Prepared remarks
Good day, and thank you for standing by. Welcome to the PureCycle Technologies Fourth Quarter 2025 Corporate Update. Please be advised that today's presentation is being recorded. I would now like to turn the conference over to your first speaker today, Eric DeNatale, Director of Investor Relations. Please go ahead.
Thank you, Marvin. Welcome to PureCycle Technologies Fourth 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; our incoming Chief Financial Officer, Donald Carpenter. Our retiring CFO, Jaime Vasquez, will also be joining the call. This evening, we will be highlighting our corporate developments for the fourth quarter 2025. The presentation we will be going through on this call can also be found on the Investor tab at our website at purecycle.com. Many of the statements made today will be forward-looking and are 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 fourth quarter 2025 corporate update press release filed this afternoon as well as in other reports on file with the SEC that provides further details 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 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 turn it over to Dustin Olson, PureCycle's Chief Executive Officer.
Thank you, Eric. Fourth quarter was another period of progress for PureCycle. We ramped our operations in Denver and Ironton, advanced our customer pipeline and made meaningful progress on our growth plan in Thailand. As we announced in the press release, effective March 1, Donald Carpenter will be stepping into the CFO role. I want to first thank Jaime for his service in the last couple of years and wish him well in his retirement. And now I'll turn it over to him for a couple of words. Jaime?
Thank you, Dustin. I appreciate the opportunity and the time that PureCycle has provided me. This is a company with a great mission and talented people that should allow the company to accomplish that mission. And with Donald stepping into the CFO role, there will be continuity among the finance and accounting teams. Donald's time at PureCycle, combined with his depth of financial knowledge, should allow him, along with the senior management team, to help continue moving the company forward. To you, Dustin, Donald, and the rest of the PureCycle team, I wish you the best as you continue to commercialize and grow PureCycle. Back to you, Dustin.
Don, would you like to say a couple of words?
Yes. Thank you, Dustin, and thank you, Jaime, especially for all of the support and opportunities you gave me to grow into this role over the past 2 years. I share your thoughts on the PureCycle team, and I'm incredibly fortunate to have such an exceptional group supporting me through the transition. I am so excited for the future of this technology and our company. While the role is new, the mission I committed to 4 years ago remains the same, and I truly believe our company has an amazing solution to help end the threat of plastic waste to our environment, both safely and responsibly. With that, Jaime, I wish you the best in retirement, and I'll turn it back over to you, Dustin.
All right. Thanks a lot, Don. I wish you both the best and I'm very excited about the path forward. In addition to this announcement, we previously announced we added 2 distinguished board members to our team, Dr. Siri, who serves as the Independent Director and Chairman of the Audit Committee at the Bangkok Bank and previously served as Thailand's Minister of Energy and Chairman of IRPC. And most recently, Valerie Mars, who retired as Senior Vice President and Head of Corporate Development at Mars Inc. We're very fortunate to have both of them. Now to the business highlights in the quarter. Before I get into the details, I want to frame where we are. We are producing high-quality food-grade recycled polypropylene at scale, something no one else in the world can do. We've qualified our materials in flexible packaging, wrappers, stand-up pouches, closures, thermoform containers, bumpers, and numerous fiber applications. Branded pricing is on track with prior guidance and our pipeline has grown to over 170 active projects. The market continues to struggle integrating large amounts of post-consumer recycled polypropylene content into consumer products. Recycled content is new, especially in the FDA space, and companies are challenging decades-old processes to make them work for this emerging space. PCT is helping them. As our brand continues to rise and other brands get more familiar with our product, we dramatically reduced the adoption challenges. When a brand puts our material into a food-grade package on a retail shelf, they're doing something that's never been done before at PCT scale, at PCT quality, and with PCT flexibility. And while customers are extremely excited about our product and how it simplifies their lives, the adoption process, which includes things like lab, pilot, and industrial scale qualifications, lots of trials, regulatory reviews, packaging design, line validation, supply chain insurance, and internal approvals, it still takes time. But here's what I want you to take away from this call. The underlying demand is very strong and growing. It's clear to me that recycled content and consumer products is coming. The regulatory environment is naturally moving in PureCycle's direction, and probably the most important thing of all, consumers continue to value sustainability, and it is driving their buying behaviors. The question is not whether brands will buy recycled PP at scale, but when. And we are positioned to be the premier global supplier. 