PureCycle Technologies, Inc.

Good day and thank you for standing by. Welcome to the PureCycle Technologies third quarter, 2026 corporate update conference call. At this time, all participants are in 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 one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, Please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Eric DeNatale, Director, Investor Relations. Please go ahead.

Thanks, Char. 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 third quarter of 2026. The presentation we'll be going through on this call can also be found on the investor tab of our website at purecycles.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 2026 press release issued this evening, as well as in other reports on file at 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 connections 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.

Thanks, Eric, and welcome everyone to our third quarter call. This is a quarter of real progress at PureCycle. We saw two reliability issues that held back production. Branded rail car orders started in October. A large global cosmetics company has announced its work with us, and our costs came in below the range given to you priorly. The quarter itself fell short, but the business is in a stronger position today than it was in August. Revenue came in below what planned. We still expect to reach the exit rate we talked about in August, but not in 2026. Two things primarily hurt us in Q3. First, two reliability issues at Ironton limited production in the third quarter, and they also affected the quality of much of what we made, which meant we could not ship the branded customers for their ramps. That was disappointing, but the important thing is that we solved both of them, and those are two of the biggest wins of the quarter. Production is now in line with current commercial demand and the plant is running at our targeted on-stream times. Second, New Jersey extended its food contact deadline in early September. Much of our selling effort for the second half of the year was focused on closing the food contact programs and the extension moved about 15 of them. Roughly 50 million pounds of expected annual volume at full ramp came out of this year. Earlier in the year, a large share of what we sold was unbranded material. We have to run the plant ahead of branded demand, both to learn and also be ready when branded orders come. And the unbranded sales are how we clear the inventory rather than store it. Those sales carry very low margins, so whether we sell more or less in the quarter has very little effect on the results. What matters is branded sales. A product a brand has qualified with its name on it. This is the volume that takes Ironton to break even and the volume we build on in 2027 and beyond. Despite New Jersey, that ramp has started in earnest. What has happened since is why I'm encouraged. Our selling effort is now focused on non-food programs that are furthest along and they are converting. Branded rail car purchase orders came in October from a very large customer. A large global cosmetics company has announced its work with us, and we expect shipments to begin in the fourth quarter. Our monthly operations spending came in below the range we previously gave you, and our qualified applications have doubled since the end of June, from 10 to 20. Our goals have not changed. Get Ireton through breakeven, prove the unit economics, and grow from there. and yesterday, Fernando Moussa became our executive chairman. Fernando has been supporting PureCycle as a director for the last five years. We have a great working relationship. He has deep experience scaling new technologies and new products and I can't wait to start digging in with him on a daily basis. I will say more about his role at the end of my remarks. The plant turnaround in April addressed production rate and reliability across a number of products, projects. and the rate test afterward confirmed the improvements held. As we ramped in the third quarter, we worked through two reliability issues. Both are solved and the plant has been running well. The lower production of the quarter is why we did not have inventory to meet our internal revenue goals. From here, production follows customer orders. As programs convert and ramp, production increases with them. We know how to run our plant and we know how to make products that our customers want. Our relationships with large brands depend on consistency. These companies are highly sensitive to supply disruption. Having earned their qualification, the job is now to supply each of them reliably to specification on time with every batch and every rail car. That is one of the main reasons we brought compounding on site, an important investment that we made this year. It is available around the clock. We load directly into rail cars. and we make exactly what the customer wants with more than 20 grades formulated in-house. A year ago, a customer's material went to an outside compounder with poor reliability and sample quality. Today, it goes straight to our compounding line on-site, we adjust the formulation during the run, and the next sample ships with the right documentation and certifications. The product shows it. One of our senior quality leaders told me recently that Ironton is making the best product that we've ever made, and I