptime we have, the better clarity that we have into how our process is working and quite frankly, it’s more efficient than what we expected when we started this journey and that’s led to our ability to forecast how we can design improvements into these plans. So the idea is that the deeper technology enables us to know that we can build much bigger plants. So we referenced in the slide something like 200 to 500. We haven’t narrowed that down yet, although we’ve got some ideas. But the point is, it’s much, much bigger and when you have bigger plants, you lower your over OpEx that’s both fixed and variable, which leads to higher EBITDA and then you also lower your CapEx per pound because as you scale facilities like this, the CapEx does not scale linearly and so you’re able to drop the CapEx pretty substantially and ultimately the higher EBITDA, 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. 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 Sheppard: Awesome. Thank you, Dustin, for the answer. Very thorough and detail. Appreciate it. Congrats again. I’ll pass it on.

Dustin Olson: Thank you, sir.

Operator: Our next question comes from Hassan Ahmed from Alembic Global.

Hassan Ahmed: Afternoon, Dustin. Apologies for the background noise. I’m actually traveling. Look, it seems like you guys have made solid progress relative to even the last quarter. So a two-part question, I guess as I compare what you guys sort of shared with us last quarter to this starting first with just the trials. 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. Thereon after, as I sort of sit there and look at the conversion of that backlog, call it, from pilot to industrial to potentially eventually commercialization, it seems that has been gaining more momentum. Momentum in terms of, more mobility of projects from that sort of pilot stage to the industrial stage.

And it seems it’s imminent that a couple of these sort of industrial sort of tests will sort of convert into lumpy sort of commercial opportunities for you. Is that the right way of thinking about the momentum from Q4 2024 to Q1 2025?

Dustin Olson: Yes, 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, we’ve been able to show continued progress with the trials. And so, yes, I think that’s right, Hassan. I mean, 2025 has always been dubbed as a transformative year for us. 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. What I think is equally important to the things that you mentioned is just the optionality that we’re starting to build. I mean, when you can qualify your product in film, fiber, automotive, dairy cups, et cetera, et cetera, that ultimately puts a lot of flexibility and optionality into PureCycle’s hands, as to 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 the supply. Ironton as a nameplate of 107 million pounds, we’ll be able to expand that a bit through compounding. But this customer funnel is more than just Ironton. This customer funnel is also planting the foundation for every growth project that we have in the future. 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. 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 — talking about the future.

Hassan Ahmed: Very helpful, Dustin. And as the follow-up, again, I know you guys were pretty clear in explaining the BOPP film opportunity, but just digging a bit deeper into that, I mean, you guys talked about sort of the market being around a 30 billion market, but just a Bruckner opportunity unto itself. I mean, if I am sort of thinking correctly about it, it seems that Bruckner has one of the larger market shares in that arena. So just that one sort of customer of yours or a potential customer of yours could actually be a huge sort of commercial opportunity for you. Is that the right way of thinking about it?

Dustin Olson: There’s a nuance to the discussion on Bruckner that I need to clarify here. Bruckner is the premier equipment supplier to the market. And so they have an enormous market share percentage in the market for equipment supplies to brands that then make the film. And so what customers will traditionally do is they will see a new product brought to the market and then they will look to Bruckner to say, does it work? And if Bruckner says, hey, it works on our machines, then the customer then also knows that it will work on their machines. And so the discussion with Bruckner and the trial at Bruckner is really important because it’s a window into what every other customer is going to be able to do. 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 just 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, Hassan, if you think about other technologies, product coming into this — into this film, if you have a heavy contaminant load in the product, then when you stretch it, it will stretch irregularly. It’ll tear, it’ll have fish eyes, it’ll be discolored, it just look hazy. It won’t, it won’t work. And so there’s been a lot of problems trying to introduce recycled products into BOPP and that’s why Bruckner 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 Bruckner. We’re not there yet. We’ve got more work to do. We’ve got trials going with a couple people outside of Bruckner that will give us additional insights and hopefully progress toward commercializing it, but the early success is just, — 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. And I made the comment about walking through the stores and thinking about all the white products. We’ll do the same thing with film. I mean, it’s everywhere. I mean, I probably should admit it, but I ate a couple candy bars today and every time I open one of them up, I’m thinking, hey, that’s BOPP film.

And I just think that this is going to be a solution that the industry is super excited about when they — when they see it come to commercialization.

Hassan Ahmed: Very helpful, Dustin. And the fact that you’re talking about fish eyes and really enjoying those candy bars, testament to you, you being spending too much time around polypropylene recycling. So kudos to you.

Dustin Olson: It’s true that I eat, breathe and sleep polypropylene.

Hassan Ahmed: Thank you so much again Dustin.

Dustin Olson: Thank you. Thank you.

Operator: Our next question comes from Thomas Boyes from TD Cowen.

Thomas Boyes: Appreciate you taking the questions. Maybe the first one around the commercialization is kind of gaining traction. Do you have a better sense of what the pricing structure looks like for the business? I know when we were at the Ironton, you talked about maybe the lower bound of what pricing could look like. And not too long ago the company used to talk about perhaps pursuing 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?

