Executive Summary / Key Takeaways

• Transformative Growth Ahead: PureCycle Technologies is pivoting from technology validation to aggressive global expansion, aiming for one billion pounds of installed capacity by 2030 across the U.S., Europe, and Asia, projected to generate approximately $600 million in run-rate EBITDA by 2029.
• Differentiated Technology & Market Moat: PCT's patented dissolution recycling technology produces ultra-pure, virgin-like polypropylene (PP) resin (>99% purity), addressing a massive, underserved market where traditional recycling falls short, particularly in high-value applications like film, fiber, and automotive.
• Operational Validation & Commercial Traction: The Ironton facility has demonstrated significantly improved reliability, achieving nearly 90% onstream time and successful rate tests. This operational stability, coupled with 17 customer applications in post-trial negotiations and initial commercial sales, validates the product and underpins future revenue growth.
• Enhanced Liquidity Fuels Expansion: A recent $300 million capital raise has substantially bolstered liquidity, alleviating prior going concern doubts and providing the necessary capital to initiate ambitious growth projects in Thailand, Belgium, and Augusta, Georgia, leveraging learnings for improved capital and operating efficiencies.
• Strategic Vertical Integration & Profitability: PCT's vertically integrated model, including feedstock pre-processing and in-house compounding, enhances control, reduces costs, and allows for customized product offerings, driving higher unit economics and accelerating customer adoption, with Ironton expected to reach corporate breakeven by Q4 2025 to Q1 2026.

The Dawn of a New Era in Plastic Recycling

PureCycle Technologies, Inc. (PCT), founded in 2015, is on a mission to revolutionize plastic waste by commercializing a patented dissolution recycling technology licensed globally from The Procter & Gamble Company (PG). This innovative process restores waste polypropylene (PP) into ultra-pure recycled (UPR) PP resin, branded PureFive, which boasts properties akin to virgin plastic. This endeavor is not merely about recycling; it is about creating a new product segment that empowers multinational corporations to achieve their sustainability goals, provides consumers with truly sustainable PP-based products, and significantly reduces global PP waste.

The global virgin PP market is vast, exceeding 200 billion pounds annually and growing at 3% to 4% per year. Yet, less than 1% of PP is currently recycled, with most mechanical recycling yielding lower-quality material unsuitable for high-value applications. This stark reality creates an enormous, underserved demand for high-quality recycled PP. Regulatory tailwinds, such as California's mandate for 5% recycled content in carpets and proposed European and Japanese regulations targeting 25% recycled content in vehicles by 2030, further amplify this demand. PCT's strategy is to capture this burgeoning market by offering a differentiated, high-performance solution.

Technological Edge: The Purity Imperative

At the heart of PureCycle's investment thesis lies its unique dissolution recycling technology. Unlike conventional mechanical recycling, which often results in downcycled products with compromised quality, PCT's process employs a combination of solvent, temperature, and pressure to physically extract and filter out contaminants like color, odor, and other impurities from PP waste. Crucially, this purification occurs without altering the polymer's chemical bonds, yielding a virgin-like resin.

This technological differentiation provides tangible and quantifiable benefits. PureCycle's process produces PP resin that is over 99% pure, a significant leap compared to mechanically recycled PP, which typically ranges from 90% to 95% purity. This superior purity is critical for demanding applications. For instance, in the automotive sector, PCT's compound for a bumper fascia demonstrated "very good success across all these quality components" with notably low scrap rates, overcoming common issues like paint adhesion and odor that plague traditional recycled materials. In the film market, a challenging segment due to its sensitivity to impurities, PCT's film blend successfully stretched nine times without tearing, exhibiting ultra-clear and transparent properties, positioning it as a "drop-in replacement for Virgin." Furthermore, the technology is designed to use significantly less energy and reduce production costs compared to virgin resin production. Recent FDA Letters of No Objection (LNOs) have expanded PureFive resin production to broader process conditions, allowing for greater flexibility and reduced energy usage, and permitting its use in contact with all types of food.

PureCycle's research and development efforts, particularly at its Durham facility, are focused on a "Gen 2 Purification design" for future plants, starting with Augusta, Georgia. These next-generation facilities are planned to have capacities exceeding 300 million pounds per year. By leveraging extensive learnings from the Ironton facility and fundamental research into polymer behavior, PCT aims to "reduce the CapEx and OpEx" of these future facilities, driving "capital and operational efficiencies" and ultimately improving overall facility economics. This technological roadmap is central to PCT's competitive moat, enabling it to command higher average selling prices (ASPs), lower costs, and better margins by serving markets that competitors cannot.

