Good morning, everyone, and thank you for participating in today’s conference call. I would like to turn the call over to Mr. David Brenner as he reads the company’s Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995. That provides important cautions regarding forward-looking statements. David, please go ahead.

Thank you, and good morning, everyone. Welcome to PureCycle Technologies First Quarter 2021 Corporate Update Conference Call. I am on David Brenner, the Chief Commercial Officer here at PureCycle and joining me today are Mike Otworth, PureCycle’s Chairman and Chief Executive Officer; Michael Dee, Chief Financial Officer; Dustin Olson, Chief Manufacturing Officer; and Tamsin Ettefagh, Chief Sustainability Officer. We’re here to discuss our recent corporate developments highlighting activity from the first quarter, recent corporate actions and our updated strategic plans. We will be using the slides to accompany today’s call, which are accessible via a link on our website purecycletech.com. During this call, certain statements we make will be forward-looking and 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 first quarter of 2021 corporate update press release issued this morning and our Form 10-Q filed which will be filed today or later this week and in our other reports on file with the SEC and 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 statements. Our remarks today may also include non-GAAP financial measures. Additional details regarding these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures can be found in our slide presentation and in our first quarter 2021 corporate update release issued this morning. And with that, I turn the call over to Mike Otworth, our Chief Executive Officer. Mike?

Thank you, David. Good morning. We appreciate everyone’s time who’s listening in. And we are going to be presenting a deck of slides here and I do realize that some people may not -- may just be calling in and don’t have access to visually the slides. So I’ll try to talk through them appropriately. This first slide really highlights the fact that, there was enormous global unmet need not being satisfied by existing technologies. The market generally once recycled plastic that can be used without compromise and by without compromise, I mean, can be used essentially interchangeably with virgin resin can be recovered, has the same physical properties, physical properties as virgin resin, has no odor. And historically, although, there have been a number of approaches that exist, most recycled polypropylene can only be used for lower value applications and so this needs to change. With less than 1% of polypropylene being recycled, it’s a wholly unacceptable situation and PureCycle endeavors to change that and we will change that. This next slide is titled Execution Roadmap. And so you can see that the technology has been in the process of development for over seven years now and it was about 2015 that PureCycle obtained a license to the technology and the patent portfolio was largely filed in 2016. And then we started aggressively on the path of commercializing the technology through initiating operation at our FEU in Southern Ohio to now where we are working on, not only are we are working on building the first commercial scale plan in Ironton, Ohio, we started line engineering on future plans and are working aggressively toward our goal of 1 billion pounds of installed and commissioned nameplate capacity for PureCycle operations. It’s exciting time for us in terms of execution and…

All right. Thanks, Mike. Yeah. So the core of our -- really the core of our company is based on technology. And I want to make a point here that our technology is based on a very strong foundation. It’s obviously had many, many years of core R&D development. But the last three years to four years have been focused on operationally -- operationalizing those concepts through detailed engineering, scale up activities and proof-of-concepts. And, in a sense, what we’ve done is, we’ve taken the concepts, which were very good from a white piece of paper and turn them into the reality that’s in the field and operating today in Ironton. So as a function of this being a deep technically-based organization, for the last quarter, we have spent a tremendous amount of time deepening our internal technical bench and we’ve hired a lot of really good people, really domain subject matter experts, not just generalists, but domain specific experts and that continues. We’ve partnered, as Mike said, with some of the leading experts in the field and we really have a good relationship, cohesive collaborative relationship with all these people in order to bring to fruition what we’re talking about here. A key part of our success thus far has been the feedstock evaluation unit. It has been in operation since 2019 and really it helps us with three primary things. The first is that advises us on feedstock evaluations. Second, that helps us to provide samples to our customers for their own application evaluation. And then last, it’s been extremely critical in the development that design of the scale of activities for the engineering design package. The FEU is just a fundamental piece of our machine, and quite frankly, it proves the technology works. And it works on…

