Executive Summary

Q1 2024 was operationally focused, with Ironton producing ~1.3M lbs of resin as sampling ramped, but GAAP net loss widened to $85.6M (diluted EPS $(0.52)), driven by a $21.2M loss on debt extinguishment, higher warrant fair value change (+$9.1M YoY), and depreciation from commissioning (+$8.0M YoY) .
Management executed >100 reliability and product-quality projects during an April outage and expects improved consistency as operations restart; no further outages are planned in 2024 barring new findings .
Liquidity actions: agreement to sell $37.5M of Series A bonds and exchange a $45.5M term loan for revenue bonds (all at $800/$1,000), bringing $30M cash and simplifying capital structure; a 12% prepayment penalty will be satisfied with ~3.1M warrants at $11.50 expiring Dec 2030 .
Stock-reaction catalyst: near-term proof of continuous uptime and CP2 removal capacity (10–20k lbs/day add-on implemented; optional Q2 step adds 15–25k lbs/day) could unlock higher feed rates, support bond remarketing, and accelerate offtake approvals in film/fiber .

What Went Well and What Went Wrong

What Went Well

“We increased the overall production by 6x” from Q4 to Q1; Ironton produced ~1.3M lbs (vs 0.2M lbs in Q4), with semi-continuous pelletizing at ~6,000–7,000 lbs/hr pre-outage and positive sampling feedback in film and fiber .
Reliability and CP2 capacity improvements executed (>100 projects) during April outage; immediate CP2 removal add-on (10–20k lbs/day) implemented, optional Q2 improvement adds 15–25k lbs/day capacity (additive) .
Financing progress: agreement to monetize bonds for $30M cash and convert the term loan to revenue bonds; warrants used to satisfy prepayment penalty, preserving cash .

What Went Wrong

GAAP net loss widened materially due to non-operational items: $21.214M loss on debt extinguishment, $13.944M change in fair value of warrants, and higher depreciation ($9.256M) post-commissioning .
Site reliability issues led to product cross-contamination during railcar loading and back-end logistics; management outlined corrective actions (valve upgrades, silo transition discipline) .
CP2 removal capacity constrained feed rates; reliance on lower-CP2 feedstocks and manual removal throttled throughput; management now addressing with capacity increases and potential tolling/off-site solutions .

Financial Results

Income Statement (YoY)

Metric	Q1 2023	Q1 2024
Net Loss ($USD Millions)	$(25.842)	$(85.607)
Diluted EPS ($USD)	$(0.16)	$(0.52)
Interest Expense ($USD Millions)	$0.657	$15.054
Change in Fair Value of Warrants ($USD Millions)	$4.835	$13.944
Loss on Debt Extinguishment ($USD Millions)	$0.000	$21.214
Depreciation ($USD Millions)	$1.294	$9.256

Drivers: Debt purchase/transactions, warrant mark-to-market, and commissioning-related depreciation materially impacted GAAP loss .

Balance Sheet (Sequential)

Metric	Dec 31, 2023	Mar 31, 2024
Cash and Equivalents ($USD Millions)	$73.411	$25.021
Debt Securities Available for Sale ($USD Millions)	$48.226	$2.187
Restricted Cash – Current ($USD Millions)	$25.692	$7.566
Restricted Cash – Non-current ($USD Millions)	$203.411	$7.353
Long-term Debt, less current ($USD Millions)	$467.708	$242.937
Warrant Liability ($USD Millions)	$22.059	$36.003
Total Liabilities ($USD Millions)	$619.137	$397.176
Total Stockholders’ Equity ($USD Millions)	$420.236	$336.839

Liquidity note: Cash and restricted cash decreased to $39.940M as of 3/31/24; subsequent bond sale/exchange expected to add $30M cash post-close .

KPIs and Operations

KPI	Q3 2023	Q4 2023	Q1 2024
Feedstock Processed (lbs)	~410,000	N/A	N/A
Pellet Production (lbs)	N/A	~200,000	~1,300,000
Semi-Continuous Pelletizing Rate (lbs/hr)	N/A	N/A	~6,000–7,000
CP2 Removal Capacity Adds (lbs/day)	N/A	N/A	+10,000–20,000 implemented; optional +15,000–25,000 in Q2

Segment breakdown: not provided; company focused on Ironton purification and UPR resin sampling .