Competitive Landscape: A Niche Innovator's Ascent

PureCycle operates as a niche innovator within the broader plastics recycling and sustainable materials industry. While not a market leader in overall plastics production, its specialized focus on ultra-pure PP recycling positions it as a leader in its specific segment.

Compared to Loop Industries (LOOP), which focuses on broader chemical recycling for PET and PP, PCT's strength lies in its PP-specific efficiency and superior purity. While Loop's technology may offer greater feedstock versatility, PCT's dedicated PP process could yield higher performance and pricing power in its targeted applications. Against larger, integrated packaging players like Berry Global (BERY), PCT differentiates itself through significantly higher resin quality and purity. Berry benefits from immense scale and distribution, but PCT's specialized output appeals to high-end applications where quality is paramount. Similarly, when contrasted with Waste Management (WM), a generalist in waste handling, PCT's resin-focused approach offers a distinct advantage in producing virgin-like material, though it lacks WM's vast infrastructure and logistical scale.

PCT's competitive advantages, or "moats," are formidable. Its patented dissolution technology and stringent regulatory approvals (including FDA clearances and GreenCircle certification for >90% PCR content) create high barriers to entry. The ability to process challenging post-consumer recycled (PCR) feeds, combined with its superior product quality, allows PCT to access markets that mechanical recyclers cannot. This differentiation supports a "feedstock plus pricing model," where customers, recognizing the unique product quality and reliable supply, are increasingly willing to absorb feedstock cost fluctuations. This positions PCT in a specialty product market, largely disconnected from the volatility of virgin PP pricing.

However, PCT faces vulnerabilities inherent to its stage of development. Its smaller operational scale and capital intensity, particularly during global expansion, present challenges compared to larger, more established competitors. Supply chain dependencies, though being mitigated by vertical integration efforts like the Denver sort facility, remain a factor. Despite these, the overwhelming market demand for sustainable solutions and PCT's unique technological solution provide a strong foundation for its competitive standing.

Operational Momentum and Financial Inflection

The second quarter of 2025 marked a significant inflection point for PureCycle, signaling a shift from a development-heavy phase to meaningful commercialization and growth. The Ironton, Ohio, facility, mechanically complete since April 2023, has demonstrated substantial operational progress. Onstream times approached 90% in both April and May 2025, with 65 consecutive days of pellet production. A rate test on August 1, 2025, successfully achieved 14,000 pounds per hour, nearing nameplate capacity of 107 million pounds per year. This operational stability, achieved after overcoming initial challenges related to random reliability events and optimizing the co-product 2 (CP2) removal system, is a critical validation of the technology. The company is now removing CP2 at rates of up to 15,000 pounds per day, converting a waste stream into a sellable recycled material.

Financially, 2025 is the first year of meaningful revenue generation. For the second quarter of 2025, PureCycle recognized $1.65 million in revenue, contributing to $3.23 million for the six months ended June 30, 2025. This revenue, primarily from finished products and byproducts, is expected to ramp significantly in the second half of the year as customer trials convert to sales. The company reported an operating loss of $45.6 million in Q2 2025 and $83.3 million for the first half of 2025. Net loss for Q2 2025 was $144.2 million, and $135.4 million for the first half, impacted by a significant increase in the fair value of warrants.

Operating expenses increased in Q2 2025, driven by a $3.7 million loss on disposal of fixed assets, $2.6 million higher production-related costs due to ramp-up, and increased employee and supply costs. However, selling, general, and administrative (SG&A) expenses saw a slight decrease, primarily due to $3.8 million lower legal costs from prior year settlements, partially offset by $3.1 million higher equity-based compensation, including a $2.3 million special grant to the CEO.

Liquidity has been dramatically strengthened. As of June 30, 2025, cash and cash equivalents stood at $284.07 million, with total current assets of $314.88 million against current liabilities of $147.11 million. A transformative $300 million capital raise in June 2025, through the issuance of Series B Convertible Perpetual Preferred Stock, has alleviated previous "substantial doubt about the Company's ability to continue as a going concern" for the next twelve months. This capital, alongside a $200 million undrawn revolving credit facility with Sylebra and $87 million in Senior Bonds held for future re-marketing, provides ample resources for operations and growth.