2026 is about converting our technical success into accelerated commercial revenue growth quarter-over-quarter, and I'll walk you through exactly where we stand on that. In the fourth quarter, we successfully added a third shift to Denver, which had previously been a constraint on production. As a result, Denver processed 44% more feed versus the third quarter, ramping to 14 million pounds, a 35% increase over its prior quarterly high. We are actively buying from more than 15 different feed suppliers, including most of the largest players in the market and have reduced procurement costs by $0.06 per pound over the last 12 months. Denver has fundamentally improved our feedstock flexibility and cost structure, and I have never felt better about our ability to reliably and economically supply Ironton as we ramp to full rates. Ironton also successfully ramped production in the fourth quarter with a production of 7.5 million pounds. We not only hit a quarterly record for production but also new daily records as well. This doesn't tell the whole story as we continue to manage production levels ahead of the commercial ramp. We are routinely running Ironton with higher reliability and at higher watermarks. In the last few quarters, I've spoken about how we ran successful rate tests at approximately 12,500 and 14,000 pounds per hour. We have a lot of data from those tests, which we've analyzed to identify some very specific improvements that should allow us to push toward nameplate capacity in '26. The original design for Ironton contemplated an annual maintenance average. We didn't take one last year, but plan on taking one between mid-April and mid-May this year. There are lots of standard maintenance activities that are expected to occur, spanning inspections, cleaning, repairs, and improvements. I expect this outage to have really positive outcomes for PureCycle. If you look back at every planned outage we've had at Ironton, the reliability, top-end rate, and quality have always improved on the other side. It is our expectation that the same will be true this one. We always incorporate the lessons learned into our procedures and activities, but outages give you the unique opportunity to make changes that are not possible when the plant is running. Reliability matters to our customers. As we've demonstrated consistent product quality and uptime, we've seen those conversations evolve. Several of our largest pipeline opportunities are now moving toward multiyear supply agreements, which is a direct reflection of the confidence that they have in our operating performance. Phase I of our on-site compounding started up last quarter. This enables CP2 to be compounded on site and sold to the market. This project has allowed us to reduce our carbon footprint and costs to produce and improve our final sales price. We're very excited about this addition. And Phase II should be mechanically complete in March, with commissioning continuing in parallel to the planned outage. Phase II coincides with the demand planning for these grades and commercial offtake profiles. The Phase II on-site compounding line will be primarily focused on producing compounds for BOPP film, which is used in flexible packaging and thermoform applications, such as coffee lids to the highest value, fastest-growing segments in our pipeline. Having this capability on-site complements existing third-party compounding assets, improves turnaround times for customer trials, and gives us direct control over the formulations. We have built and will continue to build inventory ahead of the outage and across the planned application launches, and we expect to ship while our intent is engaged in turnaround. On the other side of this outage, Ironton should be well positioned to service the expected ramp to much higher levels of production and sales later in '26. Turning to the commercial update. We booked $2.7 million of revenue in Q4, our fourth consecutive quarter of sequential revenue growth. We are actively shipping to 11 customers, roughly half of whom are branded and half are unbranded with additional conversions expected to begin in early March. While 2025 had real commercial delays relative to our original projections, the technical progress was substantial and the setup for '26 is strong. On the positive side, 2025 was a year of real technical success. We qualified our material across food-grade applications that no mechanical recycler can touch. Flexible film packaging, wrappers, stand-up pouches, closures, thermo containers, and fiber. Qualification delays are frustrating and noisy, but they only impact the short term; the real long-term value is created through the application technical successes. The other big positive was that branded margins continue to align with our previous guidance. While branded sales have a longer sales cycle than non-branded sales, branded sales are the core focus for this company and where we see the most value in the market. Co-product sales have been positive for us, and we've begun to monetize both co-product 1 and co-product 2, and are seeing prices in the $0.25 to $0.30 per pound range. Fiber technical successes provided a lot of confidence to the market early on, but the adoption was slow due to fragmented demands and extremely long sales cycles. We deprioritized it in the near term. While it does remain a real market for us, we're not concentrating our resources there today. The regulatory landscape has been broadly positive. Our material is accepted in Oregon, Colorado, California, Washington, and Europe. New Jersey has been slower. We partnered with the DEP on how our dissolution technology fits within the recycling framework, which has delayed some approvals. The good news is New Jersey has excluded chemical recycling and ISCC Plus mass balance credits, which positions us as the only supplier at scale for food-grade recycled content under the mandates. Large CPGs are lobbying the DEP on our behalf and our relationship with them is strong. I personally respect the position the New Jersey Department of Environmental Protection has taken, and we'll continue to partner with them as they integrate the legislation into action. 2025 was a challenging year for many of our customers. Tariff uncertainty, inflation hangovers, commodity spikes, and converter consolidations forced them to redirect their focus on cost savings and reorient their supply chains domestically, which lengthened approval timelines across the board. We think those high headwinds are largely behind them. The key public message from senior brand leadership is clear. 