PureCycle Technologies Inc Stock

Good day, and thank you for standing by. Welcome to the PureCycle Technologies Second Quarter 2026 Corporate Update Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Eric DeNatale, Director of Investor Relations. Please go ahead.

Thank you, Kelly. I'm Eric DeNatale, Director of Investor Relations for PureCycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer; and Donald Carpenter, our Chief Financial Officer. This evening, we will be highlighting our corporate developments for the second quarter of 2026. The presentation we'll be going through on this call can also be found at the Investor tab on our website at purecycle.com.

Many of the statements made today will be forward-looking and are based on management's beliefs and assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions and forward-looking statements that can be found at the end of our second quarter 2026 corporate update press release filed this evening, as well as in other reports on file with the SEC that provides further detail about the risks related to our business. Additionally, please note that the company's actual results may differ materially from those anticipated, and except as required by law, we undertake no obligation to update any forward-looking statement.

Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including, among other things, changes in connection with quarter-end and year-end adjustments. Any variation between PureCycle's actual results and the preliminary financial data set forth herein may be material. You're welcome to follow along with our slide deck, or if joining us by phone, you can access it at any time at purecycle.com.

With that, I will now turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Thank you, Eric, and good evening, everyone. This is a quarter of real progress on all fronts and sets up the second half for further progress. Operationally, we completed the turnaround ahead of schedule and below budget, executed more than 170 site projects and came out of it with a plant that set a new daily throughput record in June. We brought compounding in-house and it is running today, producing what customers specify.

Commercially, revenue grew for the sixth consecutive quarter, and our first Procter & Gamble application entered commercial production. On the regulatory front, New Jersey approved PureFive as recycled content, the last approval our customers are waiting on, and it's already accelerating qualification at some of the largest foodservice companies in the country.

We also spent the quarter preparing for future developments. In May, we ran Ironton under process conditions that closely match the plant designs we will build in Thailand and Antwerp, and those tests were successful. Thailand received Board of Investment approval in the quarter, and we expect to break ground in the second half of this year.

Every one of those threads points in the same direction: a second half ramp and Ironton breakeven, which remains our second half target. We are further along the path than we were 90 days ago. Let me walk you through the details.

Here is the frame that we are using internally. All year, we have said that commercial ramp will be second half-weighted, and it was for two specific reasons. The first was regulatory clock. Requirements that begin in January '27 set the pace for when brands must move.

The second was supply chain readiness. It is one thing to technically qualify the product. It is another thing to make it consistently and reliably at specification every time. Brands buy at the SKU level one application at a time, and they do not start until they're confident the material in the tenth truck will be identical to the material of the first.

Both factors are now proving out. Since the New Jersey approval, brands are accelerating their qualification process for the first time. You see it in QSR cold cups and in large snack and confectionery programs that tells you that the regulations really matter for driving demand and that the demand is coming. And with our compounding assets integrated and running, we now have the reliable supply chain that those brands require. You can see it working. A customer with standards as exacting as Procter & Gamble is accelerating their own commercial ramp with us.

The other thing to understand is fragmentation. Outside of a handful of categories, this market converts SKU by SKU, thousands of separate qualifications rather than a few large contracts. That is not an issue unique to PureCycle. It is the structure of the market and is the same for everyone in it. Quick service restaurants follow the same pattern, but with higher volume SKUs. A large chain carries fewer packaging SKUs, and each one is enormous. A single qualification there can be worth what dozens are worth elsewhere, and they are working against a deadline that's not set by us. New Jersey's food contact exemption expires in January of '27.

So the expected future pace from here is largely set by a date in statute. Customers are driving to have product on the shelves to meet requirements that start in January of '27. This all drives toward an Ironton breakeven, which remains our second half target. We have referred to breakeven as roughly 40% to 50% utilization, and that number has not changed. It is built on branded sales at those utilization rates, and branded sales are ramping. Branded pricing remains robust, and applications carrying the highest confidence for the second half maintain strong pricing.

The net of this is our confidence in the second half ramp and the path through Ironton breakeven has increased because the things that made the second half weighted are being proved out. Ironton produced approximately 4.5 million pounds of PureFive in the second quarter, down from the prior quarter and consistent with the message we communicated in advance of the planned turnaround. We processed approximately 5 million pounds of feedstock. This was not a quarter for rate. It was a quarter for making improvements to the plant, testing equipment, and the test worked. The turnaround was completed ahead of schedule and below budget, and we executed more than 170 projects during the outage, targeting reliability rate and quality.

Two reliability items are worth naming because together, they were our two largest sources of unplanned downtime last year. The first was the CP2 system, which has been a persistent problem and is now substantially improved. The second was improving the reliability of numerous mechanical systems, and this outage substantially expanded the capacity of the plant bottleneck and improved the worst performing seal in the plant. Both are structural fixes. When we opened the equipment during the outage, the large equipment where we had prior problems was very clean, including the settler, where co-product separates from the product stream. That bodes well for future reliability, so waste plastic is not [ fouling ] the system, and is a good long-term indicator for the technology, not just for this facility.

May was, by design, a low-volume month. We commissioned the newly installed equipment, and we changed process conditions at Ironton to mimic the designs we intend to build in Antwerp and Thailand. Those tests were successful. Being able to run those conditions on an operating commercial asset before we build is an advantage most companies in our position do not have. In June, we set a new daily throughput record, and we demonstrated production at 12,000 pounds per hour.

On feedstock supply, our feedstock supply is very steady. Purchases are routine, Denver is running well and inventory is balanced. Delivered costs are declining, and we now source from over 15 different domestic suppliers. On-site compounding is running.

We announced mechanical completion on our May call. The asset today is running 24 hours a day for 5 days a week, and we intend to move to 24/7 in the fourth quarter. That is consistent with the cadence we described in February and again in May and is a large part of why our ramp has been second half-weighted all year.

We previously relied on third-party compounders, and third-party operations carry their own reliability risks. Bringing it in-house saves us money and lets us ship by railcar. Most importantly, it derisks our supply chain, strengthens our quality control and gives us the flexibility to deliver on what each customer specifies.

Now that it's running, here is what it changes. We control the formulation. We can hit a customer specification with precise recycled content percentage with precise properties and hold it consistently. And the mandates do not currently require 100% recycled material, they require a percentage. Compounding is how we deliver that percentage in a form that the application needs.

It also opens thermoformed cups at scale, in clear and in white. Both sit directly in the scope of regulations, and with compounding, we can make both. Also importantly, we can now deliver compounded product in railcars directly from Ironton. This was a capability that we don't have with a third-party compound part.

We have generated and shipped numerous samples since startup. The product looks excellent, and you see the examples of it in the deck. And because compounding is running in Ironton, we can now control the product samples going into the hands of prospective customers in Thailand and Europe, and we are doing exactly that.

One comment on how to read the numbers. Compounded volumes includes additives and virgin polypropylene alongside our PureFive content, so compounded products will run ahead of the PureFive resin pounds. This is the product that the market is asking for.

Finally, in May, we achieved ISO 9001 certification, independent validation of the quality systems that sit behind all of this. It's one of those quiet milestones, but it's kind of the thing that branded customers ask about before they commit.

Revenue was approximately $4.5 million, up substantially from a year ago, with 7 new customer conversions, including our first building and construction application. On top of the $40 million to $50 million of non-New Jersey and $25 million to $50 million of New Jersey ramp, the most significant new commercial development is in quick-serve restaurants, and it happened after quarter close. In the third quarter to date, we shipped to all 3 major converters that served the QSR cold cup market for clear cups. That is the channel, not the single customer. Cold cup programs are underway at 2 major QSRs through those converters.

New Jersey is what accelerated this. Following the approval, we were fast tracked into two very large qualification programs for cold cup lids. For QSR applications in New Jersey alone, we estimate the annual demand to meet the recycled content requirement to be roughly 20 million pounds.

One piece of context on timing. The approval landed in mid-May, which means the entire market is qualifying on a compressed calendar ahead of January 2027. Compression creates urgency, and urgency favors a supplier that is ready. The brands are moving as fast as we are. This is the acceleration. This is what the acceleration actually looks like.

In February, we laid out 5 application categories that we chose to concentrate on. Let me come back to that list because I think it provides the clearest way to show you what our progress really looks like. The largest of the five was QSR cold beverages, which we size at roughly 330 million pounds in North America, growing at 7% to 10% per year. This is where we have moved furthest, as I just described it.

Value household goods at roughly 150 million pounds across multiple brand owners. This is where P&G sits, and I'll come back to them in a moment. We also added two closure partnerships during the quarter with Reliable Caps and StackTeck.

Premium pet food and jerky and meat sticks are both BOPP film categories. In June, working with Innovia Films, we successfully produced white cavitated BOPP film using PureFive Choice. So the capability is now demonstrated with the named converter.

We also continue to progress with two of the top five global food manufacturers on snack and confectionery packaging. One of those food manufacturers has accelerated its work with us and is pushing to move as quickly as it can, one of the first instances we've seen of a large company pulling a time line forward rather than pushing one out. It is a 2027 program, and the direction of travel is the point. The current regulatory deadline is a hard catalyst, and our supply chain and commercial infrastructure are materially better than they were a year ago.

[ Dermacosmetics ] is the earliest of the 5, but it moved to this quarter, achieving the highest CosPaTox purity grade, the first recycler to do so and is what made the category accessible to us. And we are nearing commercial shipments to a large global cosmetics and personal care company. They are all in different stages. 4 of the 5 moved this quarter, and the largest QSR is moving the fastest.

One thing about this business builds, accounts are sticky. Once you are qualified into an application, you tend to stay there for a long time. For calibration, a partnership we announced in July with Mitsui and RM TOHCELLO in Japan took roughly 3 years from first engagement to announcement. This is a measure of the business we are in, and it is the same reason these relationships are durable once they are established.

Following the New Jersey approval and the Cleveland Kitchen launch, inbound interest increased meaningfully. Today, the pipeline spans at 42 brands, 15 converters, 28 applications and 37 programs, advanced at least 1 stage during the second quarter to the third quarter to date.

Our relationship with Procter & Gamble continues to broaden. Downy detergent caps are now in commercial production, Tide caps are scheduled for retail production in the third quarter and the Vicks ZzzQuil PURE Zzzs child-resistant lids are targeted for the fourth quarter. Procter & Gamble continues to execute the pipeline by adding brands. This is important because Procter & Gamble has among the most demanding qualification standards in consumer products. Having cleared them once, additional applications move faster, and other brands notice. When one of the toughest qualifiers in the industry buys again, that is a third-party verdict on quality that we could not deliver ourselves.

A few things worth remembering about Procter & Gamble. They hold an offtake arrangement for up to 15% of Ironton's capacity. Their portfolio is highly fragmented across SKUs and applications, which means each approval opens the door to the next rather than closing the opportunity. They have also been clear in their support of our growth plan, and they remain committed to increasing recycled content across their portfolio.

One more point on Procter & Gamble because it applies to every large brand we serve. You start small, you prove it, and then you expand. You walk before you run. The applications we have commercialized so far are walking, and we believe the larger volume opportunities are starting to filter into the pipeline behind them. This is a natural progression of a relationship like this one, and it is what we expected to see.

In June, Cleveland Kitchen deli containers were made with 25% PureFive recycled polypropylene produced by our converter partner, IPL Schoeller. Reached store shelves at a major big box retailer. I want to be very precise about what this is. It is a commercial retail conversion, not a trial. It is on shelves. Consumers are buying it, and additional brands have since approached IPL Schoeller about using our resin.

Connect that to what other converter announcements we made during the quarter: Reliable Caps, StackTeck, Innovia, Amcor, alongside our continuing work with Plastic Ingenuity. Converter relationships and our marketing effort opened the long tail of demand, smaller brands and private label, which, in aggregate, is very real, just as affected by regulation, and they may be far less aware that a solution actually exists. That is how demand broadens beyond the largest CPGs.

The Cleveland Kitchen B2B marketing campaign was our first fully integrated marketing campaign, and it worked. 8 industry outlets picked up the story, and it generated 7 new account engagements with large retailers, food CPG companies and converters. That is pipeline, not impressions, and it came from a deliberately small test budget. We will run this playbook behind more brand launches and incremental spend is modest against the pipeline that opens.

The regulatory picture is one of the most reliable part of our demand outlook because it sets the date in which regulations will come if set by them and not set by us. ESG has been a headwind for several years globally and in the United States. The regulations matter. However, the regulations that matter kept advancing anyway. New Jersey approved, California is in effect. Japan opened food contact, and Europe keeps moving forward.

Rules that advance to the toughest part of the cycle are durable, and our demand is built on those rules. Our posture toward regulation has changed as well. We used to react to legislative developments. Today, we are proactive. We have stepped up our lobbying and government relations work, we are in regular dialogue with policymakers, and we are increasingly the thought leader in the room when recycled content rules are written. We are well ahead of those same efforts in Europe and Asia.

Two key points. First, our largest customers are accelerating in circular solutions because of regulations. The QSR programs and the food manufacturer I mentioned earlier both moved faster after the New Jersey approval. This is the clearest evidence that we have brands are treating these deadlines as real rather than aspirational. Second, we believe New Jersey and California are the tip of the iceberg. This is going global, and the regulations are set to affect the entire foundation we continue to build.

One element of the global regulatory process may be underappreciated. While Ironton is the focus on domestic demand, our REACH certification allows us to serve Europe and other geographies from it. And we're seeing increased interest in doing so. That has also helped us convert letters of intent in Thailand, which brings me to growth.

In New Jersey, the recycled content requirements rise to 20% in 2027. The food contact exemption expires in January of '27. In California, SB 54 effect is in effect, with 10% source reduction by '27, 20% by 2030 and 25% by 2032. PureFive qualifies as recycled content through our APR certification.

One point on New Jersey I want to highlight because I believe it matters how you understand the demand. The approval we received in May is a 1-year conditional approval with a defined path to permanent status. We do not regard this as a meaningful hurdle. The conditions are largely documentation, feedstock sources, the types of feedstock process, PureFive end-use application and compliance information as the New Jersey Department -- the New Jersey DEP requested. We are already providing a number of these items.

One related point, most recycled content claims in our industry rely on mass balance, an accounting approach where a producer buys credits and allocates recycled content to output that may not physically contain any. New Jersey and California both exclude it. Our product physically contains the recycled material, so it qualifies where credit-based claims do not. That makes PureCycle one of the very few compliant suppliers at scale for food-grade recycled polypropylene.

Outside the United States, the same shift is underway. In July, together with Mitsui, we announced a strategic partnership with RM TOHCELLO to bring recycled polypropylene into flexible packaging in Japan, following Japan's approval of physically recycled polypropylene for food contact. Europe continues to advance to the Packaging and Packaging Waste Regulation.

On Thailand, the detailed design is confirmed. We have ordered key long lead equipment, and we have a team on the ground progressing the project. We received the Board of Investment approval in the quarter, including admission to Thailand's FastPass investment acceleration program. The facility is expected to be operational in 2028, and we expect to break ground in the second half of this year. Total investment remains approximately $250 million.

On the commercial side of Thailand, we have signed 7 letters of intent with Thai feedstock suppliers and 14 letters of intent on feedstock. Those letters more than cover the plant requires. On the sales side, they span similar categories and are targeting the U.S. customers with heavy export business into the U.S., Europe and Japan. In Belgium, permitting continues on schedule. We signed a EUR 40 million European innovation grant fund earlier this year.

I'll now turn it over to Donald for the financial update and some commentary on our capital position.

Thank you, Dustin. Operating loss improved by $4.3 million year-over-year to $41.3 million from $45.6 million. Net loss for the second quarter was $142.2 million compared to $144.2 million a year ago. Adjusted EBITDA was negative $31.7 million compared to negative $27.8 million. That comparison reflects $7.8 million of lower noncash add-backs, which primarily consists of equity-based compensation and prior year equipment write-downs rather than a deterioration in operating performance.

Both quarters included a planned outage, and this year's was substantially longer. Production still grew approximately 32% year-over-year, while core monthly operations spending declined approximately 8%.

Operation spending was $8.3 million per month in the quarter, within the $8 million to $9 million per month range we have described previously. That figure reflects core operations and corporate cash spend presented on a consistent basis for all periods. It excludes materials purchases, meaning feedstock, virgin polypropylene and additives, which averaged approximately $2.1 million per month, up from approximately $0.7 million per month in the first quarter. This was aligned with the restart of production and the new compounding operation.

On the same basis, spending was $8.5 million per month in the first quarter and $9 million per month in the second quarter of last year. Core spending is trending down year-over-year. The Ironton turnaround, which came in below budget, was tracked separately from the ongoing operations spending rate.

We ended the quarter with total liquidity of $236.9 million, which includes $165.2 million in cash and cash equivalents, $59.6 million invested in marketable securities and $12.1 million in restricted cash. That compares to $131 million of total liquidity at the end of the first quarter. Second quarter project spend was $20.9 million. For the full year, we now expect project spend of $45 million to $50 million, up from our prior range of $39 million to $45 million, driven primarily by incremental engineering, permitting and long lead equipment spending for the Antwerp and Thailand projects. Second half project spend of $10 million to $12 million remains contingent on project gating decisions and the timing of the Thailand project financing.

In June, we closed concurrent public offerings of our 4.75% convertible senior notes due 2032 and common stock. The offerings priced at aggregate gross proceeds of $395 million. With the over-allotment options exercised, gross proceeds were $450.5 million. Net proceeds were $432 million after $18.5 million of underwriting and offering costs.

We used a portion of the proceeds to repurchase $216 million aggregate principal amount of our 7.25% convertible notes for $241.1 million plus $5.2 million of accrued interest, leaving approximately $186 million of net cash on the balance sheet. The transaction moved the put date on the substantial majority of our convertible debt from 2027 to 2030, reduced our ongoing interest costs and funds our commercial ramp and near-term growth plans.

Beyond that, our $200 million revolving credit facility remains undrawn and available. We have approximately $76 million in revenue bonds available to monetize and approximately $273 million of potential warrant proceeds. Equipment financing payments step down in the second half of the year as existing leases mature. Debt service in the third quarter is expected to be approximately $2.4 million, primarily the August coupon on the $34 million of remaining 7.25% notes, plus the final equipment lease payments. The new notes carry no coupon until January.

On Thailand project financing, we are actively negotiating binding terms and targeting financial close by year-end. With the liquidity added in June, our capital is sufficient for the commercial ramp and for our planned growth spending, and most of that spending remains discretionary until project financing is in place.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Andres Sheppard of Cantor.

