PyroGenesis Inc.

Thank you for standing by. Welcome to the Power of Genesis fiscal year 2021 business update conference call. At this time, all participants are in a listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, then one on your telephone. If you require any assistance during the call, please press star, zero. I would now like to hand the conference over to your speaker today, Mr. David Waldman. You may begin.

Good morning, and thank you for joining Pyrogenesis' 2021 Fiscal Year-End Financial Results and Business Update conference call. On the call with us today are Peter Pascali, Chief Executive Officer, Andre Minella, Chief Financial Officer, and Kostas Arsaklis, Controller of Pyrogenesis. The company issued a press release yesterday on March 31, 2022, containing business update and financial results for the 2021 Fiscal Year-End of December 31, 2021, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact the IR department. The company's management will now provide prepared remarks reviewing the financial and operational results for the 2021 fiscal year ended on December 31st, 2021. I'd like to remind everyone that this discussion will include forward-looking information that is based on certain assumptions and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Forward-looking information provided in this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions, and assumptions of management as of today's date. There could be no assurance that forward-looking information will prove to be accurate and you should not place undue reliance on forward-looking information. Pyrogenesis disclaims any obligation to update any forward-looking information or to explain any material difference between subsequent and actual events and such forward-looking information, except as required by applicable law. In addition, during the course of this call, there may also be references to certain non-IFRS financial measures, including references to adjusted net loss, adjusted EBITDA, which do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. For more information about both forward-looking information and non-IFRS financial measures, including reconciliation, of each of adjusted net loss and adjusted EBITDA net loss, please refer to the company's management discussion and analysis, which, along with the financial statements, are available on the company's website at www.pyrogenesis.com and the company's corporate filings on CDAR at www.cdar.com. With that, I'll now turn the call over to Peter Pasquale, President and Chief Executive Officer. Please go ahead, Peter.

Thank you very much, David, for that introduction. And thanks to everyone for joining us today on our call. 2021 represents another breakthrough year for the company as Pirate Genesis achieved accelerated business momentum over the past 18 months, despite the challenges of the global marketplace due to COVID. As a result, I'm very pleased to report a series of record financial results for the company. First and most importantly, Pyrogenesis achieved record revenue of $31.1 million for the fiscal 2021, or approximately 75% year-over-year revenue growth. By growing existing customer relationships, introducing new solutions, and entering new markets, 2021 built upon the successes of 2020. We achieved multiple milestones and continued our rapid expansion in 2021 and have built a broader and stronger platform for 2022 and beyond. I am extremely pleased to announce that Q4 of 2021 was the company's highest ever fourth quarter performance. It's the first time in the company's history that a Q4 has surpassed $7 million in revenue. And these Q4 numbers alone are the company's fourth largest revenue performance of any quarter ever. In fact, Q4 2021 surpassed the full year revenue of every previous year besides 2020. This is even more impressive when one considers that historically at Pyrogenesis as with many other industrial suppliers, Q4 revenues tend to see a decline as compared to Q3. As companies typically slow down during the holiday season, in our case on average in previous years, we tend to see a one-third drop from Q3s. Last year, that number was reduced to 22%, meaning 2021's Q4 pullback represents one of the company's smallest ever Q3 over Q4 differentials. Combined, These notable Q4 results demonstrate that the company is continuing on a growth trajectory and delivering positive financial results all year round. As more of our in-development business units come online for commercialization during various points in 2022, this trend towards consistent full-year performance will be demonstrated even further. Turning now to the company's backlog of signed contracts, our backlog reached an all-time high of $47.7 million. This figure represents a massive 60% increase from the backlog at the end of the previous year. With numerous proposals and bids well into the deepest territory of the procurement process, and many more in development are already on the way, we expect to see our backlog jump again quite substantially over the coming weeks and months. Our proprietary advanced plasma technologies continue to be vetted by multi-billion dollar companies as we expand into plasma-based GHG solutions, and as such, our fully commercialized solutions are gaining momentum in each of our five target markets. We cannot emphasize enough the competitive advantage of having one of the largest concentrations of plasma expertise under one roof, and the relationships we have developed with key players in each business line. Overall, we are very confident in our ability to provide our customers with sustainable clean energy solutions that not only significantly reduce GHG emissions, but are also economically attractive. We expect that the strong relationships that we have built with our existing customers combined with the reputation we continue to grow across several industries, are now positioning us for even more significant revenue streams, particularly in steelmaking and aluminum industry process improvement, 3D printing, and most recently a renewed interest in our land-based units for various forms of both environmental and hazardous waste destruction. Entities within these categories have identified Pyrogenesis's