2026 is about reinvigorating organic growth and investing in innovative packaging. That's directly relevant to us. It's been publicly reported that multiple Fortune 100 CPGs announced significant increases in R&D spending with a focus on product superiority, premium positioning, and sustainable packaging formats. After a year of playing defense, these brands are now playing offense. That's directly relevant to us because offensive brands invest in differentiated packaging. And food-grade recycled content is a differentiator. Despite the commercial progress, the revenue ramp has been delayed relative to what we projected earlier in 2025. Last quarter, we mentioned $40 million to $50 million of run-rate demand that we are actively shipping or expected to ship in the near future. That number still stands. New Jersey has delayed some of our ramp; we estimate that applications representing $15 million to $30 million of near-term demand will require that approval. New Jersey applications overall represent about $300 million per year of demand. While this has been frustrating, the demand is still there, and the fact that key brands and converters have sent letters to New Jersey on our behalf speaks to their desire to move forward once this is resolved. The good news is we've been able to shift to other applications that don't require New Jersey approval, and we have line of sight on applications that can contribute to 2026 revenue. In addition to the $40 million to $50 million that we've mentioned last quarter, we've added another $20 million to $25 million at full ramp. The earliest that these could be converted as soon as next month, and one of the most near-term opportunities represents roughly $10 million of annual demand. The pipeline continues to be strong, growing from roughly 100 projects a year ago to greater than 170 today, and a lot of this recent build is a result of our success in film, where we continue to see large high-value opportunities. I'd like to also highlight that we've been successfully qualifying pouch applications. Stand-up pouches are one of the most exciting trends in innovative packaging right now. They're lighter, more efficient, and actively taking share from rigid containers and cardboard boxes. Brands are investing heavily in flexible packaging formats, and our ability to produce food-grade recycled polypropylene film for pouches puts us right at the center of this trend. BOPP film and thermoform applications remain the core targets for our compounding operations. We focused our commercial teams on brands with the highest growth potential. Here are some examples of the end markets that we are actively engaged with: We spoke about QSR coffee lids last quarter, and the interest continues to be strong and is growing. We continue to make progress with our first QSR coffee lid project—good product fit, excellent trials, and good relationship building between the end brand and converter. We're also in discussions with 4 additional brands following our recent quarterly announcement about coffee lid innovation. But these same customers also manage a growing cold beverage category that is taking market share. Brands are launching more products in this high incremental margin category. Additionally, brands are also transitioning to PP in 12 states that have already passed single-use polystyrene bans. This will give us additional tailwind for our product in the beverage containers. The net result of this is north of 300 million pounds of additional TAM in North America, and it's growing in the high single digits each year. Beyond cold beverages, premium pet food is a 130 million-pound polypropylene market for BOPP film packaging, growing 4.6% annually as pet owners trade up to higher quality brands. Jerky and meat sticks represent 40 million pounds of BOPP film demand, growing 6% to 7% with protein snacking trends. Dermocosmetics, think CeraVe and SkinCeuticals, is a 55 million-pound market growing at 7% to 9% as clinical skincare brands shift the PP packaging for recyclability. In household goods, things like storage bins, kitchen utensils, laundry baskets represent a 700 million-pound polypropylene market where Walmart and Target sustainability mandates are creating demand for recycled content. From a base of only 3.3% to 5% penetration today, that segment alone has 150 million pounds of addressable pounds for recycled polypropylene, growing at 8% to 12% as the mandates ramp. These aren't hypothetical markets. These are specific applications where we are engaged with brands in our pipeline and where the growth trajectory works in our favor. Let me take a moment on the regulatory landscape because I think it's important to frame this in concrete terms. Every EPR and PCR mandate that's been passed in New Jersey, California, Washington, Oregon, Colorado, and Europe translates directly into pounds of required recycled content. These aren't voluntary targets; they are law. New Jersey requires 10% recycled content today, 20% in '27, and 30% in 2030. California SB 54 requires a 25% source reduction by 2032 with a stair-step approach requiring 10% by '27 and 20% by 2030. We have received post-consumer resin certification from the Association of Plastic Recyclers or APR, which is the standard that most state regulators referenced for recycled content compliance. That certification allows our material to be categorized as recycled content across numerous states, effectively clearing the regulatory path for brands to count on PureCycle material toward their targeted mandated targets. The EU's packaging and packaging waste regulation requires 10% recycled content by 2032. When you add it all up, there are literally hundreds of millions of mandated volume coming online over the next 5 to 7 years. And for food-grade polypropylene applications, we're the only