This is Anand on for Andres. Congrats on the quarter. And congrats on the BOI approval and FastPass. I was wondering, touching on Thailand, if you could give us a more full picture of where that sits today, first on the ground in terms of engineering, long lead equipment? And what happens now between now and groundbreaking? And then on the financing side, where that process stands and what are the remaining steps to financial close?

Yes. Thanks a lot, Anand. That's a good question. We're really excited about Thailand. Thailand is doing exactly what we need it to do. The detailed design is confirmed. The key long lead equipment is ordered, and we've got a really good team on the ground. We've received BOI approval in the quarter, including a FastPass treatment, which is a significant accelerant to permitting and licensing. We expect to break ground in the second half of this year, and the facility is expected to be operational in '28.

The one new capability worth noting is that with the compounding running in Ironton, we're actually now putting real samples in the hands of prospective customers in Thailand. So I think this whole project is really starting to wrap together nicely, and we're very excited about it. Donald, do you want to give a little bit more information on the financing?

Yes, sure. Thank you, Dustin. We're really pleased with the progress of the discussions thus far. We're discussing binding terms, and we believe that we can meet the requirements negotiated thus far. After the binding terms are finalized, we'll begin working on the definitive agreements and then satisfying the conditions to close. The process is tracking to a close by year-end.

Got you. I appreciate all the color, Dustin and Donald. And maybe as a follow-up, touching on P&G. That relationship looks like it keeps broadening, Downy commercial, Tide and ZzzQuil. Maybe, can you talk about what's driving that cadence? And are you seeing similar behavior from other large brands that maybe aren't ready to put their names out yet? I'm just trying to get a sense of how much of the second half ramp is already in motion underneath all of the announcements.

Yes, that's also a good question. A lot of the ramp is already in motion. You just see it publicly as the last step. When a product hits the shelves, like Procter & Gamble shows you the full pattern. I mean, we have Downy caps and Tide caps and ZzzQuil and just one by one by one, added to the list. The cadence is trust and compounding and trust in our ability to deliver good product.

P&G has among the most demanding qualification standards in consumer products. But once you clear them, the next application moves faster. And yes, we see the same behavior from large customers, other large companies, they're not ready to put their names out there. One of the largest global food manufacturers pulled its time line forward in the quarter. For the first time, we've seen that. The cold cup work with other major QSRs moved from conversation to shipments in weeks. In total of the 37 programs advancing at least one qualification stage.

Look, a lot of times, these announcements lag the activity. The activity is the ramp. And with Procter & Gamble, again, like we've been working with them for so long, have such a good relationship with them, and we have a large pipeline behind what you see on the paper right now. This effort continues every single week where we look for new trials and new developments with other applications. I'm very excited where this is going to go with Procter & Gamble.

[Operator Instructions] Our next question comes from the line of Hassan Ahmed of Alembic Global Advisors.

Dustin, a high-level question, both on near-term production as well as demand. Obviously, I know production was negatively impacted by your planned turnaround in Q2. And you guys produced, call it, 4.5 million pounds. But you also talked about post-turnaround production levels of 12,000 pounds per hour.

So I'm just trying to get a better sense of what Q3 production levels will look like? So that's on the production side of it. And then in your previous quarter's update, you guys had talked about the demand ramp-up, right? I mean, Q2 to Q3 -- Q2, Q3, 40 million to 50 million pounds, Q3 to Q4, 20 million to 25 million pounds. Where do we stand on those forecasts?

Yes. So look, I can make this pretty simple. All year long, we've said that the ramp would be in the second half weighted for basically two reasons: the regulatory clock with requirements starting in January '27 and then supply chain readiness. It's one thing to qualify products and another thing to deliver it consistently with every truck. Both are now proving out.

And so since the New Jersey approval, brands are accelerating their qualification work for the first time. And with compounding running, we have the reliable supply chain that they require. You can see it in the Procter & Gamble applications that are accelerating. And so our confidence has increased because the things we said that the ramp dependent upon are actually happening. And that's what converts the Ironton into breakeven, the site-level monthly cash breakeven at an exit rate built on the branded sales that we talked about with 40% to 50% utilization we've discussed.

So with respect to the ramps, the $40 million to $50 million and the 20 to 25 -- $25 million to $50 million for New Jersey, like those ramps are underway, okay? Part of those ramps is in the $40 million to $50 million is described by Procter & Gamble. You see progress there. And part of the ramp is described by a little bit of the revenue growth. But quite frankly, there's a lot of unnamed companies that are in that ramp that have started to pull product on the branded basis. So that's working really well.

We've always talked about the second half ramp. The second half ramp is in play, and it's largely driven by regulatory hurdles that are on the back end of the year. I mean, people don't want to start the year by trying to meet the regulation. People want to have the regulation met by the beginning of the year. And so that naturally means that they're going to start pulling in Q3 and Q4 in order to meet those regulations. And we see that in spades.

With respect to production, yes, for sure, the production came down in Q2, and we, quite frankly, planned on that. We knew that the outage was going to take a chunk out of the production. But we also planned on a substantial amount of testing of the new equipment and testing of the design premise for Antwerp and Thailand in May. And we followed that and did a good job of gathering that data. Production will always follow the commercial. So I think that what you'll see is as the commercial begins to ramp in Q3 and Q4, you're going to see the production follow suit with that.

Very helpful. And as a follow-up, I think part of the answer you already gave me, but just wanted to get a bit more granular around the demand side of things. If I heard correctly, you talked about the nearer-term New Jersey opportunity being around 25 million to 50 million pounds, right? And so that's one side of it, whether that is the case or not.

And then the other side is obviously a lot of encouraging stuff on the P&G side between Downy and Tide and Vicks. And I know you've talked about sort of walking before running over there. But I mean, could these individually be multimillion pound opportunities, I guess, in the near term over the next couple of quarters?

Yes, I see it that way. I mean, New Jersey was a real qualification for us. I would say that in the past, when you're working through the demand ramp and forecasting where you're going to go, you have a sense for what is holding up some of the qualifications.

But I think that when New Jersey passed, we had such an influx of requests. And we had some brands that were calling converters and saying, get PureCycle's product in the trial now where they weren't there originally because we didn't have New Jersey. I mean, a lot of these things really started to happen. And I mean, we fast tracked into 2 large qualification programs for cold cups. We have 17 active trials that were tied to New Jersey compliance. Brands were, quite frankly, paused because of the uncertainty.

And what hasn't changed is just the qualification process. Those cycles can run quarters, which is why that converts into volume late this year and into '27 is exactly what we described. And so I think the 25 million to 50 million pound term in the near frame still holds. I think QSR cups alone is a 20 million per year kind of bucket, but that's only a couple of QSRs, and there's a bunch of them out there. And so I see New Jersey as being a real accelerant to what we're doing. And I think you're going to see that in the next coming quarters.

[Operator Instructions] Our next question comes from the line of Luke Persons of Craig-Hallum Capital Group.

This is Luke on for Eric. So I guess first here, when thinking about the international expansion plan, so how should we think about these time lines versus your plans to ramp at Ironton? Are these -- are the new project time lines at all contingent on hitting certain commercial and operational milestones at Ironton? Or should we just consider them to be completely independent of each other?

Yes. To a certain extent, they're tied. I mean, there's a few qualifications that we're going to need to make on the commercial side to keep moving forward with Thailand, but these are pretty low hurdles that we don't expect to impact our overall ramp timing. I think it's a pretty safe assumption to say that this project stays on track.

With respect to the time line of Thailand relative to Ironton, look, we're already pulling samples from Ironton into Asia and into Europe, okay? There's a pretty healthy demand building for sampling of the Ironton product, which will accelerate the adoption process in those regions. It will probably create incremental demand in Ironton in the short term, which then will be replaced by Thailand supply and Antwerp supply when those plants are up and running. So I feel really good about that time line.

The reality is that in order to have a good project, you've got to have a good project team and you've got to have a good strategy for how you're going to implement this. And with the team we have on site in Thailand as well as the support we have at the Board level, we've got a very good project that's developing here. I think it's going to be the right size in terms of capital, and I think it's going to be the right team to execute. And I'm very excited about where this is going to go in the next couple of years.

That's helpful. So I guess for a follow-up here, just on the compounded product, how is pricing trending relative to just the PureCycle product when you're having conversations with some of these customers? I mean, are you finding that you're still able to demand a significant premium to virgin resin?

Yes. I mean, we kind of break this up into a couple of different ways. I mean, when we sell a compounded product, there's a component of that sale that is PCT material. And when you look at the pricing range that we see for that product, it's still consistent with the guidance that we've given in the past. And then on top of that, you're giving additional service, okay? We're giving them a one pellet solution. So the operational headaches are reduced, the supply chain headaches are reduced. And they're willing to pay a premium for that as well.

And so the virgin component, the mixture, the other additives that we're putting into that overall compound is really a value proposition for the customer. They like it because it makes their life easier, and it gives them exactly what they want. I mean, there are some customers that want to have a higher percentage of PCR content because they want to do more with that application for their overall book. And there are other customers that want to meet it exactly. And so with the compounding asset at Ironton, it allows us to really tailor fit for their unique specifications. It's really a differential asset that we've built in Ironton. I'm really excited to have it in service.

[Operator Instructions] Our next question comes from the line of Gerard Sweeney of ROTH Capital.

Listen, you put out some stats earlier. I think you said converted 5 million pounds of product to -- 5 million pounds of material to 4.5 million pounds of product. That's about a 90% yield, which I think gives very good, if not in the realm where you want to be. And I think you also said you were running Ironton around 12,000 pounds an hour, which is sort of 85% utilization. Is that accurate, my math assessment on where those numbers came out?

Yes. That math is right. A couple of clarifications. One, on the 5 million down to 4.5 million, the delta there represents co-product 1 and co-product 2 applications. And we've had increasing success marketing that and getting that into the market. So we're -- the 0.5 gap there is a good product for us.

And the 12,000 is a production rate that we have touched, but I did not say that we're running there routinely right now. That's a rate that we've confidently run since the outage to test different rate limitations, and we're going to continue to do that in Q3, okay? It shows what's capable, not what we're doing on a day-to-day basis.

[indiscernible].

Yes. So you're probably going to ask what's the day-to-day. The day-to-day is going to -- similar to how I responded to it earlier, it's really the production is going to chase the commercial. And as we see the qualifications with the branded sales, we'll continue to raise rates to compensate for that.

So in other words, you have a high degree of confidence this system -- the plant is operating as you want and can handle the volume of orders as they accelerate?

More and more every day. Look, Gerry, I mean, you've been in the story for a long time. And so you've seen, let's say, all the twists and turns with bringing this technology to the market. I mean, it's hard, okay? Bringing a technology to the market is a very hard thing to do. There's a lot of unexpected things that jump in your way that you've got to figure out how to work around. And I've said many, many times that the testament of this company is that we've got the team that has the capability to push through all of those constraints and keep moving forward.

That said, I mean, our technology is really, really good, okay? We've demonstrated that in terms of all the different applications that we've qualified. We've demonstrated that in terms of the, call it, SOI reduction, which is substance of interest. A lot of the big brands really care about that, and we're, quite frankly, really good there. We've demonstrated that in some of these high-colorable applications.

I mean, we're making good products. We have a really good technology that does things with speed that other people, quite frankly, can't touch. And so from a technology perspective, like, look, are we done learning? No. Is there more we're going to figure out? Yes. But the core technology is right there, and we're just getting better and better every single day.

I mean, my next comment, to be quite honest with you, is going to be, over the last several quarters, you have consistently shown incremental improvements at Ironton. And that should be the plan forward, expectation-wise, which I think is what you just said.

Yes. I mean, like on all levels, okay, there's the understanding the tech, there's the running the plant, there's the uptime, there's the reliability, there's the rate, there's the quality performance. I mean, you can imagine, Gerry, when you get into these discussions with some of the big brands, I mean, we're talking of major players in the market, right? And they don't just accept an FDA LNO and say, "Okay, good enough for us." They want to peel behind the curtain.

As they start looking and really peeling back the technology and asking a lot of questions, like we have to answer very hard questions, and we have to have the data to back it up. And with our R&D team, with our group in Durham, with our team in Ironton, like we've gotten really good at answering a lot of hard questions, which is why we're starting to get traction with a lot of these big brands.

And so yes, I mean, on every level in this company, every single day, we get better. There's just no doubt about that. And I expect that to be a core part of our DNA that continues to move forward every single day.

Got it. All right. I'll jump back in queue, I appreciate it. For what it's worth, very happy to see things continuing to move forward.

Thank you. This concludes the question-and-answer session. I would now like to turn it back to Dustin Olson, Chief Executive Officer, for closing remarks.

Yes. Look, thanks, everybody, for joining us today. Let me close with some facts about the quarter. We completed a major turnaround ahead of schedule and below budget. And within weeks of that restart, we set a new daily throughput record.

We brought compounding online. It's running well, we're delivering what customers specify. Revenue grew for a sixth consecutive quarter. Our first Procter & Gamble application went into commercial production, and our product is in the hands of converters who serve the largest cold cup programs in the country. And New Jersey approved PureFive's recycled content with a mandate taking hold in January of '27.

Every one of those facts point in the same way. The plant is ready, the product is qualified and being qualified into more applications every quarter. The regulation arrives on a statutory clock, and Ironton breakeven remains our second half target, closer now than it was 90 days ago, with the remaining work squarely within our control. Thank you for everybody for following us, investing in us and supporting us each quarter. See you next time.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the PureCycle Technologies First Quarter 2026 Corporate Update. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like to hand the conference over to our first speaker, Eric DeNatale, Director for Investor Relations. Please go ahead.

Thank you, Myla. Welcome to PureCycle Technologies First Quarter 2026 Corporate Update Conference Call. I am Eric DeNatale, Director of Investor Relations for PureCycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer; and Donald Carpenter, our Chief Financial Officer.

This evening, we will be highlighting our corporate developments for the first quarter of 2026. The presentation we'll be going through on this call can also be found on the Investors tab at our website at purecycle.com. Many of the statements made today will be forward-looking and are based on management's beliefs, assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions and forward-looking statements that can be found at the end of our first quarter 2026 corporate update press release filed this afternoon, as well as in other reports on file with the SEC that provides further detail about the risks related to our business.

Additionally, please note that the company's actual results may differ materially from those anticipated and except as required by law, we undertake no obligation to update any forward-looking statements. Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties including, among other things, changes in connection with quarter end and year-end adjustments. Any variation between PureCycle's actual results and the preliminary financial data set forth here with herein may be material. You're welcome to follow along with our slide deck or joining us by phone, you can access at any time at purecycle.com. We are excited to share updates from our previous quarter with you.

With that, I will turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Thank you, Eric, and good afternoon, everyone. Business momentum entering 2026 is the strongest it has been. Revenues came in about budget, branded customer conversions are accelerating and our confidence in the commercial ramp over the remainder of 2026 has never been higher. The commitments we made are becoming results. The P&G ramp is underway, coffee lids are commercial with multiple customers, branded sales are converting across the portfolio, the branded momentum is real. We continue to make progress toward our mission of transforming the global plastics industry and the results this quarter reinforced that we're on the right path. Let me walk you through the details.

Ironton produced 8.4 million pounds of PureFive in Q1, which is up from 12% from Q4. We processed approximately 10 million pounds of feedstock input. Both of these numbers demonstrate the continued scaling of our technology. The planned turnaround at Ironton was completed ahead of schedule and tracking approximately 15% below budget. This is significant. It is the first time we've completed turnaround ahead of schedule. It speaks to a better understanding of our operations and our core technology, and it's a great example of how the internal improvements we've been driving -- that we've made are driving external outcomes. This is something that we are increasingly seeing across the business.

It's been 2 years since we've taken a full shutdown across the facility. During this outage, we executed over 170 projects, which targeted capacity, reliability and quality. This will pave the way to achieve full capacity within the facility. We also found the plant to be in much better condition than it was 2 years ago. The vessels that created the most challenged last time required far less intervention this time, which is another testament to our progress. The long-term resiliency of our core technology is also very strong.

One of the most impactful projects and the replacement of the critical seal system, procurement required some navigation -- procurement required some navigation to global supply chain conditions, but we resolved it ahead of the outage. The installation is complete and expected to materially improve reliability going forward.

On-site compounding reached mechanical completion in April as well, and we're currently commissioning the asset. This is a strategically important addition to our platform. As customers scale in film and thermoform applications, we will be able to deliver a finished application-ready product reliably and consistently without relying on third parties.

The unit economics for compounded products are more attractive than the base resin, and as volumes build, this asset will be a significant contributor to our overall margin profile. Our third-party compounding volumes also ramped to approximately 1.7 million pounds in Q1 with significant month-over-month growth throughout the quarter.

Let's discuss the macro environment because the shifts we're seeing are very dynamic, but also clearly positive for PureCycle. The disruption to global petrochemical supply chains helped us in several specific ways. First, it has improved the co-product pricing. Second, it has reinforced the value of a domestic stable supply source that is independent of global petrochemical disruption. And third, it has created urgency. Brands and converters all around the world are actively looking for domestic compliant alternative to global supply.

We're seeing this manifest in 2 ways. Companies that are ready in our pipeline are moving faster with us, and we've received numerous inbound inquiries from the rest of the world customers looking to start the process of qualifying our product. Virgin polypropylene prices have risen roughly $0.25 to $0.35 per pound in the U.S. and $0.35 to $0.55 per pound in Asia and Europe. Our feedstock domestic waste polypropylene for more than 15 U.S. suppliers is independent of these disruptions. Unlike virgin polypropylene, our product is sourced from domestic waste streams and priced independently of those dynamics. In the current environment, our customers increasingly value the consistency and reliability of our supply as much as the sustainability credentials.

HDPE prices have roughly doubled, which will improve our coproduct pricing dynamics as well. As you recall from the last call, in 2025, we faced numerous macro challenges. This has reversed. The current macro environment in 2026 is a tailwind, not a headwind. Regulatory momentum continues to build. In California, regulations for SB54 were finalized earlier this month. Source reduction deadlines are only 7 months away and we're seeing increased urgency from brands and converters to get qualified to meet this upcoming mandate.

New Jersey is stepping up to a higher minimum recycled content rates in 2027 also and moving from 10% currently to 20%. Additionally, while New Jersey mandated PCR content for most plastic packaging starting in 2024, it included a temporary exemption for food contact containers. This goes away in January of '27.

