Dive Brief:
- PureCycle executives say Q4 was a time of “significant progress” along the company’s journey to become profitable, highlighting efforts to get back on track after a series of operational and budget challenges in 2024.
- During an earnings call on Thursday, CEO Dustin Olson noted recent improvements to PureCycle’s facility in Ironton, Ohio, as well as the recent opening of its new sorting facility in Denver, Pennsylvania. Those developments, combined with efforts to ramp up resin production, have helped establish “a path to commercialization,” he said.
- PureCycle reported a $289.14 million loss in 2024, compared with a loss of $101.72 million a year ago. It also recently announced the sale of about 4.1 million shares of common stock to a group of investors including Pleiad Investment Advisors, Sylebra Capital Management and Samlyn Capital. Proceeds from the sale were about $33 million.
Dive Insight:
It’s been a rocky year for PureCycle, which has experienced setbacks from mechanical problems at its Ironton facility. It announced an “operational pause” in April to make facility improvements before resuming operations in May. It also settled a lawsuit in May related to a significant power outage at the facility in 2023, which investors said was kept quiet to misrepresent productivity at the plant.
The company has also pursued several strategies to raise capital, including selling about $22.5 million in bonds in August, earning $18 million in gross proceeds. In September, it raised about $90 million through transactions with Sylebra Capital Management and Samlyn Capital. As of Dec. 31, PureCycle noted it did not have “any sources of material revenue” and had total consolidated debt of $346.6 million, according to filings.
Olson noted that Q4 improvements at Ironton have helped spur “quarter-over-quarter improvements in production volume, reliability, and product quality.” In an earnings release, the company noted it had hit a “new high” on feed rates of over 12,500 pounds per hour, and that it achieved a record for staying onstream for 67% of December.
PureCycle also focused in 2024 on ramping up production and sales of its PureFive polypropylene resin. PureCycle uses a solvent process to break down plastic waste, ultimately converting it into the resin. The products “have delivered minimal revenue” so far, in part because both the resins and the offtake agreements for such resin are both in “early stages,” according to a recent securities filing. Ironton produced 3.6 million pounds of resin in Q4.
Yet Olson said during the earnings call that PureCycle is working on about 20 trials, including with major packaged goods companies, and that the work “will lead to meaningful sales volume in 2025.”
At the same time, Olson said the company was making a “strategic decision to hold back some of the sales” of its resin while it waits for a third-party PCR certification required by some of its customers. The certification, expected sometime in Q1, would apply to about 7.2 million pounds of finished product and inventory, he said.
Olson also noted a recent deal with Drake Extrusion to develop a compound that performs similarly to the company’s virgin polypropylene used for apparel and upholstery yarn. The deal marks a “substantial growth opportunity,” according to the earnings release.
The company is working with Procter & Gamble to develop compounds so the resin can be used in several of the company’s products, and Olson expects trials to start in “coming months.” PureCycle is also working on a product line of cups and popcorn buckets meant to be used for sports stadiums and other venues.
While PureCycle works on its product line, it is also ramping up operations at its new $52.3 million sorting facility in Denver, Pennsylvania, which executives see as an important tool for streaming operations. PureCycle expects to recover some of the sorting facility’s costs by “finding outlets for the waste stream produced at Denver,” including aluminum and PE containers that come in the plastic bales the facility sorts. That material is already being “separated, re-baled and sold to other recyclers.”