global solution emerging at scale. The regulatory framework is laying the groundwork for the future. There's a lot of really strong progress in Rayong, Thailand project. I was in Thailand for a week in January and had many meetings with government officials, commercial offtake partners, feedstock suppliers, local banks, as well as IRPC and our very strong local team. A few key developments are worth calling out. First, we see a supply of feedstock well in excess of our needs. We have already signed 9 LOIs with regional feedstock suppliers, 6 domestic and 3 across Southeast Asia, that, even at a minimum annual levels, exceed our needs for the first purification line. We are working to expand our feedstock network in Thailand, but we are also finding feed in abundance across Southeast Asia. Thailand generates approximately 2.5 million tons of plastic waste annually, of which an estimated 400,000 to 450,000 tons is mismanaged. With about 70% of that linking into the ocean each year, making Thailand the sixth largest source of ocean plastic globally. We're finding a lot of willingness from the government and the commercial sector to partner with us to solve this challenge. The commercial conversations have also been very favorable. Our original assumption was that all products would be exported to North America and Europe. While we still expect to directly export significant quantities, a strong dialogue is evolving with domestic packaging companies, including a major film producer that sees our material as a way to grow their export business, as well as Fortune 100 CPGs with manufacturing operations in Thailand. We see key markets in automotive, flexible rigid packaging, appliances, and the fast-growing hygiene market, and expect to sign multiple LOIs with domestic customers during 2026. We had multiple meetings with the Board of Investment or BOI and submitted our application to them. If successful, we would reap many benefits, including an 8-year 100% tax holiday followed by 5 years of tax holiday at 50%. This equates to roughly $100 million of avoided cash taxes. We also had many good meetings with local banks and our other banking partners in Thailand, which Donald will touch on later. The relationship with IRPC is solid, and they have helped us build a remarkably strong domestic team in Thailand. We hosted a community forum with over 250 residents to explain the project, which was very well received. We have been purchasing equipment and expect to break ground in the second half of 2026, with project completion still expected in 2027. Our Antwerp, Belgium project also continues to move forward as planned. We expect permits in the second half of '26 with construction still scheduled to begin by Q1 '27 and mechanical completion by the end of 2028. Global brand discussions are accelerating as the Thailand and Antwerp projects advance. Many of the Fortune 100 CPGs we're working with have operations across all three of these regions. We mentioned last quarter that we expected to complete our initial engineering work for Gen 2 purification design in the first part of 2026. While there is still work to be done here, the initial findings are very encouraging. First, we see no technological constraints on building the higher end of this capacity scale than what we discussed previously or closer to the 500 million pounds of capacity that we mentioned in the range. This is important because costs do not scale linearly. In fact, the initial design analysis suggests that the incremental cost difference between the 500 million and 300 million pounds is relatively minimal. As a result, the initial look indicates greenfield costs on the Gen 2 lines approaching $1.50 per pound of capacity, and for brownfield sites should approach $1 per pound for expansions. This is a really big deal. This cuts down the capital intensity of our business, meaningfully improves future IRRs and puts us back in the ballpark for what it costs to build virgin polypropylene lines. It is also a lower CapEx intensity than what we estimated in the business plan last summer associated with our capital raise. Scale also benefits us on the production cost side, and while it's too early to give definitive numbers, we see a clear line of sight to Gen 2 cash costs to be below virgin on-purpose PP production lines. While the majority of our focus today is on selling out and ramping Ironton in executing our Thailand expansion, this news on Gen 2 is incredibly important to the long-term value of PureCycle. We've known for years that our process consumes significantly less energy than virgin production. But now we are seeing the cost efficiency translate into a permanent cost and return advantage in the market. A market that I remind you represents 200 billion pounds per year of annual demand and is expected to continue to outgrow GDP for the foreseeable future. Look, I know the commercial ramp has been slower than we projected. But I'd ask you to look at our history. Every time that we've said we've solved the technical problem we have. Every time that we've taken a planned outage, the plant came back better. The challenges that we face today are principally out of commercial adoption timing, not commercial demand, not technology, not operations, not feedstock, and now we have the product, the production, and the pipeline. The conversion is happening, it's a matter of when, not if. When I take a step back, every year during my tenure has had its own theme. 2023 was about completing Ironton. 2024 was about making the plant work. 2025 was about technically qualifying our product, especially in the high-value parts of the market. In 2026, will be about the commercial ramp and selling out the plant. Our future is bright. We have a strong foundation supported by tech and teams that know how to build. The market opportunity continues to grow in front of us, and the company is ready to lead. With that, I'll turn it over now to our new CFO, Donald Carpenter for the financial presentation.