Let's take a step back and look at this environment holistically. Three forces are converging. One, commodity pricing is extremely dynamic, creating global market uncertainty; two, regulations across numerous segments are coming from all directions, including Europe, California and New Jersey as well as others; and three, consumers still want sustainable solutions. How will the brands react? Brands will lean into solutions that work. And PureCycle's demonstrated technical successes are a clear solution.

PureCycle offers 3 positive contributions to the discussion. Very high-quality FDA grade material with demonstrated performance across a wide variety of segments, a product positively positioned as a regulatory solution and a localized supply that is insulated from global macro disruptions. Europe to Europe and Asia for Asia are emerging themes, and we are the solution for plastic. Quality matters, and we provide uncompromised material.

With regulations coming from every direction, APR certifications are increasingly accepted by regulatory agencies. This macro environment highlights the need -- highlights the need for PureCycle. It is helping in the short term, but it is also providing significant tailwinds to our long-term growth plan.

Q1 marked the quarter where branded sales moved from isolated wins to a real and growing base. We booked $4.1 million of revenue, our fifth consecutive quarter of sequential growth ahead of internal expectations with branded mix increasing meaningfully within that number. We will be shipping this quarter to Procter & Gamble. We are converting new customers like plastic ingenuity and there is more to come.

We converted 8 new customers across multiple product categories during Q1, branded pricing is robust and above internal targets as we move through Q2 and beyond, we have clear line of sight to a growing mix of branded sales and Q2 ramps. These are building a stable base of sales as the ramp becomes more meaningful in the second half.

We are reiterating that branded applications with 40 million to 50 million pounds of annual demand are ramp -- are starting to ramp in Q2 and Q3 and another 20 million to 25 million pounds of application capacity will start to ramp in Q3 and Q4. The New Jersey regulation resolution also represents a meaningful pipeline catalysts. One, we will cover in more detail when we get to the regulatory update.

Our pipeline now stands at approximately 180 active opportunities, up from over 170 at year-end and roughly 100 a year ago. We continue to be bullish about the commercial opportunities in film as we progress through 2026. During the quarter, we ran 2 industrial trials successfully at different film producers, both were on Bruckner 6-meter lines. We also ran 2 pilot lines successfully at different film producers. In all of these trials, the PCT product properties were excellent and comparable to their virgin counterparts. We continue to progress with 2 of the top 5 global food manufacturing brand owners on programs related to snack and confectionery packaging and will update the market as we get closer to commercialization.

Our relationship with Procter & Gamble is strong and activity is accelerating. They have among the highest standards for quality and reliability in the consumer products industry. They have done extensive testing of our product, and we have passed. The metrics and processes by which Procter & Gamble evaluate suppliers are the gold standard in the industry. And the fact that we have achieved commercial qualifications with them is a powerful validation that our technology and our operations.

The qualification process with Procter & Gamble took longer than anticipated. Their standards are exacting and there are no shortcuts. But clearing those standards matters. The rigor of their approval process means that the specifications we validated now apply broadly across the brand portfolio. And we expect future application approvals to move considerably faster as a result.

This quarter, we achieved final approval for commercialization of 2 Procter & Gamble applications. Tide caps for select bottles will begin shipping in Q2 and Vicks Zzzquil caps will follow in the second half of 2026. We are also in the process of qualification with 3 additional applications, which are going well, and we look for many more beyond that.

Additionally, we'll be posting on our website and through social media channels, we recently achieved the highest purity grade through [indiscernible] testing. [ Cost of tox ] is a consortium focused on the intersection of cosmetics, packaging and toxicology that has formulated a standardized voluntary safety evaluation guidance for the use of PCR and cosmetic products and detergents packaging. This milestone was the result of a collaborative effort between Procter & Gamble and PureCycle, with both teams jointly preparing and submitting samples for evaluation from the Ironton facility.

Through the testing, our dissolution process produced the highest grade material. We are the first recycler to achieve this, and that means our resident is pure enough for leave on cosmetics, achieving the highest possible cost of tox grade underscores the quality and consistency of our product and reinforces its suitability for demanding cosmetic applications. We are deeply appreciative of their support. Their continued partnership and excited for the ramp ahead of us.

All of these qualifications matter. They are proof points for Procter & Gamble, but also for other customers. When other brands see the product passing the highest quality standards and they see supply disruptions, and they see regulations coming, they start calling.

We're very excited about our recent announcement with plastic ingenuity. To put this in context, the market for hot lids in North America is massive. There are over 50 billion, 50 billion coffee cups consumed annually in the U.S. alone. Plastic Ingenuity services many of these brands, including some of the largest in the world. Part of their decision to move forward with us was the positive reception that they received from numerous QSRs and restaurant chains when they showcase the sustainable lids at the SPC IMPACT conference in Nashville 2 weeks ago. The market response validated the demand.

Coffee lids are available with 25% to 100% PureFive ultra resin, which gives brands options to buy what they need. Beyond hot lids, we have finished trials on additional applications as well, including cold lids, which is a rapidly growing category as well as food trays and meat trays. We're seeing significant opportunity to commercialize across their product portfolio.

QSR carries significant plastic packaging exposure in California. And with the mandate 7 months away, we're seeing real urgency from a number of brands actively looking for compliance supply. We completed our first international sale in Q1. Their initial purchase was over 300,000 pounds of pure choice resin for a product line we've sold previously into. Over 3 million items are being produced. Discussions are ongoing around additional applications and a broader relationship. Not only was this a successful project, it also -- it was also a much accelerated time line for qualification and approval.

The model here is simple to what we've done successfully before. Start with a qualification of a single application, demonstrate the product works and then broaden into sustained commercial relationships. We've already seen this play out with Churchill, a very trusted partner where we started small with shipments to events like the CFP National Championship game and other one-off sports and entertainment venues. That success has now matured into a broader, more meaningful commercial relationship that continues to grow into materially significant pounds that continue to ramp through the rest of this year. The progression with Churchill has directly led to increased brand recognition. Companies and organizations see the product working at scale in the real world, and it accelerates their decision to move forward.

New Jersey remains in review and we continue to progress positive discussions with all levels of the New Jersey government. I personally met with numerous government officials, including the governor, the Governor's office and the DEP, and I am very encouraged by the new administration's drive for efficiency, efficacy and impact. I remain very optimistic about our progress here. When this resolves, it will open a phased ramp of incremental demand as customers progress through the qualification process and prepare for 2027 regulation changes. And this will make New Jersey a circular state.

The broader regulatory landscape continues to advance and time lines are getting very real. California's signature recycling bill called SB54, requires 10% source reduction by 2027. That is only 7 months away with increases to 20% in 2030 and 25% in 2032. Those source reduction targets can be achieved partially through recycled content. With our APR certification, PureFive resin qualifies as recycled content under SB-54, and we're seeing increased urgency from brands and converters who need to make this mandate. We have had direct conversations with the Governor and his office about PureCycle's role in meeting the state's recycling targets and recycled content mandates.

In New Jersey, the post-consumer recycle requirement increases to 20% in 2027 and the food contact exemption expires in early 2027. Both states have excluded mass balance from the definitions of recycled content, which means PureCycle is one of the only compliant suppliers at scale for food grain recycled polypropylene. The volume contingent on New Jersey approval has increased and now stands at 25 million to 50 million pounds. That number has grown since last quarter, and I believe it will continue to grow. Two large brands have moved as far as they can to the qualification approval process, without regulatory clearance in hand, positioning themselves to move quickly once New Jersey results, both are motivated by the same deadline, the food contact exemption sunsets in early 2027.

This combination of powerful and near-term demand catalyst -- this combination creates a powerful and near-term demand catalyst for PureCycle. It drives real demand and real urgency for the customers.

A quick update on our global growth projects. As I mentioned, the Ironton turnaround was completed ahead of schedule and is tracking below budget. The improvement projects incorporated during this outage are targeting higher reliability, production rates and product quality. Our Thailand facility remains on track for mechanical completion by the end of 2027, operational commissioning in Q1 of '28 in production in Q2 through Q4 of '28. The construction expected to break ground in the second half of '26. The total investment is currently expected to be around $250 million.

The Belgium facility also remains on track. Permits are expected near year-end 2026, construction expected in Q1 of '27 and mechanical completion by the end of 2028. Total investment remains in line with prior disclosure of approximately $350 million. We are also awarded a EUR 40 million grant from the European Innovation Fund for the Belgian facility construction and finalized the documentation in April.

On Gen 2, our initial design estimates continue to validate the economics, and we're working through the more advanced design work.

At this time, I'll turn it over to Donald, our Chief Financial Officer, for the financial update and some commentary on our capital position. Donald?

Thank you, Dustin. This quarter, we are introducing operational KPIs alongside our financial results to give you a clearer view of how the business is performing. We will continue to refine and expand these disclosures as the business scales. For additional context to the KPIs, feedstock process measures purification ready material delivered into the purification process. Other production captures co-products 1 and 2 and other salable material recovered from the feedstock stream. This is an incremental revenue source that improves our overall yield and per unit economics at Ironton. Together with PureFive production, these metrics give investors a more complete view of Ironton's throughput.

Year-over-year production grew approximately 95%, while monthly operations spending grew only 6%. That divergence is operating leverage emerging in the business. As we run more pounds through a largely fixed cost base, our cost per pound falls. At the same time, branded sales are lifting revenue per pod. Those 2 trends are converging and that convergence is the foundation of the unit economics improvement we expect as the commercial ramp accelerates through 2026.

Net loss for Q1 was $33.4 million compared to net income of $8.8 million in Q1 2025. The prior year period included a $56.7 million favorable change in the fair value of our warrants. Adjusted EBITDA was negative $30.9 million compared to negative $25.5 million in Q1 2025. The year-over-year change is primarily driven by approximately $3 million of higher project development costs running through the P&L.

Included in adjusted EBITDA for the quarter is approximately $7 million of project development costs that were expensed through P&L. These are primarily professional services, project team labor and facility costs related to our Thailand, Belgium, Augusta and print development activities. As these projects advance toward construction authorization, a greater portion of these costs will shift to the balance sheet as they become capitalized. We've included a reconciliation of adjusted EBITDA in the press release.

We ended Q1 with total liquidity of approximately $131 million, which includes $90 million of cash and cash equivalents, approximately $31 million of excess cash invested in marketable securities and $10 million in restricted cash. That compares to approximately $182 million of total liquidity at the end of Q4.

Total operations spending came in at approximately $8.8 million per month in Q1 and within our $8 million to $9 million per month expectations. Importantly, we held this monthly range for Q1 even as production volumes increase and feedstock and other variable cost growth was absorbed within our ongoing operations. This metric captures our ongoing operational run rate separately from project-related spending, much of which is largely discretionary and is shown separately. The split isolates ongoing operations from the discretionary capital deployment we're making for Thailand, Belgium, Augusta and Gen 2 efforts.

The Q1 quarterly total of $27.4 million reflects an annual incentive compensation payout of $1.3 million in addition to the ongoing monthly rate. Q2 will include the Ironton turnaround spend, which is tracking below budget and reported separately from the operations spend. Q2 will also include the scheduled SOPA bond debt service payment of approximately $9 million on June 1. We have flexibility to monetize a portion of our SOPA bond holdings to offset some of this outflow.

Project spend totaled approximately $14 million for the quarter, below the $19 million to $20 million quarterly expectations primarily due to timing. Fiscal year 2026 project spend expectations of $39 million to $45 million are unchanged, and the majority of remaining project spend is discretionary.

In April, we extended our public and private warrants to March 17, 2027, and lowered the redemption trigger price to $14.38 per share, bringing them in line with the Series A warrants. These warrants now share the same expiration date with approximately $273 million in total potential proceeds available through that date. Beyond the warrants, we have meaningful financing optionality. Our $200 million revolving credit facility remains undrawn and available through September 2027, and we have approximately $75 million in revenue bonds available to monetize. Equipment financing payments will also step down in the second half of 2026 as existing leases mature, reducing our ongoing capital costs.

On Thailand, conversations with a local Thai bank continued to develop well. We are actively progressing the project financing and are encouraged by the alignment we are seeing as we work on finalizing terms and conditions. We will provide updates as appropriate.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Andres Sheppard from Cantor Fitzgerald.

Congrats on all the recent progress. Dustin, I want to start maybe -- so on the call, you mentioned the pipeline now stands at about 180 active opportunities and that branded sales are starting to convert. Curious if you could maybe help us understand what the conversional funnel looks like, maybe over the next 3 to 6 months, what type of customers and applications are close? Just a little more visibility into that.

Yes. Thanks for the question, Andres. I'm really excited about this. I mean we've got a lot of irons in the fire. The compounding assets that we put in place are really, let's say, giving us a lot of opportunity to make exactly what the customers are looking for. On the film side, if you've ever opened up a film -- film wrapper and you've seen that it's white on the inside. It's called cavitated film, we can make that. In order to seal the film around a candy bar wrapper, you have to have sealant film. We've made that. We're trialing with virtually all of the film producers in the U.S. at this point, and it's just going well, okay?

The interesting thing about film is that brands are driving that discussion. So it's less about us pushing it to a converter to see if it works. It's more about brands hearing that we can do it, and they're starting to pull it through. So that's very exciting.

On thermoform cups, we've talked a lot about coffee lids. I mean, those are just easy -- those are easy for us to make. It's hard to get to the point where we are, but that's a good product for us, both the white, the brown, the black, some of the clear cup lids, those are all very good for us. You see this a lot in cold cups as well as hot cups, and that's kind of an emerging trend. So we've got a lot of different customers that are testing to see if that clear cup can work with our material and if the coffee lid fits right on the container and it's going well.

You get to some of our other impact grades. Impact grades are things where you don't want them to break when you drop them, but you also don't want them to crush when you stack them. And so it's a tricky grade to make, but we're doing it. And so things like butter tubs and cream cheese and yogurt and different things like that. Like what's really exciting about that particular grade is that we are a drop-in replacement for Virgin and customers are really excited about that. They don't have to change their supply chain. They just -- they drop it and they go, and they've got a better sustainability story.

There's a lot of other applications, injection grade. We talked about the Tide cap. I mean -- I couldn't be more excited about what we're doing with Procter. I mean the work that we've done with them to get better at what we do. I mean there's been a delay on the Procter side, but -- but they made us better. I mean we got better at our operations. They got better at the supply chain. We got better at making the product. And that's going to lead to a lot of success with other grades as well, other detergent manufacturers and other injection molded brands like that. So I think that we're in really good shape there.

I -- the funnel is -- when you look at the funnel and you see all the grades that are popping through, it's like stuff that you see in the grocery store, I was walking through the grocery store the other day with my daughter and talking to her about all these different things. And I got really excited -- I got really excited about it. I don't think she cared at all. But if you walk through the grocery store and you see what we're able to make, it's really inspiring.

Very thorough. I appreciate it. Maybe as a follow-up, if I could, maybe a 2-part question. First one on Thailand. If you can just give us maybe a bit more color on where you are in the financing process and how are you thinking about the timing? And then the second part of the question was just around New Jersey. I know you alluded to it on the call. Just look for an update there, when might we expect a decision sooner rather than later?

Yes, this is Donald. I'll take the first part of that question. I'm really excited about the progress we've made in Thailand so far as it relates to the financing. We put together a very comprehensive data room. We have weekly dialogues with the Thai Bank. They have reviewed the data room extensively and provided feedback, and we believe that the indicative conditions are achievable. And we're looking forward to finalizing the terms, all while we're continuing to add to our LOIs for feed and offtake.

Yes. I think that we've done a really good job here, Andres. Donald has really taken a strong position on this and put together a really clean data room. The relationships in Thailand are really strong, okay? We've met with them in person multiple times. The dialogues are strong. It's more of a relationship developing, and we're very proud of that.

Getting to your second point on New Jersey. Look, I mean, New Jersey is -- it's going really well, okay? We've had lots of active discussions. We have good relationships. The new administration is doing all the right things. I mean, they're actively trying to improve the efficiency. There -- they're working hard to make government work for the people again. Our interests are clearly aligned. The administration just finished the first 100 days. So if you think about when this really started going, we worked with the old administration and September and in the late October. We had hoped to get it converted before November, but it didn't happen. The election happened, there's a bit of a pause period between November and January. And then the new administration has got to get started.

And so I think that the -- I think it's going in the right direction. Obviously, we would all like to have that done now. But rest assured, the conversations are going well. We believe that we have really clearly aligned interest, and we think it will close soon.

Great. Great to hear. Congrats again on the quarter.

Our next question comes from the line of Hassan Ahmed from Alembic Global Advisors.

First question, obviously, about the macro volatility that we've been seeing since early March. I mean, obviously, it impacts polypropylene directly. I mean a lot of facilities across the Middle East have been impacted, not to mention what is going on with oil prices, with NGL supply. I'm sort of sitting there thinking through PDH facilities in China, whether they may be getting their feedstock or not, what that does to the cost curve. Obviously, polypropylene prices have reacted quite positively to these developments.

So just with all of these sort of macro puts and takes, would love to hear your views, if you could drill it down to PureCycle, what it means to you guys? What does it mean from the cost side you guys and also from the demand side. I mean, I would imagine that more and more customers would be intrigued by your product offering. So I would love to hear your views about all of this.

Yes. I think -- I mean, this is obviously a very dynamic period. I think there's a lot of people kind of waiting on the sidelines and hoping that it ends quickly and hoping that the impact hasn't extended. I think there's a lot of destocking happening right now, particularly in China. You've definitely seen a lot of pricing change globally. The arb between the U.S. and Asia is either closing or closed or has reversed depending on who you talk to. So it's very tight now. And there's a lot of destocking. So we see that trend continuing.

Oil. And so getting to PureCycle, in particular, the oil -- oil and polyethylene have direct impacts on co-products. So if you think about our co-product on, I would say that has a bit of a market toward oil. If you look at our co-product too, it has a clear market of polyethylene. Like we said in the U.S. market, polyethylene has doubled, that makes coproduct 2 quite a bit more valuable. And you're right, customers are very excited to start pulling those coproducts in as alternatives to increase pricing.

When it comes to polypropylene, it's kind of a 2-sided story. One, for sure, increased pricing on the virgin polypropylene helps, okay? That's a tailwind that -- it gives -- it's an opening discussion always when you're dealing with customers. But most of our branded customers and most of the contracts that we're developing, they're really feedstock plus developed, okay? So largely independent of global supply chain items because feedstock is locally sourced, locally produced. And so most of the customers we see right now, they kind of like that hedge. They've got extreme, let's say, volatility toward the global -- the normal global supply chain, but with recycled content material, it's a bit more stable. So we see that as a good thing.

