PyroGenesis Inc.

Good day, and thank you for standing by. Welcome to the Pyrogenesis third quarter 2025 business update conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Steve McCormick, Vice President of Corporate Affairs. Please go ahead.

Thank you, Liz, and good morning to everyone. I'm Steve McCormick, Vice President of Corporate Affairs for Pyrogenesis, and thank you for joining Pyrogenesis today. 2025 Third Quarter Financial Results and Business Update Conference Call. On the call with me today is Mr. Andre Minella, the company's Chief Financial Officer, and Mr. Peter Pascali, the President and CEO of Pyrogenesis. The company issued a press release on Tuesday, November 11, 2025, containing the financial results and the business update for the third quarter ended September 30, 2025, which can be viewed on the company's website at pyrogenesis.com. If you have any questions after the call or would like any additional information about the company, please email the Investor Relations Department and we will try as best as possible to answer questions that are of a public nature and which are allowable by financial market regulations. The email address is ir at pyrogenesis.com. We will shortly provide prepared remarks reviewing the operational and financial results for the third quarter. But first... A reminder that this discussion may include forward-looking information that is based on certain assumptions, which are subject to risks and uncertainties that could cause actual results to differ materially from historical results or from results anticipated by the forward-looking information. The 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 can be no assurance that this forward-looking information will prove to be accurate and undue reliance should not be placed on this information. Pyrogenesis disclaims any obligation to update any forward-looking information or to explain any material differences between subsequent 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 EBITDA, modified EBITDA, and backlog, which do not have standardized meaning under IFRS and therefore may not be comparable to similar measures or information presented by other companies. For more information about both forward-looking information and non-IFRS financial measures, including a reconciliation of EBITDA and modified EBITDA, please refer to the company's management discussion and analysis, which, along with the financial statements, are available on the company's website at pyrogenesis.com and on the CDAR website at cdarplus.ca. Finally, a reminder that Pyrogenesis follows Canadian Generally Accepted Accounting Principles, or GAP, where revenue is accrued not on sales but on a model that reflects a percentage of the work completed for a given project during the reporting period. And this can vary based on both the nature of the projects in-house and on a client's own scheduling and logistical decisions, both of which can impact project milestones and the company's ability to book revenue from one quarter to the next. As stated in previous reports, the company's revenues are likely to be irregular quarter to quarter based on the project timing as stated above, or sometimes due to cash on hand. In this continuously fluctuating economic landscape, Clients can face their own cash flow and CapEx scheduling challenges, which can have an impact on Pyrogenesis revenue. I'll start off the business overview with a quick review of some of the company's top-line results for the quarter, followed by a summary of some of the key business activities that occur during the quarter, before turning the call over to our CFO, Andre Minella. Later in the call, the company's president and CEO, Peter Prescali, will answer a series of investor questions that have been submitted during the quarter. Starting with revenue, for the third quarter of 2025, the company exited the quarter with revenues of $3.25 million, which represents a decrease of 18.7% year over year. For gross margin, for the quarter, gross margin was at 24% versus 42% a year previous. While lower than average, on a nine-month basis, the company's margin remains ahead of 2024, currently sitting at 35%, compared to 31% in the nine months for the previous year. Audrey will provide additional details regarding these numbers later in this call. As always, to provide context for margins using comparison to some of the industries that the company serves and supports, in the aluminum sector, second quarter margins are being reported at 10.4%. Aerospace and defense is at 11.6%. Iron and steel is at 25%. The mining industry The metal mining industry is showing 38% margin for the quarter, as is industrial machinery and components, also at 38%. In general, across much of heavy industry in Q3, continuing tariff costs, higher energy prices in Europe, and demand swings, especially in the Far East, have contributed to higher input prices for many of these industries as commodities face shifting global tides and as energy sectors work to bring more electricity and renewables capacity online while phasing out coal. Now on to Backlog. PowerGenesis Backlog stands at $51.6 million, showing continuing strength in the company's order book. For those that need clarity on Backlog, Backlog is defined as signed or awarded contracts and outlines future revenues for the company that will be added to the financial results over subsequent quarters, as projects are started or as project milestones are reached on a percentage of work completed basis. In management's opinion, a strong backlog helps to show the strength of the long-term outlook, while also illustrating the wide variety of different types of contracts that the company can secure, or what the company often refers to as its multi-legged stool identity. So backlog shows the minimum future revenue for the company as these projects progress towards completion. And now on to some key production highlights for the third quarter. Excuse me. Please note that projects or potential projects that were previously announced but which do not appear in this summary update or within the MD&A or outlook should not be considered at risk. Noteworthy developments can occur at any time based on project stages, and the information presented is a reflection of some of that information on hand for some but not all projects. Projects not mentioned may simply not have passed milestones worthy of discussion or had their project status changed since the last reporting quarter. Starting with a brief reminder of the company's business strategy. Pyrogenesis leverages expertise in ultra-high temperature processes to create technology solutions for heavy industry and defense. From early stage pilot to full commercialization, the company's technology