PureCycle Technologies, Inc. Q1 FY2026 Earnings Call

Good day, and thank you for standing by. Welcome to the PureCycle Technologies First Quarter 2026 Corporate Update. 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 herein may be material. You're welcome to follow along with our slide deck or joining us by phone, you can access it 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, and 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 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 tracked approximately 15% below budget. This is significant. It is the first time we've completed a 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 are driving external outcomes. This is something that we are increasingly seeing across the business. It's been two 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 two years ago. The vessels that created the most challenges 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 was 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 a domestic compliant alternative to global supply. We're seeing this manifest in two ways. Companies that are ready in our pipeline are moving faster with us, and we've received numerous inbound inquiries from international 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 from 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 seven 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 rate in 2027 as well, 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 2027. 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. PureCycle's demonstrated technical successes are a clear solution. PureCycle offers three 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 for Europe and Asia for Asia' are emerging themes, and we are the solution for plastics. 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 eight 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 a 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 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 resolution also represents a meaningful pipeline catalyst; we will cover that 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 two industrial trials successfully at different film producers, both were on Bruckner 6-meter lines. We also ran two 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 two of the top five 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. The fact that we have achieved commercial qualifications with them is 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. We expect future application approvals to move considerably faster as a result. This quarter, we achieved final approval for commercialization of two 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 three additional applications, which are going well, and we expect many more beyond that. Additionally, 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 in cosmetic products and detergent 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 resin is pure enough for leave-on cosmetics, achieving the highest possible CosPaTox grade. This underscores the quality and consistency of our product and reinforces its suitability for demanding cosmetic applications. We are deeply appreciative of Procter & Gamble's support 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 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 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 they received from numerous QSRs and restaurant chains when they showcased the sustainable lids at the SPC IMPACT conference in Nashville two 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 carry significant plastic packaging exposure in California and with the mandate seven months away, we're seeing real urgency from a number of brands actively looking for compliant supply. We completed our first international sale in Q1. The initial purchase was over 300,000 pounds of PureChoice resin for a product line we've sold previously into. Over three million items are being produced. Discussions are ongoing around additional applications and a broader relationship. Not only was this a successful project, it was also a much accelerated timeline for qualification and approval. The model here is simple and consistent with what we've done successfully before: start with a qualification of a single application, demonstrate the product works and then broaden into sustained commercial relationships. We've already seen this play out with Churchill, a 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 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. This will help 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 seven 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 comply. 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 recycled 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-grade 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 in the qualification 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 creates a powerful and near-term demand catalyst for PureCycle. It drives real demand and real urgency for customers. A quick update on our global growth projects. As I mentioned, the Ironton turnaround was completed ahead of schedule and tracked 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 2028 and production in Q2 through Q4 of 2028. Construction is expected to break ground in the second half of 2026. 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 2027 and mechanical completion by the end of 2028. Total investment remains in line with prior disclosure of approximately $350 million. We were 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 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 processed' 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 two 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 increased and feedstock and other variable cost growth were 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.

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 — you mentioned the pipeline now stands at about 180 active opportunities and that branded sales are starting to convert. Could you help us understand what the conversion funnel looks like over the next three to six months? What types of customers and applications are close? Just a little more visibility into that.

We're very excited about this. We have many irons in the fire. The compounding assets we put in place are giving us a lot of opportunity to make exactly what customers are looking for. On the film side, if you've ever opened up a film wrapper and seen that it's white on the inside, that's called cavitated film; we can make that. To seal the film around a candy bar wrapper, you need a sealant film; we've made that and we're trialing with virtually all of the film producers in the U.S. at this point, and it's going well. Interesting about film is that brands are driving the discussion. It's less about us pushing it to a converter; it's more about brands hearing that we can do it, and they're starting to pull it through. On thermoform cups, we've talked a lot about coffee lids. Those are straightforward for us to make. It's hard to get to the point where we are, but lids are a good product for us across white, brown, black and some clear cup lids. You see this in cold cups as well as hot cups; that's an emerging trend. We have many customers testing to see if clear cups can work with our material and if the coffee lid fits correctly, and it's progressing well. Regarding impact grades — grades where you don't want the product to break when dropped but also not crush when stacked — those are tricky but we're making them. Applications like butter tubs, cream cheese, yogurt and similar products are exciting because we are a drop-in replacement for virgin resin; customers do not have to change their supply chain and can improve their sustainability story. There are many injection-grade applications; we highlighted the Tide cap as an example. We are doing work with Procter & Gamble that improved our capabilities. Although there was a delay on P&G's side, the process made us better: improved operations, supply chain and product quality. That will lead to success with other grades and other detergent manufacturers and injection-molded brands. Overall, we are in really good shape across these categories.