I think from our perspective also, we're starting to see the relationships that we've seeded in the last 3 to 4 years globally start to bear some fruit. We've got a very strong team in both Europe and Asia. And the relationships that we have with those customers are starting to come through. We're having discussions about shipping to both regions. I think that's very exciting. We have the REACH certification in Europe. So kind of the path is cleared for that.

With Asia, Thailand is coming. And so we've really started to do a lot of work to develop relationships with Asia customers. And quite frankly, Asian customers are just very nervous right now. I mean they largely get their supply from China, but they're not sure how long that will last or what the price will be, and there's a lot of prepayment activity with that. And so they've been reaching across the aisle to us and saying, "Hey, can you help us either to export now from Ironton or at least to accelerate the approval process to get it going for when Thailand comes on. And I think that, that bodes well for us.

So it's definitely an exciting and dynamic time. I think all things are pretty positive for us. There's one more note maybe, and that's about nationalism. I mentioned this in the script, but Europe for Europe and Asia for Asia is an emerging trend, okay? People are very nervous. It started with tariffs, wondering what the tariff is going to be month-to-month. And now it's global supply chain interruptions. And so if you can take a product that you've consumed into a replacement for a product that you used to buy, nations like that. And so I think that in Thailand and in Europe, we're going to get a lot more traction over the next couple of years for replacing supply chains that would otherwise be conflicted with things like this. That's a great question, Hassan.

That was very helpful, Dustin. And as a follow-up more on a micro level, would love to hear what you guys accomplished during the Ironton turnaround. I would love to hear about the scope the work, the standout projects. And then with this behind us, looking ahead, what should we be expecting in terms of production rates and top end capacity coming out of the outage?

Yes. Look, I mean, Ironton was a major activity. It was a major event. We opened nearly every piece of equipment. Like I mentioned in the script, it was a lot cleaner than what we expected to be quite frank. And I mean, petrochemical complexes as well as anybody, Hassan, I mean this is a very good sign, okay? The fact that we don't have corrosion or erosion or some of those traditional problems is a pretty good indicator that this plant is going to be able to run for long periods of time without outages and also make the outages much more predictable. This is a very predictable outage. No surprise, a lot of work, very good execution by the site, really came in with a good plan, improved our positioning in and out of that outage. We completed over 170 jobs. They really focused on quality, reliability and capacity.

There are a lot of things with this first plant that we've built, that are just headaches that we solved. We just cleaned up the plant quite a lot, added a lot of small improvements that will make the plant more reliable. The operators and the management team at the site are very excited about that. We mentioned about capacity. You asked about what would the rates look like. We certainly believe that we're going to be increasing rates coming out of the outage. We've mentioned in the past this pump. That was undersized. We upgraded that. We mentioned some heat integration that was undersized. We cleaned all of the exchanges on site, and so that's much better.

We've talked at length about seal problems. We've put in place a lot of seal improvements during the outage that we couldn't do without an outage. And so like I think the plant is in a really good position. I mean every time we add something or improve something, we've got to test it. We've got to test the leg, see what we can ramp up to, see if it's stable. We'll do all of that. Remember, we did several rate tests over the last 2 years where we touch 12,000 pounds an hour, which is like 75% capacity, and we touched 14,000 pounds an hour, which is like 90%, 95% capacity. Those moments gave us nice insight into what to target for this outage. And so we took those learnings and built it into the plan best we can, and we're excited to see what we can do in May, June and Q3.

Our next question comes from the line of Eric Stine from Craig-Hallum Capital Group.

This is Luke on for Eric. So I guess, first, could you just talk about any other states besides New Jersey and California that have potential regulatory catalysts on the horizon that you expect could unlock meaningful revenue opportunities?

Yes. I mean there's already some legislation in place for Washington, Oregon. There's work coming through with Massachusetts, Colorado. New York has got a lot of discussions right now as well. So I think a lot of the traditional blue states are coming through with some demand-side regulations. But New Jersey and California are big players in the room. And they've helped to establish a lot of the fundamental guidelines for where things were going. Most of the states right now are starting to adopt the APR certification as the marker for recycled content, which we get, which we have already achieved. And so we're very excited for where this goes.

Got it. That's helpful. And I guess just as a follow-up, I mean, you obviously have opportunities in several verticals that could drive step change growth themselves alone. But if you had a force rig -- force rank, which applications you expect to be the most meaningful in the near term, say, the next 12 to 18 months? I guess, what would that list look like?

Well, there's kind of 2 ways to look at that, Luke. One is what's going to create the revenue in the near term? And then what is going to be what we lean into in the long term, I think they're a little bit different. I think in the short term, we're going to keep leaning into injection molded applications like you see with the Tide caps and the Zzzquil caps. I mean we've demonstrated we can color, we can make, we can do that pretty reliably and we're getting a lot of follow-on requests for that. There's a lot of demand there.

I also think that the -- so then there's one that bridges the short term and the long term, that's coffee lids and cold cups and things like that. There is just an enormous amount of volume in that space. And we've proven that we can make it, okay? At lots of different levels. Some people want 100%. Some people are happy with the minimum content at 25%, but we can make it all. And so we're really excited about that. I think that is one that will come on pretty quickly and it will also stick around for a long time.

If I had to add to that 2 other segments that I think are going to be very big. We see a lot of interest in. One is film. Again, we are the only game in town when it comes to PCR content to film. And now we're doing it on 6-meter lines. 6-meter lines, the Bruckner 6-meter lines are enormous. That's 20 feet across with extremely thin film. It's really hard to do. And the fact that we're doing it and the fact that film producers are kind of testing it everywhere. And also brands are pulling it through. That is a really good sign for the long term. That is -- I'm very, very excited about film. And our Ironton compounding asset will unlock that for us.

The last thing, which, quite frankly, I didn't expect to be as valuable coming in. But over the last, let's say, 3 to 6 months, it's really popped up as this -- we call it the impact grade, okay? And this is where it's very tricky to get a material that can withstand cold, that can withstand drop, that can withstand crush like butter tubs and yogurt tubs and stuff like that. That's really hard to do. And we've been able to make some of those things. There's a lot of brands right now that are held up from New Jersey in that space. So we're not going to see it like immediately, but it's going to come. And I think it's going to be very strong.

I didn't mention this in the call, but there's another test out there. It's very unique. It's called the retort test. And this is like a sterilization test. And they basically test it to see how well it sterilizes and put food in it and see how well it does over time. We're doing really well there. And I think that's a differentiator for us, very much so compared to the market because we've just got less contaminants in our product. And the less contaminants you have in your product, the deep molecular washing machine that we put it through means the better you're going to do on all these tests. And I think that's going to be one that hits us in the long term as well. It's a really good question though, thank you for that.

Our next question comes from the line of James Schumm from TD Cowen.

So you have some -- you have in your forward outlook, you have some time lines for the ramp, 2 separate ramps. But I just wanted to get a better sense of what does the ramp actually look like? Like how long does it take to get to the full run rate, that annual run rate? Is it like on the second quarter, third quarter or fourth quarter? Like what -- what does the ramp look like?

Yes. It's a very difficult thing to predict because it's largely dependent on our customers' desire for the ramp time line. I think that what we've said previously, which I stand by it now as well, the Q1 and Q2 look largely the same. Q3 and Q4 start to ramp up in terms of volume and revenue. And so, we've got a lot of customers that are trialing and a lot of customers that are starting to take. And so it's really kind of an average of their ramp time that we're interested in. But I think that we've got enough line of sight to know that Q3, Q4 still look really strong. And given the, kind of a backdrop of regulation that they're pushing against. I think there's a pretty good indication that Q3, Q4 are going to be a pretty strong quarter for us because they have to be to meet the regulations.

Okay. And then you noted with Procter that [ they are ] making you better or you're getting better at making the product as you work with Procter. What does that actually look like? Like what -- why is your product better? And then what needs to happen to get some orders across the finish line with some -- whether it's Procter or some other customers?

Well, we've got orders across the line with Procter. I mean we're fully qualified on both the Tide caps and the Zzzquil. So those are coming. Zzzquil will be next, the second half of the year, but the Tide caps are happening right now. I think we have a PO in hand actually right now. for late May or early June delivery. So that is -- we've crossed the line there, it's happening.

What I mean by getting better is every time you are challenged to do something better, okay? Supply chain management, inventory management, lab testing, quality control, providing the right documentation, providing the right certifications, regulatory framework. All of these different things matter to customers. And look, the Procter & Gamble is just the gold standard. I mean they're thorough. They are tough like questions that you wouldn't think that would be asked, get asked, and you got to answer them. And sometimes you have the answer and then you move on and sometimes you don't have the answer, and you've got to -- you've got to get it. And when you go and develop the answer or the paperwork or the procedure or the process, it makes you better not just for what you're doing at Procter & Gamble, but with everybody else.

When it comes to product quality and running the plant, they're not active there, okay? They're not like saying turn this valve or move that temperature to improve your quality. That's not what I'm talking about. It's more of all of the stuff on the back end and the front end that you have to have equally right in order to make it work. And our team is getting really good, okay? We've now done it. And we're learning how to do it every quarter. And that's something I'm really proud of, and I think we'll continue to improve over time.

Okay. And just lastly for me, like what -- I think you cited 180 customers or pipeline opportunities, like what is the pushback that you're getting from the customers from those 180 opportunities? Like what's holding them back from placing an order. I think you had mentioned the New Jersey issue in the past, but what is holding them back right now?

Yes. I mean, every customer is different, and so it's a bit of an average discussion. Everybody is looking for something different. They have different drivers. Some people want to have very thorough LCAs. So they want to have a lot of discussion about how did you calculate your LCA. Some people want to go through and look at your green circle and APR certifications to get comfortable with where you're getting your feed and how you're turning it into product. But it's really not what's going wrong or what's holding them back. It's more about what is their process. Like we're not getting pushed back on these processes. We're just moving forward through the process.

There's a lot of steps in these processes that just take time. I mean when you get into food contact applications, sometimes you've got to put yogurt into a cup -- you make the cup goes great, looks great, smells great, fits great. Everything is great about the product and they say, "Wow, we love it. We've never seen something like this work as well as it is right now. Now we're going to put yogurt in it, and then we're going to let it sit in the refrigerator for 3 to 6 months, and we'll let you know how it did. And that's not anything wrong with PureCycle. It's not anything wrong with the process. It's just the time it takes for some customers. And so like this is what we've been working on the last 1.5 years. One is to make the product so we can show that we can actually do it and then step it through the different customers' qualification processes.

Now we're getting good at this. We know how to qualify product. We have much fewer unknown questions that come our way. And so we're able to answer them. We've got a very strong lab [indiscernible] that helps us answer questions extremely technically, which is really valuable for us. And so we feel really good there, but still it takes time for some of the customers to get across the line. Having said that, they're getting across the line, okay? We are converting to brands -- to branded applications. We are showing that we can make the product and that they get approved. And so what you're going to see over the rest of the year is more and more discussion in the quarterly calls like this, when we talk about other brands that have gotten across the line that we're starting to serve.

Our last question comes from the line of Jeffrey Campbell from Seaport Research Partners.

Congratulations on the continued operating success. At some point is projected that the EU recycling regulations are tough on paper, but enforcement confidence as questions. Just wondered what your take was on that?

Yes, I think that's a good question. You can never -- I'm not going to get in the business of trying to predict what direction the government is going to go on different things. Right now, there's extremely strong support for demand size, regulatory efforts. California, New Jersey, Washington, Oregon and Colorado, states like this are all in. And that's something that they put in place years ago. So we don't see that changing. We see that moving forward. And quite frankly, setting a standard for the U.S. There's a lot of bipartisan support for recycling. I mean, there was a bill that came through Florida traditionally red state, that was unanimous and approval for recycling standards.

So like that's a great example of how both blue and red states like the idea of recycling. So I think that's going to move forward pretty well. When you start getting outside of the U.S., look, I mean Europe is moving fast forward toward recycling. If it wasn't for pure sustainability reasons today -- it was for pure sustainability reasons in the past. But today, it's also for nationalism reasons. They're worried about tariffs and they're worried about being dependent on other countries to deliver them goods. And so the more that they can lean into recycling, I think the less dependence they have on others, which is good for Europe.

And then when you look to Asia, I mean you start to see EPR legislation pop up in India, Indonesia, Thailand. I mean these are not countries where you would expect to have strong support for recycling and yet you see legislation coming. So I don't -- look, I don't think this is a blue versus red thing. I don't think this is a fad. I think this is something that's growing momentum on both sides of the aisle and globally. And I think that PureCycle is going to see a lot of tailwind from that over the next 10 years.

Okay. I want to -- I'll close or just approaching the questions about conversion of customers and so forth in a little bit different way. Since you're noting new customers as you did in the presentation. And now we have the plastics, the PI interest in PureFive. Is there any chance that revenue guidance could be raised as 2026 progresses?

Yes. I think that we're not going to give revenue guidance specifically today. But you've heard my comments about kind of how we think it will shape throughout the year. It's difficult to give specific numbers at this point because it's highly variable. I mean, New Jersey has an impact on that. And so until we get New Jersey, and we get a little bit more traction there. We're probably going to wait. Having said that, I think the plan that we put in place for 2026 internally is very achievable. We're starting to execute on that plan, and I feel good about it. And I think that bodes really well for the second half of the year.

This concludes our Q&A portion, and I would like to turn it back to Dustin Olson for closing remarks.

Yes. Thank you, Myla. Thank you for listening in today and for all of your continued support. Overall, this is a strong quarter for PureCycle across all aspects of the organization. We exceeded our internal plan and are confident in our 2026 outlook. We know that this year is critical to unlocking the flywheel that allows us to capitalize on the immense opportunity to revolutionize plastic, the operational performance, the commercial conversions, the macro tailwinds, the regulatory momentum and the capital access all point in the same direction. The hard work is paying off. The branded momentum is real, and we're just getting started. Thanks, everybody.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the PureCycle Technologies Fourth Quarter 2025 Corporate Update. [Operator Instructions] Please be advised that today's presentation is being recorded. I would now like to turn the conference over to your first speaker today, Eric DeNatale, Director of Investor Relations. Please go ahead.

Thank you, Marvin. Welcome to PureCycle Technologies Fourth Quarter 2025 Corporate Update Conference Call. I am Eric DeNatale, Director of Investor Relations for PureCycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer; our incoming Chief Financial Officer, Donald Carpenter. Our retiring CFO, Jaime Vasquez, will also be joining the call.

This evening, we will be highlighting our corporate developments for the fourth quarter 2025. The presentation we will be going through on this call can also be found on the Investor tab at our website at purecycle.com.

Many of the statements made today will be made -- will be forward-looking and are based on management's beliefs and assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions and forward-looking statements that can be found at the end of our fourth quarter 2025 corporate update press release filed this afternoon as well as in other reports on file with the SEC that provides further details about the risks related to our business. Additionally, please note that the company's actual results may differ materially from those anticipated, and except as required by law, we undertake no obligation to update any forward-looking statements.

Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including, among other things, changes in connection with quarter end and year-end adjustments. Any variation between PureCycle's actual results and the preliminary financial data set forth herein may be material.

You're welcome to follow along with our slide deck or if joining us by phone, you can access it at any time at purecycle.com. We are excited to share updates from the previous quarter with you.

With that, I will turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Thank you, Eric. Fourth quarter was another period of progress from PureCycle. We ramped our operations in Denver and Ironton, advanced our customer pipeline and made meaningful progress on our growth plan in Thailand. As we announced in the press release, effective March 1, Donald Carpenter will be stepping into the CFO role. I want to first thank Jaime for his service in the last couple of years, wish him well in his retirement. And now I'll turn it over to him for a couple of words. Jaime?

Thank you, Dustin. I appreciate the opportunity and the time that PureCycle has provided me. This is a company with a great mission and talented people that should allow the company to accomplish that mission. And with Donald stepping into the CFO role, there will be continuity among the finance and accounting teams. Donald's time at PureCycle, combined with his depth of knowledge -- finance knowledge, should allow him along with the senior management team to help continue moving the company forward. To you, Dustin, Donald and the rest of the PureCycle team, I wish you the best as you continue to commercialize and grow PureCycle. Back to you, Dustin.

Don, would you like to say a couple of words?

Yes. Thank you. Thank you, Dustin, and thank you, Jaime, and thanks, especially for all of the support and opportunities you gave me to grow into this role over the past 2 years. I share your thoughts on the PureCycle team, and I'm incredibly fortunate to have such an exceptional group supporting me through the transition. I am so excited for the future of this technology and our company. While the role is new, the mission I committed to 4 years ago remains the same, and I truly believe our company has an amazing solution to help end the threat of plastic waste to our environment, both safely and responsibly. With that, Jaime, I wish you the best in retirement, and I'll turn it back over to you, Dustin.

All right. Thanks a lot, Don. I wish you both the best and I'm very excited about the path forward. Additional to this announcement, we previously announced we added 2 distinguished board members to our team, Dr. Siri, who serves as the Independent Director and Chairman of the Audit Committee at the Bangkok Bank and previously served as a Thailand's Minister of Energy and Chairman of IRPC. And most recently, Valerie Mars, who retired as Senior Vice President and Head of the Corporate Development at Mars Inc. We're very fortunate to have both of them.

Now to the business highlights in the quarter. Before I get into the details, I want to frame where we are. We are producing high-quality food-grade recycled polypropylene at scale, something no one else in the world can do. We've qualified our materials in flexible packaging, wrappers, stand-up pouches, closures, thermoform containers, bumpers and numerous fiber applications. Branded pricing is on track with prior guidance and our pipeline has grown to over 170 active projects. The market continues to struggle integrating large amounts of post-consumer recycled polypropylene content into consumer products.

Recycled content is new, especially in the FDA space. And companies are challenging decades old processes to make them work for this emerging space. PCT is helping them.

As our brand continues to rise and other brands get more familiar with our product, we dramatically reduced the adoption challenges. When a brand puts our material into food-grade package on a retail shelf, they're doing something that's never been done before at PCT scale, at PCT quality, and with PCT flexibility. And while customers are extremely excited about our product and how it simplifies their lives, the adoption process, which includes things like lab, pilot and industrial scale qualifications, lots of trials, regulatory reviews, packaging design, line validation, supply chain insurance and internal approvals, it still takes time.

