PureCycle Technologies, Inc. (PCT) Q1 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the PureCycle Technologies First Quarter 2026 Corporate Update. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to our first speaker, Eric DeNatale, Director for Investor Relations. Please go ahead.

Thank you, Myla. Welcome to PureCycle Technologies First Quarter 2026 Corporate Update Conference Call. I am 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 first quarter of 2026. The presentation we'll be going through on this call can also be found on the Investors tab at our website at purecycle.com. Many of the statements made today will be forward looking and are based on management's beliefs, 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 first quarter 2026 corporate update press release filed this afternoon as well as in other reports on file with 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 connection with quarter end and year-end adjustments. Any variation between PureCycle's actual results and the preliminary financial data set forth here with herein may be material. You're welcome to follow along with our slide deck or joining us by phone, you can access at any time at purecycle.com. We are excited to share updates from our previous quarter with you. With that, I will turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Thank you, Eric, and good afternoon, everyone. Business momentum entering 2026 is the strongest it has been. Revenues came in above budget, branded customer conversions are accelerating and our confidence in the commercial ramp over the remainder of 2026 has never been higher. The commitments we made are becoming results. The P&G ramp is underway, coffee lids are commercial with multiple customers, branded sales are converting across the portfolio, the branded momentum is real. We continue to make progress toward our mission of transforming the global plastics industry and the results this quarter reinforced that we're on the right path. Let me walk you through the details. Ironton produced 8.4 million pounds of PureFive in Q1, which is up from 12% from Q4. We processed approximately 10 million pounds of feedstock input. Both of these numbers demonstrate the continued scaling of our technology. The planned turnaround at Ironton was completed ahead of schedule and tracking approximately 15% below budget. This is significant. It is the first time we've completed turnaround ahead of schedule. It speaks to a better understanding of our operations and our core technology, and it's a great example of how the internal improvements we've been driving -- that we've made are driving external outcomes. This is something that we are increasingly seeing across the business. It's been 2 years since we've taken a full shutdown across the facility. During this outage, we executed over 170 projects, which targeted capacity, reliability and quality. This will pave the way to achieve full capacity within this facility. We also found the plant to be in much better condition than it was 2 years ago. The vessels that created the most challenged last time required far less intervention this time, which is another testament to our progress. The long-term resiliency of our core technology is also very strong. One of the most impactful projects and the replacement of the critical seal system, procurement required some navigation through global supply chain conditions, but we resolved it ahead of the outage. The installation is complete and expected to materially improve reliability going forward. On-site compounding reached mechanical completion in April as well, and we're currently commissioning the asset. This is a strategically important addition to our platform. As customers scale in film and thermoform applications, we will be able to deliver a finished application-ready product reliably and consistently without relying on third parties. The unit economics for compounded products are more attractive than the base resin, and as volumes build, this asset will be a significant contributor to our overall margin profile. Our third-party compounding volumes also ramped to approximately 1.7 million pounds in Q1 with significant month-over-month growth throughout the quarter. Let's discuss the macro environment because the shifts we're seeing are very dynamic, but also clearly positive for PureCycle. The disruption to global petrochemical supply chains helped us in several specific ways. First, it has improved the co-product pricing. Second, it has reinforced the value of a domestic stable supply source that is independent of global petrochemical disruption. And third, it has created urgency. Brands and converters all around the world are actively looking for domestic compliant alternative to global supply. We're seeing this manifest in 2 ways. Companies that are ready in our pipeline are moving faster with us, and we've received numerous inbound inquiries from the rest of the world customers looking to start the process of qualifying our product. Virgin polypropylene prices have risen roughly $0.25 to $0.35 per pound in the U.S. and $0.35 to $0.55 per pound in Asia and Europe. Our feedstock domestic waste polypropylene for more than 15 U.S. suppliers is independent of these disruptions. Unlike virgin polypropylene, our product is sourced from domestic waste streams and priced independently of those dynamics. In the current environment, our customers increasingly value the consistency and reliability of our supply as much as the sustainability credentials. HDPE prices have roughly doubled, which will improve our coproduct pricing dynamics as well. As you recall from the last call, in 2025, we faced numerous macro challenges. This has reversed. The current macro environment in 2026 is a tailwind, not a headwind. Regulatory momentum continues to build. In California, regulations for SB 54 were finalized earlier this month. Source reduction deadlines are only 7 months away and we're seeing increased urgency from brands and converters to get qualified to meet this upcoming mandate. New Jersey is stepping up to a higher minimum recycled content rates in 2027 also and moving from 10% currently to 20%. Additionally, while New Jersey mandated PCR content for most plastic packaging starting in 2024, it included a temporary exemption for food contact containers. This goes away in January of '27. Let's take a step back and look at this environment holistically. Three forces are converging: one, commodity pricing is extremely dynamic, creating global market uncertainty; two, regulations across numerous segments are coming from all directions, including Europe, California and New Jersey as well as others; and three, consumers still want sustainable solutions. How will the brands react? Brands will lean into solutions that work. And PureCycle's demonstrated technical successes are a clear solution. PureCycle offers 3 positive contributions to the discussion. Very high-quality FDA-grade material with demonstrated performance across a wide variety of segments, a product positively positioned as a regulatory solution and a localized supply that is insulated from global macro disruptions. Europe to Europe and Asia for Asia are emerging themes, and we are the solution for plastic. Quality matters, and we provide uncompromised material. With regulations coming from every direction, APR certifications are increasingly accepted by regulatory agencies. This macro environment highlights the need for PureCycle. It is helping in the short term, but it is also providing significant tailwinds to our long-term growth plan. Q1 marked the quarter where branded sales moved from isolated wins to a real and growing base. We booked $4.1 million of revenue, our fifth consecutive quarter of sequential growth ahead of internal expectations with branded mix increasing meaningfully within that number. We will be shipping this quarter to Procter & Gamble. We are converting new customers like plastic ingenuity and there is more to come. We converted 8 new customers across multiple product categories during Q1, branded pricing is robust and above internal targets as we move through Q2 and beyond, we have clear line of sight to a growing mix of branded sales and Q2 ramps. These are building a stable base of sales as the ramp becomes more meaningful in the second half. We are reiterating that branded applications with 40 million to 50 million pounds of annual demand are ramp -- are starting to ramp in Q2 and Q3 and another 20 million to 25 million pounds of application capacity will start to ramp in Q3 and Q4. The New Jersey regulation -- resolution also represents a meaningful pipeline catalysts. One, we will cover in more detail when we get to the regulatory update. Our pipeline now stands at approximately 180 active opportunities, up from over 170 at year-end and roughly 100 a year ago. We continue to be bullish about the commercial opportunities in film as we progress