solution set is concentrated under three business verticals. Energy transition, materials production, and waste processing. These three verticals were recently reframed to better match the company's offerings and to account for changes in the business landscape. As pyrogenesis has evolved over the past five years, new technologies were introduced, certain industry terminology became more identifiable and normalized, and future opportunities for the company within each business vertical became clearer. So first, for the energy transition vertical, which provides primarily plasma-based fuel-sweeping their high-temperature processes, modify their energy mix, and lower emissions. In August, the company announced the signing of a contract with Constellium, one of the world's largest aluminum transformation and recycling companies, for the purchase of plasma torch technology and related components to be implemented in an aluminum remelting furnace. This contract marked the launch of the Phase II industrial implementation portion of of the two companies' collaboration agreement from April 2024, which outlined Constellium's stated plan to use pyrogenesis plasma torches and associated processes as potential replacement heating sources in aluminum remelting furnaces at Constellium's aluminum casthouses. In September, the company announced a $1.2 million contract with a European cement industry customer for the supply of a plasma torch system for use in a calcination furnace Calcination furnace, also known as a calciner, can be used for various steps in the cement process, including for high-temperature processing of limestone, quicklime, and trona to produce lime clinker and soda ash, all of which can be key components of cement, contributing to its binding properties, strength, and durability. Fossil fuel combustion and CO2 released during the calcination process are major sources of emissions in the cement industry. In fact, approximately 40% of greenhouse gas emissions in cement production comes from the combustion of fuel needed to generate the heat required in the calcination process. Switching to the materials production business vertical, which encompasses the development of chemical-free material production systems and the production of in-demand materials, for manufacturers. During the quarter, the company issued a series of announcements regarding its fumed silica reactor pilot plant, known as the FSR. For those who are unfamiliar, fumed silica is one of the most widely used industrial materials and can be found in thousands of products, including cosmetics, toothpaste, pet litter, powdered food, milkshakes, instant coffees, pharmaceuticals, paints, inks, thermal insulation, batteries, just to name a few. It is often used as a thickening agent or to stabilize and improve the texture, consistency, and flow of end product. The fume silica reactor was designed by Pyrogenesis to produce commercial-grade fume silica from quartz in a single eco-friendly system, while eliminating the use of the harmful chemicals used in the conventional production method. Pyrogenesis has been engaged to develop and build the FSR, for HPQ Pulver Inc., a subsidiary of Pyrogenesis client HPQ Silicon Inc. Pyrogenesis has a 50% interest in Pulver and an exclusive arrangement to be the sole supplier of equipment relating to any future commercialization of this process. A sequence of developments during the quarter helped move the FSR closer to commercialization. In early July, the company announced improved quality, purity, and consistency of the material across multiple production cycles of the pilot plant. These results were verified by a leading global fume silica manufacturer who had previously requested, tested, and verified first-stage material samples produced in the FSR pilot plant under the terms of a letter of intent. Later in the month, the company announced the confirmation from a third-party analysis of those previously announced results. further validating the key technical metrics for material samples generated by the pilot plant. And in September, the company announced that the August performance trials and modifications to the pilot plant resulted in a three-times increase in material surface area and significant progress across a number of essential product parameters. These results were provided by a global manufacturer of fume silica who conducted analysis on the fume silica sample materials submitted by Pyrogenesis after the latest series of operational tests. With these results, the surface area of fume silica produced by the reactor met the requirement for several of the commercial grades of fume silica products, while also showing total elimination of carbon impurities. Also in July, the company announced the receipt of a contract for titanium metal powder produced by Pyrogenesis' next-gen plasma atomization process from a European engineering and materials science firm specializing in the additive manufacturing industry. The client had previously received and tested samples of pyrogenesis metal powder, and the contract marks the first commercial order with this customer. The order is for a TI-64 coarse-cut titanium powder. And finally, to the waste processing vertical, which provides for the safe, emission-free destruction, remediation, and valorization of industrial, chemical, agricultural, and municipal waste on land and at sea. In July, the company announced a $600,000 contract with one of the world's largest integrated environmental services companies for the engineering and testing of an advanced waste management solution targeting both non-recyclable plastics and other forms of hazardous liquid waste in Europe using pyrogenesis plasma gasification technology as the platform. And finally, also in July, the company announced the completion of a previously announced $9.3 million coke oven gas valorization and hydrogen production project for Tata Steel, one of the world's largest diversified steel producers. The systems developed by Pyrogenesis subsidiary Pyro Green Gas are in continuous 24-hour-a-day operation at the Tata Steel facility in Kalanganagar, India, and the newly reformed hydrogen produced by the system is being reused by other applications around the facility. To read about these and other updates and events, as well as some of the many ongoing projects not discussed on this call, please refer to the corresponding section of yesterday's news release or to the Management Discussion and Analysis document, in particular, the Outlook sections of each. I'll be back at the end for some final thoughts, but at this point, I'd like to turn the call over to the company's Chief Financial Officer, Andre Minella, to provide more details about the third quarter financials. Andre?