Good morning, everyone. As Dustin mentioned, I’m Tamsin Ettefagh, the Chief Sustainability Officer for PureCycle working with this team to build out our feedstock strategy. I have spent 32 years of my career in plastics recycling. But this is my most exciting chapter. Today there has been very little investment in sorting and washing the polypropylene from the other plastics in our waste stream simply because there has not been a value added market for recycled polypropylene at the quality by the consumer product companies to justify the investment. PureCycle completely changes that dynamic. This is key to the revolution we are creating, making it economically attractive together feedstock, process it through an ultra-pure state to meet the enormous growing demand. For our first pipeline in here [ph], as mentioned, we have already engaged third-party suppliers to do this for us. Going forward, we are laser focused and are undertaking the development effort to add this value partners by collecting, storing and washing the polypropylene feedstock ourselves to supplement the supply. This will allow us to control our own destiny as -- in an economical way. Now for me this becomes the fun part creating those supply chains to feed the process well into the future. Today this feedstock strategy has four main streams that I am looking at. Our first, of course, comes from curbside collected plastics. So, multi-recycling facilities that some people hallmark [ph] has a material called plastic residue. Some call it as 3 to 7 bales. Historically, these 3 to 7 bales of plastic residue were shipped to China. Back in 2018, China stopped taking it and is now being predominantly landfill domestically, even after going to the market to be recycled, this is fact. The recycling partnership estimates that GBP1.8 billion of this 3 to…

Thank you, Tamsin. Let me try and run a few things. I want to give you an update on Q1 and then talk a little bit about going forward. First, as David mentioned, we hope to have the 10-Q out this week. As many of you are aware there has been tremendous confusion on the treatment of SPAC warrants. We have decided to update ours. It’s non-material. But that just the latest little bit. So we are working on that, should have that out shortly. Let me just say as an override, the things that I focus on mostly with the team are how can we do our build out strategy faster? How can we do it cheaper? And most importantly, how can we derisk it? Keeping in mind that derisking doesn’t always mean it’s faster and derisking doesn’t always mean it’s cheaper. But we are on an aggressive plan to build out up to 1 billion pounds and we want to make sure that we are doing everything today, which would derisk that scaling which will occur in the future. I’ll talk about that in a moment. There are three slides here, I’m actually not going to follow these slides. You can look at them and I’ll reference them as I go through my remarks. I would prefer to have you listen to my comments, rather than trying to read the slides. Let’s talk about quarter one for a moment. Number one, Ironton remains on track and on budget. This is very important. This is our number one priority. This is the flagship plant, GBP107 million being built in Ironton, Ohio. Now, there is a monthly report put out on the municipal bond system called EMMA. That is White House [ph], who puts out that report. I’m not going…

Thank you. [Operator Instructions] Our first question comes from the line of Noah Kaye from Oppenheimer. Your line is now open. You may ask your question.

Great. Good morning. Thank you for the update and for taking the questions. Maybe we could start with what you talked about in your prepared remarks about moving from GBP165 million target designed to GBP230 million. Can you just help us understand a little bit, what makes it easier to go from GBP107 million to GBP130 million versus GBP165 million. You talked a lot about modularity time to build. Can you -- without getting too technical, just give us some additional insight on why this is a more efficient way to go? And then the follow-up question to that would really be about CapEx efficiency, in your prior presentation for the cluster plant, I think you were targeting something around $30 plus per pound of CapEx. How do you think about to CapEx efficiency on a plant that’s a GBP130 million? Thanks.

Thanks, Noah. I am going to let -- I’m going to direct the first part of your question to Dustin to talk about the capacity decision and then I’ll let Michael address your CapEx question? Thanks.

Yeah. Thanks Noah. So, with respect to the GBP165 million versus GBP130 million, it really has to do with how much of the core equipment is changing inside of the system. And so what we’re doing is we’re starting with the Ironton design and looking at where the constraints to the -- that design will be based on our expectations for feedstock and operation and product slate and then fixing the edges of the design to relieve constraints. And so the reason that it makes sense is, it allows us to stay consistent on the core of the technology and only work on the edges. Additionally to that, anytime that you’re building something, the first time you build it will likely be the least efficient that you do it. You got to learn how to make the right jigs, the right equipment, you have to learn where the lay the equipment down to move it into the construction phase. The second plant that you build, if it is the same basic design is much more efficient. And so by doing what we’ve done on the GBP130 million or I like to call it the GBP107 million plus, it effectively allows us to gain construction efficiency, long lead efficiency, procurement efficiencies, and ultimately, it enabled us to accelerate the engineering phase substantially, because we’re not changing as much of the design.

Yeah. Noah, it’s Michael. CapEx efficiency is very, very important to us. One of the metrics that we look at is CapEx per pound of capacity. The GBP165 were about $1.33. And based on what we’re looking at now it’s in a similar range. So it’s not costing us more in terms of building the capacity. The engineering timeframes are shortening and we’re also able to do it in such a way that it derisks that scale up factor. We’ve put a lot of effort into the scaling. We’ve heard it as a question for many, many people and that’s why we want to make sure that people understand that what we’re trying to find is that optimal size. Now building more capacity with smaller-sized plants, it means we need to build a few more plants…

Okay.

… but once you have the similar size plant, it then is going to become much easier over time and we have actually not factored lower costs in the future or shorter timeframes into our modeling in order to be somewhat conservative. Thank you.