Andres, I'll take the first part of the Thailand financing question. I'm excited about the progress we've made in Thailand. We put together a comprehensive data room and have weekly dialogues with the Thai bank. They have reviewed the data room extensively and provided feedback, and we believe the indicative conditions are achievable. We're working to finalize terms while continuing to add to our LOIs for feed and offtake.

We have built strong relationships in Thailand and have met with the bank in person multiple times. The dialogues are strong and the relationship is developing well. Regarding New Jersey, the process is progressing positively. We've had active discussions and good relationships with the new administration, which is focused on improving efficiency and impact. The administration recently completed their first 100 days, so while there was a pause after the election, the conversations are moving in the right direction. We believe our interests are clearly aligned and that this will close soon.

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

First question about the macro volatility since early March that has impacted polypropylene and other feedstocks. With all of the puts and takes — Middle East facility impacts, oil prices, NGL supply, PDH facilities in China — polypropylene prices have reacted. With these macro dynamics, could you drill down into what this means for PureCycle from both cost and demand perspectives? I imagine more customers would be intrigued by your product offering. I'd love to hear your views.

This is a very dynamic period. Many are waiting on the sidelines hoping disruptions end quickly. We see destocking, particularly in China, and significant global pricing changes. The arbitrage between the U.S. and Asia is very tight now and has in some cases reversed, so the market is tight and destocking may continue. Oil and polyethylene have direct impacts on co-products. Co-product one has some market correlation to oil; co-product two has a clear market correlation to polyethylene. In the U.S., polyethylene has roughly doubled, which increases the value of co-product two. Increased virgin polypropylene pricing is a tailwind for us and opens discussion with customers, but many of our branded customers structure agreements based on feedstock plus delivered terms and are therefore largely independent of global supply chain volatility because our feedstock is locally sourced and produced. That hedge is attractive to customers. We're also seeing relationships seeded globally over the past three to four years begin to bear fruit. We have a strong team in Europe and Asia, and discussions are underway about shipping to those regions. We have REACH certification in Europe, which clears a path. In Asia, Thailand is coming online and we've developed relationships with Asian customers, who are nervous about the current supply environment and are reaching out to diversify supply or accelerate approvals. There is also a trend toward nationalism — 'Europe for Europe and Asia for Asia' — where nations prefer domestic or regionally reliable supply. That could accelerate traction for PureCycle in Thailand and Europe as they seek to replace uncertain supply chains.

That was helpful. As a follow-up, what did you accomplish during the Ironton turnaround? Please describe the scope of work and standout projects. With this behind you, what should we expect in terms of production rates and top-end capacity coming out of the outage?

Ironton was a major activity and we opened nearly every piece of equipment. As I mentioned earlier, the plant was cleaner than expected, which is a very good sign for operational durability. The lack of significant corrosion or erosion suggests the plant can run for long periods without unscheduled outages and makes future outages more predictable. Execution on site was strong and the plan improved our positioning. We completed over 170 jobs focused on quality, reliability and capacity. We cleaned up many of the early headaches, implemented many small improvements and the site team is enthusiastic about these changes. Regarding capacity and rates, we upgraded an undersized pump, improved heat integration, cleaned all heat exchangers and implemented numerous seal improvements that required an outage. Each improvement will be tested to determine stable ramp rates. Over the last two years, we performed several rate tests where we reached 12,000 pounds per hour (about 75% capacity) and touched 14,000 pounds per hour (roughly 90–95% capacity). Those tests gave us insight into targets for this outage, and we've designed improvements accordingly. We expect to increase rates coming out of the outage and are excited to see performance 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. Could you talk about any other U.S. states besides New Jersey and California that have potential regulatory catalysts on the horizon which could unlock meaningful revenue opportunities?

There is legislation in Washington and Oregon and work progressing in Massachusetts and Colorado. New York has a lot of discussions underway as well. Many of the traditional states are moving toward demand-side regulations. New Jersey and California are particularly influential and have helped establish fundamental guidelines. Most states are starting to adopt APR certification as the marker for recycled content, which we already have, so we are well positioned for where this regulation is headed.

Got it. As a follow-up, if you were to rank applications that you expect to be most meaningful in the near term — say the next 12 to 18 months — which would top the list?