through 2026. During the quarter, we ran 2 industrial trials successfully at different film producers, both were on Bruckner 6-meter lines. We also ran 2 pilot lines successfully at different film producers. In all of these trials, the PCT product properties were excellent and comparable to their virgin counterparts. We continue to progress with 2 of the top 5 global food manufacturing brand owners on programs related to snack and confectionery packaging and will update the market as we get closer to commercialization. Our relationship with Procter & Gamble is strong and activity is accelerating. They have among the highest standards for quality and reliability in the consumer products industry. They have done extensive testing of our product, and we have passed. The metrics and processes by which Procter & Gamble evaluate suppliers are the gold standard in the industry. And the fact that we have achieved commercial qualifications with them the a powerful validation of our technology and our operations. The qualification process with Procter & Gamble took longer than anticipated. Their standards are exacting and there are no shortcuts. But clearing those standards matters. The rigor of their approval process means that the specifications we validated now apply broadly across the brand portfolio. And we expect future application approvals to move considerably faster as a result. This quarter, we achieved final approval for commercialization of 2 Procter & Gamble applications. Tide caps for select bottles will begin shipping in Q2 and Vicks ZzzQuil caps will follow in the second half of 2026. We are also in the process of qualification with 3 additional applications, which are going well, and we look for many more beyond that. Additionally, we'll be posting on our website and through social media channels, we recently achieved the highest purity grade through CosPaTox testing. CosPaTox is a consortium focused on the intersection of cosmetics, packaging and toxicology that has formulated a standardized voluntary safety evaluation guidance for the use of PCR and cosmetic products and detergents packaging. This milestone was the result of a collaborative effort between Procter & Gamble and PureCycle, with both teams jointly preparing and submitting samples for evaluation from the Ironton facility. Through the testing, our dissolution process produced the highest grade material. We are the first recycler to achieve this, and that means our resins is pure enough for leave-on cosmetics, achieving the highest possible CosPaTox grade underscores the quality and consistency of our product and reinforces its suitability for demanding cosmetic applications. We are deeply appreciative of their support. Their continued partnership and excited for the ramp ahead of us. All of these qualifications matter. They are proof points for Procter & Gamble, but also for other customers. When other brands see the product passing the highest quality standards and they see supply disruptions, and they see regulations coming, they start calling. We're very excited about our recent announcement with plastic ingenuity. To put this in context, the market for hot lids in North America is massive. There are over 50 billion, 50 billion coffee cups consumed annually in the U.S. alone. Plastic Ingenuity services many of these brands, including some of the largest in the world. Part of their decision to move forward with us was the positive reception that they received from numerous QSRs and restaurant chains when they showcase the sustainable lids at the SPC IMPACT conference in Nashville 2 weeks ago. The market response validated the demand. Coffee lids are available with 25% to 100% PureFive ultra resin, which gives brands options to buy what they need. Beyond hot lids, we have finished trials on additional applications as well, including cold lids, which is a rapidly growing category as well as food trays and meat trays. We're seeing significant opportunity to commercialize across their product portfolio. QSRs carries significant plastic packaging exposure in California. And with the mandate 7 months away, we're seeing real urgency from a number of brands actively looking for compliance supply. We completed our first international sale in Q1. Their initial purchase was over 300,000 pounds of PureChoice resin for a product line we've sold previously into. Over 3 million items are being produced. Discussions are ongoing around additional applications and a broader relationship. Not only was this a successful project, it also -- it was also a much accelerated timeline for qualification and approval. The model here is simple to what we've done successfully before. Start with a qualification of the single application, demonstrate the product works and then broaden into sustained commercial relationships. We've already seen this play out with Churchill, a very trusted partner where we started small with shipments to events like the CFP National Championship game and other one-off sports and entertainment venues. That success has now matured into a broader, more meaningful commercial relationship that continues to grow into materially significant pounds that continue to ramp through the rest of this year. The progression with Churchill has directly led to increased brand recognition. Companies and organizations see the product working at scale in the real world, and it accelerates their decision to move forward. New Jersey remains in review and we continue to progress positive discussions with all levels of the New Jersey government. I personally met with numerous government officials, including the governor, the Governor's office and the DEP, and I am very encouraged by the new administration's drive for efficiency, efficacy and impact. I remain very optimistic about our progress here. When this resolves, it will open a phased ramp of incremental demand as customers progress through the qualification process and prepare for 2027 regulation changes. And this will make New Jersey a circular state. The broader regulatory landscape continues to advance and timelines are getting very real. California's signature recycling bill called SB 54, requires 10% source reduction by 2027. That is only 7 months away with increases to 20% in 2030 and 25% in 2032. Those source reduction targets can be achieved partially through recycled content. With our APR certification, PureFive resin qualifies as recycled content under SB 54, and we're seeing increased urgency from brands and converters who need to make this mandate. We have had direct conversations with the Governor and his office about PureCycle's role in meeting the state's recycling targets and recycled content mandates. In New Jersey, the post-consumer recycle requirement increases to 20% in 2027 and the food contact exemption expires in early 2027. Both states have excluded mass balance from the definitions of recycled content, which means PureCycle is one of the only compliant suppliers at scale for food grain recycled polypropylene. The volume contingent on New Jersey approval has increased and now stands at 25 million to 50 million pounds. That number has grown since last quarter, and I believe it will continue to grow. Two large brands have moved as far as they can to the qualification approval process, without regulatory clearance in hand, positioning themselves to move quickly once New Jersey resolves, both are motivated by the same deadline, the food contact exemption sunsets in early 2027. This combination of powerful and near-term demand catalyst -- this combination creates a powerful and near-term demand catalyst for PureCycle. It drives real demand and real urgency for the customers. A quick update on our global growth projects. As I mentioned, the Ironton turnaround was completed ahead of schedule and is tracking below budget. The improvement projects incorporated during this outage are targeting higher reliability, production rates and product quality. Our Thailand facility remains on track for mechanical completion by the end of 2027, operational commissioning in Q1 of '28 in production in Q2 through Q4 of '28. The construction expected to break ground in the second half of '26. The total investment is currently expected to be around $250 million. The Belgium facility also remains on track. Permits are expected near year-end 2026, construction expected in Q1 of '27 and mechanical completion by the end of 2028. Total investment remains in line with prior disclosure of approximately $350 million. We are also awarded a EUR 40 million grant from the European Innovation Fund for the Belgian facility construction and finalized the documentation in April. On Gen 2, our initial design estimates continue to validate the economics, and we're working through the more advanced design work. At this time, I'll turn it over to Donald, our Chief Financial Officer, for the financial update and some commentary on our capital position. Donald?

