Earnings Call Transcript - PCT Q2 2025

Operator, Operator

Good evening. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the PureCycle Technologies Second Quarter 2025 Corporate Update Conference Call. I'd now like to turn the call over to Eric DeNatale, Director of Investor Relations. Please go ahead, sir.

Eric DeNatale, Director of Investor Relations

Thank you, Carrie. Welcome to PureCycle Technologies Second Quarter 2025 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 Jaime Vasquez, our Chief Financial Officer. This evening, we will be highlighting our corporate developments for the second quarter of 2025. The presentation we'll be going through on this call can also be found on the Investor tab on our website at purecycle.com. Many of the statements made today will be forward-looking and based on management's beliefs and 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 second quarter 2025 corporate update press release filed this afternoon as well as in other reports on file with the SEC to provide further detail about the risks related to our business. Additionally, please note that the company's actual results may differ materially from those anticipated and except as required by law, we undertake no obligation to update any forward-looking statement. 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 if joining us by phone, you can access it at any time at purecycle.com. We are excited to share updates from the previous quarter with you. With that, I will now turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Dustin Olson, CEO

All right. Thank you, Eric. Thanks for joining the call today. You may notice my voice is a bit short as I'm still recovering from a little summer cold. So forgive me ahead of time, if I've got to go on mute for a moment or two for a cough. The second quarter was a meaningful period for PureCycle as it marked the shift towards growth. We updated the market approximately 6 weeks ago with the successful capital raise in late June and the announcement of our global growth plans in Asia, Europe, and the U.S. This expansion is planned to bring roughly 1 billion pounds of installed capacity to the market by 2030. The reaction from our customers has been very positive, especially from the larger global brands looking for an opportunity to truly move the needle for their brand's global sustainability goals. This is a transformative moment, and we're thrilled to bring our product to the world. I want to thank our team for their hard work on this and in particular, thank our new and existing capital partners that participated in the $300 million capital raise. We also continue to see progress on the commercial front as our pipeline advanced. The acceptance of our material continues to strengthen across numerous applications; our ability to deliver high volumes of FDA and PCR resin with a wide range of material properties through compounding is differential. We now have numerous applications and post-trial negotiations, and the backlog of trials continues to build. We currently have 17 customer applications that are post-trial discussions with continued plans for second-half revenue ramp as these discussions convert into sales. Additionally, it is notable that the commercial discussions focused not only on deliveries in 2025 but also capacity reservation for '26. This is a fundamentally different dialogue when compared to before our successful capital raise. Many of these applications are with brands and products that I expect all of you are familiar with. Coffee lids, yogurt cups, spouts, container lids, pins, snack bags, tapes, storage totes, are only a few of the applications that we're excited to bring to the market. We also sought the first major commercial agreement with Emerald in this quarter for approximately 5 million pounds of purified resin, which starts converting into revenue in Q3. Fiber was one of those first major technical compounding achievements, and we're excited to see those early wins accelerating into increased customer interest. The film market is an enormous opportunity for PureCycle, one that we have been talking about in the recent quarters. Remember, there isn't a reliable high-quality post-consumer recycled FDA resin that can be used at scale and in chip bags, candy bars, and other fill applications. We originally expected trial success in the second half of 2025, but I'm very proud to announce that we achieved our first successful trial in film earlier than expected and have planned to test two additional larger-scale trials in August, one with Bruckner and another with a large global converter, and a third in September. We believe that this is a very large underserved market for both FDA and non-FDA applications and are hearing indications of demand from film players for '26 even before the product has been fully tested. Operationally, the story continues to be one of steady progress at Ironton. As we noted on the capital raise update six weeks ago, Q2 was a strong quarter for our team, where we achieved on-stream times approaching 90% in both April and May. We also produced pellets for 65 consecutive days. In early June, we took a small planned outage to prepare for the second half of 2025 commercial ramp to implement a couple of small reliability improvement projects. We also successfully completed an initial test run at upper limits of the facility with a rate test at 14,000 pounds per hour on August 1. We plan to continue testing the plant at these high levels throughout August and September to map out the requirements at these rates and also raise rates to higher and higher levels in Q3 and Q4 to meet the commercial funnel requirements. Overall, the progress that we're seeing with the trial pipeline, as well as what we're hearing in our post-trial brand discussions is positive and will lead to increased branded sales in the second half of the year. More importantly, the indications of demand that we are hearing from our customers are strong and give us increased belief that sales will continue to ramp up leading to and through 2026. The unit economics on our branded contracts and what we are seeing with our