Executive Summary

Q2 marked an operational inflection: Ironton achieved new highs (8,000 lb/hr feed, 11,000 lb/hr pelletization; peak daily output 134k lbs) and demonstrated CP2 removal capacity >20k lbs/day, though July production dipped as the team finished low‑pressure CP2 handling fixes .
Commercial ramp advanced: first purchase orders for compounded PureFive were received; shipments were expected to begin in August; PureCycle added three compounding partners targeting up to 2.8MM lbs/month of compounded output in Q4, broadening routes to market and pricing power .
Liquidity was tight but extended: quarter-end unrestricted cash was ~$10.9M; PureCycle sold $22.5M face value of revenue bonds for $18.0M cash and plans to remarket the remaining ~$117.5M in Q4 to bolster liquidity .
Regulatory/market access improved: the company received an expanded FDA Letter of No Objection covering A–H Conditions of Use for food-grade feedstocks, supporting premium applications and accelerating customer approvals .

What Went Well and What Went Wrong

What Went Well

CP2 bottleneck largely solved on the high-pressure side, enabling >20,000 lbs/day removal; management expects the remaining low-pressure handling improvements to clear rate constraints without further 2024 outages .
Record production momentum: June was the highest monthly output to date (1.1MM lbs), with 13 consecutive days of pelletization and 25 of 30 calendar days running; operational reliability in solvent circulation and utilities reached >98% (ex‑outage) .
Commercialization levers: first compounded-product POs in hand; 47 compounders identified within 400 miles of Ironton; three partners engaged to tailor “one‑pellet” solutions and expand addressable applications and margins .
- “We are proud to have the first POs in hand for the compounded material and expect first deliveries in August.” — CEO Dustin Olson .

What Went Wrong

July production slowed due to downstream bottlenecks in the low‑pressure CP2 system, causing temporary rate reductions while fixes were implemented .
Liquidity strain and elevated cash usage: Q2 cash expenses were $34.7M (vs. normalized ~$26M/quarter), driven by outage timing and higher outside services; unrestricted cash ended at ~$10.9M before the $18M bond proceeds .
Product variability and below‑nameplate output continue to delay ratable revenues; compounding is intended to bridge fit‑for‑use gaps (MFI, color/opacity) and speed customer approvals but adds cost and execution complexity near term .

Financial Results

Note: The company did not disclose Q2 revenue or EPS in the 8‑K/press release; analyst estimates via S&P Global were unavailable at the time of this analysis due to data access limits. Comparisons below focus on liquidity and operating KPIs disclosed by the company.

Liquidity and cash burn

Metric	Q4 2023	Q1 2024	Q2 2024
Unrestricted Cash ($MM)	N/A	$25.0	$10.9
Quarterly Cash Outlays/Expenses ($MM)	$27.5 (operating + corporate)	$27.6 (day‑to‑day cash outlays)	$34.7 (cash expenses)
Revenue Bond Proceeds in Period ($MM)	N/A	Agreement to sell $37.5 notional for $30.0 cash (closing in tranches)	$18.0 cash from sale of $22.5 notional

Operating KPIs

KPI	Q4 2023	Q1 2024	Q2 2024
Pellets Produced (lbs)	0.2MM	1.1MM (quarter‑to‑date clarified)	N/D
Max Feed Rate (lb/hr)	8,000	8,000 (continued)	8,000
Max Pelletization Rate (lb/hr)	9,000–10,000	9,000–10,000	11,000
Peak Daily Production (lbs)	144,000 (pelletization record)	N/D	134,000
CP2 Removal Capacity (lbs/day)	Manual 3,000–7,000; project planned	Post‑outage estimate 10,000–20,000	>20,000 demonstrated (high‑pressure system)

Notes: Q1 2024 production was described as ~1.3MM lbs in the May 7 8‑K highlights, while Q&A later clarified 1.1MM quarter‑to‑date; we use the 1.1MM figure for consistency .

Guidance Changes

Metric	Period	Previous Guidance/Commentary	Current Guidance/Commentary	Change
Plant outages	2024	Q2 outage planned; future outages TBD	No additional outages anticipated in 2024 (post CP2 low‑pressure fix), barring new learnings	Maintained stable operations; removed outage overhang
Near‑term production targets	2H 2024	N/A	Targets: 10,000 lb/hr feed; >200,000 lbs/day; 1MM lbs/week	New operational targets
Compounded output run‑rate	Q4 2024	N/A	Up to 2.8MM lbs/month across three partners	New commercial target
Flake sorting capacity	By end‑Sep 2024	One optical line installed; scaling anticipated	Two lines combined >4MM lbs/month output expected	Capacity increased
Revenue bonds remarketing	2H 2024	“Market remaining bonds later this year”	Expect to market remaining ~$117.5MM in Q4	Timing specified to Q4