But here's what I want you to take away from this call. The underlying demand is very strong and growing. It's clear to me that the recycled content and consumer products is coming, the regulatory environment is naturally moving in PureCycle's direction and probably the most important thing of all, consumers continue to value sustainability, and it is driving their buying behaviors. The question is not whether brands will buy recycled PP at scale, but when. And we are positioned to be the premier global supplier.

2026 is about converting our technical success into accelerated commercial revenue growth quarter-over-quarter, and I'll walk you through exactly where we stand on that. In the fourth quarter, we successfully added a third shift to Denver, which had previously been a constraint on production. As a result, Denver processed 44% more feed versus third quarter ramping to 14 million pounds, a 35% increase over its prior quarterly high.

We are actively buying from more than 15 different feed suppliers, including most of the largest players in the market and have reduced procurement costs by $0.06 per pound over the last 12 months. Denver has fundamentally improved our feedstock flexibility and cost structure, and I have never felt better about our ability to reliably and economically supply Ironton as we ramp to full rates. Ironton also successfully ramped production in the fourth quarter with a production of 7.5 million pounds. We not only hit a quarterly record for production but also new daily records as well. This doesn't tell the whole story as we continue to manage production levels ahead of the commercial ramp. We are routinely running Ironton with higher reliability and at higher watermarks.

In the last few quarters, I've spoken about how we ran successful rate tests at about 12,500 and 14,000 pounds per hour. We have a lot of data from those tests, which we've analyzed and see some very specific improvements that should allow us to push towards nameplate capacity in '26.

The original design for Ironton contemplated an annual maintenance average. We didn't take 1 last year, but plan on taking one between mid-April and mid-May this year. There are lots of standard maintenance activities that are expected to occur, spanning inspections, cleaning, repairs and improvements. I expect this outage to have really positive outcomes for PureCycle.

If you look back at every planned outage we've had at Ironton, the reliability, top end rate and quality has always improved on the other side. It is our expectation that the same will be true this one. We always incorporate the lessons learned into our procedures and activities, but outages give you the unique opportunity to make changes that are not possible when the plant is running.

Reliability matters to our customers. As we've demonstrated consistent product quality and uptime, we've seen those conversations evolve. Several of our largest pipeline opportunities are now moving toward multiyear supply agreements, which is a direct reflection of the confidence that they have in our operating performance.

Phase I of our on-site compounding started up last quarter. This enables CP2 to be compounded on site and sold to the market. This project allowed us to reduce carbon footprint and cost to produce and improve our final sales price. We're very excited about this addition. And Phase II should be mechanically complete in March and commissioning will continue in parallel to planned outage.

Phase II coincides with the demand planning for these grades and commercial offtake profiles. The Phase II on-site compounding line will be primarily focused on producing compounds for BOPP film, which is used in flexible packaging and thermoform applications, which is used in things like coffee lids to the highest value, fastest-growing segments in our pipeline. Having this capability on site complements existing third-party compounding assets improves turnaround times for customer trials and gives us direct control over the formulations.

We have built and will continue to build inventory ahead of the outage and across the planned application launches, and we expect to ship while our intent is engaged in turnaround. On the other side of this outage, Ironton should be well positioned to service the expected ramp to much higher levels of production and sales later in '26.

Turning to the commercial update. We booked $2.7 million of revenue in Q4, our fourth consecutive quarter of sequential revenue growth. We are actively shipping to 11 customers, roughly half of the branded and half are unbranded with additional conversions expected to begin in early March. While 2025 had real commercial delays relative to our original projections, the technical progress was substantial and the setup for '26 is strong.

On the positive side, 2025 was a year of real technical success. We qualified our material across food grade applications that no mechanical recycler can touch. Flexible film packaging, wrapper, stand-up pouches, closures, thermo containers, fiber, qualification delays are frustrating and noisy, but they only impact the short term, the real long-term value is created through the application technical successes.

The other big positive was that branded margins continue to be in line with our previous guidance. While branded sales have a longer sales cycle than non-branded sales, branded sales are the core focus for this company and where we see the most value in the market. Co-product sales have been positive for us, and we've begun to monetize both co-product 1 and co-product 2, and are seeing prices in the $0.25 to $0.30 per pound range.

Fiber technical successes provided a lot of confidence to the market early on, but the adoption was slow due to fragmented demands and extremely long sales cycles. We de-prioritized it in the near term. And while it does remain a real market for us, we're not going to concentrate our resources there today.

The regulatory landscape has been broadly positive. Our material is accepted in Oregon, Colorado, California, Washington and Europe. New Jersey has been slower. We partnered with the DEP on how our dissolution technology fits within the recycling framework, which has delayed some approvals. The good news is New Jersey has excluded chemical recycling and ISCC Plus mass balance credits, which positions us as the only supplier at scale for food-grade recycled content under the mandates. Large CPGs are lobbying the DEP on our behalf and our relationship with them is strong. I personally respect the position in New Jersey Department of Environmental Protection has taken, and we'll continue to partner with them as they integrate the legislation into action.

2025 was a challenging year for many of our customers. Tariff uncertainty, inflation hangovers, commodity spikes and converter consolidations forced them to redirect their focus on cost savings and reorienting their supply chains domestically, which lengthened approval time lines across the board. We think those high headwinds are largely behind them. The key public message from senior brand leadership is clear. 2026 is about reinvigorating organic growth and investing in innovative packaging. That's directly relevant to us. It's been publicly reported that multiple Fortune 100 CPGs announced significant increases in R&D spending with a focus on product superiority, premium positioning and sustainable packaging formats. After a year of playing defense, these brands are now playing offense. That's directly relevant to us because offensive brands invest in differentiated packaging. And food-grade recycle content is a differentiator.

Despite the commercial progress, the revenue ramp has been delayed relative to what we projected earlier in 2025. Last quarter, we mentioned 40 million to 50 million of run rate demand that we are actively shipping or expected to ship in the near future. That number still stands. New Jersey has delayed some of our ramp, we estimate that applications representing 15 million to 30 million pounds of near-term demand will be required -- will require that approval.

New Jersey applications overall represent about 300 million pounds per year of demand. While this has been frustrating, the demand is still there and the fact that key brands and converters have sent letters to New Jersey on our behalf, speaks to their desire to move forward once this is resolved. The good news is we've been able to shift to other applications that don't require New Jersey approval, and we have line of sight on applications that can contribute to 2026 revenue. In addition to the 40 million to 50 million pounds that we mentioned last quarter, we've added another 20 million to 25 million pounds at full ramp. The earliest that these could be converted -- the earliest of these could convert as soon as next month and one of the most near-term opportunities represents roughly 10 million pounds of annual demand.

The pipeline continues to be strong, growing from roughly 100 projects a year ago to greater than 170 today, and a lot of this recent bill is a result of our success in film, where we continue to see large high-value opportunities. I'd like to also highlight that we've been successfully qualifying pouch applications. Stand-up pouches are one of the most exciting trends in innovative packaging right now. They're lighter, more efficient and actively taking shape from rigid containers, taking share from rigid containers and cardboard boxes. Brands are investing heavily in flexible packaging formats and our ability to produce food-grade recycled polypropylene film for pouches puts us in the right at the center of this trend.

BOPP film and thermoform applications remain the core targets for our compounding operations. And we focused our commercial teams on brands with the highest growth potential. Here are some examples of the end markets that we're actively engaged. We spoke about QSR coffee lids last quarter, and the interest continues to be strong and is growing. We continue to make progress with our first QSR coffee lid project, good product fit, excellent trials and good relationship building between the end brand and converter.

We're also in discussions with 4 additional brands following our recent quarterly announcement about coffee lid innovation. But these same customers also manage a growing cold beverage category that is taking market share. Brands are launching more products in this high incremental margin category. Additionally, brands are also transitioning to PP in 12 states that have already passed single-use polystyrene bands. This will give us additional tailwind to our product in the beverage containers. The net result of the -- is north of 300 million pounds of additional TAM in North America, and it's growing in the high single digits each year.

Beyond cold beverages, premium pet food is a 130 million-pound polypropylene market for BOPP film packaging, growing 4.6% annually as pet owners trade up to higher quality brands. Jerky and Meat Sticks represent 40 million pounds of BOPP film demand, growing 6% to 7% with protein snacking trends. Dermocosmetics, think CeraVe and SkinCeuticals is a 55 million-pound market growing at 7% to 9% as clinical skincare brands shift the PP packaging for recyclability.

In household goods, things like storage bins, kitchen utensils, laundry baskets is a 700 million-pound polypropylene market where Walmart and Target sustainably -- sustainability mandates are creating demand for recycled content. From a base of only 3.3% to 5% penetration today, that segment alone has 150 million pounds of addressable pounds for recycled polypropylene growing at 8% to 12% as the mandates ramp. These aren't hypothetical markets. These are specific applications where we are engaged with brands in our pipeline and where growth trajectory works in our favor.

Let me take a moment on the regulatory landscape because I think it's important to frame this in concrete terms. Every EPR and PCR mandate that's been passed in New Jersey, California, Washington, Oregon, Colorado, and Europe, translates directly into pounds of required recycled content. These aren't voluntary targets. They are law. New Jersey requires 10% recycled content today, 20% in '27 and 30% in 2030. California SB 54 requires 25% source reduction by 2032 with a stairstep approach requiring 10% by '27, 20% by 2030. We have received post-consumer resin certification from the Association of Plastic Recyclers or APR, which is the standard that most state regulators referenced for recycled content compliance. That certification allows our material to be categorized as recycled content across numerous states, effectively clearing the regulatory path for brands to count on PureCycle material toward their targeted -- mandated targets.

The EU's packaging and packaging waste regulation requires 10% recycle content by 2032. When you add it all up, there are literally hundreds of millions of mandated volume coming online over the next 5 to 7 years. And for food-grade polypropylene applications, we're the only global solution emerging at scale. The regulatory framework laying the groundwork for the future.

There's a lot of really strong progress in Rayong, Thailand project. I was in Thailand for a week in January and had many meetings with government officials, commercial offtake partners, feedstock suppliers, local banks as well as IRPC and our very strong local team. A few key developments are worth calling out. First, we see a supply of feedstock well in excess of our needs. We have already signed 9 LOIs with regional feedstock suppliers, 6 domestic and 3 across Southeast Asia, that, even at a minimum annual levels exceed our needs for the first purification line. We are working to expand our feedstock network in Thailand, but we are also finding feed and abundance across Southeast Asia.

Thailand generates approximately 2.5 million tons of plastic waste annually, of which an estimated 400,000 to 450,000 tons is mismanaged. With about 70% of that linking into the ocean each year, making Thailand the sixth largest source of ocean plastic -- sixth largest source for ocean plastic globally. We're finding a lot of willingness from the government and the commercial sector to partner with us to solve this challenge.

The commercial conversations have also been very favorable. Our original assumption was that all products would be exported to North America and Europe. And while we still expect to directly export significant quantities of strong -- significant quantities, a strong dialogue is evolving with domestic packaging companies, including a major film producer that sees our material as a way to grow their export business as well as Fortune 100 CPGs with manufacturing operations in Thailand. We see key markets in automotive, flexible rigid packaging, appliances and fast-growing hygiene market and expect to sign multiple LOIs with domestic customers during 2026. We had multiple meetings with the Board of Investment or BOI and submitted our application to them. If successful, we would reap many benefits, including an 8-year 100% tax holiday followed by 5 years of tax holiday at 50%. This equates to roughly $100 million of avoided cash taxes. We also had many good meetings with local banks and our other banking partners in Thailand, which Donald will touch on later.

The relationship with IRPC is solid, and they have helped us build a remarkably strong domestic team in Thailand. We hosted a community forum with over 250 residents to explain the project, which was very well received.

We have been purchasing equipment and expect to break ground in the second half of 2026, with project completion still expected in 2027. Our Antwerp, Belgium project also continues to move forward for plan. We expect permits in the second half of '26 with construction still scheduled to begin by 1Q '27 and mechanical completion by the end of 2028. Global brand discussions are accelerating as the Thailand and Antwerp projects advance. Many of the Fortune 100 CPGs we're working with have operations across all three of these regions.

We last -- we mentioned last quarter that we expected to complete our initial engineering work for Gen 2 purification design in the first part of 2026. While there is still work to be done here, the initial findings are very encouraging. First, we see no technological constraints on building the higher end of this capacity scale than what we discussed previously or closer to the 500 million pounds of capacity that we mentioned in the range. This is important because costs do not scale linearly. And in fact, the initial design analysis suggests that the incremental cost difference between the 500 million and 300 million pounds is relatively minimal. As a result, the initial look indicates greenfield costs on the Gen 2 lines approaching $1.50 per pound of capacity and for brownfield sites should approach $1 per pound for expansions. This is a really big deal. This cuts down the capital intensity of our business, meaningfully improves future IRRs and puts us back in the ballpark for what it costs to build virgin polypropylene lines. It is also a lower CapEx intensity than what we estimated in the business plan last summer associated with our capital raise.

Scale also benefits us on the production cost side. And while it's too early to give definitive numbers, we see a clear line of sight to Gen 2 cash cost to be below virgin on-purpose PP production lines. While the majority of our focus today is on selling out and ramping Ironton in executing our Thailand expansion, this news on Gen 2 is incredibly important to the long-term value of PureCycle. We've known for years that our process consumes significantly less energy than virgin production. But now we are seeing the cost efficiency translate into a permanent cost and return advantage in the market. A market that I remind you represents 200 billion pounds per year of annual demand and a market that is expected to continue to outgrow GDP for the foreseeable future.

Look, I know the commercial ramp has been slower than we projected. But I'd ask you to look at our history. Every time that we've said we've solved that we -- every time that we said we'd solve the technical problem we have. Every time that we've taken a planned outage, the plant came back better. The challenges that we face today are principally out of commercial adoption timing, not commercial demand, not technology, not operations, not feedstock, and now we have the product, the production and the pipeline. The conversion is happening, it's a matter of when not if. When I take a step back every year during my tenure has had its own theme. 2023, a was about completing Ironton. 2024 was about making the plant work. 2025 was about technically qualifying our product, especially in the high-value parts of the market. In 2026, will be about the commercial ramp and selling out the plant. Our future is bright. We have a strong foundation supported by tech and teams that know how to build. The market opportunity continues to grow in front of us, and the company is ready to lead.

With that, I'll turn it over now to our new CFO, Donald Carpenter for the financial presentation.

Thank you, Dustin. Our revenue goal is unchanged: reach Ironton breakeven, then Corporate breakeven. Revenue ramp has been delayed by customer adoption timing, but we built and staged inventory for product launches later in the year. Core operations costs across Ironton, Denver and Corporate remain largely in line with prior guidance. I'll put more specifics around that on the next slide.

On warrants, we have two series of warrants that were extended. The Series A, which represents 15.7 million of potential shares and the public and private warrants that represent 5.7 million potential shares. We have obtained agreement with the Series A warrant holders to extend through March 17, 2027 at a reduced redemption price of $14.38 per share, representing approximately $205 million of potential proceeds. The public and private warrants have been extended for 3 months with further details in the 8-K filed today. These represent approximately $68 million of potential proceeds.

On capital structure. During Q4, we repaid $20.3 million of high-cost equipment finance debt and retired $9.8 million of principal on the Ironton bonds. We continue to spend on projects across Ironton, Thailand, Antwerp and our Gen 2 development. On operations, we previously said ongoing operational and corporate cash burn were in the range of $8 million to $9 million per month, and this was prior to significant feedstock and free processing costs. Now that we're incurring more of these costs as Ironton ramps, we're still trending within that range with $24.5 million of operational and corporate costs for the quarter.

The incremental production-related costs have been offset by managing discretionary spend and capitalizing on efficiencies elsewhere in the organization.

Revenue timing reflects the customer adoption delays I mentioned. We currently expect improvement as Q2 product launches begin converting our staged inventory. The debt service line includes the nonrecurring equipment lease payoff and bond retirement I referenced on the prior slide. Looking ahead, for Q1 2026, we expect total project-related spend of $19 million to $20 million with $7 million to $8 million for Ironton-related projects, primarily related to the on-site compounding project. The remaining $11 million to $13 million is spread across our growth projects. For full year 2026, total project-related spend is expected to be $39 million to $45 million, with $14 million to $16 million for R&D, which includes cost of our planned shutdown in Q2 and completion of our on-site compounding project. The balance is spread across our growth projects, a majority of which remains discretionary.

Q1 2026 debt service is expected to be approximately $11.1 million, which includes our semiannual convertible bond interest payment and some equipment leasing payments. Regarding financing, we are excited about our prospects for Project Finance given the progress we're making with both Ironton production and our future commercial ramp. Our first area of focus is on securing local financing for our Thailand project. The project data room is open with a large Thai bank. Critical site agreements with IRPC are in place, the EPC on contractor is advancing through final design and cost estimates.

In parallel, we are advancing discussions for our Antwerp project and finding a lot of synergies between the 2 efforts. Antwerp continues to be a strong project as evidenced by our recent success securing the EUR 40 million EIF grants. Additionally, we have approximately $75 million of revenue bonds that we will look for opportunities to monetize. The warrant extensions preserve approximately $273 million of potential proceeds. And together with the revenue bonds and project financing I described give us multiple paths to fund the business through the ramp.

With that, I'll turn it to the operator for Q&A.

[Operator Instructions] And our first question comes from the line of Hassan Ahmed of Alembic Global Advisors.

I know you guys gave a lot of details in there. Clearly, there are a lot of moving parts around the commercial progress and ramp. Just wanted to dig a bit deeper into that. Maybe we can start off with a basic sort of question that the 40 million to 50 million pounds ramp that you're talking about for Q2/Q3 and then there on and after sort of an incremental 20 million to 25 million pounds ramp. How much of that is, for lack of a better way of putting it, forecasted versus contracted? I just -- any further details around your conviction level and the shape of that ramp would be appreciated.

Yes, Hassan, it's nice to talk to you again. Thanks for the question. Look, at the end of the day, we have very strong conviction on our commercial ramp. These things that we're doing right now are very hard. It's eluded recyclers for decades. We have a new technology with a new product, and quite frankly, it just takes time to educate the market on our capabilities. And every time we have a technical success, it opens up the aperture for us to do more and more.