Thank you, Dustin. This quarter, we are introducing operational KPIs alongside our financial results to give you a clearer view of how the business is performing. We will continue to refine and expand these disclosures as the business scales. For additional context to the KPIs, feedstock process measures purification-ready material delivered into the purification process. Other production captures co-products 1 and 2 and other salable material recovered from the feedstock stream. This is an incremental revenue source that improves our overall yield and per unit economics at Ironton. Together with PureFive production, these metrics give investors a more complete view of Ironton's throughput. Year-over-year production grew approximately 95%, while monthly operations spending grew only 6%. That divergence is operating leverage emerging in the business. As we run more pounds through a largely fixed cost base, our cost per pound falls. At the same time, branded sales are lifting revenue per pound. Those 2 trends are converging and that convergence is the foundation of the unit economics improvement we expect as the commercial ramp accelerates through 2026. Net loss for Q1 was $33.4 million compared to net income of $8.8 million in Q1 2025. The prior year period included a $56.7 million favorable change in the fair value of our warrants. Adjusted EBITDA was negative $30.9 million compared to negative $25.5 million in Q1 2025. The year-over-year change is primarily driven by approximately $3 million of higher project development costs running through the P&L. Included in adjusted EBITDA for the quarter is approximately $7 million of project development costs that were expensed through P&L. These are primarily professional services, project team labor and facility costs related to our Thailand, Belgium, Augusta and PreP development activities. As these projects advance toward construction authorization, a greater portion of these costs will shift to the balance sheet as they become capitalized. We've included a reconciliation of adjusted EBITDA in the press release. We ended Q1 with total liquidity of approximately $131 million, which includes $90 million of cash and cash equivalents, approximately $31 million of excess cash invested in marketable securities and $10 million in restricted cash. That compares to approximately $182 million of total liquidity at the end of Q4. Total operations spending came in at approximately $8.8 million per month in Q1 and within our $8 million to $9 million per month expectations. Importantly, we held this monthly range for Q1 even as production volumes increase and feedstock and other variable cost growth was absorbed within our ongoing operations. This metric captures our ongoing operational run rate separately from project-related spending, much of which is largely discretionary and is shown separately. The split isolates ongoing operations from the discretionary capital deployment we're making for Thailand, Belgium, Augusta and Gen 2 efforts. The Q1 quarterly total of $27.4 million reflects an annual incentive compensation payout of $1.3 million in addition to the ongoing monthly rate. Q2 will include the Ironton turnaround spend, which is tracking below budget and reported separately from the operations spend. Q2 will also include the scheduled SOPA bond debt service payment of approximately $9 million on June 1. We have flexibility to monetize a portion of our SOPA bond holdings to offset some of this outflow. Project spend totaled approximately $14 million for the quarter, below the $19 million to $20 million quarterly expectations, primarily due to timing. Fiscal year 2026 project spend expectations of $39 million to $45 million are unchanged, and the majority of remaining project spend is discretionary. In April, we extended our public and private warrants to March 17, 2027, and lowered the redemption trigger price to $14.38 per share, bringing them in line with the Series A warrants. These warrants now share the same expiration date with approximately $273 million in total potential proceeds available through that date. Beyond the warrants, we have meaningful financing optionality. Our $200 million revolving credit facility remains undrawn and available through September 2027, and we have approximately $75 million in revenue bonds available to monetize. Equipment financing payments will also step down in the second half of 2026 as existing leases mature, reducing our ongoing capital costs. On Thailand, conversations with a local Thai bank continued to develop well. We are actively progressing the project financing and are encouraged by the alignment we are seeing as we work on finalizing terms and conditions. We will provide updates as appropriate. With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Andres Sheppard from Cantor Fitzgerald.