There are two ways to look at this: what drives near-term revenue and what we will lean into longer term. In the short term, injection-molded applications like Tide caps and similar products will create revenue because we can color and manufacture those reliably and we are seeing follow-on requests. Bridging short and long term are coffee lids and cold cups; the volume is enormous and we have proven we can produce them at various blend levels from 25% to 100% PCR. That category should come on quickly and persist for a long time. Film is another major segment for the long term. We believe we are the only game in town when it comes to PCR content in film, and running on Bruckner 6-meter lines is significant because those lines are large and technically challenging. The Ironton compounding asset will unlock film for us. A fourth category that has become unexpectedly valuable in the last three to six months is the impact grade — products that must withstand drop and crush, like butter tubs and yogurt tubs. That grade is difficult to make and we can be a drop-in replacement for virgin grades. Many brands in that space are currently held up by New Jersey regulation, so it will come but perhaps later. Additionally, we are performing well in retort tests, which are sterilization tests used for food packaging; our low contaminant levels are an advantage in those rigorous tests. Overall, film, lids/cups, injection molded caps and impact grades will be meaningful.

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

You have timelines for the ramp and two separate ramps in your outlook. Could you give a better sense of what the ramp actually looks like? How long does it take to get to full run rate or annual run rate? Is it in Q2, Q3 or Q4? What does the ramp profile look like?

It's difficult to predict precisely because the ramp depends on customer timing. What we've said previously still applies: Q1 and Q2 look largely similar, and Q3 and Q4 start to ramp in terms of volume and revenue. Many customers are trialing and beginning to take supply; the average of their ramp timelines drives our ramp. Given regulatory deadlines, we have line of sight that Q3 and Q4 should be strong quarters as customers work to meet mandates.

You noted that Procter made you better as you worked through qualification. What does that improvement look like? Why is your product better now and what needs to happen to get more orders across the finish line with Procter or other customers?

We have orders across the line with Procter. We are fully qualified on both the Tide caps and the ZzzQuil caps; Tide caps are happening now and ZzzQuil will follow in the second half of the year. We actually have a purchase order for late May or early June delivery. When I say working with Procter made us better, I mean the rigorous qualification required improvements across many areas: supply chain management, inventory control, lab testing, quality control, documentation, certifications and regulatory work. Procter asks thorough questions that sometimes require us to develop additional procedures, documentation and processes. Developing those capabilities makes us better not only for Procter but for all customers. Procter does not direct plant-level operational changes like turning valves; their involvement elevated our organizational rigor across the board. Our team has now executed these processes repeatedly and improved quarter over quarter.

Finally, with roughly 180 pipeline opportunities, what pushback are you getting from customers? What's holding them back from placing orders? You mentioned New Jersey before — are there other reasons?

Every customer is different and has distinct processes. Some customers request detailed LCAs; others focus on APR certifications and feedstock traceability. It's not that customers are pushing back on our product; it is simply the time required by their internal qualification processes. For food contact applications, customers often perform extended testing, such as filling a container with yogurt and observing it for three to six months. These are normal, time-consuming steps and are not indicative of issues with our product. Over the past 1.5 years, we've worked to perfect the product and the qualification process. We have fewer unknowns and can answer technical questions more quickly, supported by a strong lab in Durham. We feel confident in our ability to qualify product and customers are progressing through their respective processes; we're converting branded applications and expect to announce more brand qualifications through the year.

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

Congratulations on the continued operating success. Regarding EU recycling regulations, enforcement confidence is sometimes questioned. What is your take on enforcement and the EU regulatory landscape?

I won't attempt to predict government decisions. Currently there is strong support for demand-side regulatory efforts globally. California, New Jersey, Washington, Oregon and Colorado are moving forward and setting standards in the U.S. There is bipartisan support for recycling; for example, Florida passed a recycling standard with unanimous approval. Europe is moving fast on recycling for both sustainability and supply-security reasons, and nationalism is a factor as countries seek to reduce dependence on external supply. In Asia, EPR legislation is appearing in India, Indonesia and Thailand. This is not a regional fad; it's momentum that is building globally and should provide tailwinds for PureCycle over the next decade.

Given new customer conversions and announcements like the interest from Plastic Ingenuity, is there any chance revenue guidance could be raised as 2026 progresses?

We are not issuing updated revenue guidance today. The path of revenue is highly variable and influenced by factors such as New Jersey resolution. Internally, the plan we put in place for 2026 is very achievable, and we are executing against it. We feel good about our progress and that positions us favorably 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.

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 plastics. 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.