We've talked about the difficulty with predicting the specific timing. We know it's coming and we know it will be asymptotic, but it's not fully in our control. You see things like the number of customers shipping to increases. We see the revenue continuing to increase. We see the size of trial volumes continuing to increase. At the end of the day, the thing that we're building is really a relationship between us and the customer, and we had to get the certifications. We have to show the LCA. We've got to do the trials, we've got to prove that Ironton can be reliable enough to give them the security and supply that they need.

We've got line of sight on these applications. The volumes that you talked about are very good. We are in active discussions for both single year as well as multiyear contracts for those 40 million to 50 million pounds as well as 20 million to 30 million pounds. We continue to see the technical successes, mount with the film, pouches, wrappers, et cetera. The thing that we did with Toppan, Hassan, is really important. I mean if you do any research on CPG, you'll find that there's a major consumer trend to move out of boxes and move into pouches. And we're going to be -- I believe we're going to be the only recycled company that can serve that market.

The market was challenging last year, okay? I mean, like -- now 2025, I think it's always easy to look in hindsight. I think that we all agree to that. I think when you look back at 2025, objectively, you see massive distractions for everybody, for every company. The hangover on inflation, the tariffs, Make America Healthy Again, focus on protein, I mean, all these things were real. And it just diverted the focus of the CPGs to something different. Instead of coming up with a cool new design for packaging, they were worried about reshoring, let's say, production in the U.S. versus China. And I think that 2025 was a bit of a wake up and a reset.

But now what you hear is that CPGs are like dialing in to growth in '26. They're talking about how can they differentiate. There's only a few things you can do. I mean you can change the formulation of what they're selling. That takes a lot of effort, a lot of work. But you can also change the packaging and you can market better and you can put more effort there, and that's what we're seeing. I think from a practical perspective, Hassan, like -- last quarter, we showed this packaging date, okay? And it's a huge technical success. After the call, we got multiple inbounds from other tape producers that are interested in that product. We showed the coffee lid innovation, and now we have 4 new coffee lid companies in the pipeline. We talked about Toppan this time. And I suspect we're going to get a lot of inbounds from the standup pouches because everybody wants them. And no one's been able to solve the film wrapper issue. It's a single-use plastic with no recycled supply and no recyclability until pure cycle. So we have products on the shelves right now. We're continuing to grow the pipeline. The applications are getting better. And our team is just -- is doing a really good job of getting customers excited about our products.

So you asked, I think the core question was, how much conviction do we have about our commercial ramp? And it's very high, okay? We are very, very excited about the next few quarters and where PureCycle is going to go because this work that we're doing right now, quite frankly, sets the foundation for every new commercial activity that we do going forward, both in Thailand and Antwerp and our Gen 2 facilities down the road. That's a great question, Hassan. Thank you.

Understood. Very helpful. And just to wrap up on the commercialization side, and then I have a follow-up. I mean the New Jersey opportunity looks quite large, right? I mean I was just wondering if you could give more details around the time lines associated with that. I mean, this could be a pretty large opportunity for you guys, and it seems fairly imminent.

Yes. I think you have to take a step back. First of all, I think New Jersey is doing a really good job. They're being extremely thoughtful. They're digging into the details of the space. If you think about it, and you reset 5 years ago, the terminology used 5 years ago is completely different than the terminology used today. And for a regulator, gathering information, it's a lot of work to tease out all of the nuances associated with how to regulate a certain thing. What we know for a fact is that chemical recycling in the majority of these regions is out. They don't like the idea of plastic to fuel. They don't like the idea of ISCC Plus credits, and they love the idea of plastic to plastic solutions.

And when you're interpreting the law written by regulators and trying to put it into practice, it takes a lot of education by us to the New Jersey Department of Environmental Protection as an example, and we've been doing it. The process is painstakingly slow, and we understand that. But we're making really good progress. I think we have a very good relationship with New Jersey. We have active dialogues with them. We meet face-to-face. And I think it's really about progressing the education for this topic broadly. In many ways, PureCycle in New Jersey are kind of at the point of the spear. We are leading the industry in terms of where we're going on recycled content on our ability to do things. And New Jersey came out early and led in many ways the recycled content legislation.

And so I think that as these things get clarified and move forward, I think that it's going to provide a lot of clarity for our customers, but quite frankly, a lot of clarity for other regulators as well. Since then, the other regulators have come in and like I mentioned, the APR certification is a really big deal. That means that we are considered to recycled content in many other regions. And at the end of the day, we think that New Jersey will get to the same place.

And when that happens, you're right. There's a lot of demand that's out there ready to go. And we'll get to New Jersey, and then we'll start working with those customers to get our products qualified in and ramping up into 2026.

Very helpful, Dustin. And just as a follow-up, the Gen 2 design work obviously seems very impressive. Just trying to get a better sense of what sort of key assumptions are behind achieving sub-virgin sort of cash costs, maybe in terms of assumptions around energy, scale, yields, et cetera.

Yes. No, that's good. So first of all, we have the pleasure of operating a new technology at commercial scale and Ironton successfully. And I've mentioned this on a couple of calls that the technology in many ways is doing more with certain steps than what we expected. And we've been able to take those learnings and leverage it into our Durham research facility and really get down to the fundamentals of the technology and understand how we can scale it.

And in some ways, Hassan, there are pieces of equipment in the Gen 2 design that you only need to make a little bit bigger. And then in other parts of the process, you need to add parallel trains. But the long result of this study indicates that our technology is very scalable. And when you do that, then you're going to end up scaling costs, reducing the CapEx per pound. And also -- and I'll speak to this in a second, the operational cost per pound also drops pretty dramatically.

On the op cost and maybe the assumptions on yields, I'll remind you that our technology is a plastic to plastic solution. And so we have 100% or nearly 100% yield recovery on polypropylene. Our goal is to remove everything that's not polypropylene out of the screens and create co-product 1 and co-product 2, and so our yield is very high. And our yield doesn't change as you scale. That's an enormous benefit that we have over other technologies. The same is true for operating costs. The reality is that many of the steps of our process require the same amount of people only incrementally more energy and incrementally more steam to operate. And therefore, when you look at the overall dollars per pound that it's going to cost to run this facility, the operating costs just getting divided by a much bigger number, and that number is going to drop significantly.

So we're talking about fee plus a $0.35 per pound number for Ironton and fee plus a much lower number on our Gen 2 facility. Now we haven't -- we're not releasing yet what we think that number will be. But if you're talking about feed at $0.05 to $0.10 per pound and then yield adjusted to $0.15 per pound and you start adding smaller numbers than $0.35, on top of that, you very quickly get to numbers that are below the virgin cost to produce polypropylene. And think about that, Hassan.

I mean, down the road, people -- polypropylene is a growing market. It's a great polymer and people are going to use more and more of this as we go into the future. And so, as that happens and people need to build new polypropylene facilities, what are they going to build? Are they going to build a traditional virgin polypropylene facility? Or are they going to lean into a technology that is proven at Ironton, and they can scale to big numbers, that could potentially give them bigger margins than what they would have on the virgin side. We're very excited about where this takes PureCycle.

Our next question comes from the line of Andres Sheppard of Cantor Fitzgerald.

This is Anand for Andres. Congrats on the quarter. And Donald, congrats on the promotion to CFO. It sounds like you're making good progress on the Thailand debt financing with data room now open. So I was wondering if you could give us an update on the latest developments there? And then how do you see that project progressing?

Yes. Thank you for the kind words. I'm really excited about the opportunity, and I'm also really excited about this particular project. We've made a ton of progress so far. We've put together a comprehensive data room, and our team and the bank's team have been working collaboratively. We're meeting frequently and we're working through this project together.

There's a significant amount of documentation that goes into a project financing of this scale, and the critical agreements with IRPC are in place, and I'm really pleased with the progress on the site design and initial cost estimates thus far. Both teams are really excited and working hard on this. It serves a really critical need for Thailand, and it's a strategic growth location for PureCycle. I've been involved in several project financings over my career, and I'm really proud of the first foot that we put forward with the bank.

Anand, just a follow-on on that. I mean, Donald brings a lot of really good project finance experience. And I think that's going to really sets up nicely for both Thailand and Antwerp and everything that we do in the future. But I'd like to get back to a point that he made about Thailand. I mean, think about this. PureCycle could come into Thailand. When PureCycle comes into Thailand, we will fundamentally change their performance on plastic waste. That is such a compelling story, not only for us because it's a great market and it's a great location and we've got the great tax holiday and all these things we've talked about. But it's exciting for Thailand, too. Because Thailand -- think about Thailand's core industry, it's tourism. Think about how negatively tourism can be impacted by plastic waste. I mean, in a way, there are a lot of existential benefits to Thailand by adopting a technology like ours, and we couldn't be more excited to get going there and get this project up and run. It's a great question, Anand.

Got you. And maybe as a follow-up, on the call and on the presentation, there was lots of great macro commentary on the TAM, whether it's cold beverages or cosmetics. And so I was wondering which verticals you see as the most promising with respect to your customer pipeline, whether it's automotive or snack bar wrappers and what should investors be focusing on here?

Yes. Look, I think this is going to develop over time. I think short term, we'll be heavily focused on closures and injection molder projects. These are very much in our wheelhouse. We've got a lot of experience, and those run really well. I think that what you'll see as we commission the Phase II of compounding at Ironton and get that compounded facility up and running, you're going to see a tremendous amount of benefit arises from that project into the thermoforming and film activities. Film and thermoforming have been very elusive for recyclers. This is very difficult to do, and it's difficult to get the quality needed to make those projects. And I think that while short term, we'll be focused on something a little different. I think that we're really going to grow into this concept of thermoforming and film, and I think that's going to be an extremely strong market for us because not many people can participate in it, and it's one of the largest growing segments on the macro side.

Our next question comes from the line of Gerry Sweeney of ROTH Capital.

Listen, I -- when we look at everything, it sounds like -- and I caught some of this on the call, when you're engaged with brands, and you sell them to brands, it sounds as though they're looking for a couple of things. Obviously, one was reliability, which I picked up. I think I picked up on your prepared remarks; and two, you have brand testing of the product. It feels as though the brands are getting more and more confident. One, they can see what's happening in Ironton reliability is increasing. And two, going through the brand testing. So is this sort of path forward? Is this an accurate assessment as to what's happening today?

Yes, I think so. I mean, I think both of the things that you just mentioned there are very true. Ironton operating better and better every day, has given confidence in brands. That's -- there's no doubt about that. I mean we routinely have tours out to the plant and people always be very impressed.

I think on the testing side, I think the more experience that we get testing and qualifying different products. I mean, it's very simple. It's like we have things in our hands that we can show people, okay? When we make film and we print on film, we can hand people a piece of film and say, see what we can make and then people can immediately connect to it. And I think that, that reduces the hurdle for getting started with different applications. So I think both of those are very true.

But I don't want to understate just the methodical nature of brands going through this process. I mean we can't control it. But we've gotten very good at answering their questions because a lot of the questions are repeat over and over and over. But they're very methodical. I mean, a brand has built an entire lifetime building that reputation. And so in order to make a change, that brand has got to feel really good about who they're partnering with. That's why we focus so much our comments around the trust built between supplier and customer. I mean there's relationship building, there's product quality building. There's all these components. There's 20 different steps or more that you have to go through to get to a yes on a customer like this. And it just takes time. And look, from an outside looking in and also from the inside looking in, it's very frustrating. It takes time.

And -- but if you lift your head up and you see the progress that you've made, you realize that you're really starting to make some pretty big strides with big brands that are excited about where you are, and I think these are foundation laying type things. They're going to be very good for us for a long, long time.

In that respect, does this process really help you kind of, for lack of a better term, crack the code, speed up additional opportunities going forward?

The answer to that is 100% yes. But as it eliminates the need for every single brand to go through some qualification process on their side. I mean the reality is that when we get into a lot of the techie stuff like contaminant removals and contaminant validations and things like that, we performed very, very well, and we're stacking a database that we can show customers a trend line that says, "Wow, you really pass all of these different things in a good way. That kind of data is based on history and to give brands immediate confidence in what you're doing. But then they still want to test it on their machines and they still want to make sure it looks right on their material. And so they're going to do some of their own testing. But every time we do something, we prove that we can do it and then the brand gets comfortable with it and the next brand coming in has a bit of a shorter ramp to get started.

One more quick question. The Ironton, I'm not going to call it an outage, I'm going to call it a turnaround. So you -- it sounds like you have a lot of confidence in uptick in utilization post-turnaround. Are there line of sight to a couple of things that you can fix, implement that gives you confidence on that uptick?

Yes. I mean, look, this is a very traditional turnaround. When we first built this company, we had an expectation to do 1 per year for 30 days a year. Actually, last year, we didn't have to do that, which I think bodes well for the future in terms of how often will we need to do this. Look, I think we're going to do a whole lot of stuff that's very normal, very easy. And then we're going to do a few things that are very exciting. There's -- any time you run a facility for a couple of years in a row, and we've been running very steady. We obviously have our ups and downs. Reliability continues to improve. But like, by and large, this plant is up and running full time. And when you do that, there's just a certain piece of equipment that you can't get to because it's running, you have to take it out as you do it. So there's a lot of simple things like instrumentation replacements and instrumentation upgrades. But I think the most important thing about this outage really is the data that we collected when we did our 2 test runs. We did a test run at 12.5. We did a test run at 14, and both of those gave us insight into constraints that we see in the facility.

And I -- we're going to attack those items. We're going to get the plant back up and running, and we're going to -- we're going to push the plant to higher watermarks. And as we do that, we'll learn more, we'll do more, we'll grow more, and we'll continue building that into our operations at Ironton. I'm really excited about the turnaround, as you call it. We call it that as well. I'm excited about it because every time you get to open the equipment, look inside, learn more about what your technology is doing, it just makes you better. It's a core team, and I'm very confident that we're going to come out of this outage with a much better facility than we've got right now.

Our next question comes from the line of Jeffrey Campbell, Seaport Research Partners.

Dustin, I don't want to gild the lily, but my understanding is that there is no other DP recycling method, including chemical recycling that is qualified for BOPP application suites to PureCycle's level. So just to confirm, when you're talking about thermoforming and the compounding capabilities that you're going to develop this year as a long-term driver, this is related to PCT's BOPP technical capabilities, correct?

Yes, I think that's a good way to speak to it. I don't want to over speak for other technologies. I mean there's a lot of nuances when something like chemical recycling is mentioned. There's straight up incineration, there's pyrolysis, there's ISCC Plus credits. Those things are in a different category because most customers prefer plastic to plastic, not mass balance solutions or plastic to fuel solutions.

When it comes to our ability to do BOPP, I think we stand alone in the market right now, okay? Whenever you make BOPP, the simplest way to think about it is imagine taking a piece of plastic and stretching it really, really, really thin, so it can turn into 1 of the 7 layers on a chip bag or one of the layers that covers up meat packing or something like that, it's really thin. If you have any contaminants in that pellet, whenever you start to stretch it, it adds blemishes. They can add like little pimples that will look like stretch marks. It will add problems in the operations where it could break when they're running it. All these things are real concerns for BOPP producers. And as a result of that, yes, I mean, what we're finding is that because our purification technology purifies at the molecular fundamental level, we're able to remove solids, ash, colors and other contaminants to a level that just works on BOPP. And this isn't theoretical anymore. A couple of quarters ago we talked about Bruckner on a small pilot line. Well, since we have the Bruckner success, we've been doing it on the industrial scale. So we've got, I think, 3 or 4 -- 2 or 3 industrial line size success trials that have worked really well. I mean, these are all big machines. I mean, these are like 6.3-meter machines that are making film with our product, and that is cool. It's super exciting, and I think it's going to be the future for us.

Great. When you speak about the percentage of recycling the states are increasingly requiring, are they specifically requiring certain plastic types? Or are these sort of broad statements of the amount of recycled content they want, however it's arrived at?

Yes, that's a good clarification question, Jeff. The answer is kind of both. I mean, if you look at that slide, we mentioned the percentage, but there's a small note below it that says those percentages apply to lots of different things. In some cases, they apply to specific categories of plastic like PP or PE or PET, in other cases, it applies to specific types of applications like rigids or bottles or something like that. And so you really have to dive into the details. I will tell you that we've done a lot of research on the regulatory front. I think we're getting smarter here. It's a very dynamic market that's very nuanced, but we're learning more and more about it every year.

And I think that the general trend is 2 things. One, broadly speaking, regulations fall into 2 buckets. One is recycled content and the other is EPR. And two, it's coming. Like the regulations are real and they're coming. And in many ways, they're coming faster in the U.S. I mean everybody talks about Europe and the PPWR is really coming in Europe for 2030, and our Ironton facility is going to be online just in time for that, which is going to be great for brands over there.

But actually, states are leading quite a lot, and we're starting to get a lot of inbounds from customers on how to handle different regulations that are coming. The SB-54 in California is a very real thing. And a lot of times, California regulates and the country moves that direction, we saw that with fuel standards a decade, 1.5 decades ago, and we could see that happening here as well. And I think that we're well suited for the future.

The reason I asked the question is because I wondered, aside from different categories of plastic and so forth. Is there any notion of circularity versus the reality of mechanical recycling that it gets recycled 5 or 10x then it becomes a hard patch. So -- are you hearing any discussions of that when you're working with the regulators?

I would say that the concept of circularity is there in principle. I would say it's not legislated at this point just yet. Definitely, people are looking for circularity. A couple of things to point out on that, though. One, if you look at New Jersey, in particular, we bought over 10 million pounds of feed from New Jersey last year. And so I'm -- I think New Jersey is excited about this, too. But I'm really excited about what we're going to be able to do in New Jersey. I mean we're actually going to take waste from that state, be able to show them how much employed from that state, convert it into something beautiful and then let them turn into something that a customer can buy over and over. That is New Jersey becoming circular and they're super excited about it as are we.

The other point on the recycled content is that with respect to the circularity is brands definitely value that, and so we get a lot of inbound questions about feedstock. Can we use this feedstock and then make it back into a product that they can buy again? There's a lot of discussions there. It's just not -- at this point, it's not legislated in.

Yes. Well, it's not surprising because you're the only ones that can do it. But my last question is kind of a one that I get a lot from investors. And I just kind of wanted to give you a chance to put your $0.02 in. We continue to see PET recyclers pulling back on production and even shuttering facilities in the U.S. and the EU. Can you help investors understand why demand for PCT's recycled PP will continue to grow while recycling of other types of plastics appears to be languishing.