agree. Color used to be one of our biggest challenges, and now it's a selling point. A brand does not want 15 different shades of blue at the top of a laundry bottle, and now we know the color they want lot after lot. That control is the biggest single reason qualifications move faster this year. We continue to make incremental improvements at Ironton. For a long time, the priority was solving the problems of a first-of-its-kind plant, and our spending reflected that. With the plant running more consistently, we have found real efficiency on how we spend, and it is beginning to show in the monthly operations spent. We also signed a three-year feedstock agreement with WM, the largest recycler in North America, for up to 25 million pounds a year beginning this month. We have purchased number five bales from WM for years, and we've run a few circularity programs with them at sporting events. Most polypropylene feedstock is still bought on the spot market, so a contract like this has been rare, and it secures a portion of supply for three years. It also simplifies our operations and improves the polypropylene yield. The relationship is broader than feedstock. WM has deep relationships with the brands whose packaging ends up in bins. and we're working with WM on circularity programs with those brands. What WM collects, we purify and it goes back into the same product. We do not down cycle, we up cycle. And now we have contracted feedstock, commercial scale purification and onsite compounding in one company. And that combination is why brands can qualify us and we can supply them. In early September, New Jersey extended the food contact exemption from 2027 to 2030. About 15 food contact programs moved into 2027 and beyond. Some of those brands are continuing on their own timetable and others have deferred. Two of those programs are quick service restaurant clear cold cups. They were fast tracked and qualified over the summer after New Jersey's conditional approval of Pure 5 in May. and then moved out of the fourth quarter into 2027 after New Jersey's food exemption extension. The delay was disappointing, but we qualified. We are ready to ship and the customers continue to show interest in our volume. We expect both programs to begin in the first half of 2027. New Jersey did not change the mandate for non-food rigid containers. which steps up to 20% recycled content in January, 2027. That covers items such as storage totes and containers for detergents and household cleaning supplies. That is where we have redirected our selling effort with initial positive results in October. In California, they're also adding incentives. Under its packaging law, FSB 54, the latest plan submitted by Circular Action Alliance pays $500 a ton from 2027 for post-consumer recycled polypropylene certified by the Association of Plastic Recyclers. It also applies to film. Both states count Pure 5 resin because it comes from a physical plastic-to-plastic recycling process and is certified recycled content. Mass balance credits, which are based on bookkeeping rather than physical content, do not count, and that works in our favor. Recycling is not going away. Recycle content regulation has kept moving forward through changes in the administration. Even when ESG has been out of favor, the long-term direction has not changed. I have personally spent a lot of time this year with candidates for governor across several states, and the support for domestic recycling, manufacturing jobs, and keeping plastic out of landfills came through clearly in every one of those conversations. Regulation creates urgency. But it's not the only thing driving demand. Two of our larger opportunities, hot lids and deodorant sticks, are being driven by the brand's own commitments, not by a state mandate. And the two quick service restaurant cup programs are still moving forward after New Jersey's extension because those brands want recycled content in their packaging regardless of deadline. For the past year, we have reported on programs as they move through trials toward contracts. and this first phase of commercialization taught us how long the cycle typically takes. It is well over a year from the first trial to the program. A brand qualification runs through 10 to 15 groups inside the customer and every late or off-spec sample costs precious time. This quarter, the branded programs are converting and they're converting into ongoing demand for Ironton, not spot purchases. The Hot Lids program is the best example. We've worked on this for over a year with a compounder that supplies multiple QSR chains. The customers changed direction more than once. And when they came back to recycle content, we were the first in line. With the color and processing work already done at the lab and industrial scale, a customer with a bag, then a box, then a truck, and then a rail car. A rail car holds about 190 to 200,000 pounds. and a customer only buys at that level when it trusts every car will match what it tested. Trucks went into the third quarter. The first rail car purchase orders came in October and the program is expected to reach seven to eight million pounds a year once fully ramped. A large global cosmetics company has qualified Pure5 for shampoo closures and we expect to begin shipping the resin this quarter. The closures will be made with 100% recycled content. This was a demanding