Yeah. Thank you. And I mean just to reflect back Plant 1 was -- feel free to correct my figures around $250 million budgeted CapEx here, it sounds like you’re going to be sub $200 million per plants with a good amount of higher output. So that’s a very helpful metrics for us to think about. Thank you. The last question I have is really around the feedstock and some of the strategic efforts that you mentioned, we look at the 3 to 7 price per pound versus recycled bale polypropylene there is just a huge spread right now. I mean, effectively the market seems to be saying, 3 to 7 not worth a lot of PP you can pull it out was the lot. And so I guess with that in mind, can you talk about how some of that spread dynamic factors and then really what is the type of potential investment you would need to make whether in sort of sortation or other equipment to be able to do this in separation and washing yourself?

Sure. I’ll let Tamsin, This is Michael. I’ll let Tamsin address this question, but I think it’s important to understand a couple of dynamics, anytime you’re talking about feedstock. One is that, because of the fact that our process will work with so many different types of feedstock. We don’t have to compete with the mechanical recyclers feedstock. So you hear opinions out there about our feedstock is going to be really difficult, et cetera. We take it very seriously, global feedstock strategy is top of mind for us on a daily basis. We’re building -- our whole team of people focused on feedstock strategy and execution. But one of the things that attracted me to this opportunity very early on was the fact that things that are wholly unacceptable to most people in the recycling game work perfectly well for us. So that makes the task certainly easier than it would be. Otherwise and so I’ll just -- I will stop there and let Tamsin finish answering your question.

Well, I would just say that, mechanical recyclers, when you take that material and take it straight their expect a quality product. Technically, we could get a quality side, but as I mentioned in my speech, we are planning to grind, sort and wash this material and because we have partnerships that we’re working with out there we will find other homes effectively and efficiently for the other materials. So basically will be able to mine a much higher cost polypropylene in a much lower cost format by doing what we’re doing with the 3 to 7. It doesn’t mean we won’t buy polypropylene bales where they’re available. It doesn’t mean we won’t buy other sources of post-consumer polypropylene. This is just a big opportunity. It’s a need for them to find a solution and we can help bring that to that.

Yeah. Noah, it’s Michael. If I can just add one more sure thing to that. The differential you’re seeing in prices is largely due to shortages that occurred earlier this year and late last year because of maintenance on polypropylene production facilities, which drove prices up and created a shortage in the polypropylene market. However, looking forward, the pricing model that I discussed that we would like to migrate to which is somewhat of a pass-through will help protect us against that, number one. Number two, that differential, you correctly pointed out, means we can pull it out and create a lot of value. So therefore that also leads to the feedstock evaluation that we’re doing right now and looking it moving upstream and pulling some of that out and making an economic decision that way as well. Third, it’s very important for everyone to understand what we are not. We are not chemical recyclers and we are not mechanical recyclers. Keep in mind, mechanical recycling is creates a very low quality and a very low value-added output. That’s not what we’re doing. We’re creating a very high value output. That means we can pay more for the feedstock and that means ultimately that we will be more competitive. So if you see a mechanical recycler talking about us, keep in mind that they’re talking their own book as we say, and they’re focused on the fact that they will have a difficult time competing with us in terms of pricing for that feedstock. Thank you.

Thanks.

Thank you. Next question comes from the line of Eric Stine from Craig-Hallum. Your line is now open. You may ask a question.

Yes. Good morning, everyone. So…

Hi, Eric.

So, I mean, clearly, your customers are very invested in this process, what you’re doing in your a key part of their sustainability goals. Just curious how involved they are or what type of input and planning do they have in the site selection, in the supply chain analysis and everything that’s going into?

Yeah. Thanks for that question. It is -- so we look to all of our, almost all of our partners to give us their perspective on feedstock, right? And that’s when you’re talking about site selection, obviously feedstock and availability of feedstock, logistics associated with transportation of feedstock to a particular site. Those are all important elements that we consider. So we talk of those partners. And with regard to what we’re looking at in Europe, we will -- because of the complexity of regulatory considerations and other considerations that we yet to have experience with. We will most certainly endeavor on our first plan or possibly for several plants and executing them with a partner, either in a co-location and/or co-location joint venture. And of course, in that case, we would consult with our partner on a variety of fronts with regard to the site. And so we’re actively talking to partner for about multiple considerations with regard to kind of final sites in Europe and we’re doing a lot of analysis of comparative sites in North America, including analysis of all the logistics and involved in the transportation of feedstock to those sites. So Dustin is there anything additional you’d like to add on this question?