Congrats on all the recent progress. Dustin, I want to start maybe -- so on the call, you mentioned the pipeline now stands at about 180 active opportunities and that branded sales are starting to convert. Curious if you could maybe help us understand what the conversional funnel looks like, maybe over the next 3 to 6 months, what type of customers and applications are close? Just a little more visibility into that.

Yes. Thanks for the question, Andres. I'm really excited about this. I mean we've got a lot of irons in the fire. The compounding assets that we put in place are really, let's say, giving us a lot of opportunity to make exactly what the customers are looking for. On the film side, if you've ever opened up a film wrapper and you've seen that it's white on the inside. It's called cavitated film, we can make that. In order to seal the film around a candy bar wrapper, you have to have sealant film. We've made that. We're trialing with virtually all of the film producers in the U.S. at this point, and it's just going well, okay? The interesting thing about film is that brands are driving that discussion. So it's less about us pushing it to a converter to see if it works. It's more about brands hearing that we can do it, and they're starting to pull it through. So that's very exciting. On thermoform cups, we've talked a lot about coffee lids. I mean, those are just easy. Those are easy for us to make. It's hard to get to the point where we are, but that's a good product for us, both the white, the brown, the black, some of the clear cup lids, those are all very good for us. You see this a lot in cold cups as well as hot cups, and that's kind of an emerging trend. So we've got a lot of different customers that are testing to see if that clear cup can work with our material and if the coffee lid fits right on the container and it's going well. You get to some of our other impact grades. Impact grades are things where you don't want them to break when you drop them, but you also don't want them to crush when you stack them. And so it's a tricky grade to make, but we're doing it. And so things like butter tubs and cream cheese and yogurt and different things like that. Like what's really exciting about that particular grade is that we are a drop-in replacement for virgin and customers are really excited about that. They don't have to change their supply chain. They just -- they drop it and they go, and they've got a better sustainability story. There's a lot of other applications, injection grade. We talked about the Tide cap. I mean -- I couldn't be more excited about what we're doing with Procter. I mean the work that we've done with them to get better at what we do. I mean there's been a delay on the Procter side, but they made us better. I mean we got better at our operations. They got better at the supply chain. We got better at making the product. And that's going to lead to a lot of success with other grades as well, other detergent manufacturers and other injection molded brands like that. So I think that we're in really good shape there. I -- the funnel is -- when you look at the funnel and you see all the grades that are popping through, it's like stuff that you see in the grocery store, I was walking through the grocery store the other day with my daughter and talking to her about all these different things. And I got really excited about it. I don't think she cared at all. But if you walk through the grocery store and you see what we're able to make, it's really inspiring.