current discussions continues to support the unit economics we previously laid out to the market. When we announced our capital raise about six weeks ago, we gave a lot of detail to the market regarding our global growth plans. I think it's important to take a step back and reiterate why the time for growth is now. First, the operational reliability at Ironton has meaningfully improved over the past year, which was exemplified by on-stream time approaching 90% in both April and May and 65 days of consecutive pellet production. Secondly, the momentum in our commercial trials has continued, and this gives us increased confidence that demand for recycled polypropylene far exceeds our ability to supply the market. When it comes to growth, I couldn't be more excited about Thailand. We shifted to Thailand because it allows the fastest speed to market while also minimizing the incremental capital outflow. This project has a high return on invested capital, gives direct access to Southeast Asia, and ensures Procter & Gamble exclusivity for Asia. The brownfield site that we have access to in Rail has existing infrastructure, including power, steam, roads, warehousing, fire, compounding assets, a deepwater port, and equally, if not more important, a deep bench of very talented project professionals. This combined with the low-cost nature of Thailand should allow us to bring the project to completion for somewhere between $1.50 and $1.75 capital expenditure per pound. This is inclusive of roughly $87 million in long lead equipment that we've already purchased, which further reduces the incremental cash outflow. We continue to expect that we should have this facility operational in the second half of '27. A portion of the capital raise will also be allocated to completing the permitting process in Antwerp and also finalizing the Gen 2 design for a $300 million-plus pound production unit for future facilities. We continue to expect that permitting for Antwerp will be completed in the second half of '26 and the overall project should be completed in '28. Design work for the larger lines should be completed in the first half of '26, which will then kick off construction of our Gen 2 line, which is expected to complete in 2029. Since the most recent update, we continue to progress our growth plan and have already selected our EPCm partners for Thailand and Antwerp. We are measuring the staffing needs for both projects carefully as we scale the future designs and integrate Ironton learnings into the process. This should lead to lower operating costs for each new line, and the combination of lower capital expenditure per pound and lower operating expenditure per pound should result in very attractive capital returns and positive results from project financing. We continue to make progress with our commercial trials and are now in post-trial discussions for 17 customer applications with numerous brands and converters. These consist of applications for many large global brands. This is consistent with prior guidance where the first half of the year would be about application trials and the second half would be about working to convert those trials into sales, and that's what we're starting to see. While it's difficult to precisely time the trial-to-sales pipeline, we are on track with prior disclosures and are very happy with our trial win percentage. The brands are excited about our product, and we are moving into the final gating items for many applications. This is good for the 2025 ramp but it's also very good timing as they plan for 2026 volume commitments. Many of these are with large well-known consumer brands with meaningful volume requests north of 5 million pounds per year with the intent to grow thereafter. Other major brands are inquiring about reservations starting at volumes greater than that. When we look at our sales funnel, I think it's important to look at a couple of different metrics. First, does the funnel continue to progress and build? Secondly, how do the attrition rates look? On both of these metrics, we see incredible success. Last quarter, we had a meaningful number of active trials convert to post-trial discussions, and many pending trials convert to active trials and the backlog of future trials continues to grow as well. Last quarter, we reported 88 active and pending trials with 3 that were post-trial. Now we have 96 active and pending trials, and 17 are post-trial. Additionally, we have only had 1 trial drop out of the funnel. So the attrition rates have been incredibly low. This speaks to our ability to meet the customer requirements as well as how much our customers want a quality recycled product. We're introducing a couple of new terms, but one of them is serviceable addressable market. The serviceable addressable market of our sales funnel is currently 4.8 billion pounds, and while that's an enormous number, that continues to build quarter-over-quarter. It's still only a fraction of the 200 billion pounds global market. Last quarter, we talked a lot about the excitement we have regarding our ability to make sales, which is an underserved market for recycled material. Since the last update, we had our first industrial trial success in film, which positions us well for commercial success going forward. I was actually at a facility a while ago and got to see the equipment running. I have to say it was just awesome. These moments fuel our team and give everyone confidence in the products that we're building. I remain very bullish on our potential for non-FDA and FDA BOPP film. We're moving as fast as we can to qualify film across numerous customers by working our product into their highly congested production schedules for industrial trials. We have two large-scale BOPP trials scheduled for August, one with our partner, Bruckner, which we mentioned last quarter, and another with a large global converter and a third, scheduled for September in the U.S. The conversations with brand owners have increased and film, even in front of these trials, some have even begun to communicate interest in securing volume reservations for 2026 and beyond. The overall backlog of potential trials also