Overview of PureCycle Technologies

PureCycle Technologies, Inc. is a Florida-based corporation focused on commercializing a patented dissolution recycling technology to restore waste polypropylene into resin, called PureFive™, which has similar properties and applicability for reuse as virgin polypropylene. The company has a global license for this technology from Procter & Gamble (P&G) and is working to build commercial-scale recycling facilities in the U.S. and Europe.

PureCycle’s process includes three main steps: Feed PreP to collect, sort, and prepare polypropylene waste feedstock; Purification to use a dissolution recycling process to return the feedstock to near-virgin condition; and Compounding to modify the resin to meet end-user specifications. The company has built a Feedstock Evaluation Unit, its first commercial-scale plant in Ironton, Ohio, and is planning its first multi-line facility in Augusta, Georgia.

Financial Performance

PureCycle reported its first quarterly revenues of approximately $1.6 million in Q1 2025, representing the start of meaningful operations and sales. This was a significant increase from the prior year, when the company had not yet reached significant continuous operational volumes or revenue generation.

The company’s operating expenses increased by $0.3 million year-over-year, driven by higher production-related costs, employee expenses, rent, and equity-based compensation, partially offset by lower depreciation and consulting costs. Research and development expenses decreased by $0.3 million, while selling, general and administrative expenses decreased by $1.5 million, mainly due to lower legal costs.

Interest expense remained relatively flat, but interest income decreased by $3.2 million due to the liquidation of the company’s investment portfolio. The fair value of PureCycle’s liability-classified warrants decreased by $56.7 million, resulting in a gain, compared to a $13.9 million increase in the prior year. There was also a $21.2 million loss on debt extinguishment in the prior year that did not recur.

Overall, PureCycle reported net income of $8.8 million in Q1 2025, compared to a net loss of $85.6 million in the prior year period.

Liquidity and Capital Resources

As of March 31, 2025, PureCycle had $22.5 million in cash and cash equivalents, as well as $15.0 million in restricted cash. The company also has a $200 million revolving credit facility with Sylebra Capital that is currently unused.

PureCycle’s long-term debt, including Green Convertible Notes, Revenue Bonds, and equipment financing, totaled $363.4 million as of March 31, 2025, net of discounts and issuance costs.

The company believes its current level of unrestricted liquidity is not sufficient to fund operations, outstanding commitments, and further growth plans. To address this, PureCycle is working to improve the Ironton Facility’s operations, pursue commercialization with potential customers, and raise additional capital through equity and debt financing.

In September 2024, the company raised $90 million through a private placement of Series A Preferred Stock, common stock, and warrants. In February 2025, PureCycle raised an additional $33 million through a common stock offering. The company has also sold $27 million in Revenue Bonds it owned to generate additional liquidity.

PureCycle’s future capital requirements will depend on the funding and construction of additional facilities, support for other business opportunities, debt service, and other challenges. The company may need to seek additional debt or equity financing, which may not be available on favorable terms.

Strengths and Weaknesses

Strengths:

• Patented dissolution recycling technology licensed from P&G, which can restore waste polypropylene to near-virgin quality
• First commercial-scale plant in Ironton, Ohio, with plans for larger multi-line facility in Augusta, Georgia and expansion into Europe and Asia
• Established relationships with major consumer brands through offtake agreements
• Feedstock+ pricing model that passes on feedstock costs and reduces margin volatility

Weaknesses:

• Significant capital requirements to fund construction of new facilities, with uncertainty around project financing
• Challenges obtaining necessary permits and leases for Feed PreP facilities
• Reliance on successful commissioning and ramp-up of Ironton Facility to drive revenue growth
• Limited operating history and history of losses, with uncertainty around achieving profitability

Outlook and Risks

PureCycle’s future success will depend on its ability to successfully commission and ramp up operations at the Ironton Facility, secure project financing for the Augusta Facility and other expansion plans, maintain exclusivity under the P&G license, and achieve market acceptance of its recycled polypropylene products.

Key risks include:

• Ability to obtain necessary funding and complete construction of new facilities in a timely and cost-effective manner
• Successful establishment of Feed PreP facilities to supply high-quality feedstock
• Maintaining exclusivity under the P&G license
• Effective implementation of the company’s business model and growth strategy
• Profitability of offtake arrangements
• Macroeconomic factors such as inflation, supply chain disruptions, and availability of capital
• Potential legal and regulatory challenges
• Operational risks such as labor shortages and business disruptions

Overall, PureCycle has made progress in establishing its first commercial-scale recycling facility and generating initial revenues. However, the company faces significant challenges in securing the capital required for further expansion and achieving consistent profitability. Successful execution of its growth plans and effective management of operational and financial risks will be critical for PureCycle to realize its vision of creating a new segment of the global polypropylene market.