Very thorough. I appreciate it. Maybe as a follow-up, if I could, maybe a 2-part question. First one on Thailand. If you can just give us maybe a bit more color on where you are in the financing process and how are you thinking about the timing? And then the second part of the question was just around New Jersey. I know you alluded to it on the call. Just look for an update there, when might we expect a decision sooner rather than later?

Yes, this is Donald. I'll take the first part of that question. I'm really excited about the progress we've made in Thailand so far as it relates to the financing. We put together a very comprehensive data room. We have weekly dialogues with the Thai Bank. They have reviewed the data room extensively and provided feedback, and we believe that the indicative conditions are achievable. And we're looking forward to finalizing the terms, all while we're continuing to add to our LOIs for feed and offtake.

Yes. I think that we've done a really good job here, Andres. Donald has really taken a strong position on this and put together a really clean data room. The relationships in Thailand are really strong, okay? We've met with them in-person multiple times. The dialogues are strong. It's more of a relationship developing, and we're very proud of that. Getting to your second point on New Jersey. Look, I mean, New Jersey is -- it's going really well, okay? We've had lots of active discussions. We have good relationships. The new administration is doing all the right things. I mean, they're actively trying to improve the efficiency. They're working hard to make government work for the people again. Our interests are clearly aligned. The administration just finished the first 100 days. So if you think about when this really started going, we worked with the old administration in September and in the late October. We had hoped to get it converted before November, but it didn't happen. The election happened, there's a bit of a pause period between November and January. And then the new administration has got to get started. And so I think that the -- I think it's going in the right direction. Obviously, we would all like to have that done now. But rest assured, the conversations are going well. We believe that we have really clearly aligned interest, and we think it will close soon.

Congrats, again, on the quarter.

Our next question comes from the line of Hassan Ahmed from Alembic Global Advisors.

First question, obviously, about the macro volatility that we've been seeing since early March. I mean, obviously, it impacts polypropylene directly. I mean a lot of facilities across the Middle East have been impacted, not to mention what is going on with oil prices, with NGL supply. I'm sort of sitting there thinking through PDH facilities in China, whether they may be getting their feedstock or not, what that does to the cost curve. Obviously, polypropylene prices have reacted quite positively to these developments. So just with all of these sort of macro puts and takes, would love to hear your views, if you could drill it down to PureCycle, what it means to you guys? What does it mean from the cost side you guys and also from the demand side. I mean, I would imagine that more and more customers would be intrigued by your product offering. So I would love to hear your views about all of this.

Yes. I think -- I mean, this is obviously a very dynamic period. I think there's a lot of people kind of waiting on the sidelines and hoping that it ends quickly and hoping that the impact hasn't extended. I think there's a lot of destocking happening right now, particularly in China. You've definitely seen a lot of pricing change globally. The arb between the U.S. and Asia is either closing or closed or has reversed depending on who you talk to. So it's very tight now. And there's a lot of destocking. So we see that trend continuing. Oil. And so getting to PureCycle, in particular, the oil -- oil and polyethylene have direct impacts on co-products. So if you think about our co-product one, I would say that has a bit of a market toward oil. If you look at our co-product two, it has a clear market of polyethylene. So like we said in the U.S. market, polyethylene has doubled, that makes co-product two quite a bit more valuable. And you're right, customers are very excited to start pulling those co-products in as alternatives to increase pricing. When it comes to polypropylene, it's kind of a 2-sided story. One, for sure, increased pricing on the virgin polypropylene helps, okay? That's a tailwind that -- it gives -- it's an opening discussion always when you're dealing with customers. But most of our branded customers and most of the contracts that we're developing, they're really feedstock plus developed, okay? So largely independent of global supply chain items because feedstock is locally sourced, locally produced. And so most of the customers we see right now, they kind of like that hedge. They've got extreme, let's say, volatility toward the global -- the normal global supply chain, but with recycled content material, it's a bit more stable. So we see that as a good thing. I think from our perspective also, we're starting to see the relationships that we've seeded in the last 3 to 4 years globally start to bear some fruit. We've got a very strong team in both Europe and Asia. And the relationships that we have with those customers are starting to come through. We're having discussions about shipping to both regions. I think that's very exciting. We have the REACH certification in Europe. So kind of the path is cleared for that. With Asia, Thailand is coming. And so we've really started to do a lot of work to develop relationships with Asia customers. And quite frankly, Asian customers are just very nervous right now. I mean they largely get their supply from China, but they're not sure how long that will last or what the price will be, and there's a lot of prepayment activity with that. And so they've been reaching across the aisle to us and saying, hey, can you help us either to export now from Ironton or at least to accelerate the approval process to get it going for when Thailand, it comes on. And I think that, that bodes well for us. So it's definitely an exciting and dynamic time. I think all things are pretty positive for us. There's one more note maybe, and that's about nationalism. I mentioned this in the script, but Europe for Europe and Asia for Asia is an emerging trend, okay? People are very nervous. It started with tariffs, wondering what the tariff is going to be month-to-month. And now it's global supply chain interruptions. And so if you can take a product that you've consumed into a replacement for a product that you used to buy, nations like that. And so I think that in Thailand and in Europe, we're going to get a lot more traction over the next couple of years for replacing supply chains that would otherwise be conflicted with things like this. That's a great question, Hassan.