offerings to be unique, in demand, and of significant commercial value, which has led to these relationships. Here are some examples of the company's offerings that have continued to gain traction over the past 12 months. One, replacing the fossil-fueled burners in the upstream aspect of the steelmaking process known as iron ore pelletization with Pyrogenesis proprietary clean plasma torches. Two, recovering valuable metal and chemicals from aluminum-smelting waste streams. Three, repurposing aluminum industry waste previously destined for landfills. Four, destroying hazardous medical and chemical waste using plasma-based destruction systems. Five, disrupting the additive manufacturing 3D printing industry with an innovative powder production method that is capable of producing highly sought after metal powders cheaper, faster, and to a higher quality. And six, generating renewable natural gas from ozone depleting substances. Turning first to the steelmaking industry, it is one of the most carbon emission intensive industries in the world. estimated to be responsible for between 7% to 12% of all global fossil fuel and greenhouse gas emissions, and continues to be under intense pressure, including huge financial penalties, to find emission reductions. Solutions. This pressure on the steelmaking industry allows pyrogenesis to expect demand for its upstream iron ore pelletization solution to increase significantly, as steelmakers look to all aspects of the production lifecycle for carbon reduction opportunities. In 2021, we reached what we and many around the industry consider to be a major milestone when two major firms moved to first-stage equipment orders, and we're now building the plasma torches for in-factory trials at their iron ore privatization plants in different locations around the world. We signed a commercial plasma torch contract for four torches for approximately $6 million with a client B, a multi-billion dollar international provider of iron ore. Client B also indicated an initial need for over 100 torches upon the successful installation of these first four. This is in addition to client A, who had ordered an initial torch and has requested a cost estimate in 2021 for 36 more torches. Interestingly enough, client A operates over 500 diesel burners. So this first indication for a cost estimate was for just 36. With the factory accepted test process now successfully completed, and officially approved by client A, we expect the plasma torch to arrive at the customer's location on or about the end of Q2 2022, in just a few months. The torch will then be installed in client A in duration furnace, replacing the dirty fossil fuel burner system currently in place. The installation should take approximately three to four weeks, after which a site acceptance test will be performed. This site acceptance test is scheduled to be completed before the end of July 2022. Both the installation and site acceptance tests will be conducted by Client A and supervised by pyrogenesis personnel. Assuming these tests go well, which we fully expect, we look forward to receiving orders and delivering additional torches to this customer. Keep in mind that Client A and Client B are not just two of the biggest mining and steel makers in the world. They are two of the biggest companies in the world. The potential sales opportunity with these two companies alone for us is in the hundreds of millions of dollars. We are looking forward to the results as the in-factory trials progress. And we continue to be contacted by others in the industry for information, modeling, and quotes. As mentioned, the entirety of the steelmaking industry is under extreme pressure to reduce their greenhouse gas emissions. The lending institutions have even begun to tie their loan facilities to a coverage GHG track record, making pyrogenesis solution all the more timely. As a reminder, pyrogenesis has the only patented process to replace contaminated diesel burners with a clean plasma torch in iron ore palletization. As sales of pyrogenesis plasma torches increase, Pyrogenesis should also benefit from providing proprietary spare parts and services, which should generate significant high-margin recurring revenue. Overall, the market represents an enormous opportunity for pyrogenesis. Assuming a one-to-one replacement of a diesel burner with a plasma torch, and each plasma torch selling for approximately $1.5 million with a net present value of $7 million, this would equate to a total addressable market of more than $10 billion. As you can imagine, we are also proactively targeting other industries which are experiencing significant pressure to reduce greenhouse gases and which utilize fossil fuel burners as well. These industries include but are not limited to the aluminum, cement, and gas industries. We fully expect to leverage our first mover advantage developed in the steelmaking and R&R industries in these industries as well. Among the many opportunities under review, preheating of refactory ladles as well as maintaining the temperature of molten steel in the Turkish for continuous casting are two examples. Pyrogenesis is also working with industry partners to develop a role for plasma torches in the direct reduction of steel using hydrogen, which could produce steel with a very low carbon footprint. More recently, in February 2022, we announced that we signed the plasma torch contract with the European Research Center to manufacture and deliver a 50 kilowatt methane plasma torch, which will be used by the client to develop a process to convert hydrocarbons, including methane, into useful chemicals such as olefins, ethylene, or propylene, thereby, again, significantly reducing greenhouse gases. Turning now to our aluminum industry process improvement business line, following our successful joint venture agreement with a leading residue producer to transform aluminum dross residues into high-value chemical products, we decided to create a new division specifically dedicated to the aluminum industry. The new division's name, it's named Pyrogenesis Aluminum, includes five main offerings. One, dross right sales and tolling services. Two, the valorization of downstream dross residues. Three, a number of upstream