has continued to increase since last quarter. After our successful capital raise, many brand owners are inquiring about capacity commitments from our facilities beyond Ironton. I would like to pause for a moment and highlight this point. Global brands manage massive systems in extremely competitive markets. To do so successfully, they require high levels of efficiency and consistency from everyone that touches their system. Like all of us, they are judicious with where they spend their time. The fact that we can deliver a no-compromise drop-in replacement product with FDA and PCR certifications and that we have significant volume pipeline planned that solves major regulatory, consumer, and investor-related demands is noteworthy. We provide the value proposition that they need. In July, we announced a partnership with Emerald Carpets, who is one of the largest installers of trade show carpets in the country. The large-scale commercial supply agreement that we have with them is for approximately 5 million pounds per year of PureFive Choice resin beginning this quarter. Emerald consumes roughly 50 million pounds of polypropylene per year. So there's a lot of room for us to grow the partnership. I can tell you; both parties are interested in doing so. There is also a unique opportunity with Emerald to create true circularity over time. I give them a lot of credit for really chasing this activity in the market. With true circularity, we can take their unused carpets and use them as feedstock to produce recycled resin for their future demand. This is an exciting development, one that we hope to iterate with other commercial partners over time. The success with Emerald is also a good reminder of the regulatory pressures that are beginning to come into play for consumers and polypropylene. California recently mandated 5% recycled content for all their carpets sold in the state, with a stated goal of increasing that over time. PureCycle is a solution for California and other states that decide to follow suit. During the second quarter, PureCycle earned Green Circle's Recycled Content Certification for nearly 30 grades of PureCycle resin and co-products one and two. This is an independent certification verifying that greater than 90% of our feed comes from qualified PCR feedstocks. Customers just want to know that their product is truly coming from post-consumer curbside, and they know it's extremely difficult to procure high-quality final product made at scale from PCR feed. We hear this in the market all the time, and we know this is a differential value proposition for PureCycle. The reality is that PureCycle is processing PCR feedstock day in and day out at Ironton, and we're happy to get this certification to add to our docket of successful certifications. Overall, we've made tremendous progress with our commercial pipeline, and we continue to expect a commercial ramp in both Q3 and Q4 with increasing visibility on potential demand from our customers for 2026 and beyond. We recently received board approval to initiate a project to bring compounding operations to Ironton by the end of the year. This is a great project. This is expected to increase our on-site compounding capacity to approximately 100 million pounds and will be primarily focused on film, thermoforming, and injection molding applications. This decision came in large part due to our commercial conversations. First, it's becoming clearer every day that our customers want compounded material across multiple application types and grades, and therefore, our existing third-party capacity would be insufficient to meet their needs. Secondly, as we progress with larger blue-chip companies, their volume indications require higher volumes and therefore require rail, which can be more cost-effectively and reliably managed through compounding at Ironton. This expansion will not only help to improve our logistics and our ability to serve our customer needs, but we believe it will realize cost savings in excess of $4 million per year and improve the overall quality management activities. The expected payback on this project is less than 2 years. The announcement today on our compounding expansion is a reflection of the commercial progress on specific trials and speaks to the confidence that we see in the demand ramp to come. As previously disclosed, we achieved on-stream times approaching 90% in both April and May before taking a brief outage in June. The Ironton Facility has been back up and is ramping into higher production levels for Q3. We initiated several rate tests and successfully ran at levels of 14,000 pounds per hour, nearing nameplate rates on the first of August. With all rate tests, we move to a new level and then evaluate product quality, reliability, and operability at these levels. Then we do it over again; we optimize, we learn, and we improve along the way until it becomes the new norm for operations. We have been doing this successfully for 2 years now. I can't say enough how proud I am of our operational successes. This is not a game that's won with a single home run. It takes practice, diligence, some occasional strikeouts, and a series of endless singles. These accomplishments position us well for when we ramp our production in conjunction with the commercial ramp. Overall, the second quarter marked an important inflection point for PureCycle. We successfully raised $300 million in capital, which should allow us to begin our growth beyond Ironton and bring our PureFive resin to the global marketplace. We have structured our growth plans to create the best balance between speed to market, cost, and overall returns. As we laid out in late June, we continue to see a path to roughly 1 billion pounds of installed capacity by the end of 2029 and should provide roughly $600 million of run-rate EBITDA. We have successfully advanced our commercial trials and are ramping revenue at Ironton. We are excited for the next stage of the journey, and I'm incredibly excited about the recent developments and more confident than ever about what the future holds for PureCycle. With that, I'll turn over to Jaime for the financial presentation.