That was very helpful, Dustin. And as a follow-up more on a micro level, would love to hear what you guys accomplished during the Ironton turnaround. I would love to hear about the scope the work, the standout projects. And then with this behind us, looking ahead, what should we be expecting in terms of production rates and top end capacity coming out of the outage?

Yes. Look, I mean, Ironton was a major activity. It was a major event. We opened nearly every piece of equipment. Like I mentioned in the script, it was a lot cleaner than what we expected to be quite frank. And I mean, petrochemical complexes as well as anybody, Hassan, I mean this is a very good sign, okay? The fact that we don't have corrosion or erosion or some of those traditional problems is a pretty good indicator that this plant is going to be able to run for long periods of time without outages and also make the outages much more predictable. This is a very predictable outage. No surprise, there's a lot of work, very good execution by the site, really came in with a good plan, improved our positioning in and out of that outage. We completed over 170 jobs. They really focused on quality, reliability and capacity. There are a lot of things with this first plant that we've built, that are just headaches that we solved. We just cleaned up the plant quite a lot, added a lot of small improvements that will make the plant more reliable. The operators and the management team at the site are very excited about that. We mentioned about capacity. You asked about what would the rates look like? We certainly believe that we're going to be increasing rates coming out of the outage. We've mentioned in the past some pump. That was undersized. We upgraded that. We mentioned some heat integration that was undersized. We cleaned all of the exchanges on site, and so that's much better. We've talked at length about seal problems. We've put in place a lot of seal improvements during this outage that we couldn't do without an outage. And so like I think the plant is in a really good position. I mean every time we add something or improve something, we've got to test it. We've got to test the leg, see what we can ramp up to, see if it's stable. We'll do all of that. Remember, we did several rate tests over the last 2 years where we touch 12,000 pounds an hour, which is like 75% capacity, and we touched 14,000 pounds an hour, which is like 90%, 95% capacity. Those moments gave us nice insight into what to target for this outage. And so we took those learnings and built it into the plan best we can, and we're excited to see what we can do in May, June and Q3.

Our next question comes from the line of Eric Stine from Craig-Hallum Capital Group.

This is Luke on for Eric. So I guess, first, could you just talk about any other states besides New Jersey and California that have potential regulatory catalysts on the horizon that you expect could unlock meaningful revenue opportunities?

Yes. I mean there's already some legislation in place for Washington, Oregon. There's work coming through with Massachusetts, Colorado. New York has got a lot of discussions right now as well. So I think a lot of the traditional blue states are coming through with some demand-side regulations. But New Jersey and California are big players in the room. And they've helped to establish a lot of the fundamental guidelines for where things were going. Most of the states right now are starting to adopt the APR certification as the marker for recycled content, which we get, which we have already achieved. And so we're very excited for where this goes.

Got it. That's helpful. And I guess just as a follow-up, I mean, you obviously have opportunities in several verticals that could drive step change growth themselves alone. But if you had a force rig -- force rank, which applications you expect to be the most meaningful in the near term, say, the next 12 to 18 months? I guess, what would that list look like?