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’23, Q1’24)	Current Period (Q2’24)	Trend
CP2 bottleneck/removal	Manual 3–7k lbs/day; longer‑term fix planned; outage tie‑ins in Q2	>20k lbs/day demonstrated on high‑pressure side; low‑pressure handling being finalized; no further 2024 outages anticipated	Improving; near‑term constraint easing
Compounding strategy	Early exploration to accelerate approvals and value; target compounding channels	Three partners engaged; POs in hand; Q4 target up to 2.8MM lbs/month; “one‑pellet” solutions to widen adoption and unit economics	Expanding
Feedstock quality/sortation	Plan to reduce CP2 via feedstock selection/tolling	One flake‑sorting line installed; second (larger) line by end‑Sep; combined >4MM lbs/month output; in‑house + partner sortation mix	Building internal capability
FDA LNO / regulatory	Working with FDA to expand conditions of use	Expanded FDA LNO covering A–H Conditions of Use for food‑grade feedstocks	Regulatory scope widened
Liquidity & bonds	Repurchased ~99% SOPA bonds; plan to remarket; raised $30M via Series A at $800 per $1,000 face value (agreement)	$18M cash from $22.5M face sold; plan to market ~$117.5M in Q4; improving bond pricing if Ironton derisks	Liquidity extended; pricing tied to execution
Augusta project	Integrating Ironton learnings; partnering with KBR; progress but timing undisclosed	Continued integration; no new timing; focus remains on Ironton proof	Steady; contingent on Ironton

Management Commentary

“We achieved new high bars for feed at 8,000 pounds per hour and pelletization at 11,000 pounds per hour… We now see indications of removing greater than 20,000 pounds per day of CP2.” — CEO Dustin Olson .
“We ended June with just under $11 million of unrestricted cash… cash expenses were $34.7 million for the second quarter… [and] sold $22.5 million of revenue bonds for total cash proceeds of $18 million.” — CFO Jaime Vasquez .
“First orders secured for compounded PureFive material… Expanded commercial operations to include compounding… plan to produce up to 2.8MM lbs./month of compounded material in Q4.” — Company presentation .
“We received the first POs in hand for the compounded material and expect first deliveries in August.” — CEO .
“At this time, we do not see any need for incremental outages in Ironton this year.” — Company presentation .

Q&A Highlights

Path to nameplate: Management framed 10k lb/hr feed, 200k lbs/day, 1MM lbs/week as near‑term waypoints toward nameplate; with CP2 removal largely solved on the high‑pressure side, the team expects a production inflection post low‑pressure automation .
Compounding economics: Added conversion cost but widens mix, accelerates approvals, and supports premium pricing via application‑specific recipes; proximity to long compounding capacity should keep toll costs competitive .
Offtake/customer adoption: Compounding viewed positively by large-brand customers (e.g., P&G/L’Oréal) and should enable broader internal application use without renegotiating core offtake structures .
Logistics: Ironton railcars will route to compounders for box‑out; PureCycle pays a fee; then sells directly to end customers (primary model) .
Bonds/liquidity: Recent sales priced around “80 points”; management expects improved pricing as Ironton derisks .

Estimates Context

Revenue/EPS: The Q2 2024 8‑K/press release did not disclose revenue or EPS figures, and S&P Global consensus estimates were unavailable at the time of this analysis due to data access limits. As such, we cannot present a vs‑consensus revenue/EPS comparison for Q2 2024. Management indicated they expect revenue to follow as compounded product accelerates adoption, but did not provide numeric guidance .
Prior quarter context: Q1 2024 included large non‑cash items related to bond transactions and warrants (e.g., $21.2M loss on debt extinguishment; $13.9M warrant fair value change), which shaped reported net loss; these are notable when modeling forward earnings power .

Key Takeaways for Investors

Ironton’s CP2 constraint is materially alleviated (high‑pressure), and the final low‑pressure handling step is being automated; with reliability improvements, Q3/Q4 production should rise absent new outages — watch for sustained 200k lbs/day and 1MM lbs/week prints as confirmation .
Compounding POs and an August shipment start create a bridge to ratable revenues, expand the MFI range, and support premium positioning; Q4 compounded run‑rate up to 2.8MM lbs/month is a tangible commercialization KPI .
Liquidity remains the swing factor: Q2 cash expenses were $34.7M vs ~$10.9M unrestricted cash at quarter end, partially offset by $18M bond proceeds; successful Q4 remarketing of ~$117.5M bonds is a key de‑risking catalyst .
FDA LNO expansion (A–H Conditions of Use) opens higher‑value food‑grade end markets and should compress customer qualification timelines, a positive for ASPs and mix .
Expectation reset: Management refrained from revenue/EPS guidance and emphasized operational KPIs; traders should anchor on production cadence (continuous runs, weekly tonnage), compounded volume ramps, and additional CP2 system validation as near‑term stock drivers .
Legal overhang: A proposed $12M securities class action settlement is pending court approval in October; while unrelated to operations, resolution cleans up legacy litigation risk .

Appendix: Additional Press Release (Legal)

Proposed settlement of securities class action for $12.0M; final approval hearing scheduled October 8, 2024 (U.S. District Court, M.D. Florida) .

PureCycle Technologies, Inc. (PCT)·Q2 2024 Earnings Summary