Dustin Olson: Yes, I think that the discussion is 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 per pound of PCT products. I think that the idea of the feedstock plus pricing is actually gaining more traction now, to be honest with you. There’s a lot of customers that as they deal more and more with the recycle market and they see some of the moves both on the feedstock and the virgin market perspective, they recognize that feedstock plus pricing 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 really trying to anchor into a fixed price or something that touches virgin, like a virgin plus type mechanism.

But I think that especially given the supply demand imbalance, I think that 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.

Thomas Boyes: Excellent. And I appreciate the color there. And then I would also like to just get your thoughts on liquidity moving forward. Obviously, the burn rate still remains relatively high. So I’m just curious on how maybe you think that trends through the year and how that could potentially extend the cash runway and then to that end given where your cash position is now and the revenue bonds that you still have remaining, do you see the need to raise additional capital sort of project — maybe project debt financing for future facilities?

Dustin Olson: Yes, let me. Let me take the first crack at it, and I’ll pass it to Jamie 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 bumpier quarters that we’ve had over the last year and a half, I mean, we’ve done a lot of work at Ironton in terms of putting a screen changer in or doing some work on the adsorbent beads or seal improvements. Those things cost money. And we’ve spent quite a bit of money over the last 12 to 18 months improving that. 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 plants around as much 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. When it comes to the overall cash position, remind everybody that we have the revenue bonds on the balance sheet. We also have the $200 million line of credit and the longer and better that the Ironton facility continues to operate and also, quite frankly, the progress that we’re making on customer trials, that makes the Ironton bonds more and more valuable, and so we see increasing demand for those and better pricing for those over time. So, 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 the inventory down.

So I see it improving over the second half of the year. Jamie?

Jaime Vasquez: I think you touched on it Dustin. Thomas we have a very good, steady rate of costs. They don’t vary too much now from month to month. 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.

Dustin Olson: And I think we mentioned this in the call also, but our goal is to, let’s say, first get to break even at Ironton, Q3-ish time frame, and then as we start to exit the year, get into early 2026 start to 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 pretty significant reduction in overall cash burn from operations.

Thomas Boyes: Excellent. I appreciate the kind of the updated thought there on breakeven at Ironton, the corporate breakeven. I’ll hop back in queue.

Dustin Olson: Hey, Thomas, you broke up there at the end, did you. Okay, so next question. Thank you. Thanks, Thomas.

Operator: Our next question comes from Eric Stine from Craig-Hallum Capital Group.

Eric Stine: Hi, everyone.

Dustin Olson: Hey, Eric. How you doing?

Eric Stine: Doing well. You?

Dustin Olson: Doing great. Doing great.

Eric Stine: Good, good. So I guess first thing, obviously, great to see that you have increased the number of active trials. And I guess as you said, you reported nine weeks ago, I know at that time you had, I believe, 10 in later stage and you had some level of confidence that those trials would be largely complete or some of them would be in Q2. So just wondering kind of where things stand in terms of how far along are these trials? As you look at these trials, what are kind of the steps and 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?

Dustin Olson: Yes, so, first of all, appreciate the question. Yes, 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, yes, I think some of these are going to start commercializing inside of Q2 and starting to ramp-up. We’re already starting to see that a bit with the fiber trial. So I think that will continue. And then I definitely believe that second half of 2025 looks really positive from a commercial perspective. So, I think it’s hard to say how many of the 33 or which ones will, because quite frankly, every, every customer is different. And every customer has a different qualification period and qualification, let’s say, procedure. 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.

So it provides us, let’s just say, great optionality and flexibility for our sales team. And so, yes, I think in the course of 2025, for sure, we’re going to start to see ramp. We’re going to see some of these commercial trials move from pilot to industrial and into ramp. And I feel really good about getting the production up and the sales up in the second half of the year.

Eric Stine: Got it. That is good to hear. And then maybe last one for me just on compounding and I apologize, I’m jumping around on calls and may have missed this earlier. But as you think about that, do you find or do you expect that you’ll get a premium 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?

Dustin Olson: No, I think the way to look at compounding is this is a service that we’re providing to the customer. I mean, quite frankly, a lot of the customers that we deal with, they have, let’s say pre compounding steps coming into their facility. They’ll buy virgin, they’ll compound it up, get it ready for their facility and so we’re basically allowing them to integrate more with us as opposed to going to third-party compounders. So I think generally speaking that’s a very positive — positively viewed activity by us with our customers. And they definitely see it as a service ad. And with respect to pricing, I mean, I think it gives us a lot of flexibility. I mean, ultimately you have an overall bill of materials that you’re operating to, you’re driving different mechanical performances across different applications and in some cases 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 and I think that the compounding operation is just going to give us more flexibility with the customer.

So we’ll see where it lands in the end. I definitely see compounding as accretive to the original base plan for PureCycle. And I see it as a real enabler to get the qualifications done more quickly. If we hadn’t had compounding, we wouldn’t be able to do film and 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.

Eric Stine: Okay, thanks a lot.

Dustin Olson: Thank you.