Well, there's kind of 2 ways to look at that, Luke. One is what's going to create the revenue in the near term? And then what is going to be what we lean into in the long term, I think they're a little bit different. I think in the short term, we're going to keep leaning into injection molded applications like you see with the Tide caps and the Zzzquil caps. I mean we've demonstrated we can color, we can make, we can do that pretty reliably and we're getting a lot of follow-on requests for that. There's a lot of demand there. I also think that the -- so then there's one that bridges the short term and the long term, that's coffee lids and cold cups and things like that. There is just an enormous amount of volume in that space. And we've proven that we can make it, okay? At lots of different levels. Some people want 100%. Some people are happy with the minimum content at 25%, but we can make it all. And so we're really excited about that. I think that is one that will come on pretty quickly and it will also stick around for a long time. If I had to add to that 2 other segments that I think are going to be very big. We see a lot of interest in. One is film. Again, we are the only game in town when it comes to PCR content to film. And now we're doing it on 6-meter lines. 6-meter lines, the Bruckner 6-meter lines are enormous. That's 20 feet across with extremely thin film. It's really hard to do. And the fact that we're doing it and the fact that film producers are kind of testing it everywhere. And also brands are pulling it through. That is a really good sign for the long term. That is -- I'm very, very excited about film. And our Ironton compounding asset will unlock that for us. The last thing, which, quite frankly, I didn't expect to be as valuable coming in. But over the last, let's say, 3 to 6 months, it's really popped up as this -- we call it the impact grade, okay? And this is where it's very tricky to get a material that can withstand cold, that can withstand drop, that can withstand crush like butter tubs and yogurt tubs and stuff like that. That's really hard to do. And we've been able to make some of those things. There's a lot of brands right now that are held up from New Jersey in that space. So we're not going to see it like immediately, but it's going to come. And I think it's going to be very strong. I didn't mention this in the call, but there's another test out there. It's very unique. It's called the retort test. And this is like a sterilization test. And they basically test it to see how well it sterilizes and put food in it and see how well it does over time. We're doing really well there. And I think that's a differentiator for us, very much so compared to the market because we've just got less contaminants in our product. And the less contaminants you have in your product, the deep molecular washing machine that we put it through means the better you're going to do on all these tests. And I think that's going to be one that hits us in the long term as well. It's a really good question though, thank you for that.

Our next question comes from the line of James Schumm from TD Cowen.

So you have some -- you have in your forward outlook, you have some timelines for the ramp, 2 separate ramps. But I just wanted to get a better sense of what does the ramp actually look like? Like how long does it take to get to the full run rate, that annual run rate? Is it like on the second quarter, third quarter or fourth quarter? Like what -- what does the ramp look like?

Yes. It's a very difficult thing to predict because it's largely dependent on our customers' desire for the ramp timeline. I think that what we've said previously, which I stand by it now as well, the Q1 and Q2 look largely the same. Q3 and Q4 start to ramp up in terms of volume and revenue. And so, we've got a lot of customers that are trialing and a lot of customers that are starting to take. And so it's really kind of an average of their ramp time that we're interested in. But I think that we've got enough line of sight to know that Q3, Q4 still look really strong. And given the, kind of a backdrop of regulation that they're pushing against. I think there's a pretty good indication that Q3, Q4 are going to be a pretty strong quarters for us because they have to be to meet the regulations.

Okay. And then you noted with Procter that they are making you better or you're getting better at making the product as you work with Procter. What does that actually look like? Like what -- why is your product better? And then what needs to happen to get some orders across the finish line with some -- whether it's Procter or some other customers?

Well, we've got orders across the line with Procter. I mean we're fully qualified on both the Tide caps and the Zzzquil. So those are coming. Zzzquil will be next, the second half of the year, but the Tide caps are happening right now. I think we have a PO in hand actually right now. for late May or early June delivery. So that is -- we've crossed the line there, it's happening. What I mean by getting better is every time you are challenged to do something better, okay? Supply chain management, inventory management, lab testing, quality control, providing the right documentation, providing the right certifications, regulatory framework. All of these different things matter to customers. And look, the Procter & Gamble is just the gold standard. I mean they're thorough. They are tough like questions that you wouldn't think that would be asked, get asked, and you got to answer them. And sometimes you have the answer and then you move on and sometimes you don't have the answer, and you've got to -- you've got to get it. And when you go and develop the answer or the paperwork or the procedure or the process, it makes you better not just for what you're doing at Procter & Gamble, but with everybody else. When it comes to product quality and running the plant, they're not active there, okay? They're not like saying turn this valve or move that temperature to improve your quality. That's not what I'm talking about. It's more of all of the stuff on the back end and the front end that you have to have equally right in order to make it work. And our team is getting really good, okay? We've now done it. And we're learning how to do it every quarter. And that's something I'm really proud of, and I think we'll continue to improve over time.

Okay. And just lastly for me, like what -- I think you cited 180 customers or pipeline opportunities, like what is the pushback that you're getting from the customers from those 180 opportunities? Like what's holding them back from placing an order. I think you had mentioned the New Jersey issue in the past, but what is holding them back right now?