Thank you, Steve, for the detailed overview. And thank you to the listeners for joining the call. Now, I'd like to continue with the review of PyroGenesis financial Q3 2025, while providing a little more insight into the main revenue and expense items. For Q3 2025, PyroGenesis recorded revenue of 3.3 million, a decrease of 0.7 million when compared with the 4 million recorded in Q3 of 2024. The main product line responsible for this was torch sales, which decreased by 0.6 million. This was due to the reduced project activity and resulting from the completion of several significant projects in the prior year that did not repeat in the current period, and also the 2025 projects, which are still in their early stage. In the biogas upgrading product line, revenue was up 0.3 million as the company continues to make progress on a significant gas desulphurization project. For year-to-date revenue, it closed at 9.3 million, down by 2.2 million versus 2024. This decrease is explained by the same reasons of the quarter, and further extending to a revenue decrease in system supply to the U.S. Navy. The biogas upgrading category offset this decrease by adding 3.2 million of revenue in the nine-month period, which is 2.3 million more than it did for the same period of 2024. We expect to see improvements in revenue as project stages advance with more momentum and greater revenue being recorded in the coming quarters. As of November 11th, the date that these financial statements were released, our backlog of signed and or awarded contracts stands at $51.6 million and is expected to be recognized into revenue over the next three years. It's important to note the majority of this backlog is in foreign currency with greater than 80% being in US dollars. Gross profit for the quarter is $0.8 million, or $3.2 million year-to-date, and this represents a gross margin of 24% and 42% respectively. The Q3 margins are affected by the current project stages, and therefore the nature of expenses being incurred. Employee compensation decreased, and more reliance was placed on external subcontractors. These stages also incurred additional material costs, which generated lower margins. This is the reverse of what occurred in the prior quarter whereby project pages generate higher margins with small incremental direct costs. We also want to mention that company continues to control costs and product sourcing on an ongoing and proactive basis as seen in the past years. Now let's turn to operating expenses. Selling general and admin expenses total 2.6 million in Q3 2025 and 5 million for 2025 year to date. In Q3 of 2024, provisions for credit losses were recorded, and portions of those expenses were reversed in that quarter due to these accounts receivables being collected. SG&A expenses decreased across additional categories as we continued to monitor costs. The largest of these favorable quarterly variations were once again seen in employee compensation, $400,000, professional fees down $250,000, as well as insurance, other expenses, and depreciation. For the year-to-date SG&A, we experienced the same anomaly with the comparative figures. But again, if we exclude the impact of the credit reversal, which was $3.3 million in 2024, the year-to-date SG&A expenses are actually down by 2.6 million. And once again, the main drivers for these reductions are employee compensation due to less headcount, share-based compensation, professional fees, along with insurance and other expenses. Again, we've continued to execute our cost optimization across all categories and improve sourcing. Net R&D expenses for Q3 2025 totaled $0.2 million and is comparable to Q3 of 2024. Year-to-date closed at $0.9 million and quite comparable to the $0.7 million we had for 2024. The company continues to benefit from client-funded R&D projects, which qualify for SR&ED tax credits, while further supporting and developing new technologies. Next, let's look at the quarterly net financial cost, which is $245,000 for the quarter. This expense is well within expectations. The interest expense and accretion expense on the secured loan issued in May 2025 are new for the current quarter, but offset similar expenses from the prior convertible loan, which is now fully reimbursed. 2024 also was negatively impacted by an expense for the balance due on the business combination. The year-to-date financial expense before considering net financial income is also well within expectations of $800,000 to $900,000 for the 2025 and 2024 year-to-date periods. The fair value adjustments of strategic investments resulted in a minimal expense in both the current quarter and comparative 2024 periods. This was based on the decrease of the share price of HPQ common shares, which directly affects the value of the investment and also the fair value of the warrants owned by Pyrogenesis. Moving on to our comprehensive loss, which as a result of the items discussed is a loss of 2.5 million compared to 3.9 million loss in 2024, a favorable variation of $1.4 million. Now, although sales and gross profit were lower, The lower SG&A expense generated smaller loss from operations and was further improved by less net financial expenses. On a year-to-date basis, the loss is $3.1 million greater than 2024 due to the non-cash loss from change in fair value of strategic investments and the fact that 2024 had a $1.2 million gain from a legal settlement. The improved quarterly comprehensive loss leads to an improvement in both EBITDA and modified EBITDA by $1.1 million. Now, this metric helps investors to better understand the financial performance of our operations while excluding elements outside of our control and other non-cash items. This wraps up the financial review portion of Q3 2025. I'll now hand it back to Steve. Thank you.