Jaime Vasquez, CFO

Thank you, Dustin. As we mentioned, we had a successful capital raise in June, which significantly bolstered our liquidity position. As you see on Slide 12, we ended the quarter with $298 million of cash on the balance sheet, including $284 million of unrestricted cash. Earlier in the quarter, we also sold $11.9 million face value of our revenue bonds at a price of $88 for net proceeds of $10.5 million, and we still hold about $87 million of revenue bonds that we plan to sell in the future to further support our growth initiatives. Our operations and corporate spend was around $39 million, which was slightly higher than the $37 million spent in the previous quarter. We anticipate that our operational spend will remain at similar levels adjusted for increased spend associated with the ramp-up of commercial sales. Additionally, we expect growth capital spend to slowly increase over the next several quarters. We are working on detailed project plans and will provide more insight once the spend curves associated with those plans are finalized. I would now like to turn the call back to Carrie, who will open the call for questions.

Operator, Operator

Your first question will come from Andres Sheppard with Cantor Fitzgerald.

Andres Sheppard, Analyst

Congratulations on the quarter and all the great progress. Dustin, you touched on this a little bit on the call, but I'm wondering if you can give us maybe a bit more detail on the growth plans, how you have progressed them since you last updated the market?

Dustin Olson, CEO

Yes, thank you, Andres. I appreciate your compliment. We are genuinely excited about moving forward with growth. We have discussed three key growth projects: Thailand, Antwerp, and our Gen 2 facilities. We are well positioned, having invested considerable effort in securing suitable sites that are ready to launch. Ironton is now prepared to support these activities, giving us the confidence to proceed. Specifically regarding Thailand, it's an excellent facility with an integrated polypropylene production process. The installation costs are relatively low since much of the necessary infrastructure is already in place, allowing us to install our purification facility quickly. This results in a high return on invested capital and strong cash flow right from the start. We have robust infrastructure, including good roads, steam supply, and deep port access. This deep port access is crucial because plastic pollution is a significant issue in Asia, where waste handling facilities are often less developed. Organizations like the Alliance to End Plastic Waste are actively working to address this problem. We expect significant new capacity to emerge in the next few decades for collecting, sorting, and processing waste, positioning our facilities in Thailand to purify a continuously increasing supply of feedstock from that area. I'm very enthusiastic about Thailand, as I see it becoming a flagship facility for our future initiatives. Additionally, we have an outstanding team and partnership with IRPC in Thailand. They possess the right facility and experienced personnel, which is vital for the project's success. The coordination between our companies regarding staffing and project support is strong, and our team has already begun engaging with their expertise to ensure we meet our timelines and budget. Regarding the other two projects, Antwerp is centrally located in the recycling landscape in Europe, which is a leader in recycling capacity demand; we aim to be a key supplier there. The permitting process varies by region, and in Europe, it requires thorough engineering before submission, which is causing some delays. However, we are optimistic about the returns and acceptance in that market. Lastly, for Gen 2, we are still determining the plant's size; we are evaluating whether to proceed with a capacity of 300 or larger. This facility is set to feature an excellent cost structure, and those who collaborate with us early will benefit from volume at competitive prices. We aim to make PureCycle projects competitive with virgin polypropylene facilities, ensuring that when polypropylene demand increases, our facilities are preferred over new virgin production options. Thank you for the great question.

