PureCycle Technologies, Inc.

Good day, and thank you for standing by. Welcome to the fourth quarter 2022 corporate update call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand has been raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to turn the conference over to Charlie Place, Director of Investor Relations. Please go ahead.

Thank you, Lisa. Welcome to PureCycle Technologies' fourth quarter 2022 corporate update conference call. I'm Charlie Place, Director of Investor Relations for PureCycle, and joining me on the call today are Dustin Olson, our Chief Executive Officer, and Larry Soma, our Chief Financial Officer. This morning, we will be highlighting our corporate developments for the fourth quarter and subsequent to quarter end. The presentation we'll be going through on this call can also be found under the Investors tab of our website at www.peercycle.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. These 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 for forward-looking statements that can be found at the end of our fourth quarter 2022 corporate update press release and in our annual report on Form 10-K filed this morning, as well as in other reports on file with the SEC that provide 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 others, changes in connection with quarter-end and year-end adjustments. Any variation between PCP's actual results and the preliminary financial data set forth year-end may be material. You are welcome to follow along our slide deck or if joining us by phone, you can access it at any time on purecycle.com. We are excited to share updates from the previous quarter with you. I will now turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Thank you, Charlie. Thank you for joining us today for our fourth quarter 2022 corporate update conference call. We appreciate your support and look forward to discussing our recent developments. I could not be more proud of our PureCycle team as the company's flagship purification facility in Ironton is weeks away from final installation and producing pellets. The whole company has worked hard to overcome various challenges, and like many of you who have followed our progress, we cannot wait to start up operations at Ironton. Over the last six months, we encountered and worked our way through several speed bumps and are now in control of our destiny. we are excited to be able to finally share with you the details associated with the solutions we've developed. It is now time for PureCycle to change the landscape of plastic recycling. Being late on mechanical completion caused the company to miss a 1 December 22 timeline in the original loan agreement and ultimately required a waiver between the bondholders and PureCycle. The process of getting a waiver was complex and time consuming, as there are many points to be resolved and parties engaged. We're extremely thankful for the support we've received from the bondholders to reach this solution. Finishing a project of this scale and complexity has proven difficult, but I'm excited to report that our flagship facility in Ironton, Ohio is in its final stages of construction and expected to be mechanically complete in early April. We are currently on track to circulate solvent, produce pellets, and be in a position to start ramping operations by the end of April. While behind the original schedule set three years ago, this has only shifted the timeline. We still expect to be able to complete our startup plan inside of nine months as originally envisioned. Our goal still remains to produce 55 to 75 million pounds of ultra-pure recycled resin in 2023. During the fourth quarter, we continue to progress the long lead purchases and early engineering activities for Augusta, with a startup plan for the latter part of 2024. We are incorporating project execution learnings from the Ironton project into the Augusta project and are poised to finalize the timeline. In January, we announced the first European location at the Port of Antwerp in Belgium. This location has the capacity to develop up to four purification lines representing 520 million pounds of UPR resin produced annually. We expect startup and commissioning of Line 1 to occur in the first half of 2026. The support for this facility has been exciting and motivating. We look forward to bringing more details to you over the next six months. Additionally, we are excited to progress in Japan with Mitsui, a leading global petrochemicals conglomerate. We continue to progress our detailed joint venture discussions and site selection efforts. The site selection effort for this planned purification facility in Japan is down to two locations that have the capacity for multiple purification lines that could host between 260 and 520 million pounds per year of capacity. Our joint venture with SK Geocentric is finalizing the development budget and financing strategy for the purification facility to be built in Ulsan, South Korea. As you may have seen in the newswire last week, SK recently sent a large delegation to Ironton and left with better clarity and strong excitement about this project. SK has invested literally hours of review, of technical review in this process and have offered technical support whenever needed and have been a very strong partner of ours over the past two years. Financing in this environment has been very challenging for all companies, but I'm very excited to see notable accomplishments in this area. I'm very proud of our finance, legal, and accounting teams for this effort. In conjunction with our waiver agreement with the bondholders, our finance team secured a significant line of credit representing $150 million of borrowing capacity. This financing should not be viewed as our long-term capital plan, but rather provide confidence in our ability to bridge through the Ironton startup and progress our growth initiatives. This will help us raise longer-term funding for phase one of the Augusta project and other projects at a more attractive cost of capital. Additionally, we continue to evaluate incremental short-term financing opportunities and other debt structures. Turning to slide four, we always like to show a recent picture of the Ironton facility so that you can see for yourselves the progress we have made since our last updates. Our teams are working hard to close this project. I can tell you that now that we can see the plant with our own eyes, we can all begin to envision how this facility will operate. While the delays have been challenging, we have taken advantage of the time to train, prepare, and validate our operational plans. Over the next several weeks, we will