applications. Four, pyrogenesis high-powered plasma torches geared towards replacing fossil fuel burners. And five, repurposing of spent pot lining residues recovery. Pyrogenesis drossite offering enables smelters to not only operate more economically, but also to concurrently reduce their greenhouse gas emissions At the same time, Pyrogenesis' Drossrite offering has proven quite successful. Pyrogenesis has been successfully selling its Drossrite technology either directly to smelters or to independent operators and benefiting from initial sales and securing long-term recurring revenues through after-sales support and spare parts business. This strategy culminated in our DrossRite technology winning one of the largest, if not the largest, bid ever put out for Dross processing to date. With the receipt of a $4 million purchase order for the first of three 10 ton DrossRite systems, we are now one of the largest and certainly the fastest growing Dross recovery solution in the world and now have 13 commercial DrossRite systems either in full operation, delivered, or in the process of being delivered. Once all these systems are fully operational, we expect to generate recurring revenue from ongoing maintenance and spare parts contracts as well. Leveraging what we call our inside the fence advantage with our Dross-Rite offering, we have identified several other opportunities within the aluminum industry where we can apply our plasma expertise to again decreasing greenhouse gas emissions economically. One, A joint venture with a technology provider to explore the potential of utilizing their existing technology to convert dross residues into valuable chemicals. Currently, these residues are being landfilled or sold to the cement industry as a cheap aggregate. A successful implementation of this technology would be timely as governments are beginning to ban the landfill of these residues. Two, providing tolling services of our dross right offering. A tolling service arrangement is one in which a smelter provides dross to a third party to process either on or off site. In this case, Pyrogenesis would provide a tolling service using its DrossRite system to process the dross and recover valuable metals for a fee. Tolling services are expected to be more lucrative to the company than an outright sale of the underlying DrossRite technology. Furthermore, Tolan provides high-margin recurring revenues. Our main objective is to, in short order, generate sufficient recurring revenues to cover all fixed and variable costs. We expect to conclude our first Tolan contract, a 10-ton system in Europe, within the first half of 2022. If successful, the same client has a Tolan requirement for two additional systems, both located in Europe as well. Three. Upstream opportunities where plasma-based solutions are expected to reduce greenhouse gas emissions while being more economic than the existing dirty legacy processes. We had previously announced that we were bidding on an upstream opportunity valued at approximately $40 million, and that Pyrogenesis was the preferred bidder. We subsequently disclosed that the project was delayed due to paperwork issues with the facility and the government. There have been no material developments since our last update. However, we expect additional delays as there have been significant changes in personnel within the government responsible for the project. We have, however, identified identical upstream opportunities with an existing client and expect to move forward with this opportunity later this year. Four, repurposing spent pot lining residues into a valuable end product. These residues are currently being landfill and represent a significant problem and challenge to the aluminum industry. Pyrogenesis is currently developing a new technology in partnership with a major Quebec aluminum smelter, Aluminier Alouette, based on our core plasma waste destruction technologies that are currently in use with the US Navy. This process is designed to transform SPL residues into a fuel that is low in carbon. as well as into materials that are inert and reusable. In turn, this process provides an alternative to landfill disposal of SPL residues and potentially other industrial byproducts, while significantly reducing specific greenhouse gas emissions. This process is a closed-loop solution at the smelter site, eliminating the current industry reliance upon the cement industry for disposal of hazardous waste fractions. With respect to our additive manufacturing segment, Pyrogenesis has improved our innovative plasma atomization process by developing NextGen. NextGen allows for the production of powder that retains all the desired properties of plasma atomized powder production capex and lower opex to be realized by our production line. This method is widely viewed as the gold standard for producing powder for the additive manufacturing industry. Pyrogenesis locked down the production process, improved quality management systems, and set in motion an expansion plan. This plan pertains to improving the infrastructure, which includes a provision for a full in-house testing facility. These developments should allow pyrogenesis to execute on our plan of becoming a world-leading supplier of atom manufacturing powders. The quality of Pyrogenesis Powder is what we believe has allowed us to establish unique relationships with top-tier aerospace companies and original equipment manufacturers in North America, Europe, and Asia. Pyrogenesis Powder is in the final stages of qualifications in Europe and North America, along with samples being analyzed in Asia. To date, we have established a mutually exclusive relationship with Aubert & Gervais, to supply our powder to the additive manufacturing industry in Europe. Upon the completion of qualification and acceptance of pyrogenesis powder by a large North American OEM, we are accelerating our first powder delivery of 2022. Furthermore, by the end of Q2 2022, we expect to have our powders qualified by our clients in Europe and North America. We expect these initial qualifications will provide the marketplace with further confidence in our powders, which we believe will accelerate the adoption of pyrogynous plasma atomized powder