Andres Sheppard, Analyst

No. Thank you, Dustin, for that very elaborate answer. I really appreciate all the color. Maybe one more for me. I think the big question that most of us probably have on the call. So I'm wondering if you can give us a bit more granularity on the 17 applications that you disclosed are post trial. How should we think about the gating items here before commercialization? And maybe how would you characterize the likelihood of success?

Dustin Olson, CEO

Yes. So look, I mean, first of all, we've continued to invest in our commercial team. I think that we're building a first-class team. We are starting to formalize the process for evaluating the funnel, getting very strategic about how we look at different customer segments, and really starting to distill into which applications are going to make the most sense. I'm really proud of the team for the work that they've done there. I mean, look, the way to look at the 17 trials is that it's working. If you take a step back 12 months ago, people were wondering if the product would even work. Now we're talking about post-trial success conversations, which is a substantially different place than we were a year ago. First take should be, okay, the tech works. Customers are using it; customers are approving it from a trial perspective, and now they're in further conversations. That's very positive. The other thing to take from that table is to look at different lanes. We can play in just about every major lane in the market, and getting trial success in each of these lanes will give us flexibility to go where it makes the most sense. When it comes to conversion to sales, it's happening. Many of the 17 successful trials are in late-stage discussions. Brands are excited to get moving, and they're just working through supply chain and inventory management procedures, logistics, and how do I incorporate PureCycle and work out the incumbent? These things take time. The technical success we're having is leading to good discussions in all those areas, and we feel very good about the ramp-up we’ve discussed in the past. We are starting to ramp right now, and we still feel good about the ramp we’ve discussed.

Hassan Ahmad, Analyst

Things seem to be progressing along extremely well. My first question is around commercialization, right? A couple of things that you said on the call intrigued me a lot. You talked about the serviceable addressable market being around 12.8 billion pounds. And like you rightly said, for an industry that's around 185 million to 190 billion pounds, that's just scratching the surface. So I guess my question is that as you inked this commercial agreement with Emerald, 5 million pounds, their needs are 50. I mean, how are you guys thinking about parceling the production out, meaning the pace at which things are going, and what you're alluding to? You seem to be able to sign these commercial agreements with a variety of players; the demand is there, they're just going to scoop this up, right? So how is your commercial team thinking about picking and choosing the right sort of customers? How are you thinking about what it entails to actually get the best deals and how to sort of maybe even grow in pricing? Because I mean, it's a unique sort of place to be in commodity chemical land where the demand so exceeds what you're producing that, in theory, the pricing power is with you.

