PureCycle Technologies provides Q2 commercial update

PureCycle CEO Dustin Olson said, “Our team made foundational progress in the second quarter, in terms of production, improving our reliability, and with higher levels of co-product 2 or CP2. All of this has provided a further understanding of how the plant behaves at higher rates. The many improvements made at the Ironton Facility during the planned outage in April resulted in our highest production month in June. We understand there is more work to be done, but we have taken significant steps forward.” Olson added, “On the commercial front, I’m excited about the work we’ve done with compounding. This approach should allow us to make a one-pellet-solution that customers need for their specific application. We have received the first orders for our compounded PureFive material.” A significant portion of the second quarter was spent making improvements to the Ironton Facility. The upgrades led to greater reliability during the production runs from late-May through June with feedstocks low in CP2. During that time, the Ironton Facility had multiple days with more than 100,000 pounds of pellets produced. When the Company transitioned to a feedstock with higher levels of CP2 in late-June and July, the rates were limited principally by reliability issues and the CP2 recovery and handling system. The upgrades to the front end of the CP2 removal system made in April are working as designed. The material removed from the system is now consistent in form and density. The current primary limiting factor is reducing the size of the end-product, so it can be removed through an automated process. The Company has begun implementing adjustments to the recovery and handling system and believes once this limitation is removed, production rates should improve throughout the rest of the year. In the meantime, the Company is continuing to pursue higher throughput by purchasing feedstock low in CP2 and sorting feedstocks for higher quality material. The Company has already installed one optical flake-sorting line that helps to reduce the CP2 in the feed. PureCycle expects to have an additional, larger flake-sorting line installed by the end of September. The combined output for the two lines is expected to be more than four million pounds per month. The production during the second quarter has provided PureCycle’s commercial team with the opportunity to introduce the Company’s recycled resin to more markets. One avenue that should provide greater flexibility is through compounding. By blending the PureCycle resin with post-industrial recycled material or virgin polypropylene, compounded material provides a more consistent product, should simplify the customer approval process, and is expected to increase the ability to bring higher levels of recycled product to the market. PureCycle is working with several partners that specialize in the development and production of recyclate-based polymers with similar performance properties and consistency to virgin resin. PureCycle will be offering multiple PureFive grades to customers that include a blend of PureCycle resin and varying levels of post-industrial recycled material or virgin polypropylene. PureCycle ended the second quarter of fiscal 2024 with approximately $10.9 million of unrestricted cash. On August 7, PureCycle reached an agreement on the sale of $22.5 million notional amount of its Southern Ohio Port Authority Revenue Bonds that will provide cash proceeds of $18.0 million.