PG - PureCycle Technologies Is Already In Cost Hell

2025-01-20 16:07:38 ET

Summary

• PureCycle Technologies had $0 of commercial sales in Q3 2024 despite having significant inventory and processing record feedstock amounts.
• PCT faces rising costs and has limited offtake agreements. It is struggling to meet its original SPAC deal promises.
• The company’s Ironton plant operates at only 13% of nameplate capacity, with ongoing production issues and escalating costs.
• PCT's balance sheet is in trouble. Its high cash burn gives it high bankruptcy risk if sales don't start soon.

Another Quarter Of $0 Sales

Despite processing a record 3.5 million pounds of feedstock and having 2.5 million pounds of compounded recycled polypropylene (PP) in inventory, PureCycle Technologies ( PCT ) had $0 of commercial sales in Q3 2024. I was correct in my September article when I said the firm would miss estimates for $3.54 million in Q3 sales.

In the past few quarters, PCT has been mired with production problems causing it to pivot to compounded PP (recycled PP mixed with virgin PP) because fully recycled PP (PureFive) hasn’t met spec for customers yet. It’s hard to follow a business with no sales and changing prospects because there’s not much to latch onto. Everything is a hypothetical projection until it actually happens. That’s why you have my articles to analyze the changes. One example of a change is the recent decision by PCT and SK geo centric to cancel their joint venture (JV) to produce a recycling PP plant in South Korea....

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