Dustin Olson, CEO

Yes. I mean that's a great question, so. I mean, in a way, it's a little bit about the decommoditization of polypropylene. We are not commodity polypropylene; we are a specialty product. It's in short supply, and there's a lot of demand for it in the market. I think that when you think about the overall segment choices for us, it goes in a couple of different ways. First of all, with Ironton, our goal is to show that we can make it in all these applications. We want to be able to show the automotive sector that we can make a bumper and that our odor is good enough to go on the inside of a car. We want to show the textile market that we can make fiber reliably, both in single strand, non woven, staple, and it could go to cars and to carpet. It can go into these high regulatory areas like California for the 5%. We want to show them it can work. In food-grade applications, like dairy and yogurt, all these different things, these are highly technical. You don't want the yogurt to break when it drops on the floor, so you have to add an impact modifier to make sure it holds up. All of these things are questions that our customers ask, and they want to know that it works. So first off, we want to show that technically, we can do it, and in many different ways, we are doing really well there. When it comes to how much do you deliver to each segment, I think that there is a high-valued customer willing to pay high prices in every segment. Depending on the segment, it may not be as deep as others; for sure, consumer-facing FDA grades have a deeper pool than in some of the other segments. But there are deep segments and deep value customers in those segments that we can target. We want to manage the overall margin across each segment. We will choose which segment to dive into to maximize the margin at volume. When it comes to Ironton, I want to highlight an important point—we're essentially announcing for the first time the in-house compounding of material. When you recycle material, it’s fundamentally different feedstock, and it needs work to get it ready for the customer. Sometimes you need to add whitening; sometimes, you need to add impact so it doesn't break. That means creating a product that meets their needs, and if we do it well, then we win. This compounding solution won't replace the third-party compounding we’ve discussed in the past. It’s additional capacity to handle demands from big brands and customers. We're in a great place, Hassan, and we’ll figure out how to maximize margins so we can maximize value to shareholders by creating a robust slate of optionality in our funnel. We’re going to get better and better at defining the funnel, adding to it, and choosing our focus areas triumphantly.

Hassan Ahmad, Analyst

No, that's phenomenal and a unique situation to be in. And sort of question around where you just left off. I mean, the compounding opportunities seem very interesting as well. I mean, it's almost like on the pricing side, you could get that economics for bulk chemicals. So my question is, you've initiated that 100 million pound project as you called it for compounding. Could you give us a sense of, a) how long this is going to take, and b) the capital outlay? Part and parcel with that, c) would this be something that you would consider at the other growth projects that you are considering, whether it's in Asia, Europe, or elsewhere? Is this going to be the model?

Dustin Olson, CEO

Yes. I mean let's answer the first question—the compounding project is expected to be done by the end of the year with startup in Q1. We do not expect it to impact our compounding operations with the third party, and if we do get pressure, we need more compounded capacity; we have alternatives in place. It should be operational by the end of the year. When it comes to whether this will be part of future discussions, I think so. We're evaluating how it plays into our upcoming projects, but the moment we started turning on compounding about a year ago, we started to find great traction. We found great traction with our customers, and they started seeing us differently in terms of reliability. We can adjust material quality on our side, which makes it easier for them. When it comes to thin-wall injection, the plastic industry has been thin-wall plastic applications for decades, more and more each year to minimize plastic use, and that requires higher performance polymers. We're going to be able to do that with our compounding operations because we have such a clean product coming out of purification. For thermoforming, it's very difficult to get MFIs less than 10; we can do that. For film, you need less than 10 MFI and also a highly pure product. We're in a truly unique position. The successes we’re seeing at Ironton are translating to potentially the same customers in different regions; we have many that want uniformity for their global operations. I don’t think there are many recycled solutions that can provide a no-compromise kind of lower anxiety changeover to recycled sustainability products. We’re truly unique there.

Luke Persons, Analyst

This is Luke on for Eric. So first, your capacity seems to be in high demand at Ironton right now, which could give you the luxury of being selective. How are you thinking about customer diversification playing out? Do you expect to service maybe a select few customers and higher volumes at Ironton, or do you think it's realistic to plan on converting a greater portion of that trial pipeline into perhaps lower-volume commercial contracts?