Thank you, Dustin. Our revenue goal is unchanged: reach Ironton breakeven, then Corporate breakeven. Revenue ramp has been delayed by customer adoption timing, but we built and staged inventory for product launches later in the year. Core operations costs across Ironton, Denver, and Corporate remain largely in line with prior guidance. I'll put more specifics around that on the next slide. On warrants, we have two series of warrants that were extended. The Series A, which represents 15.7 million potential shares and the public and private warrants that represent 5.7 million potential shares. We have obtained agreement with the Series A warrant holders to extend through March 17, 2027, at a reduced redemption price of $14.38 per share, representing approximately $205 million of potential proceeds. The public and private warrants have been extended for 3 months with further details in the 8-K filed today. These represent approximately $68 million of potential proceeds. On capital structure. During Q4, we repaid $20.3 million of high-cost equipment finance debt and retired $9.8 million of principal on the Ironton bonds. We continue to spend on projects across Ironton, Thailand, Antwerp, and our Gen 2 development. On operations, we previously said ongoing operational and corporate cash burn were in the range of $8 million to $9 million per month, and this was prior to significant feedstock and free processing costs. Now that we're incurring more of these costs as Ironton ramps, we're still trending within that range with $24.5 million of operational and corporate costs for the quarter. The incremental production-related costs have been offset by managing discretionary spend and capitalizing on efficiencies elsewhere in the organization. Revenue timing reflects the customer adoption delays I mentioned. We currently expect improvement as Q2 product launches begin converting our staged inventory. The debt service line includes the nonrecurring equipment lease payoff and bond retirement I referenced on the prior slide. Looking ahead, for Q1 2026, we expect total project-related spend of $19 million to $20 million with $7 million to $8 million for Ironton-related projects, primarily related to the on-site compounding project. The remaining $11 million to $13 million is spread across our growth projects. For full year 2026, total project-related spend is expected to be $39 million to $45 million, with $14 million to $16 million for R&D, which includes the cost of our planned shutdown in Q2 and completion of our on-site compounding project. The balance is spread across our growth projects, a majority of which remains discretionary. Q1 2026 debt service is expected to be approximately $11.1 million, which includes our semiannual convertible bond interest payment and some equipment leasing payments. Regarding financing, we are excited about our prospects for Project Finance given the progress we're making with both Ironton production and our future commercial ramp. Our first area of focus is on securing local financing for our Thailand project. The project data room is open with a large Thai bank. Critical site agreements with IRPC are in place, the EPC contractor is advancing through final design and cost estimates. In parallel, we are advancing discussions for our Antwerp project and finding a lot of synergies between the two efforts. Antwerp continues to be a strong project as evidenced by our recent success securing the EUR 40 million EIF grants. Additionally, we have approximately $75 million of revenue bonds that we will look for opportunities to monetize. The warrant extensions preserve approximately $273 million of potential proceeds. Together with the revenue bonds and project financing I described, we have multiple paths to fund the business through the ramp. With that, I'll turn it to the operator for Q&A.
Questions and answers
And our first question comes from the line of Hassan Ahmed of Alembic Global Advisors.
I understand you provided extensive details. There are clearly several variables affecting the commercial progress and ramp. I would like to explore that in more depth. Could we begin with a simple question regarding the ramp of 40 million to 50 million pounds that you're discussing for Q2 and Q3, followed by an additional 20 million to 25 million pounds ramp? How much of that is forecasted compared to what is actually contracted? I would appreciate any additional insights regarding your confidence level and the progression of that ramp.
