PureCycle Technologies(US:PCT)2024-03-05 16:00Facility Operations and Production Capacity - PCT's Ironton Facility achieved mechanical completion and commenced pellet production in 2023, with an expected capacity of approximately 107 million pounds/year when fully operational[169]. - The Augusta Facility is projected to have a production capacity of approximately 1 billion pounds of UPR resin per year, with 40% of the output allocated to existing customers[172]. - The Ironton Facility has not yet reached significant continuous operational volumes due to mechanical challenges, with expectations for full operational status later in 2024[200]. - PCO is required to produce 8.90 million pounds of pellets for thirty consecutive days by April 30, 2024, and achieve full production capacity of 107 million pounds per year by the same date[228]. Financial Performance and Losses - Net loss for 2023 was $101.7 million, a 20% increase from the net loss of $84.7 million in 2022[189]. - The company reported a net loss of $101.715 million for the year ended December 31, 2023, compared to a net loss of $84.746 million in 2022, indicating a decline of 20% in performance year-over-year[319]. - The company incurred a net loss of $101.7 million for the twelve months ended December 31, 2023, compared to a net loss of $84.7 million in 2022[348]. - The company has sustained recurring losses and negative cash flows from operations since inception, with an accumulated deficit of $344.2 million as of December 31, 2023[348]. Cash Flow and Liquidity - Available unrestricted liquidity decreased to $121.6 million in 2023 from $162.5 million in 2022, while restricted cash increased to $229.1 million[199]. - The company reported a cash outflow of $153.899 million for the purchase of property, plant, and equipment in 2023, down from $287.189 million in 2022[326]. - Total cash, cash equivalents, and restricted cash at the end of 2023 was $302.514 million, an increase from $227.523 million in 2022 and $263.858 million in 2021[327]. - Management believes that current liquidity levels are insufficient to fund operations and commitments, raising substantial doubt about the company's ability to continue as a going concern[355]. Capital Expenditures and Investments - PCT has invested approximately $84.9 million in pre-construction engineering and long-lead equipment for the Augusta Facility as of December 31, 2023[173]. - The company incurred equity-based compensation expenses of $11.829 million in 2023, compared to $10.840 million in 2022 and $22.636 million in 2021[326]. - The company reported a net cash used in investing activities of $102.103 million in 2023, a decrease from $218.387 million in 2022 and $305.575 million in 2021, indicating a reduction in capital expenditures[326]. - Future capital requirements will depend on various factors, including the construction schedule of the Augusta Facility and other anticipated facilities, with the company planning to seek additional debt or equity financing[358]. Debt and Financing Arrangements - The company entered into a $150.0 million revolving credit facility in March 2023, which was increased to $200.0 million in March 2024 to support working capital and capital expenditures[199][206]. - PCT raised $285.1 million in debt financing in 2023, compared to $250.0 million in 2022[214]. - The Company entered into a $40.0 million Term Loan Facility on May 8, 2023, maturing on December 31, 2025[249]. - The interest rate for the outstanding term loan was 12.9% as of December 31, 2023, with an applicable margin of 7.5%[250]. Research and Development - Research and development expenses are expected to increase as PCT invests in feedstock evaluation and new mechanical separators to improve feedstock purity[187]. - Research and development expenses rose by 52% to $6.6 million in 2023, primarily due to increased employee costs and operational site costs[191]. - The profitability of the business is affected by fluctuations in the price and availability of feedstock, which is critical for the purification process[290]. Operational Challenges and Milestones - PCT failed to meet a production milestone of 4.45 million pounds of pellets by September 30, 2023, resulting in an Event of Default[222]. - The company negotiated a Second Limited Waiver with Revenue Bondholders to address a milestone event of default related to the Ironton Facility[350]. - The company is pursuing project financing for the Augusta Facility amid challenging market conditions, which may affect its business and financial condition[176]. Asset Management and Valuation - The Company evaluated long-lived assets for impairment but did not recognize any impairment losses during 2023[272]. - The expected volatility for RTI Warrants was 118.1%, compared to 99.7% in 2022, while the risk-free rate of return increased to 4.7% from 4.4%[278]. - The company’s investments in Debt Securities are classified as Available for Sale, with fair value based on quoted market prices[362].