Dustin Olson, CEO

Yes. So look, I think it's a great question. I think to a certain extent, those customers that move fastest are going to have the first bite of the apple. That's first. We're starting to see a lot of capacity reservation cleanup in 2026, so I think there's a bit of a rush to get a piece of the pie. That’s good for us. I also think that there will be some segments that are naturally deeper with margin than others. FDA film, and consumer-facing brands will obviously be there. But don't lose sight of some of the other big brands. I mean, look, automotive has major regulations coming in '28 and '30; they have to start now to be successful. I just think in every single segment, there will be pieces that see enough value to generate margin, which makes sense. Now switching gears to the Gen 2 facilities, can you talk about some of the challenges you anticipate scaling to a $300 million-plus pound facility? Obviously, you've learned a lot from Ironton starting from scratch, but what are some major areas to focus on to ensure execution? Yes. Look, I mean it is fundamentally different where we are today than when we started building and designing Ironton. Today, we've seen a commercial-scale run. We know how it works and what will improve operations. We are extremely deep in understanding processes and have learned a lot through the commercialization of Ironton. We understand how the molecule behaves at different regimes, giving us confidence to scale up to much higher levels. Our team is confident in scaling various pieces of the unit operation to get to a larger scale. That’s why we haven't decided how big we want to make the plant yet, and that will ultimately be a cost optimization decision for us in the next 6 to 12 months.

James Schumm, Analyst

Can you just update us on what the 2H ramp actually looks like now? Does Q3 look like Q2, and then Q4 is significantly better? I think in the past; you talked about EBITDA breakeven for Ironton in Q3 and at the corporate level, breakeven by late Q4 or early Q1. Is that target still on track?

Dustin Olson, CEO

Yes. That’s a good clarification question, Jim. I appreciate that. When we talked in the last quarter, we disclosed 12 weeks ago that we expected Q1 and Q2 to be consistent, and largely, they are. Q2 is a small increase over Q1, but effectively at the same level. We anticipated that and expected it. For Q3 and Q4, we see ramp in both quarters. We're already seeing higher revenue numbers in Q3 than what we did in Q2. We expect that to continue. Exiting Q3, we believe we could exit at the $4 million per month revenue level. I think that still makes sense. We've done a lot of work to minimize cost. I mentioned in-line compounding, which will help us to get to breakeven. We've seen good progress with our trials. Ultimately, the timing depends on when customers turn on, but we have good visibility and run rates at the end of September. Whether we reach $4 million in September or the end of October is uncertain, but we are on the right trajectory. For Q4 and Q1, we believe we can achieve corporate breakeven in the Q4 to Q1 timeline. We still feel good about it. Our target is $4 million per month for breakeven at Ironton and $8 million for the corporate level, which we still feel is achievable across the upcoming quarters.

James Schumm, Analyst

Can you just talk about your goals for orders in the third quarter? What's the pushback you're getting from customers? Is it price? Is it melt flow? Is it quality consistency? What are you getting? What is the pushback from customers?

Dustin Olson, CEO

Yes, that's a good question. We have a lot of discussions trying to understand what their incumbent resin looks like and how it performs. How can we emulate that through our compounding operation? There are often back-and-forth conversations that take time. Sometimes we get the compounding recipe perfect out of the gate; it's a drop-in day one, awesome! Other times, it takes a couple of trials to get there. We experience that with fiber. The pushback boils down to the bureaucracy of each company and the established comfort levels. Each brand, especially global ones, has requirements to move through before they can reach the sales point. So there's a whole lot of back and forth. The Green Circle certification is very important, as is FDA compliance, and how we handle compounding. Customers are more comfortable with in-house services through fewer turnovers. That comfort level comes with time and conversations, and we're making progress. I wouldn't view it as major pushback anywhere. There's a funnel filling up very quickly, and a backlog of new opportunities is developing. Customers are becoming more comfortable and excited about what this means for their operations. About orders goals in Q3, I would lean back to your question regarding revenue expectations; our orders should align with what we are projecting in terms of revenue ramp-up.

Jeffrey Campbell, Analyst

Really exciting progress. First, this circular supply that you noted with Emerald is certainly meaningful. Separately, looking at recent feedstock data, we've seen evidence in mechanical recyclers increasing uptake in PP feedstock, which we assume is largely down cycle. Is this a competitive concern for PCT, or can you obviate this as you move to the increased volumes that you've been talking about?