Yes, Hassan, it's nice to talk to you again. Thanks for the question. Look, at the end of the day, we have very strong conviction on our commercial ramp. These things that we're doing right now are very hard. It's eluded recyclers for decades. We have a new technology with a new product, and quite frankly, it just takes time to educate the market on our capabilities. And every time we have a technical success, it opens up the aperture for us to do more and more. We've talked about the difficulty with predicting the specific timing. We know it's coming and we know it will be asymptotic, but it's not fully in our control. You see things like the number of customers shipping increases. We see the revenue continuing to increase. We see the size of trial volumes getting better. At the end of the day, the thing that we're building is really a relationship between us and the customer, and we had to get the certifications. We have to show the LCA. We've got to do the trials, we've got to prove that Ironton can be reliable enough to give them the security and supply that they need. We've got line of sight on these applications. The volumes that you talked about are very good. We are in active discussions for both single year as well as multiyear contracts for those 40 million to 50 million pounds as well as 20 million to 30 million pounds. We continue to see the technical successes mount with the film, pouches, wrappers, et cetera. The thing that we did with Toppan, Hassan, is really important. If you do any research on CPG, you'll find that there's a major consumer trend to move out of boxes and move into pouches. And we're going to be—I believe we're going to be the only recycled company that can serve that market. The market was challenging last year, okay? I mean, like—now 2025, I think it's always easy to look in hindsight. I think that we all agree to that. I think when you look back at 2025 objectively, you see massive distractions for everybody, for every company. The hangover on inflation, the tariffs, focus on reshoring production—it just diverted the focus of the CPGs to something different. Instead of coming up with a cool new design for packaging, they were worried about reshoring, let's say, production in the U.S. versus China. I think that 2025 was a bit of a wake-up and a reset. But now what you hear is that CPGs are dialing in to growth in '26. They're talking about how they can differentiate. There are only a few things you can do. I mean, you can change the formulation of what they're selling. That takes a lot of work. But you can also change the packaging and you can market better and you can put more effort there, and that's what we're seeing. I think from a practical perspective, Hassan, like—last quarter, we showed this packaging date. It's a huge technical success. After the call, we got multiple inbounds from other tape producers that are interested in that product. We showed the coffee lid innovation, and now we have 4 new coffee lid companies in the pipeline. We talked about Toppan this time, and I suspect we're going to get a lot of inbounds from the standup pouches because everybody wants them. No one's been able to solve the film wrapper issue. It's a single-use plastic with no recycled supply and no recyclability until PureCycle. So we have products on the shelves right now. We're continuing to grow the pipeline. The applications are getting better. And our team is just doing a really good job of getting customers excited about our products. So you asked, I think the core question was, how much conviction do we have about our commercial ramp? And it's very high, we are very, very excited about the next few quarters and where PureCycle is going because this work that we're doing right now, quite frankly, sets the foundation for every new commercial activity that we do going forward, both in Thailand and Antwerp and our Gen 2 facilities down the road. That's a great question, Hassan. Thank you.
Understood. Very helpful. And just to wrap up on the commercialization side, and then I have a follow-up. I mean the New Jersey opportunity looks quite large, right? I mean I was just wondering if you could give more details around the timelines associated with that. I mean, this could be a pretty large opportunity for you guys and it seems fairly imminent.
Yes. I think you have to take a step back. First of all, I think New Jersey is doing a really good job. They're being extremely thoughtful. They're digging into the details of the space. If you think about it, and you reset 5 years ago, the terminology used 5 years ago is completely different than the terminology used today. For a regulator, gathering information takes a lot of work to tease out all of the nuances associated with how to regulate a certain thing. What we know is that chemical recycling in the majority of these regions is out. They don't like the idea of plastic to fuel and they love the idea of plastic to plastic solutions. We have been educating the New Jersey Department of Environmental Protection, and we're making really good progress. We have a very good relationship with New Jersey. We meet face-to-face. I think it's really about progressing the education for this topic broadly. PureCycle and New Jersey are kind of at the point of the spear. We are leading the industry in terms of where we're going on recycled content and our ability to do things. As these things get clarified and move forward, there will be a lot of clarity for our customers and, quite frankly, a lot of clarity for other regulators as well. We're confident about getting to New Jersey, and then we will start working with those customers to get our products qualified and ramping up into 2026.
Very helpful, Dustin. And just as a follow-up, the Gen 2 design work obviously seems very impressive. Just trying to get a better sense of what sort of key assumptions are behind achieving sub-virgin sort of cash costs, maybe in terms of assumptions around energy, scale, yields, etc.
Yes. No, that's good. First of all, we have the pleasure of operating a new technology at commercial scale and Ironton successfully. I've mentioned this on a couple of calls that the technology in many ways is doing more with certain steps than what we expected. And we've been able to take those learnings and leverage them into our Durham research facility to really get down to the fundamentals of the technology and understand how we can scale it. There are pieces of equipment in the Gen 2 design that you only need to make a little bit bigger. In other parts of the process, you need to add parallel trains. But the long result of this study indicates that our technology is very scalable. When you scale it, you're going to end up scaling costs, reducing the CapEx per pound. On the op cost and the assumptions on yields, our technology is a plastic to plastic solution. We have a near 100% yield recovery on polypropylene. Our goal is to remove everything that's not polypropylene out of the screens and create co-product 1 and co-product 2, and so our yield is very high. Our yield doesn't change as you scale. Many of the steps of our process require the same amount of people only incrementally more energy and incrementally more steam to operate. The overall dollar per pound will cost less to run this facility as the operating costs will be divided by a much bigger number, thereby dropping significantly. We're talking about fee plus a $0.35 per pound number for Ironton and fee plus a much lower number on our Gen 2 facility. Now we haven't released yet what that number will be. But if you're talking about feed at $0.05 to $0.10 per pound and then yield adjusted to $0.15 per pound, and you start adding smaller numbers than $0.35, you very quickly get to numbers that are below the virgin cost to produce polypropylene. Think about that, Hassan. I mean, down the road, people will use more and more polypropylene as we go into the future. As that happens and people need to build new polypropylene facilities, we expect to be a preferred choice.