worldwide. Whereas in the past we've been primarily targeting the very demanding aerospace industry, we have recently expanded the target market to also address the unique needs of the electric vehicles marketplace, who have recently approached us with their powder needs. With respect to our hybrid ceramic powder process, our goal is to become the leader in carbon nanotube and specialty powder production. Specifically, we have recently been awarded an Innovative Solutions Canada Phase II prototype development contract of approximately $1.15 million to develop a unique hybrid ceramic powder processing system. Carbon nanotubes hold significant potential for mechanical reinforcement in composite materials, including ceramic composites. However, the bundling of the carbon nanotubes has prevented this potential from being realized. The main competitive advantage of our solution is the ability to process ceramic powder in the same reactor as the carbon nanotube synthesis, allowing for production in a single step. We believe this process will prove far more efficient and scalable than conventional technologies, such as the chemical vapor deposition process. Additionally, we believe that our technology is capable of processing a variety of composite materials, which could lead to the development of new IP and product lines for other specialty powder production technologies. We are also expanding our role as HPQ Silicon's technology provider for the game-changing family of silicon processes, which we are developing exclusively for HPQ and its wholly-owned subsidiaries, HPQ Nano-Silicon Powders Inc. and HPQ Silica Pulver Inc. Specifically, we developed several processes. One, we developed the PureVap Quartz Reduction Reactors, which should permit the one-step transformation of lower-purity quartz that any traditional process can handle into a silicon of a higher purity level that can be produced by any traditional smelter at reduced costs, energy output, and carbon footprint. The unique capabilities of this process could position HPQ as a leading provider of the specialized silicon material needed to propagate its considerable renewable energy potential. we developed the PureVap nano-silicon reactor, which, if successful, could position this as a new proprietary, low-cost process that can transform the silicon made by the PureVap QRR into the nano-silicon materials sought after by the energy storage, battery, electric vehicle, and clean hydrogen companies. The aim of the ongoing work is to position HPQ-nano as the first to market with a commercial-scale, low-cost nanoparticle production system, and third, we developed a new plasma-based process that converts silica into fume silica, also known as pyrogenic silica, again, in one step. This new process could be a low-cost and environmentally-friendly option that enables HPQ silicon high-purity quartz initiatives with pyrogenesis industry-leading know-how in the development of commercial plasma processes. It is our expectation that the process will eliminate harmful chemicals presently generated by traditional methods. This new process could revolutionize the manufacturing of fume silica while repatriating production back to North America. In late 2021, HPQ secured government participation in excess of $5 million funding of the fume silica project, with the vast majority of these funds to be paid to us, to pyrogenesis. In total, the government participation of 1.3 million in the 5.3 million fume silica project with HPQ is strong validation of these technologies and sets the stage for potentially significant upcoming developments. At the same time, pyrogenesis is pursuing synergistic M&A opportunities to speed our growth. In 2021, we announced the acquisition of Air Science Technologies, Inc., a Montreal-based company offering technologies, equipment, and expertise in the area of biogas upgrading, as well as air pollution controls, which provides us a healthy backlog of over $10 million of signed contracts. Air Science Technologies is also known for its line of landfill gas flares, which reduce greenhouse gas emissions specifically from landfills. This acquisition effectively provided Pyrogenesis with a 15-plus year advantage as compared to building these operations from scratch. In addition, the acquisition provided Pyrogenesis with a presence in Europe via Italy and India, where air science technologies had already developed strong relationships with several multi-billion dollar companies who are currently using their technology. This acquisition springboards Pyrogenesis into the renewable natural gas market, where we believe there is significant unmet need for renewable natural gas providers, particularly in North America. The acquisition of AirScience, which we renamed as Pyro Green Gas, also provides potential synergy with Pyrogenesis' land-based waste destruction offerings, which, if successful, would significantly increase the value of such offerings to the marketplace. In September 2021, Pyro Green Gas was selected to supply a 5 million landfill biogas purification system, which is projected to repurpose 3,500 tons of greenhouse gas each year, the GHG equivalent of removing 1,000 cars per year from circulation every year. The contract is expected to be fully commissioned in the first half of 2023. We believe there is significant demand for upgrading biogas facilities worldwide, particularly given the legislative trend across North America towards regulating minimum amounts of renewable natural gas to be incorporated within gas pipelines. Our goal for the next 12 to 18 months is to strengthen Pyro Green Gas's operations and quality control systems, while at the same time increasing the backlog of signed contracts to position Pyro Green Gas as a significant and credible player in the marketplace. Overall, we cannot emphasize enough our competitive advantage of having one of the largest concentrations of plasma expertise under one roof and the range we have developed with key players in each business line. For now, I'll be back with some final thoughts at the end, but for now, at this point, I'd like to turn the call over to our Chief Financial Officer, Andre Manella, to go over the financials in detail. Andre, please go ahead.