Results vs Estimates

Metric	Q1 2024 Actual	Q1 2024 Consensus
Diluted EPS ($USD)	$(0.52)	Unavailable (SPGI request limit)
Revenue ($USD)	Not disclosed in press release	Unavailable (SPGI request limit)

Note: Wall Street consensus (S&P Global) was unavailable at time of retrieval due to request limits; use company-reported actuals for assessment .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Ironton Outages	FY 2024	Not specified	No further outages planned in 2024, subject to learnings	Clarified/maintained operations
Liquidity Actions	Q2 2024	N/A	$37.5M Series A bonds sale at $800/$1,000; $45.5M term loan exchanged into revenue bonds; ~$30M cash inflow; ~3.1M warrants at $11.50 for 12% prepay premium	New
Revenue/Margins/OpEx/Tax	FY/Q2 2024	Not provided	Not provided (management emphasized operational ramp and sampling)	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2023, Q4 2023)	Current Period (Q1 2024)	Trend
Reliability and CP2 removal	Screen changer to address bead issue; CP2 capacity limited; plan for upgrades	>100 projects completed; immediate CP2 add (10–20k/day); optional Q2 add (15–25k/day)	Improving capacity and reliability
Product performance (film/fiber)	Early success; sample shipments; fiber proof points	Positive feedback in film and fiber; viable applications for UPR; ongoing approvals	Expanding applications
Supply/demand and regulatory	Undersupply of high-quality PP recyclate; regulatory momentum (EPR/content)	Demand “very, very high”; US state regulatory advances highlighted	Supportive backdrop
Financing/liquidity	Repurchase of Ironton revenue bonds to remove restrictive covenants	Bond sale/exchange to add $30M cash; simplification; potential remarketing after uptime demonstrated	Strengthening liquidity optionality
FDA/regulatory approvals	LNO received; expanding conditions of use; contaminants removal emphasized	Additional feedstock approvals; agreed testing methodology with FDA	Broadening approvals
Augusta/Global expansion	Integrating Ironton learnings; KBR partnership; CapEx efficiency focus	Design refinement continues; timeline contingent on Ironton’s reliable operations	Prudent pacing tied to Ironton

Management Commentary

CEO Dustin Olson: “We increased the overall production by 6x… We are closer to making the promise of PureCycle a reality… Our job now is to leverage the improved reliability, expand the capacity of CP2 and run the plant continuously” .
CFO Jaime Vasquez: “On May 6, we reached an agreement… for the sale of $37.5M notional value of bonds at $800… which will provide additional liquidity of $30M… The early termination… results in a prepayment penalty… both parties agreed to warrants in lieu of cash” .
CEO on outages: “We do not have plans to take the plant down again in 2024… if we learn things… then we will [consider it].” .

Q&A Highlights

Communications cadence: Expect more periodic operational updates through Q2 to improve visibility for investors .
CP2 capacity math: 10% CP2 feed requires 20k lbs/day removal to support ~200k lbs/day feed; variability by feed CP2 content acknowledged .
Feedstock strategy: Flex between low-CP2 feed and affordable base feed with CP2 removal via tolling/off-site; bale prices ~$0.04–$0.06/lb cited .
Liquidity and warrants: Additional bond sales likely after a “couple of months” of reliable Ironton operations; warrants at $11.50 strike expiring Dec 2030 .
Revenue outlook: No mid-quarter guidance; focus on sampling-to-railcar progression and qualifying customers .

Estimates Context

S&P Global consensus estimates for Q1 2024 (EPS and revenue) were unavailable at retrieval due to request limits; therefore, comparisons to consensus could not be performed at this time. Management did not disclose revenue in the Q1 press release; use GAAP net loss and EPS reported by the company .

Key Takeaways for Investors

Near-term inflection hinges on continuous Ironton uptime and CP2 removal capacity executing as designed; each capacity add directly expands feed rates and supports sales ramp .
GAAP loss was driven by discrete items (debt extinguishment, warrants, depreciation) rather than core unit economics; watch subsequent quarters for normalization as operations stabilize .
Liquidity runway improved via bond sale/exchange and warrants; further bond remarketing likely contingent on verified production continuity, a potential catalyst for the stock .
Film and fiber applications are a differentiated advantage versus mechanical recyclate; successful trials/approvals could accelerate offtake and pricing power relative to $0.80–$1.20/lb mechanical benchmarks .
Management targets no further outages in 2024; monitor for operational updates through Q2 and evidence of sustained quality to reduce cross-contamination risk .
Expansion (Augusta, Antwerp, Ulsan) remains strategically aligned but paced to Ironton performance; improved design and reliability learnings should enhance future CapEx efficiency and ramp curves .
Regulatory momentum (recycled content/EPR) and undersupply of PP recyclate support medium-term demand; successful FDA pathway expansions broaden addressable markets .

Citations:

PureCycle Technologies, Inc. (PCT)·Q1 2024 Earnings Summary