No. I don’t think so. I mean the supply chain analysis is very dynamic and whether you’re shipping product to your customers or your shipping feed into the plants, the analysis is complex. So we’re looking at a lot of different variables and conditions to make the right decision there.

Got it. Very helpful. And then maybe just more of a, well, the demand question going forward, obviously, significant demand, when you think about your future plans, do you think that these are made up of your current customers the ones that are really underpinning Plant 1 or do you feel like, I mean, given that you are opening the ability or an avenue that’s really not been opened at this point in polypropylene that it will be current customers in addition to new customers?

Yeah. I think it most certainly will be current customers plus new customers. There are a number -- we’re getting a lot of interest from vertical markets that we haven’t even penetrated all in terms of our customer set for the first plant. And so -- and not trying to make the task any harder or any riskier than it needed to be for Plant 1. We largely settled on for a large percentage of the off-take for Plant 1. I would characterize as kind of a mid-line kind of SPAC for CPG packaging. But as we go the subsequent plans, we will continue to service those customers, but there are many other verticals automotive, aerospace and transportation in general, a whole host of others that we are talking to on a daily basis and so I think you’ll see a rapid expansion in terms of breadth of customer sets as we move to Plants 2 and beyond.

Got it. And then maybe just a follow-up to that is, I mean, since this whole process started or since the planned merger was announced, I guess, would have been in October of any -- anything you can hear, just how that pipeline has expanded details would be great? Thanks.

This is David Brenner. Yeah. I would say, at this point, there are a series of concurrent discussions both with current and future partners. We’re not at a point this afternoon or this morning where will dive into details of those numbers, but we’ll be providing updates in the coming months.

Thank you.

Next question we have from the line of Gerry Sweeney from ROTH Capital. Your lines now open. You may ask your question.

Good morning. Thanks for taking my call. I just wanted to touch back on feedstock and I know we talked about quite a bit, but do you find it has been a critical point of conversations I had. Can you just maybe explain a little bit more about the opportunity PureCycle brings in terms up cycling of use as polypropylene versus down cycling that is essentially prevalent in today’s market and all the levers that really provides PureCycle what the opportunity to expand this feedstock base?

Thanks, Gerry. I’ll let Tamsin speak to this question. But I would I just say that, one of the things that was quite shocking to me when I first started to learn about how plastic recycling is separated and how it works is that, even though polypropylene is recycled at a shockingly low rate of less than 1%. Even for that 1% that’s recycled it’s kind of a use of the sports analogy one and done. Most of that is sorted by virtue of optical scanners who can’t discern between different resins if it’s black. So if it’s being recycled by mechanical recycling and it’s turned black, this is what typically happens. It can’t be recycled again. So it’s a bit of a recycling depth sense to be recycled even once, very obviously very poor situation and in our case with PureCycle, we can recycle polypropylene essentially indefinitely with an indefinite number of cycles, which changes the whole game significantly. So I think that’s an important thing to realize. But I’ll let Tamsin make any comments she thinks are relevant.

Hi. I think you made a good point about lot of this material goes into a black application. So we do see most polypropylene that’s recycled today mechanically very few use hot washes, they haven’t put the investment and because the end markets that could pay a higher price, which comes into the packaging forms, haven’t been able to buy that type of recycled polypropylene in the past, mainly because it’s grey and has an odor and so it’s the particularly add, they could possibly put in hot washes to get rid of some of the odor, some developed condition, which a couple have done to get rid of odor, but they’re still stuck with a grey product. Then you’ve got some mechanical recyclers who put in optical sorting to make specific colors. But all they can do is make a shade, a shade of blue, shade of green, shade of yellow and then quite often a large amount of color has to go back into that to color corrector to the color the consumer product companies need, if they’re going to use a recycle. So they’ve got variability that they have to deal with. The other thing is, the recyclers to do mechanical have been kind of focused on a specific format, as you’ve seen bottles are recycled and they don’t want thermal forms, bottles are recycled and they don’t want films. The difference that PureCycle has is that we can take all of those different formats and also removes the color and the odor. So we kind of got three little buckets that really put us ahead of the traditional mechanical recycling and that’s being able to take different formats in, being able to take different colors and they take it back to a natural, so they can be used in any type of application for color. We also by removing the odor we are also removing a lot of absorbed chemicals. So we bring it back to a food grade material. There isn’t that much in food grade LNO’s for mechanically recycled today. So this will be a huge accomplishment to bring to the market is to make it so that you can go back into the packages that we’re recycling to begin with really creating circularity is key.