specification, and it had to work on a living hinge cap to match and match the brand's clear and translucent colors. That qualification took well over a year, and it closed because we could make a product that behaved exactly like the one it was replacing. The second application with the same customer Color Book Closures is underway and it should move faster because the people, the questions, and the trust are already in place. Procter & Gamble caps for select detergent bottles are on shelves across Downey and Tide brands. Gain is coming next. And it was another color match that we got right. Phase two of our work with Procter & Gamble is underway. It is another set of applications larger and equally recognizable. You would find these applications in your home, and we look forward to sharing more about them in the future. What Proctor taught us carries to every customer behind them. We have an inventory depth, a certified warehouse, lot-to-lot consistency and the agreed test method. So questions like a new customer asks are the ones that we've already answered. A large global personal care company, one of the world's largest consumer product companies, has approved our white for deodorant sticks. The November trial is the last of many industrial-scale processing runs. When it passes, the brand tells the converter to start, the converter tells us to ship, and the converter then can offer that same grade to other customers inside of its own portfolio. This is how one approval can lead to several programs. This is a very large program, and I believe we are close. The two quick service restaurant cut programs are qualified with the converter. That means our material has run on their lines at industrial scale and passed their test. And the converter, which works with these restaurants every single day, has done the review. What remains is the brand's own review and the supply agreement, which is under negotiation. Film is the application insiders said could not be done. And now we're doing it. You cannot take a rigid plastic and mechanically recycle it into a film. because of what is in the feed will end up in the film and it doesn't work technically. We are different. We purify at the molecular level, so we can. We proved at the pilot scale last year with Bruckner and on the commercial line this year. Our snack film trial with a brand was completed successfully in early November and 12 new film programs have opened in the quarter. We already produce clear film grades and no one else can supply them at scale. Film as a global market represents billions of pounds a year that no recycler has been able to touch. And we're on the cusp of fundamentally changing how people view the recyclability of film. The initial batch of branded programs represent about 12 million pounds of expected volume at full ramp. And the programs in commercial contract negotiation or final qualification add up to a total of 45 to 55 million pounds a year at full ramp, which would approach about 40 to 50% utilization that we've described at Ironton. This is a mix of both neat product as well as compounded product, and I believe this combination of programs that add up to the 45 to 55 million pounds a year get us pretty close to Ironton breakeven. A large global cosmetics company has also announced its work with PureCycle in a LinkedIn post. New Jersey's actions set our pipeline back in September, and some metrics declined that month. By the end of October, 67 programs had advanced at stage since July. Qualified applications have doubled from 10 to 20, and 19 new programs had opened in Asia Pacific. The setback was real, but Our team adjusted and the forward progress is also real. We're working through the final terms and conditions of the Thailand project financing now, and we'll announce financial close at signing. We have already invested more than $85 million of the $250 million project in equipment and initial engineering. The construction permit was issued in September and groundbreaking and full construction will follow financial close. In October, I spent two weeks with government representatives, the banks, our partners, and going through the capital costs and schedule in detail and remained very confident in the $250 million estimate. The Rayon site sits inside of an operating complex, so the roads, utilities, and site services already exist. This is why line one will be cost effective. and the infrastructure built alongside that first line is why the second line there should cost materially less than the first. Local and Southeast Asian demand is real as well. Converters in Thailand make packaging for brands in the United States, Europe and Japan that want recycled content and they can't find it. They see our plant as a way for them to win the business. On the supply side, The collectors already sort polypropylene alongside PET and polyethylene, but they've got nowhere to go with it. When the plant was built, the stranded polypropylene stream will finally have a home and a circular life. We have built the foundation to grow beyond Ironton, with Thailand first, and then we are going to manage our growth spend prudently. Our other growth projects reached internal milestones in 2026, and discretionary spending on them is on hold until commercial progress at Ironton supports the further investment. With that, I'll turn the call over to Donald.