Yes, it's because we make a premium product. Okay. A lot of the recyclers, they're struggling in economic times like this because they sell a product that competes with virgin or sells at a discount to virgin, and it's difficult to make money there. I think that you have to have a differentiated product, which we do. And so I feel really good about our technology in the long run for a couple of reasons. One, I mean, as this dynamic begins to emerge, I think that you're going to start to see downward movement in feedstock pricing. That's good for us.

I think that as we add compounding to our capability, we're going to start to monetize the value of the coproducts that come out of the feed and get better value out of that. That's very exciting from both a margin perspective as well as overall system perspective. And then the more and more that we do to qualify different product applications, which -- I mean we're doing it in spades. I mean, we're qualifying new things all the time. I think it just gives us more optionality on the offtake side, okay?

I mean we will -- our supply to customers will be limited, okay? We don't have an infinite amount of supply for all the customers that want our material out of Ironton. And so the more that we can do to create optionality for where we choose to sell our product, which will ultimately depend on where did we get qualified and who wants it the most is going to drive that overall supply picture. And I think that the technical qualification that we're doing is just opening that up to give us a lot of flexibility for where we go in the future.

Our next question comes from the line of Eric Stine of Craig-Hallum Capital Group.

This is Luke on for Eric. So first, is there a time line for when you might finalize the site for your Gen 2 facility? I know Thailand has mentioned in the past as a potential suitor since it's a really appealing market. But could you just talk about some of the factors that are going into this decision?

Yes. I mean I think the first step is for us to really get a good handle on the overall technology for Gen 2 and then the cost position for Gen 2. And I think that we're getting better at that, but we still have more work to do. So I don't want to get too far ahead of it because there's work that we need to do to finish that up. Look, we're very excited about Augusta. Augusta has been a good partner for us in Georgia. That's a really nice site, and we can build the facility there. We've been very public about that Gen 2 going there first.

Look, I think that -- I think that every site that we've announced in the past is a good location for Gen 2, okay? Where the first 1 goes, that's open for discussion right now. We are very excited about the Augusta facility. But you mentioned Thailand, honestly, I think that's a great location, too. We're finding lots and lots of opportunities on the feedstock side to fill that facility, I think the integrated brownfield opportunities there will help us on overall CapEx efficiency.

But one of the interesting things that will happen, I didn't speak to this on the call, but 1 of the things that will happen is, actually, the footprint required for a Gen 2 at $500 million, it's not even that different than a footprint for Ironton. It's a little bit bigger. I mean it swells a bit. But when you start talking about how much capacity can you put on each site, like the more efficient you get with building Gen 2 and upsizing that equipment, actually, the more capacity you can put on each site. And so when we talked about Augusta hosting 8 lines, I think it will be able to do 8 lines potentially 8 Gen 2 lines. We have to work the math. But I think that with Augusta, Antwerp, Thailand and also with our partners up in Japan with Mitsumi company, I mean, all of those sites are perfect for expanding into. And I think that you'll naturally see us start to do that with the Gen 2s in the future.

Got it. That's helpful. And just as a quick follow-up here. So, what are your plans for prioritizing which customers will get capacity at Ironton since you really only need a small percentage of the pipeline that you're engaged with the fully scale before you booked out.

Yes. I mean, look, I mean, we're evaluating that. I mean, quite frankly, we're filling the pipeline first, sell it up, and then we'll make that -- sell it out, and then we'll make that decision. I think we have a lot of flexibility. What I can tell you is we're leaving ourselves open on contract flexibility. We don't want to get baked into a long-term contract that could restrict us in the future. And so we'll be able to optimize that over time. Typically, polypropylene contracts are 1 year at a time, and then you renegotiate. And I think that as we build the flexibility, we're going to have the ability to optimize that over time.

This concludes the question-and-answer session. I'd like to turn it back to CEO, Dustin Olson for closing remarks.

Yes. Look, I appreciate everybody dialing in on a late day today. We've had a lot of prepared remarks. I know there's a lot that you're going to have to go through. We are always very available for your questions. So sleep on it tonight, calls back tomorrow and we'll do more. I think you can tell from our comments how excited we are and how confident we are about 2026. So buckle up, enjoy the ride. 2026 will be a great year for PureCycle. Thanks, everybody.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Good day, and thank you for standing by. Welcome to the PureCycle Technologies Third Quarter 2025 Corporate Update Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Eric DeNatale, Director of Investor Relations. Please go ahead, sir.

Thank you, Kyle. Welcome to PureCycle Technologies Third Quarter 2025 Corporate Update Conference Call. I am Eric DeNatale, Director of Investor Relations for PureCycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer; and Jaime Vasquez, our Chief Financial Officer. .

This evening, we will be highlighting our corporate developments for the third quarter of 2025. The presentation we'll be going through on this call can also be found on the Investor tab at our website at purecycle.com.

Many of the statements made today will be forward-looking and are based on management's beliefs and assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions and forward-looking statements that can be found at the end of our third quarter 2025 corporate update press release filed this afternoon as well as well as in other reports on file with the SEC that provides further details about the risks related to our business.

Additionally, please note that the company's actual results may differ materially from those anticipated, and except as required by law, we undertake no obligation to update any forward-looking statements. Our remarks today may also include preliminary non-GAAP estimates that are subject to risks and uncertainties, including, among other things, changes in connection with quarter end and year-end adjustments. Any variation between PureCycle's actual results and the preliminary financial data set forth herein may be material. You're welcome to follow along with our slide deck or joining a phone you can access at any time at purecycle.com. We are excited to share updates from the previous quarter review.

With that, I will now turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Yes. Thanks, Eric. Thank you all for joining today's call. It's been another quarter of meaningful progress for PureCycle across all parts of the business. We're ramping operations, starting to ship to key customers in Q4, and we're excited about the growth ahead.

I'd like to begin with the recent board changes that we announced. I'm very pleased to welcome our newest Board member, [ Dr. Siri Jiraungpan ]. Dr. Siri has an impressive resume and I believe he is going to be instrumental in PureCycle's future success. He's the former Chairman of the Board for IRPC, this is our partner in Thailand and is currently serving as an independent director of Bangkok Bank, the largest bank in Thailand by assets. Dr. Siri is an incredibly bright individual. He's got degrees from both [ Caltech ] and MIT and chemical engineering, and he has already made an impact when interacting with the Board and the PureCycle team over the last few weeks. His polymer expertise has deep network in Southeast Asia and passion for PureCycle is bringing good energy and perspective to our decision-making process. He will serve a key role in our debt financing activities as well as support our technical and project teams. I'm excited to have him join the team.

I'd also like to personally thank [ Jeff Feeler ] for his service on the Board over the last 4 years. He has been an instrumental part of getting PureCycle to where we are today. And from a personal perspective, he has taught me so much about how to think about our business, our activities and how to lead this organization effectively. His departure coincides with Dan Gibson of [ Celebre ] Capital joining the Board 3 months ago.

Operational performance has shown steady improvement. Ramp-up activities underway at both Denver and Ironton further reinforcing our confidence in the business trajectory. Q3 was 1 of the highest quarter of production in the company's history. September was the highest month at 3.3 million pounds and was limited by fee.

At the end of Q3, we successfully added a second shift in Denver during the quarter and plan to add a third in Q4. This will bring Denver's capacity to approximately 100 million pounds annually. The compounding expansion at Ironton continues to be on track, and we expect this to significantly reduce complexity of supply chain, improve our product offering, lower our cost and meaningfully widen the market for available sales.

On the commercial front, we continue to make a lot of progress. We scheduled to ship material in Q4 to P&G's converter for application production that are scheduled to the shelves in early '26. Additionally, we are working to finalize and ship for other P&G applications in Q1. We continue to add to the P&G funnel. We have made major strides on the operational front, and we believe we have alignment to meaningfully grow their volume in 2026. We have also made standout technical progress on numerous applications and are beginning to narrow the focus to high-value applications. One of the biggest successes have been with white thermoform coffee lids, this led to progress with 3 of the top 5 quick service restaurant companies or QSRs and we expect to be shipping into stores for a top 5 QSR group in the fourth quarter and ramping in 2026. We've made tremendous strides in the commercial and general trajectory is very positive. We've also made -- we also have a much better sense of what our customer volume expectations and needs are for the next year. While the timing of any ramp is always hard to pinpoint with certainty, we do see initial volume indications between Emerald, Procter & Gamble, QSR coffee lids and other converters in the range of about [ 40 million to 50 million pounds ] annually. To put a [indiscernible] point on it, we see significant volume converting from just 4 to 5 projects, and we have another 75 to 100 projects churning through the hopper. Given our technical successes and the product line that we've developed, we feel confident about the long-term demand for ironton.

The sales funnel continues to be very strong and successful conversion of only some of these would be large enough to sell out Ironton many times over. The focus has shifted more towards converting these large applications into sales and less towards growing the funnel. Even in a challenging consumer spending and petrochemical environment, we continue to see robust demand and pricing in line with the unit economics we have previously laid out. Our growth plan continued to progress during the third quarter. The personnel in Thailand continues to grow, and I'm excited about the team that is being put in place. The [indiscernible] permitting process continues on schedule, and it is extremely good news that our proposal to the EU Innovation Fund or EIS, was accepted. We expect to receive final grant approval of up to EUR 40 million by the end of Q1. We continue to progress our Gen 2 purification design work through [indiscernible] and beyond and expect this to be completed in the first half of 2026.

Overall, this has been another quarter of extreme progress. Branded shipments are moving. We're in the final stage of commercial negotiation with a number of very large potential applications, and we are accelerating. We are doing something that has never been done before. The operation Ironton and Denver continued to show progress during the quarter. Ironton produce 7.2 million pounds in this quarter and 3.3 million pounds in September, both new records. Denver continues to ramp as well, processing 9.4 million pounds of feedstock in Q3 and 4.4 million pounds in October. This was possible due to strong reliability performance and successfully adding a second shift in Denver. We have plans to add a third shift in the near future, and this will allow Ironton to continue to ramp to higher rates of production in coming quarters. We have developed a really strong relationship with our feedstock providers and are taking product in numerous locations, some of which are among the largest waste companies in the country. These companies value steady and ratable offtakes and thus, it makes sense to deliberately and systemically ramp Denver volumes in conjunction with Ironton production and sales. and speaks to our confidence in the commercial ramp in front of us. The amount of feed coming out of Denver was a constrained Ironton production in the quarter and with the additional shifts this should be relieved going forward. The [ 100 million ] compounding expansion at Ironton announced last quarter is on track for mechanical completion in December. And in addition to that, we've already installed the co-product 2 extruder on-site and started the operational commissioning. This compounding capacity that we're installing will allow for reduced complexity of supply chain, improved product offering lowers our costs and should widen the market for available sales. [indiscernible] compounding expansion is already showing positive results. As you can see in the pictures on Slide 4, we can now take raw co-product 2 coming out of Ironton and compounded into a sellable pellet that we have already sold into the market for $0.20 to $0.30 per pound. As we have ramped Denver, we have developed market outlets to sell the non polypropylene co-product. As we have found markets for approximately 20% to 30% of the ball, that is non-PP which results in approximately a net 20% reduction in feedstock costs. This is inclusive of the waste disposal costs for 18% of the [indiscernible] that we are currently not selling. This is a really big deal. And I believe it's only the early innings of this co-product optimization and that it will be a big driver in our long-term low-cost story.

Operations continues to make progress, and I feel increasingly confident about our ability to ramp production in coming quarters. To pace the commercial ramps, we expect to run the facility at 60% to 70% rates for the next 3 to 6 months and then ramp to near nameplate in the second half of the year.

Now turning to the commercial update. Some of the largest brands and companies in the world are becoming interested in our products. This is a tremendous investment for the quality of our product and the future of our company. It's important for our teams to stay focused on developing these high-quality demand applications like this. While there have been some delays with respect to the overall rollout, it's important to note that none of that was driven by technical capabilities of our product or the market's underlying demand for it. The delays relate to developing regulatory dynamics in states, which are largely behind us as well as the natural delays that came from 2 mergers among the 4 largest global converters. Both mergers impacted the timing for a few contracts that we had initially expected to close, start moving in Q3. We None of this has impacted the long-term progress or where things are going. Frankly, confidence in the end state of where Ironton is headed has only improved. I continue to see potential demand in the funnel, well exceeding our ability to supply it by multiple times over and a growing list of qualified products to take us there. If you [indiscernible] to the customers that we're beginning to ship to, with the ones we already have high visibility to ship to in the near term, this represents approximately 40 million to 50 million pounds annually at full ramp. I've spoken a lot over the past few quarters about how our resin continues to get qualified in numerous applications, especially those like film and fiber that traditional mechanical recyclers cannot serve. I've also talked about the value of compounding business and how it is a core component of how we can take our purified product and transform it into exactly what the customers require. So with that in mind, I think it's valuable to present to the market our current product portfolio with which we're going to market. There's a lot of technical data in there, but I think it's important to note a few things. First, all of our products serving food-grade end markets have FDA LNOs. Second, all of the material that we process has both Green Circle and APR certifications for post-consumer recycled content. Third, our general purpose material does not require compounding. However, we use compounding to augment the mechanical properties and to deliver a single pellet solution to customers. This product portfolio is a function of a lot of incredible work by our technical and R&D teams as well as demand and pricing discovery by our sales team over the last year and is a big part of why I'm so excited about the future of PureCycle. No other recycled PP [indiscernible] can offer to the market what we can.

Last quarter, we told the market that we had 17 applications that had successfully passed industrial trials and that we're in later stages before commercialization. I want to give as -- I want to give a detailed and update as possible on these. The key takeaways here is that we are progressing and converting the funnel.

We completed negotiations with an unnamed consumer goods company during the quarter and expect to ship product for a thermoform application in Q4. 2 large applications for yogurt cups had to undergo lengthy odor and taste test, but that's now complete. We successfully made industrial adhesive tape for a top 5 manufacturer during the quarter. This is very similar packaging tape consumers use every day when preparing to remove or when shifting a gift to the postal service during the holiday time. They informed us that they do not that they do not -- that they -- sorry, they informed us that they want to do additional testing on a [indiscernible] machine, which was planned for November. This will be our first commercialization of BOPP and believe this can be a double-digit annual volume opportunity for PureCycle. The only real disappointment in the funnel was the long brand adoption cycle we're seeing with fiber. We're fully technically qualified with numerous fiber app -- fiber producers, but this is a very fragmented market with literally thousands of small textile producers making decisions for apparel. It is taking longer to build out the new projects with end customers during the challenged market conditions. The only application of the 17 that PCT dropped out of the funnel with small consumer goods application. This is one of the smallest applications in our pipeline and PCT chose not to pursue due to the required internal resources to develop the project. What's really exciting to me is the number of new opportunities that have entered the later stages of the funnel. Many of them are with Fortune 100 brand owners, specifically across thermoform and BOPP. As I've mentioned, these last few quarters, part of the reason that we have qualified so many applications is to prove out the market depth across different segments and end markets. Not surprisingly, FDA flexible film or BOPP is toward the top of the list. Thermal forming for QSRs, namely for coffee lids and cups as well as for other food container opportunities are also emerging as 1 of the best places for us to focus. The demand from just 3 of these large QSRs for coffee lids alone could be enough to sell out Ironton.

We have had a PO -- we have a PO in hand to begin shipping for the first of these top 5 global QSRs in the fourth quarter and are closely working with the top -- with 2 top QSRs and they have both told us that they want to move forward but are waiting for a couple of internal approvals before doing so. BOPP film continues to progress on schedule and trialing success with [ Bruckner ] has unlocked with -- has now locked trials with brand owners of multiple top 5 snack brands. These are huge volume opportunities and currently cannot be served by mechanically recycled product due to the technical challenges of producing BOPP. We've also had virgin resin producers reach out to us for BOPP supply. The success we've seen with the first adhesive tape trial has led to interest and scheduled trials for other brands. To be clear, both white thermoform and BOPP film technical developments are very complex, and this is a very undersupplied market. We've proven that we can make the grades, we've tested it and it's working. And while they took additional time to complete the development of trials, the interest in this segment is strong and moving quickly -- moving more quickly than other applications. We believe that the single-use nature of many of these applications is driving interest and quicker adoption by QSRs and snack brands. Additionally, due to the lack of true recycled demand for these applications, we believe many of these companies are currently using currently by ISCCs credits for roughly 70% to 80% per pound over virgin to cover their regulatory requirements.

We continue to make progress with Procter & Gamble during the quarter. They are 1 of the most technically demanding companies due to their intense focus on quality and brand image. And I'm very excited that we expect to be shipping product in the fourth quarter with these caps making it to the shelves in early 2026. The relationship with Procter & Gamble is transitioning to an operational relationship. We meet weekly. We are well aligned and are both excited about this first application and the pipeline that's following. The partnership with Churchill continues to ramp with incremental end customers, and I'm very excited that we will be producing cups for the release of a very popular upcoming franchise film release.

Additionally, there's a major sporting event taking place in the United States in 2026, and they have confirmed that they will be using our run it back cups during the entirety of that event. These are both nice volume additions, but even more importantly, I believe there will be great opportunities to showcase the PureCycle brand to a broader audience. It's also worth noting that 1 of the, 1 of the big 4 sports leagues has invited us to a Private Stadium Operations Conference or will have an opportunity to present our cups to all the franchise procurement teams at the same time. There's also a lot of positive news emerging from the regulatory front. 7 states covering about 20% of the U.S. population, have passed our extended producer responsibility regulations or EPR for packaging over the past 4 years. On top of that, states like New Jersey have passed and are implementing laws that mandate recycled content. Further builds are also being introduced in numerous states across the political spectrum, including places like Tennessee and North Carolina. These bills were passed for the last 3 to 4 years and are just now being implemented. I believe this will force many large brands who operate an interstate commerce to ship to almost every state to adopt our material, and we expect will only accelerate as more states implement these policies in '26, '27 and beyond. We're ramping up our efforts to educate the steps on the positive role that the PureCycle can play in compliance to the new rules. Many new independent publications like the PRE white paper for dissolution and the NOVA Institutes Definitive Chart for recycled technologies are helping to place the right designations on plastic to plastic solutions at the regulations demand. PureCycle is very well positioned to be the premier solution for many brand applications. The regulation in Europe regarding PPWR as well as mandated recycled content for automotive continue to be planned for implementation towards the end of the decade and our recent successful application for the EIF grants speaks to the momentum PureCycle -- through the momentum for Pure Cycle in Europe. We will continue to educate all agencies and regulatory bodies on how PureCycle can support the legislative efforts around the globe.