Yes. I mean, every customer is different, and so it's a bit of an average discussion. Everybody is looking for something different. They have different drivers. Some people want to have very thorough LCAs. So they want to have a lot of discussion about how did you calculate your LCA. Some people want to go through and look at your green circle and APR certifications to get comfortable with where you're getting your feed and how you're turning it into product. But it's really not what's going wrong or what's holding them back. It's more about what is their process. Like we're not getting pushed back on these processes. We're just moving forward through the process. There's a lot of steps in these processes that just take time. I mean when you get into food contact applications, sometimes you've got to put yogurt into a cup -- you make the cup goes great, looks great, smells great, fits great. Everything is great about the product and they say, wow, we love it. We've never seen something like this work as well as it is right now. Now we're going to put yogurt in it, and then we're going to let it sit in the refrigerator for 3 to 6 months, and we'll let you know how it did. And that's not anything wrong with PureCycle. It's not anything wrong with the process. It's just the time it takes for some customers. And so like this is what we've been working on the last 1.5 years. One is to make the product so we can show that we can actually do it and then step it through the different customers' qualification processes. Now we're getting good at this. We know how to qualify product. We have much fewer unknown questions that come our way. And so we're able to answer them. We've got a very strong lab in Durham that helps us answer questions extremely technically, which is really valuable for us. And so we feel really good there, but still it takes time for some of the customers to get across the line. Having said that, they're getting across the line, okay? We are converting to brands -- to branded applications. We are showing that we can make the product and that they get approved. And so what you're going to see over the rest of the year is more and more discussion in the quarterly calls like this, when we talk about other brands that have gotten across the line that we're starting to serve.

Our last question comes from the line of Jeffrey Campbell from Seaport Research Partners.

Congratulations on the continued operating success. At some point it is projected that the EU recycling regulations are tough on paper, but enforcement confidence is questioned. Just wondered what your take was on that?

Yes, I think that's a good question. You can never -- I'm not going to get in the business of trying to predict what direction the government is going to go on different things. Right now, there's extremely strong support for demand size, regulatory efforts. California, New Jersey, Washington, Oregon and Colorado, states like this are all in. And that's something that they put in place years ago. So we don't see that changing. We see that moving forward. And quite frankly, setting a standard for the U.S. There's a lot of bipartisan support for recycling. I mean, there was a bill that came through Florida traditionally red state, that was unanimous and approval for recycling standards. So like that's a great example of how both blue and red states like the idea of recycling. So I think that's going to move forward pretty well. When you start getting outside of the U.S., look, I mean Europe is moving fast forward toward recycling. If it wasn't for pure sustainability reasons today -- it was for pure sustainability reasons in the past. But today, it's also for nationalism reasons. They're worried about tariffs and they're worried about being dependent on other countries to deliver them goods. And so the more that they can lean into recycling, I think the less dependence they have on others, which is good for Europe. And then when you look to Asia, I mean you start to see EPR legislation pop up in India, Indonesia, Thailand. I mean these are not countries where you would expect to have strong support for recycling and yet you see legislation coming. So I don't -- look, I don't think this is a blue versus red thing. I don't think this is a fad. I think this is something that's growing momentum on both sides of the aisle and globally. And I think that PureCycle is going to see a lot of tailwind from that over the next 10 years.

Okay. I want to -- I'll close or just approaching the questions about conversion of customers and so forth in a little bit different way. Since you're noting new customers as you did in the presentation. And now we have the plastics, the PI interest in PureFive. Is there any chance that revenue guidance could be raised as 2026 progresses?

Yes. I think that we're not going to give revenue guidance specifically today. But you've heard my comments about kind of how we think it will shape throughout the year. It's difficult to give specific numbers at this point because it's highly variable. I mean, New Jersey has an impact on that. And so until we get New Jersey, and we get a little bit more traction there. We're probably going to wait. Having said that, I think the plan that we put in place for 2026 internally is very achievable. We're starting to execute on that plan, and I feel good about it. And I think that bodes really well for the second half of the year.

This concludes our Q&A portion, and I would like to turn it back to Dustin Olson for closing remarks.

Yes. Thank you, Myla. Thank you for listening in today and for all of your continued support. Overall, this is a strong quarter for PureCycle across all aspects of the organization. We exceeded our internal plan and are confident in our 2026 outlook. We know that this year is critical to unlocking the flywheel that allows us to capitalize on the immense opportunity to revolutionize plastic, the operational performance, the commercial conversions, the macro tailwinds, the regulatory momentum and the capital access all point in the same direction. The hard work is paying off. The branded momentum is real, and we're just getting started. Thanks, everybody.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.