be publishing a series of videos that illustrate some of our facility details so that you can experience this like we are today. Moving to slide five. In our recent executed waiver with bondholders, we have agreed to the following operational milestone dates for the certification of the Ironton project. Again, I want to note that these are dates required to meet bond covenants, not the timeline that we expect to achieve. Certification that Ironton is mechanically complete by June 30, 2023, we currently expect to be fully mechanically complete in April. Certification that we are producing UPR resin from post-industrial feedstock by July 1. We expect to produce UPR resin from post-industrial feedstock in April. Reach 50% operating capacity or 4.45 million pounds of production for a month by September 30th. We are currently expecting to be operating at 50% capacity in Q2. Complete performance test of running five days continuously by November 30th. we expect to be in a position to run the performance test by early Q2, but may decide to run that test later in the startup phase of our facility. Ironton operating at 100% capacity by January 31, 2024, we currently expect to reach the milestone in early Q4, 23. Formerly closed the project by January 31st, we expect to complete this project in November. We feel comfortable that we will achieve these milestones given where we are today in ramping up Ironton operations. Moving to slide six. Today Ironton is nearly mechanically complete. We still require time to finish the loose ends, mostly relating to the co-products operations, but expect to be mechanically complete by early April. Feed prep, control room, central utilities, offtake, rail operations, all represent the majority of this project, are in operations or are fully commissioned and ready for operations. Finally, three of the six extruders are fully commissioned and able to move plastic through the machines, and three are in the startup commissioning process. Pure Cyclone and its contracting partners are working relentlessly to reach 100% mechanical completion as soon as possible. During the fourth quarter and early this year, we experienced delays relating to engineering rework, extruder component deliveries, and extruder electric equipment damage during commissioning. Adjusting for these delays, we now expect pellet production in April. We've always said that we would like to take time needed to start the facility safely and effectively, and we intend to. When you start up a facility like this, you need to move with purpose and analytical justification. We will ramp the facility with this in mind. When the data supports an increase, we will increase. We will schedule the final performance test once we have gained the early experiences running the plant and when it makes the most sense for the overall operation. I would like to personally thank the 400 craftsmen, engineers, operators, technicians, and professionals across all of our partners for their relentless dedication during the cold, rainy, and muddy days in Ironton this winter. It is because of their support that we are nearing the summit of this mountain. The more we walk around the facility, the more we see the facility emerge in front of us, the more confident and excited we are to run this facility. Moving to slide seven. Our technical teams continue to work closely with our customers on new applications. Thanks to the strong technical collaboration with our partners, we have been developing convincing data that supports superior performance of our resin. The four main characteristics of tests for our UPR resin are processability, strength, low odor, and colorless attributes. Using various additive packages, we can offer the market multiple product grades of varying melt flow and strength characteristics without manipulation of feedstock input. With the help of our partners, we can now show odor analytics which indicate a four-fold improvement to food grade recycle and a two-fold improvement relative to virgin PP. This creates the opportunity for pure cycle PP to potentially replace virgin PP when low odor requirements are required by customers. As a practical example, Pure Cycle products should be able to reduce the new car smell by replacing virgin polypropylene. We have also generated countless beautiful color samples and proven the color matching can be completed without compromise. Quite simply, we believe the Pure Cycle product is superior. We continue to invest in our product development and technology. We have data to support our efforts, and we are excited to share our product with our customers. The margin and demand profile for our product is already significant today, and we expect it will grow in the future as people see the product properties of scale. Moving to slide eight. In January, we were invited to participate in a sustainability panel at the World Economic Forum in Davos. and used this opportunity to announce that PureCycle was selected to develop a purification facility at the Port of Antwerp in Belgium. The development of the site has a capacity for four lines or up to 520 million pounds and is expected to start up operations in early 26. Our team is currently building a financing plan, developing a partnership with a strong financial institution, targeting circular project grants for incentives for funding, Discussions involving feedstock and offtake agreements have been very positive, with LOIs signed that represent a feedstock oversubscription at 125% and offtake nearly sold out at 75%. The outpouring of support for our project has been both breathtaking and exciting, and as we have received over 15 letters of support from government institutions, customers, suppliers, banks, and other supporters of our project. Additionally, we continue to make progress on our joint venture agreement with Mitsui by signing an HOA that outlines the expected key terms of the JVA. We have reduced site selection options to two locations in Japan near high population densities with a capacity to develop multiple lines. In South Korea, PureCycle and SK Geocentric have assigned teams focused on operations and finance to establish and manage the development project budget and financing strategy. Our strong global partnership and progress in Europe and Asia should give the industry confidence in our technology, the demand for our product, and the PureCycle team. Each partner has offered to provide whatever support that we need to help close the Ironton project and improve the scalability. I would like to personally thank our global partners for their support. I will now turn it over to CFO Larry Soma for our financial update.