The growth plan we outlined to the market last quarter continues to progress. Since announcing the Thailand project earlier this year key feedstock LOIs have been signed and the amount of material available appears to be more than required to run the facility at full capacity. In Europe, permitting for the [indiscernible] facility is progressing as planned, with construction expected to commence thereafter. Our proposal to the EU Innovation Fund has been accepted and we anticipate up to a maximum of -- maximum grant of EUR 40 million by the end of Q1. Between the capital efficiency of the Thailand project, the EIF grant for[indiscernible] and the capital already spent on long-lead equipment, the remaining capital requirements are limited relative to the scope of these projects. We're in a good position to progress these 2 projects over the next 3 years according to our original plan.

Additionally, we're on schedule to complete the final engineering for our Gen 2 purification line design work in early 2026. While not finalized yet, we still believe the capacity will likely fall between [ $300 million and $500 million ] annually. On the sciencing front, we have initiated debt financing efforts in Thailand in collaboration with local banks are making good progress to secure the financing and believe that we remain on track for financial close in line with prior communications.

With that, I'll turn it over to Jaime for the financial presentation.

Thank you, Dustin. As shown on Slide 16, we ended the quarter with just over $234 million of unrestricted cash. In addition to the cash on hand, we still hold about $87 million of revenue bonds that we plan to sell in the future to further support our growth initiatives. Also, as we mentioned in our June growth update, we have almost $25 million warrants outstanding that expire in March of 2026 and must exercise at a price of $11.50 per warrant prior to that time. In addition to the potential proceeds from the warrants, our team is pursuing other nondilutive financing arrangements including the successful EUR 40 million grant application for our Belgium project that Dustin just mentioned.

Our operations and corporate spend was around $37 million, which was slightly lower than the $39 million spent in the previous quarter. We anticipate that our operational spend will remain at similar levels adjusted for increased spend associated with the ramp-up of commercial sales. Additionally, we expect growth capital spend to increase beginning in early 2026. We are working on detailed project plans and we'll provide more insight once the spend curves associated with those plans are finalized.

I would now like to turn the call back to Kyle, who will open the call for your questions.

[Operator Instructions] And for your first question, it comes from the line of Andres Shepherd from Cantor Gerald.

Can you hear me okay?

Yes, Andres. We hear you loud and clear.

Wonderful. Congrats on the quarter and then all the progress. I think there's a lot to unpack, but I wanted to maybe start with all the progress with these QSRs. I was wondering if you can maybe give us some details as to where is the interest coming from? Any feedback you've received. Why have they been so interested as of late?

Yes. I mean, thanks for the question, Andres. What I think is really exciting to me is to see the interest coming from these very recognizable brands around the world. These are not only brands people will recognize, but also brands that we can grow with globally. Sustainability is, quite frankly, really important to these companies and the brand value is core to their success. And ultimately, that's where the true opportunity lies. I think it's important to take a step back a little bit and helicopter up on recycling. I think when any individual thinks about recycling, they probably naturally go to their bin at home, okay? What are they throw in the bin? And where does it go? And everybody has this idea that they want to see that material go back in the products, but they don't see the scale of it. But that's what's interesting with PureCycle and quite frankly, our Denver facility. Our Denver facility is processing so many balls at that location. And when you really watch it for a while to stand on the line and watch the material move through, you see what's coming through. And there's just a tremendous amount of QSR material on the belts in Denver. And I think that when you see that and you share that with the QSRs, it really resonates with them. So I see these products, these companies, products running through the process in ironton, and I see it as a real circularity opportunity. Not only can we give them high-quality product to make the product that they need, we can also take it back to Denver and show them that their material is coming back into their products. So when you see -- so when the companies see their product in the bales at Denver, it resonates. When they see it transform back into things like coffee lids, it moves them. And yes, I mean, as far as big companies are concerned, these QSRs are moving faster. And they're really excited about how we can work together, and these companies need a lot of material. Once we designed the white thorform and the film brands, and we got them tested and showed that they'd work, the excitement really started to grow.

And for your next question, it comes from the line of Jeffrey Campbell from Seaport Research Partners.

Well, first of all, I wanted to congratulate you on strong progress this quarter. I'd like to ask a couple of questions if could. The first 1 is, I want to make sure I understood what you said earlier. Regarding the co-product to, is the plan to sell what you separate from the feedstock to the market although you utilize any of it in your compounding operations?

That's a very insightful question, Jeff. Thank you for that. The answer is both. We see opportunities to take the co-product to that we separate out in our purification facility and compound that into a pellet form, so it's easier for customers to use. That's primarily what we're doing at Ironton right now with our newly installed compounding operations, which were commercialize or operationalizing right now. But you hit on something that's very interesting, and it speaks to where we're going to go with coproducts. The concept of compounding is really about recipe management, and about taking lots of things and blending them together to make something better. And given the compounding of the capacity that we have with a third party as well as the compounded capacity we've installed in Ironton, coupled with the things that we make, both in Ironton and at Denver, it creates a lot of opportunities for us to find synergy. And so I think that your question is good. and that we will start taking some meal from Denver and also bringing it into the co-product sales, which and how much that will be proprietary IP for the company to manage the recipe. But I think at the end of the day, it's going to lead to higher revenue from co-product sales and ultimately lower net feedstock costs Ironton.

Right. Yes, that was kind of what I was thinking as well. I also wanted to ask you, you mentioned that some of your potential customers have to buy credits. Could you expand on that a little bit? And just give us a sense of the value of the PCT is going to provide these people hopefully by [indiscernible] .

Yes, that's a good point. So this is 1 of the things that I'm not sure how much people are aware of what's going on out there. But there are ISCC credits being generated by several facilities across the industry, okay? And some of our customers, we believe, will buy those credits as part of the regulatory requirements for their company. Those credits, the best that we understand are valued at $0.75 to $0.80 per pound in the market, and that's effectively virgin pricing plus $0.75 to $0.80. So that's a really good proxy for the value proposition that we offer. And we should, at a minimum, be at those kind of levels in the long run. But quite frankly, we believe we should be over that. And here's why. ISC credits are not a plastic to plastic solution. It's effectively a plastic to fuel solution that is mass balance to plastic. And that's inferior for the brands. The brands really want to be the consumers, customers buying candy bar, snack bags and things like that. They want to know that the material that they threw into their bin has come back to the products that they're buying and that's a plastic to plastic solution that we offer. And so we offer our consumers, let's say, a real plastic solution, less regulatory risk and less litigation risk. You can see across the regulatory ecosystem that a lot of rules are coming in that limit the use of recycled material. And that limit the use of the ISCC material, and that's where we can come in and fill the gap. I think it's also notable that on many of the brands, the marketing for how they use recycled product becomes very complex, either they don't put the fact that they're recycling content on their packaging or they put a lot of legalese around it that complicates the overall message. And quite frankly, that's why brands like a simple plastic to plastic solution, and I think that's where we're going to start filling the gap.

Right. And the last question I wanted to ask is, are you -- right now, are you [indiscernible] selling very much sure? Or are you building inventory for the compounding that you're going to be able to do equipment installed in the export.

Yes. I mean it's a little bit of both. I mean we sold some PureFive. We've sold some compounded products, but we've also built more inventory that we've sold. So I think that we've got an opportunity as these as these trials convert and the funnel starts to pull and the ramp extends, I think we'll pull that inventory down to show the revenue from that in the future.

And for your next question, it comes from the line of Hassan Ahmed from Alembic Global Advisors.

So I want you to focus both of my questions on the growth project side of things, right? So let me throw the first 1 out. This EIS grant that you guys were awarded. Would love to hear the process around that, what it entails, what this means for your sort of European growth projects?

Yes. Look, I mean, -- this is a little bit third time's the charm. First of all, I want to compliment the team in Europe. We've got an incredible small but mighty team in Europe that has been building toward this project for 3 years. We've submitted 2 times in the past, and we're not selected, but we've continued to improve the quality of the project, economics of the project. And now we are -- we were awarded the EIF this year, and we're extremely excited about it. I think what it does -- I mean, look, it shows a lot of confidence in our ability to bring the technology to scale. I think it shows a lot of interest in Europe to -- it shows a lot of interest in Europe to continue to lean into sustainability. And I think from an economics perspective, the EIF is just a way to further reduce the overall CapEx for the project, which makes the project look more valuable to our shareholders. We continue to look at the overall CapEx of projects and work them very, very hard. And this will be another feather in the cap for the overall return when we put it to use for the development of the project.

Very helpful. And just sticking to the growth side of things. On the [indiscernible] side, it's -- you guys sort of flagged the sort of securing the feedstock letters. I mean, what does that entail? Can you talk a bit about the cost of it, the availability of it, particularly sort of in line with what you guys are thinking in terms of the capacity out there?

Well, I think the punch line is it's just the tip of the iceberg. Okay. One of the reasons that we found Thailand, and we leaned into it is that we believe that's a location for great growth. It's no surprise to anybody that Asia is an area of a tremendous population, and b, tremendous need for waste management, trash management, recycling. And so there's a lot of efforts going into, let's say, small cap projects to improve the handling of waste in Asia. We're starting to see the fruit of that. But quite frankly, all handlers of waste are looking for partners like PureCycle that can improve the net value of the product at the end. Look, at the end of the day, if we can't sell to a higher-margin business, then we can provide better economics to feed to continue pulling feed out of different systems. That will allow us to support the growth of the feed and also allow us to grow our business. So we're super excited about it. I mean, look, we've talked to -- we've talked to so many different people in Asia around the willingness to partner with us and there's a strong willingness to partner. But in many cases, they say things like I'm not limited by how much polypropylene I can find. I'm limited with how much polypropylene I can sell to customers like you. And I think that, that speaks really well to the prospects for our Gen 2 design and where we're going to place it and how we're going to grow around the world.

And you're comfortable with the cost associated with it as well. Is it like the per pound, unit economics of procuring that feed stock?

Yes, I think so. I mean you find it a little bit all over the map. It depends on what stage of preparation has been put into the pellet. But yes, I think the economics look pretty good for us there. We're still in the process of nailing down all of that to firm up the final economics, but they all look very, very, very positive for Thailand. .

And for your next question, it comes from the line of Jeff Grampp from Northland Capital Markets.

Was curious, Dustin, and I think you hit on this in your prepared remarks as well as the deck. A couple of applications are awaiting brand approval. It sounded like you guys have kind of jumped through all the hoops and just waiting for a couple of back office signatures effectively. Like what -- do you have any sense of what that timing looks like? Like what is the inflection point? Are we just literally just waiting on a couple of signatures and off we go. And what might that ramp look like for some of these where you guys sound like you're pretty close.

I think we feel really good about it. I mean, if you look at what we've actually got kind of coming already, that's green lines on our 2 slides. I mean that plus Procter & Gamble is enough demand to get to 40 million to 50 million pounds annually when ramped. And honestly, what's most exciting about the remaining opportunities and I highlighted is what we described on Slide 9. I mean these are really big and with some of the biggest brands in the world. Many of those are category leaders, Fortune 100 types and converting any of those will materially impact the [ 40 to 50 ]. I think we're really encouraged by how the conversations are going and feel good about getting a few of these over the line and get us to a sold-out condition. These brands are very deliberate. They ramp in stages. It takes time, but their needs are real. Their interest is real. And that makes me feel good about what's to come. We are really excited not just to convert these guys quickly and get them in, in the short term. We're really excited to build a long-term relationship with them. So we're selling to them for decades. And so that takes a little bit more time on the front end, but we're doing that and we're successful so far.

Great. That's helpful color. For my follow-up on the co-product monetization side of things. Is that something that you guys think is feasible kind of across the spectrum as you guys get into new continents, is this something that has a depth of market, if you will, in future projects as well? Or do you guys have that level of, I guess, friction or build out at this point?

I think if you break it into Prepco products and purification co-products, for sure, the concept of purification coproducts is directly applicable. I mean our co-product 1 is a very useful [indiscernible] type product. and we're investigating different opportunities to move that into different applications. And I think the value of those applications will grow year-over-year. as we find new opportunities to move that in. And the same thing with co-product too. And both of those co-product we made off of every plant that we build in the future. With respect to to prep-co products, I think it depends a little bit on the region and how sophisticated they are, okay? Generally speaking, I think the answer is yes. I think we're going to be able to take prep-co products also and bring them in. in various stages of our process, whether it be compounding or it's feedstocks into purification. We've got a lot of ideas and opportunities there and we'll handle them by a case-by-case basis. But I think the bigger takeaway here is that the ecosystem that we're building, both on the feed side as well as the compounding side is really transformative, and it's going to create so much optionality for our company to create full value chain value for the company and options to do different things to reduce overall yield loss from the prep process and overall value value creation. We're really excited about the asset footprint we're putting down. .

And for your next question, it comes from the line of Eric Stein from Craig-Hallum Capital Group.

This is Luke on for Eric. So I guess, first. Could you maybe provide a little more color just high level on the financial impact that your shipments in 4Q will have or that you expect to have? And can you outline how quickly you expect to ramp towards full production levels for these contracts?

Yes. That's a good question, Luke. Thanks for dialing in. I think what's most important is to focus on what we're shipping and growing with our customers in the fourth quarter and first quarter. it's always very tricky to know exactly which week or which month these type of shipments will ultimately fall in. But look, they're happening, okay? And the timing of the ramp is hard to pinpoint. But that doesn't mean that we're not -- that does not mean that we're wavering from the prior commentary around the $8 million target per month at the end of Q1 and into Q2. Listen, the bottom line is that the sales funnel continues to get stronger, the largest global brands are now fully engaged and interested. We're increasing revenue but what's most important is selling out Ironton with brands that are going to be there for -- with our customers for the next decade, as I said before. That's a good question.

Right. That's helpful. And just as a follow-up here, I guess, what's your thought process on just inventory and cash use going forward? So we thought we might start to see you build a little bit more inventory this past quarter, which is some of these contracts getting closer to the finish line. Should we expect to see that balance really start to build here in 4Q, 1Q?

Yes. I think from an inventory perspective, I mean, we're going to be ramping rates at Ironton and Denver, consistent with what we see on the sales ramp. There might be a little bit of inventory build as we ramp into the customer sales funnel. But again, that's -- it's tricky to pinpoint exactly which month or which quarter that will happen. Yes. So that's how I go with that.

And we have a follow-up question from the line of Andres Sheppard from Cantor Fitzgerald.

Sorry, I think I got disconnected Justin, I just wanted to follow up, if maybe you can give us a little more details around the 40 million to 50 million run rate that you mentioned in the call. And also, I was wondering if you could maybe, maybe help us connect some dots with the REACH certification in Europe and then the joint presentation with Volkswagen on the Bumper how should we be interpreting that? And anything you can say to that effect?

Yes, that's great. Yes. So on $40 million to $50 million, I mean, I think we've hit that a little bit. But if you look at the, let's say, the green highlighted lines on the projects and you add Procter & Gamble of that, I think at full ramp, we're going to get to the $40 million to $50 million. And it's just, it's just super positive, Andres. I mean like we're really moving forward with some big brands and good names. I mean these are top companies, big global brands that we can grow with, not only in Ironton and in Augusta, but also in Thailand and in [indiscernible]. I think it's going to be a really nice foundation for future plants, future sales, and that's going to be very positive for us. With respect to reach and BW, look, I mean, we are going to -- we are a brand-new company. We're just emerging, and we're doing a lot of great things. And we're going to continue to click the box on lots of different certifications. We did it with Green Circle. We did it with APR. We've done it multiple times with FDA LNO. I think we have 4 or 5 of those now. I don't know the exact number, but we've got several. And we just recently did with REACH. And so reach is just a step to get your product into Europe, okay? If you don't have REACH, you can't ship appreciable volumes in Europe. And now that we have that, I think that we're starting to see already some interest in trials and getting things moving. And I think that will be very interesting for us. The European team has not only been working on the EIF submission, but they've also got a great outreach with different customers in Europe. And as we develop our product portfolio [indiscernible] with the white thermoform and the flexible packaging and the injection molding grades, things like that. We're going to start shipping samples over to Europe at scale and getting customers to really start biting off on those for trials. And I think that the REACH has enabled that. With respect to the 8-K that we put out a few weeks ago with VW, look, I mean I couldn't be more thankful of the partnership with that technical team. They really worked with us to develop the right recipe, the right compound to develop a beautiful bumper. I mean, we've got this bumper actually on display in our office in Orlando, and it's just Beautiful. Okay? And it's just -- it's a very difficult project to get post-consumer curbside recycled product into applications that are as sensitive as automotive. Remember, automotive is 1 of the most complex supply chains in the world and their precision, quality and just perfection is extreme. And so if you've got recycled product that varies in product quality or it has gels in it or it's got whatever contaminants in it that get to the surface to make it difficult to paint or make the paint crack when it's in cold weather, and make the paint crack what it's in hot weather. It's not going to work. And so the most exciting thing about the presentation that we published in the 8-K was the 1 slide that showed the picture. And then the next slide -- right next to that slide, it showed a whole bunch of green dots next to very complicated tests. And that's basically the 2 teams coming together and saying, not only did we build a bumper, but it passed all the required tests for another company that values quality, just as highly as is -- just above everybody else. I mean it's a really quality company. And so I think that -- I do not think that automotive is going to ramp quickly in the next to years for Ironton. I think we have other opportunities that are going to go faster and quite frankly, probably bring more value. But I fully believe that automotive is going to be a foundational component to our growth plan. It's going to be a stable volume for Thailand and for Augusta in the future. And I think that, that particular case is a good example for every automotive company in the world to see that our product works really well in an extremely complex application. And when the other automotive companies see that bumper, they say, "Wow, that's pretty amazing they're ready to pull that off. Great question, Andres.

This concludes our Q&A session. I would now like to hand the conference back over to Dustin Olson, PureCycle's Chief Executive Officer, for closing remarks.

Look, thanks, everybody, for joining the call. I mean it's another good quarter for PureCycle. We've built a unique asset footprint on both ends of our process, feedstock processing and product compounding. This is unlocking opportunities to reduce costs and expand our customer base. We continue to deliver technical improvements to the pipeline. We're seeing strong adoption by major brands in the market, and the shipments are beginning to flow in Q4 of 2025. But most importantly, we're playing our part to improve our planet. We're converting post-consumer curbside waste from your waste spend into high-quality products that consumers can use. This is the holy grail for recycling and PureCycle is starting to achieve it. We're poised to execute on a very strong 2026. Thank you for your interest in PureCycle and your continued support. See you next time, everybody.

This concludes today's conference call. You may now disconnect.