Dustin Olson, CEO

So let’s start with Emerald. Emerald is great. One, it's a new customer with real demand and an opportunity to create true circularity, which everyone is looking for. I think this will be a shining example. With respect to feed and mechanical recycling and some of the uptake, many mechanical recyclers globally are having trouble separating themselves in an increasingly competitive feedstock environment. As a result, some players are falling away. In the U.S., there’s going to be movements in the feedstock market depending on current events. I think that, at the end of the day, PureCycle makes a highly differential product that can go into many markets that mechanical recyclers can’t touch, placing us in a unique position to pay for feedstock and still make great margins on final products. For long-term projects in Europe and Thailand, we're leaning into a feedstock plus pricing model—effectively yield-adjusted plus a marker. Our customers recognize feed is fundamentally different from oil and they know the importance of being sensitive to feedstock changes for reliable supply. This provides a good margin protection capability and puts us competitively alongside mechanical recyclers. Our customers are willing to handle feedstock costs because of our product quality, which is a differential value position.

Jeffrey Campbell, Analyst

Is it reasonable to expect that as circularity develops, this could actually be a less expensive feedstock to source because it would presumably be a much better qualified feedstock rather than digging through giant piles and trying to sort them out?

Dustin Olson, CEO

Yes, that's a great question. With a good partner, we have chances to help build the product for better circularity. This improves our opportunities to find economic optimisms that work for both of us—cutting their costs by avoiding the landfill and reducing our costs through lower feedstock. That’s true partnership and a good opportunity for a fully circular model.

Jeffrey Campbell, Analyst

Are you still thinking about $1.36 a pound as an average price? I'm asking that because of the feedstock plus; I'm wondering if that's changing any of those dynamics.

Dustin Olson, CEO

Yes. We still feel comfortable with what we said previously regarding the $1.36 announced a couple of years ago. It leads to an EBITDA expectation we manage closely. As feedstock moves up and down, those numbers fluctuate. It gets complicated as we incorporate compounding because the overall average selling price may dip for the compound while the per-pound numbers for PureCycle increase. Generally, we hold to the numbers mentioned in the past and see good volume for branded products. All the things we’re doing to cut costs, ensure flexibile feedstock options, and qualify various final products is going to position us to preserve margins over the long run. Ultimately, we’re focused on the long arc of PureCycle's journey.

Gerard Sweeney, Analyst

I understand all the trials, the pipeline, and all that. At some point, do you narrow the aperture of some of the markets you're pursuing? How do you discuss best options, best returns? 1 billion pounds is great in 2030, but do you narrow down to get the best optionality? Have you discussed that internally?

Dustin Olson, CEO

Yes, that's a good question. I think that we're moving the funnel efficiently. It is progressing step by step, and we’re moving quite fast. Ultimately, we will find markets to focus on based on an evaluation of margin potential. For Ironton, I think a broad stroke makes sense right now because we're making a case for various lanes that give good pricing insight. Still, we need to ensure we have demand in place to build to 1 billion pounds; we can’t rush our pipeline.

Gerard Sweeney, Analyst

I was curious about the Thailand facility. I think you mentioned it gives exclusivity to Procter & Gamble in Southeast Asia; could you elaborate?

Dustin Olson, CEO

Yes, you've got it right. Our relationship with Procter is strong and continues to progress. The licensing agreement provides for exclusivity as we build capacity in specific regions, linked to the life of the patents. This plan is crucial for the long term.

Operator, Operator

That concludes the Q&A portion of today's conference. I will now turn the call back over to CEO, Dustin Olson, for any closing remarks.

Dustin Olson, CEO

Look, thank you for bearing with me, my voice and my summer cold for this call. It was just six weeks ago that we updated the market on the capital raise and gave updates on operations, the commercial pipeline, and projects. Just six weeks later, we've seen real, substantive progress. We're proud of that. PureCycle is working; our tech is transformative, and we're distancing ourselves from the competition. Our operations and commercial plans are becoming clear and ramping. Our growth plan is established and wildly exciting and we are poised for a great decade. It's now time for us—employees, investors, and believers in PureCycle—to change the world on a grand scale and make history. Thank you all for your attention today, and we look forward to talking to you again in a few weeks.

Operator, Operator

Thank you for your participation. This concludes today's conference call. You may now disconnect.