Operator: Our next question comes from Gerry Sweeney from ROTH Capital.

Gerry Sweeney: Good afternoon. Dustin and Jamie, thanks for taking my call.

Dustin Olson: Hey Gerry, good to talk to you again.

Gerry Sweeney: Nice to talk to you as well. Eric kind of took one of my questions on the compounding side, so I’m not sure how much you want to address this, but Gen 1, in the presentation you have 2027 sort of commissioning target. But separately with that, we’ve also talked about some investments being made in Augusta. Putting those two together, how much work has actually been done in Augusta and does that really sort of help you jumpstart — hit that 2027 assuming project financing or other funding opportunities come along?

Dustin Olson: Yes, I mean, look, we feel really good about the Gen1 design. It’s an improvement to Ironton. The improvements from Ironton are baked into that design. And we bought the majority of the long lead equipment for that activity to proceed. I think that that’s one of the real value points from having the two 130s, say, already on site and ready to go, because we’ll be able to accelerate that pretty quickly once we, once we decide to do so. So I think that’s still in play. We’re excited about it.

Gerry Sweeney: Got it. That’s helpful. And then obviously a lot of questions that are around the trials, but I’m just curious, is there anything that’s — I don’t want to — I want to rephrase this the correct way, Anything that impediments that are slowing down trials or and what I’m really trying to say is, is this just a matter of time in testing and iteration that your partners have to go through? And once we get a couple large orders or approvals, does that naturally speed up the process for people behind them?

Dustin Olson: Well, I think that 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. So the first way is, does the product work in the general application? So can you make fiber? Check. Can you make film? Partial check. Not 100% theory, but gone, it looks really good. Can you make a dairy cup? Check. 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 and now it’s just working through the individual customer application periods 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, I think that this looks really good for second half of 2025.

Gerry Sweeney: Got it. I know it’s a question probably different iterations, so I appreciate it. I’ll jump back in queue.

Dustin Olson: Yes, thanks, Gerry.

Operator: Our next question comes from Amer Tiwana from Imperial Capital. Please go ahead.

Amer Tiwana: Good afternoon, guys. First of all congratulations on achieving your first revenue. My question is around your nameplate capacity. You mentioned in the presentation that you’re on the path to getting to that. What are the impediments to getting to full nameplate capacity?

Dustin Olson: Yes, hey, thanks for the question, Amer. It’s nice to meet you, by the way, and appreciate you jumping into the queue to participate on this call. Look, in the last quarter, we announced that we were able to touch 12,500 pounds per hour, which is 90% of nameplate capacity. Okay, and what we said before is every time you bump that limit up, you basically test the plant to see how it operates there, to see if you hit any constraints and when we got to 12,500 pounds, we ran pretty well. We ran pretty steady. And so it gave us confidence at that level. We haven’t tested it above that yet. But honestly, 90% to 100% is pretty close. And we still feel really good about that operation. When we ramp rates will be driven by the customer trials.

So as the customer trials progress and as demand comes on the books and as trucks start moving out the door, we will raise rates in order to meet the demand and so I feel really good about the plant. Okay. I mean, look, the headaches over the last year and a half have been twofold. The first is random reliability events. And we were able to work through a lot of those things to improve the reliability. You see that now in uptime. And then the other piece is just a fundamental understanding of how the plant operates so that we can get steadier and steadier on the operation. 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. The one point I want to make, Amer, I mentioned the 12,500 pounds, and you were speaking to nameplate capacity.

The 12,500 pounds actually is with respect to feed, not final pellet production. That’s a nuance. It’s fairly small difference. But I want to make sure you got your numbers right.

Amer Tiwana: Understood. That’s good. One clarification. This also says that 87% onstream time in April. Is that the average for April, or is that the number that you achieved in April?

Dustin Olson: That’s the number that we achieved in April. And the way to think about uptime, 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. 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 up 98%, 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.

Amer Tiwana: Understood. Last question. You’ve talked about your expansion and building future plans. Any plans on putting some CapEx for the rest of the year for growth purposes or given the liquidity position, you just want to make sure you’re focused on Ironton at this point.

Dustin Olson: 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 getting the engineering right and implementing some of the things that I talked about before. We have done some work at Augusta to get the civil work ready to go for that facility, and like we said before, also like, we put some CapEx into Denver sorting facility last year, which was really part of the Augusta project. So we continue to spend capital on growth because we know that that’s the — that’s the food for the future and we want to be ready when it’s here.

Amer Tiwana: Thank you so much.

Dustin Olson: Thanks, Amer.

Operator: There are no further questions at this time. I’ll now turn the call back over to Dustin Olson, PureCycle’s CEO.

Dustin Olson: All right, thank you again, everyone, for the change in time this time for our quarterly review, and also for your continued support. This is another good quarter for PCT. We’re very pleased with the momentum that is building behind this company. Our performance on first revenue and steady Ironton performance and advancements on film, that gives us a lot of confidence and I hope it gives you confidence as well as the path that we’re on is the right one. I mentioned before that 2025 would be a transformative year for PCT. And our performance in 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.

Operator: This concludes the meeting. You may now disconnect.