Our next question comes from the line of Andres Sheppard of Cantor Fitzgerald.
This is Anand for Andres. Congrats on the quarter. And Donald, congrats on the promotion to CFO. It sounds like you're making good progress on the Thailand debt financing with the data room now open. So I was wondering if you could give us an update on the latest developments there? And then how do you see that project progressing?
Yes. Thank you for the kind words. I'm really excited about the opportunity, and I'm also really excited about this particular project. We've made a ton of progress so far. We've put together a comprehensive data room, and our team and the bank's team have been working collaboratively. We're meeting frequently and working through this project together. There is a significant amount of documentation that goes into a project financing of this scale, and the critical agreements with IRPC are in place, and I'm really pleased with the progress on the site design and initial cost estimates thus far.
Anand, just a follow-on on that. Donald brings a lot of really good project finance experience. I think that's going to set us up nicely for both Thailand and Antwerp and everything that we do in the future. But I'd like to get back to a point that he made about Thailand. PureCycle could fundamentally change their performance on plastic waste. That is such a compelling story, not only for us because it's a great market and location, but it's exciting for Thailand, too. Because Thailand's core industry is tourism, which can be negatively impacted by plastic waste.
Got you. And maybe as a follow-up, on the call and on the presentation, there was lots of great macro commentary on the TAM, whether it's cold beverages or cosmetics. Wondering which verticals you see as the most promising with respect to your customer pipeline, and what should investors be focusing on here?
Yes. Look, I think this is going to develop over time. Short term, we'll be heavily focused on closures and injection molder projects. These are very much in our wheelhouse. We've got a lot of experience, and those run really well. I think that what you'll see as we commission the Phase II of compounding at Ironton and get that compounded facility up and running, you're going to see a tremendous amount of benefit arise from that project into the thermoforming and film activities.
Our next question comes from the line of Gerry Sweeney of ROTH Capital.
When we look at everything, it sounds like—when you're engaged with brands, it seems as though they're looking for a couple of things: reliability and brand testing of the product. It feels as though the brands are getting more confident. One, they can see what's happening in Ironton reliability is increasing. And two, going through the brand testing. Is this sort of path forward? Is this an accurate assessment as to what's happening today?
Yes, I think so. Both of the things you mentioned are very true. Ironton operating better and better every day has given confidence to brands. We routinely have tours out to the plant, and people are always very impressed. I think on the testing side, the more experience we get testing and qualifying different products—it's very simple: We have things in our hands that we can show people. When we make film and we print on film, we can hand people a piece of film and say, 'See what we can make,' and they can immediately connect to it. That reduces the hurdle for getting started with different applications. I think both of those are true. I don't want to understate just the methodical nature of brands going through this process. We can't control it. We've gotten very good at answering their questions, but they're very methodical. A brand has built an entire lifetime building that reputation. To make a change, they have to feel really good about who they're partnering with. That's why we focus so much on our comments around the trust built between supplier and customer. There is relationship building, product quality building, and many components. There are 20 different steps or more that you have to go through to get to a yes from the customer, and it takes time. From an outside or inside perspective, it's very frustrating. It takes time. But if you lift your head up and see the progress made, you'll realize that big strides are being made with big brands that are excited about where we are.
Does this process really help you sort of crack the code, speeding up additional opportunities going forward?
The answer is 100% yes. It eliminates the need for every single brand to go through some qualification process on their side. The reality is, when we prove that we can do something, the brand gets comfortable with it and the next brand coming in has a bit of a shorter ramp to get started.
The Ironton turnaround: you have a lot of confidence in uptick in utilization post-turnaround. Are there line of sight to a few things you can fix that give you confidence on that uptick?
