PureCycle Technologies(PCT) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company ended the second quarter with over $516 million in total cash and investments, a decrease of $68.2 million from March due to significant investments in facilities [11][32] - Payroll and benefit costs were $6.3 million during the second quarter, with an additional $8 million used for normal corporate operations [33] Business Line Data and Key Metrics Changes - The Ironton facility is on track for mechanical completion in Q4 2022, with initial pellet production expected by year-end [14][36] - The Augusta purification facility's first phase is planned to ramp to full capacity in 2024, with construction activities ongoing [16][36] - The company secured additional feedstock LOIs expected to yield approximately 111 million pounds of recovered polypropylene, bringing total commitments for Augusta to 329 million pounds [8][24] Market Data and Key Metrics Changes - The company is diversifying feedstock sources through the PureZero program, which aims to eliminate plastic waste and create a circular environment [9] - The Augusta purification facility's first two lines are 70% allocated, with 205 million pounds of offtake in final contract negotiations [9][25] Company Strategy and Development Direction - The principal strategy remains scaling operations, focusing on the mechanical completion of the Ironton facility and the Augusta facility's phase one [12][36] - The company is deepening relationships with partners in South Korea and Japan for future purification facilities [12][13] - The company plans to develop three regional feedstock PreP facilities along the East Coast to support the Augusta facility [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational momentum and the strategic growth plan, emphasizing the importance of the FDA pre-notification letter for future feedstock approvals [27][36] - The company is adapting to supply chain challenges and inflationary pressures while maintaining project schedules [14][18] Other Important Information - The company is not planning to move into the compounding space but is establishing relationships with compounders to enhance market value [74] - The FDA's approval process is seen as a significant milestone, with expectations for a shorter cycle time in future approvals [49][60] Q&A Session Summary Question: Feedstock pricing and availability - Management indicated that their technology allows for a wider range of feedstock, insulating them from market variability [42] Question: Capital raising in a changing environment - Management acknowledged rising rates but expressed confidence in their strong cash flow models to mitigate impacts [44] Question: FDA approval process importance - Management highlighted the collaborative effort with the FDA and the potential for quicker future approvals [49][60] Question: Operational updates for Ironton - Management confirmed that mechanical completion and pellet production are key milestones, with a focus on a reliable startup [78] Question: Transition to feedstock pricing - Approximately 80% of the Augusta portfolio is expected to be under feedstock plus pricing, with ongoing negotiations for additional contracts [80]