PureCycle Technologies(PCT) - 2024 Q3 - Quarterly Report

Production Capacity and Facilities - PCT's Ironton Facility is expected to have a UPR resin capacity of approximately 107 million pounds per year when fully operational, with pellet production commencing later in 2023 [202]. - The Augusta Facility is projected to have a total UPR resin production capacity of approximately 1 billion pounds per year, with each purification line expected to produce about 130 million pounds annually [205]. - PCT has invested approximately $95.9 million for pre-construction engineering and long-lead equipment for the Augusta Facility, with a commitment to create 82 full-time jobs and invest at least$440 million by December 31, 2026 [206]. - The company plans to build Feed PreP facilities near feed sources to optimize supply chain economics, with operations commencing in Denver, Pennsylvania in October 2024 [213]. - Future expansion plans include a joint venture with Mitsui & Co. Ltd. in Japan and a potential new location in South Korea for production capabilities [220]. Financial Performance - PCT's revenue through the first nine months of 2024 has been immaterial, with no significant operational volumes or revenue generation yet achieved [221]. - Total operating costs for the three months ended September 30, 2024, were $31.298 million, a decrease of 1$31.603 million in the same period of 2023 [226]. - Research and development expenses for the nine months ended September 30, 2024, were $4.940 million, showing no significant change from$4.917 million in 2023 [226]. - Selling, general, and administrative expenses increased by 15% for the nine months ended September 30, 2024, totaling $44.883 million compared to$39.063 million in 2023 [226]. - Interest expense rose by 158% for the nine months ended September 30, 2024, amounting to $41.676 million, up from$16.183 million in 2023 [226]. - The net loss for the three months ended September 30, 2024, was $90.639 million, a significant increase from a net income of$8.530 million in the same period of 2023 [226]. Cash Flow and Financing - As of September 30, 2024, the company had $83.7 million in cash and cash equivalents, an increase from$73.4 million as of December 31, 2023 [238]. - The company entered into subscription agreements on September 11, 2024, raising approximately $90 million through a private placement of Series A Preferred Stock, Common Stock, and Series C Warrants [235]. - Net cash used in operating activities increased by$51.7 million to $112.985 million for the nine months ending September 30, 2024, compared to$61.330 million in the same period of 2023, representing an 84% increase [248]. - Cash provided by investing activities increased by $69.9 million, with capital expenditure payments decreasing by$108.7 million for the nine months ending September 30, 2024 [250]. - Net cash used in financing activities increased by $383.7 million, primarily due to$253.2 million paid to purchase outstanding Revenue Bonds and a decrease of $225.2 million in proceeds from debt [251]. - Cash and cash equivalents at the end of the period decreased to$93.653 million from $384.139 million, a decline of 76$31.1 million, including $17.7 million for green convertible notes and$5.9 million for Revenue Bonds [249]. - Cash payments related to operating expenses increased by $22.1 million, driven by higher operational site costs and legal fees [249]. - As of September 30, 2024, there were$117.6 million of outstanding Revenue Bonds that the company intends to re-market [257]. - The company renewed a surety bond increasing the amount from $25.0 million to$45.9 million, later decreased to $8.1 million [273]. - The Revolving Credit Facility was increased from$150.0 million to $200.0 million on March 1, 2024 [266]. - The company entered into a$40.0 million term loan facility on May 8, 2023, maturing on December 31, 2025 [269]. Operational Challenges - The company has experienced intermittent mechanical challenges during the commissioning process, impacting the ability to produce consistent, high-quality UPR resin [204]. - The company is currently addressing mechanical challenges at the Ironton Facility to improve production consistency and volume [240]. - The company has not yet reached significant continuous operational volumes, focusing on customer sampling and qualifications to drive future sales [239]. Market and Regulatory Developments - PCT's "Feedstock+" pricing model effectively passes on the cost of feedstock and reduces operating margin volatility, linking feedstock prices to market indices [211]. - The FDA has granted PCT a Letter of No Objection for its UPR resin, allowing it to be used in contact with all food types under specified conditions, expanding its market potential [217]. - PCT is pursuing various structures for project financing for the Augusta Facility due to challenging market conditions, which may affect its business and financial condition [210]. Future Capital Requirements - Future capital requirements will depend on various factors, including the construction schedule of the Augusta Facility and the need for additional financing [245].