And because the mechanical recyclers are generally limited in terms of their capability, they reject a lot of the recycled material that they do buy and I had a conversation recently with supplier feedstock who were selling to one of the larger players in recycling, who said, hey, when they buy from us, but they reject as much as 40% of what we shipped them, obviously, this is a big problem with regard to the whole efficiency of the recycling process in general and it’s obviously helpful when you’re process can successfully deal with a much broader spectrum of feedstocks and still make an extremely high quality product.

Got it. Super helpful.

Thank you. Next question comes from the line of Barry Haimes from Sage Asset Management. Your line is now open. You may ask your question.

Thanks very much. I had a couple of questions. One is, as you do the full scale plant at Ironton and think about the key parts of the process and where you could have some scale-up risk. Could you talk through that a little bit? And sort of related to that in terms of breaking ground on the second plan is it your intent to wait until the first one is up and running, and working or will you actually break ground before you have all that data from the first plant? And then I have one other financial question. Thanks.

Thank you for that question and I’ll let Dustin Olson to address your question.

Yeah. So thanks for the question. I think the first way to answer this is that, we do have a proof-of-concept up and running in Ironton today, we start feedstock evaluation unit, okay? So it is working. We make -- we bring traction of all shapes and sizes, and we make beautiful polypropylene on the back side. So many times when we talk about new scale technology, taking it from paper to the field is a -- is probably the biggest most critical steps, sometimes what you think will happen on the paper won’t happen in the field and you learn at that stage we’re past that, because we have the FEU up and running. When it comes to scale-up concerns, I mean there’s no doubt that as we started the FEU and we worked through the growing pains of getting that plant up and running. There were some, okay? There were some issues around the plant where we had some plugging that we had to heat trace better, there were some issues where we had to test the filtration and we’ve tried various mechanisms, but we work through those, okay? And so I would say that, for sure, there have been, let’s say, technical items that we have worked through the FEU and that has advised us on how to design the commercial plan, okay? In some ways, actually the commercial plant is going to be less prone to some of the problems with the FEU you had in the early stages because of its scale and of size. I guess the second portion of your question is really how unique is the technology that we’re using to build the plant. And what I’d say is, the magic of our process is not so much in the type of equipment that we’re buying as it is in the way that we are arranging it and the way that we are using it, okay? And so I have pretty high confidence that the pots and pans that we’re putting together are going to work properly, because it’s pretty well known technology, okay.

And there were outside engineering resources brought into opine on this process and its design even before we acquired the license. And I think it’s important to understand that there is no here to for unknown magic going on inside any of the unit operations that comprise the system in total. It is a unique assemblage of unit operations that have existed and manufacturing processes of different types in some cases for decades. So there were -- there was -- when you looked at the list of unknowns with regard to the technology and the system, it really wasn’t such that you would be so worried that you would want to go to every last step of detail to make sure, oh, well, let’s make sure that all of these unknowns are answered and this will work. We feel like we’ve answered enough that we’re quite confident and moving forward with starting to build subsequent plants, but this has been -- this decision has been made with a lot of careful consideration and with the advice of existing industry partner that deal with similar processes that involve temperature and pressure, and with some of the world’s best engineering resources that have opined early on in the development of PureCycle and continue to do so to this day.

Thanks. That’s extremely helpful. And again, maybe just the timing of Plant 2 and then my other question was, could you just remind us what the expected revenue and EBITDA would be added original Ironton plant at the GBP107 million level, but then even more importantly, the GBP130 million prototype or subsequent design? Thanks.

So just, just to answer your first question in completion, we do intend to break ground on the second facility before Ironton is up and running, and that’s because of the confidence that we have in the original design package based on the information that we’ve been able to agreeing from the FEU and the work that we’ve done with the experts around the world…

Plant 2 timing.

And Plant 2 timing, Plat 2 is expected to be up and running in the first half of 2023.

Michael will answer the...

There are no further question at this time, please continue.

I am sorry. I’m sorry, Operator. Just to answer Barry -- your other question, Barry. The revenue on the GBP130 million would be about GBP94 million and the EBITDA would be about GBP50 million. Sorry [inaudible]. Sorry, go ahead, Operator?

All right. So, there are no further questions at this time, please continue presenters. We have no more questions.

Okay. Thank you, everyone. We appreciate your time. And as Michael mentioned, we will be hosting an open house for investors that will be -- we will determine the date soon. It will be late June and we would welcome anyone who hasn’t seen our facility and how it operates, so come and see it. And we -- as we said, we’ve been open about making it available for people to see and hear and smell and we’ll continue to do so in the future. Thank you.

Thank you. Ladies and gentlemen that concludes today’s conference call. Thank you all for participating. You may now disconnect.