Commercial momentum is building rapidly. The company is in post-trial negotiations for 17 customer applications, up from just three in Q4 2024. A significant commercial supply agreement with Emerald Carpets for approximately 5 million pounds of PureFive resin annually commences in Q3 2025, with potential for true circularity. Initial industrial trial success in biaxially-oriented polypropylene (BOPP) film, a 30 billion pounds per year market, has accelerated plans, with larger-scale trials scheduled for August and September 2025. The company also plans to add 100 million pounds of annual compounding capacity to the Ironton facility by late Q4 2025, expected to generate over $4 million in annualized cost savings with a payback period of less than two years. This strategic move will enhance product customization, streamline logistics, and further reduce the carbon footprint.

Ambitious Outlook and Strategic Expansion

PureCycle's forward-looking guidance paints a picture of aggressive global expansion and significant profitability. The company aims to bring approximately one billion pounds of installed capacity online by 2030 across the United States, Europe, and Asia. This growth plan is projected to yield roughly $600 million of run-rate EBITDA by 2029.

The expansion includes:

• Thailand Facility: Construction is slated to begin in the second half of 2025, with operations expected by mid-2027. This 130 million pound facility, a partnership with IRPC Public Company Limited (IRPC), will leverage existing brownfield infrastructure to achieve a competitive capital expenditure of $1.50 to $1.75 per pound, including $87 million in pre-purchased long-lead equipment. It also secures P&G exclusivity for Asia.
• Antwerp Facility (Belgium): A 130 million pound PP recycling facility is projected to be operational in 2028, with permitting expected to conclude in the second half of 2026.
• Augusta Facility (Georgia): Construction for this multi-line purification facility, featuring a "Gen 2 Purification design" with capacities exceeding 300 million pounds per year, is expected to commence in mid-2026. PreP facilities are targeted for mid-2026, with the first purification line operational by 2029. The Augusta project is envisioned as a two-line operation, totaling 260 million pounds per year, with a construction timeline estimated at an average of six to ten quarters.

Management expects increased branded sales in the second half of 2025, with revenue projected to exit Q3 2025 at a $4 million per month run rate. Corporate breakeven is anticipated in the Q4 2025 to Q1 2026 timeline. These projections are underpinned by the proven operational reliability at Ironton, the accelerating commercial pipeline, and the strategic advantages gained from vertical integration and compounding capabilities.

Risks and Considerations

Despite the compelling growth narrative, investors should consider several key risks. The long-term viability of PureCycle remains dependent on sustained operational improvement at Ironton, successful commercialization of PureFive resin, and the timely, cost-effective construction and product sales from its new facilities in Thailand, Antwerp, and Augusta. Operational hazards and the ability to scale production efficiently across multiple new sites present execution risks. Furthermore, securing additional financing for future growth projects, while aided by recent capital raises, will be crucial. The ability to consistently source high-quality PP feedstock at a reasonable cost, manage supply chain complexities, and navigate evolving regulatory landscapes and competitive pressures from both mechanical and chemical recyclers are ongoing challenges. Macroeconomic factors, including interest rates, inflation, and geopolitical instability, could also impact project costs and market demand.

Conclusion

PureCycle Technologies stands at a pivotal juncture, having successfully validated its groundbreaking dissolution recycling technology and laid a robust foundation for global expansion. The company's unique ability to transform waste polypropylene into virgin-like resin, coupled with a vertically integrated strategy and aggressive growth plans, positions it as a transformative leader in the sustainable materials sector. Recent operational milestones at Ironton, including near-90% onstream times and successful rate tests, underscore the technology's viability, while accelerating commercial traction, evidenced by numerous post-trial negotiations and initial sales, validates market demand. The substantial $300 million capital raise has provided the necessary fuel to embark on an ambitious global capacity build-out, targeting one billion pounds by 2030 and significant future EBITDA. While execution risks associated with scaling a novel technology and managing rapid expansion persist, PureCycle's technological leadership and strategic positioning in a massive, underserved market for high-quality recycled plastics present a compelling long-term investment thesis. The company is not merely recycling; it is redefining the future of polypropylene, offering a no-compromise solution that is critical for a circular economy.