PureCycle Technologies, Inc. Q3 FY2024 earnings call

• Achieved three critical production milestones at Ironton facility in Q3, with Q3 being the strongest production quarter ever, seeing over 200% quarter-over-quarter production growth.
• Progress in feedstock production: Denver PA's PreP facility launched, compounding operations ramped, and improved CP2 removal enabled use of more challenging feeds with higher CP2 levels and PCR content.
• Increased feedstock flexibility with Denver sort facility, off-site flake sorting, and plans for additional flake sorting at Ironton, leading to higher PP concentration.
• Improved product quality, enhancing commercial adoption and opening up more applications.
• Compounding strategy operational, producing ~$400,000 per week of sellable product and building 2.5 million pounds of compounded product inventory.
• Active commercial efforts across fiber, injection molding, automotive, and film, with trials ongoing and positive market feedback.

No detailed financial breakdown by product segments with absolute revenue and contribution % provided in the transcript.

• Confidence in ramping production to meet commercial demand, with revenue expected to show materially in Q4 and ramp into 2025.
• Augusta project financing to be pursued, with Augusta planned as a two-line operation (260 million pounds per year) and construction timeline estimated at 6-10 quarters.
• Operating cash burn declined to $23.5 million in Q3, expected to continue improving in subsequent quarters.

• Risks related to business operations, including market uncertainties, regulatory changes, and potential differences between actual results and forward-looking statements as outlined in SEC filings.

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

A: Yeah. Every time we reach a new milestone, we map out the boundary conditions for that operation, and we learn how to operate at that place. We have very high confidence in our ability to get back to those levels and operate at those levels on demand. As we progress into Q4, we've been running higher feedstock with higher levels of CP2, continuing to commission the CP2 to get all the kinks worked out so we can run at high levels, and continuing to ramp up production from there.

Q: Commercial sales timeline?

A: We're not going to provide incremental revenue projections for 2025, but we're extremely excited about where we are with customers. While it's difficult to say when specific customers will give the full green light for POs and commercial transition, the signs are all there for solid and meaningful commercial progress, both in Q4 and ramping into 2025.

Q: Joint ventures pipeline?

A: Ever since we started, we've had a lot of interest with different partners to bring the technology to different regions of the world. With respect to SK specifically, SK was an early investor and a good partner, but the project was delayed due to timing gaps, however, SK continues to be a strong partner and we continue to look for new opportunities outside of South Korea.

Q: Confidence in ramping to meet commercial demand?

A: We are pacing our production at Ironton with the commercial aspects of the business. Our operations team is very confident in their ability to ramp up as needed to meet the demand from the market. We've seen a step change improvement in overall product quality over the course of the last 6 to 8 months, and our customers see the benefits of our higher quality product and are leaning into PureCycle as a solution.

Q: Augusta construction timeline?

A: Augusta is a two-line operation (260 million pounds per year) with a construction timeline estimated at 6-10 quarters. There are many variables, but an average of two years plus a couple of quarters is a good framework.

Q: Ironton production capacity?

A: Ironton is in a great place. The solution we put in place for CP2 removal has unbridled the capacity at Ironton. We feel good about our potential, and while we need to continue to optimize to push rates above certain levels, our focus is on ramping commercial with an asset we can control that will do what we ask it to do.

Q: Augusta capital requirements?

A: The total CapEx for Augusta is in flux. There are many moving parts, including inflation. With respect to additional lines, the third line would take less time than the first two due to existing infrastructure being in place.

Q: Operating cash burn?

A: Operating cash expenses totaled $23.5 million for the third quarter, a decline from previous quarters. We expect the cash burn to be lower in Q4 as maintenance activity from prior quarters is not reoccurring.

Q: Feedstock type?

A: We've been running exclusively on post-consumer recycled material (PCR). Running PCR is preferred by customers and we're in a good position to run substantial volumes of PCR going forward due to improvements in feedstock handling and CP2 removal.