PureCycle Technologies, Inc. (PCT)·Q3 2024 Earnings Summary

Executive Summary

• PureCycle delivered a milestone-heavy Q3: Ironton hit 1MM lbs/week processed, 200K lbs/day, and >10K lbs/hour feed rates; product quality improved as CP2 removal reached up to 15K lbs/day and feed PP concentration rose to 92–95% with an expectation of ~97% in Q4 .
• Commercialization advanced: management expects revenue to “begin to show up materially in Q4 and ramp into 2025,” with automotive approval targeted for Q4 (orders in Q1’25) and material to P&G for production in Q2/Q3’25 .
• Liquidity strengthened: Q3-end cash (unrestricted + restricted) rose to $93.7MM, aided by $90MM equity/preferred/warrant financing and $18MM bond sale proceeds; unrestricted cash rose from $10.9MM (Q2) to $83.7MM (Q3) .
• Operating discipline improved: Q3 operating cash expenses totaled $23.5MM (down from “nearly $35MM” in Q2 and ~$4MM lower vs Q1); CFO indicated Q4 should be “in that $8MM range” with non-recurring maintenance behind them .
• Key catalysts into 2025: first commercial sales, automotive program approvals, P&G compounding programs, and continued throughput/quality gains at Ironton; legal overhang easing via a proposed $12MM class action settlement announced in July (hearing Oct. 8, 2024) .

What Went Well and What Went Wrong

What Went Well

• Achieved Ironton production milestones and improved reliability/quality; CEO: “Q3 was a pivotal time…we are confident in continuing to move the Ironton Facility forward…These achievements are allowing the Company to turn its focus toward…commercialization” .
• Commercial momentum building across fiber, film, injection molding, and automotive; “revenue to begin to show up materially in Q4 and ramp into 2025,” with inventory of 2.5MM lbs of compounded product to support ramp .
• Liquidity markedly improved with $90MM capital raise and $18MM additional bond proceeds; Q3-end total cash (unrestricted + restricted) reached $93.7MM .

What Went Wrong

• Financial disclosure remained limited; company did not provide Q3 revenue/EPS/margins and is still pre-material revenue pending customer approvals and ramp .
• CP2 removal operating rates at Ironton were up to 15K lbs/day (good progress), but below >20K/day “indications” cited in Q2 materials; team still optimizing to push rates and reliability higher .
• Commercial timing remains inherently uncertain; management declined providing 2025 revenue guidance and is pacing production to demand during Q4-Q1 ramp .

Financial Results

Note: The company’s Q3 corporate update did not include revenue/EPS/margin figures; management focused on operational progress, commercialization timing, and liquidity .

Liquidity snapshot (chronological: Q1 → Q2 → Q3):

Operational KPIs (chronological: Q1 → Q2 → Q3):

P&L snapshot and estimates (company disclosure):

Footnote: SPGI estimate retrieval failed due to daily limit; consensus comparisons unavailable at this time.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Q3 was a pivotal time for the team. We are seeing strong interest in our product…plan to increase production…believes this should lead to meaningful sales going into 2025.” – CEO Dustin Olson .
• “We expect revenue to begin to show up materially in Q4 and ramp into 2025.” – CEO Dustin Olson .
• “Ironton is under control. CP2 is under control…Compounding is operational…inventory is building…laying the groundwork for commercialization in Q4 and going into 2025.” – CEO Dustin Olson .
• “Operating cash expenses totaled $23.5MM for the third quarter…a decline from nearly $35MM in the previous quarter and down about $4MM from the first quarter.” – CFO Jaime Vasquez .
• “We should no longer be limited by a CP2 removal constraint…removing this material at rates of up to 15,000 pounds per day.” – CEO Dustin Olson .

Q&A Highlights

• Production reproducibility and pacing: Management confident milestones can be reproduced on demand; Q4 production will be paced to commercial demand as orders ramp .
• Commercialization timeline: Revenue expected to start in Q4 and ramp into 2025; management declined specific 2025 revenue guidance .
• Partnerships/JV pipeline: Interest rising post-Ironton progress; SK JV termination viewed as timing/coordination issue; exploring opportunities outside South Korea with SK as a continuing partner .
• Economics and breakeven: Facility breakeven at 40–50% utilization; company-level breakeven requires 80–90% Ironton rate (ex-CapEx); compounding should enhance overall profitability .
• Augusta build: With long-lead equipment in hand, 6–10 quarters to stand up initial two lines; additional lines would be faster once core infrastructure in place .

Estimates Context

• Wall Street consensus (S&P Global) for Q3 revenue/EPS/EBITDA was unavailable due to data access limits at time of analysis; management did not provide numeric guidance and emphasized commercialization timing (Q4 start, 2025 ramp) .
• Implication: Models likely need to shift revenue recognition from Q3 to Q4’24, with steeper 2025 ramps in fiber, injection molding, automotive, and eventual film as approvals progress .

Key Takeaways for Investors

• Execution turning the corner: Ironton’s throughput, reliability, and product quality improved, with CP2 no longer expected to constrain rates; feedstock quality gains (92–95% PP, aiming ~97% in Q4) should lift yields and efficiency .
• Commercial catalysts near term: Expect first revenue in Q4; targeted auto approval in Q4 with orders in Q1’25; P&G production in Q2/Q3’25 supports medium-term volume visibility .
• Liquidity runway extended: $93.7MM total cash at Q3-end plus plans to sell ~$118MM of bonds to support 2025; reduced operating cash expense trajectory improves resilience .
• Profit path: Compounding broadens addressable market and enhances dollar profit via higher volumes/fixed-cost leverage; breakeven utilization thresholds (40–50% facility; 80–90% company) anchor ramp goals .
• Monitoring items: Conversion of trials to POs, timing and scale of initial shipments in Q4–Q1, sustained reproducibility of milestone rates, CP2 removal running closer to >20K/day indicated capacity, and financing milestones for Augusta/Antwerp .
• Legal overhang easing: Proposed $12MM settlement of legacy class action, with October hearing, reduces headline risk .
• Trading setup: Stock likely sensitive to first commercial order announcements, customer approvals (auto/P&G), and evidence of sequential revenue scaling in Q4/Q1; operational updates on feed rates/uptime and cash burn can be incremental catalysts .

Note on financial disclosures and estimates:
- The Q3 corporate update and call did not include revenue/EPS/margin figures; management focused on operations, commercialization, and liquidity **[1830033_0000950170-24-122838_pct-ex99_1.htm:0]** **[1830033_PCT_3406596_5]**.
- S&P Global consensus estimates for Q3 were unavailable at query time due to data access limits. We will update comparisons when accessible.

Citations:

• Q3 8-K press release and slide content
• Q3 earnings call transcript
• Q2 8-K update (for trend)
• Q1 8-K update (for baseline)
• July 1 press release (legal)