Yes. This is a very traditional turnaround. When we first built this company, we had an expectation to do one per year for 30 days. Last year, we didn't have to do that, which I think bodes well for the future in terms of how often we will need to do this. This year, we're going to do a lot of normal, easy tasks, and a few things that are very exciting. You run a facility for a couple of years, and there are always certain pieces of equipment that you can't access because it's running. During the outage, we'll implement simple things like instrumentation upgrades, but I'll emphasize the data we've collected during our test runs. We ran the tests at 12.5 and 14.0. Both provided insights into constraints that we see in the facility, and we're going to address those items. This will help the plant run at higher watermarks. Every time you open equipment, look inside, and learn more about your technology, it just makes you better.
Our next question comes from the line of Jeffrey Campbell, Seaport Research Partners.
Dustin, I don't want to gild the lily, but my understanding is that there is no other DP recycling method, including chemical recycling that is qualified for BOPP application suites to PureCycle's level. So just to confirm, when you're talking about thermoforming and the compounding capabilities that you're going to develop this year as a long-term driver, this is related to PCT's BOPP technical capabilities, correct?
Yes, that's a good way to speak to it. I don't want to overstate other technologies. There are nuances when discussing chemical recycling. When it comes to our ability to do BOPP, we currently stand alone in the market. When you make BOPP, the simplest way to think about it is stretching a piece of plastic so thin that it can turn into a component for various applications. If you have contaminants in that pellet, it will cause blemishes and problems in the operations where it could break. These are real concerns for BOPP producers. Our purification technology purifies at a molecular fundamental level, removing solids, ash, colors, and other contaminants to a level that works for BOPP. This isn't theoretical anymore. Since we talked about Bruckner on a small pilot line, we have done it on the industrial scale. We have had several industrial line-sized success trials that have worked well, and that is exciting. I think it's going to be the future for us.
When you speak about the percentage of recycling, are they specifically requiring certain plastic types, or are these broad statements of the amount of recycled content they want?
The answer is kind of both. If you look at our slides, we mention the percentages, but they apply to various things. In some cases, they apply to specific categories of plastic like PP, PE, or PET, and in other cases, it applies to specific types of applications. We've done a lot of research on the regulatory front. It's a very dynamic market, and we think that the regulations are coming faster in the U.S. In many ways, regulations are real and they're coming. We saw this with California SB-54, and we believe we're well-suited for the future. The fact is New Jersey will require 10% recycled content today, 20% by '27, and 30% by 2030. The EU's packaging and packaging waste regulation requires 10% recycled content by 2032. Our Ironton facility will be online just in time for that, which is going to be great for brands over there. Every EPR and PCR mandate creates a need for recycled content. There are hundreds of millions of mandated volume coming online over the next 5 to 7 years. For food-grade polypropylene applications, we're the only global solution emerging at scale. The concept of circularity is present in principle but hasn't yet been legislated. Brands definitely value circularity and inquire about the feedstock. Can we use this feedstock and then make it back into a product they can buy again? This is part of current discussions, but it's not a law just yet. We're actually taking waste from New Jersey and converting it into something beautiful that customers can continually purchase. That is New Jersey becoming circular, and everyone is excited about it.
We continue to see PET recyclers pulling back on production in the U.S. and EU. Can you help explain why demand for PCT's recycled PP will continue to grow while other types of recycling appear to be languishing?
It's because we produce a premium product. Many recyclers struggle because they sell a product that competes directly with virgin or at a discount to virgin, making it difficult to profit. You have to have a differentiated product, which we do. As the dynamics emerge, feedstock pricing may decrease, which is good for us. As we add compounding to our capability, we'll monetize the value of the coproducts that come out of the feed, generating better overall margins. We are constantly qualifying new applications, creating optionality for the offtake side. Our supply will be limited, and the more we qualify products, the more flexibility we gain. This technical progress opens doors for us in the future.
Our next question comes from the line of Eric Stine of Craig-Hallum Capital Group.
Is there a timeframe for finalizing the site for your Gen 2 facility? I know Thailand has been mentioned in the past as a potential suitor since it's appealing.
The first step is to get a good handle on the overall technology for Gen 2 and the cost position. We're getting better at that, but we still have more work to do. We are excited about Augusta as it's been a good partner for us, and we can build the facility there. While we previously indicated that Gen 2 would go there first, all previously announced sites are good options. Thailand is a great location, too. We're finding lots of feedstock opportunities to fill that facility. The footprint required for a Gen 2 at 500 million is similar to that for Ironton. The efficient building will allow us to maximize capacity potential. We suggest through our partners that as we expand, we could potentially host 8 Gen 2 lines in Augusta, Antwerp, Thailand, and with other partners in Japan. All sites are perfect for future expansions. We'll sell out first, and then make capacity decisions for Ironton. We're evaluating that. We're filling the pipeline and leaving ourselves contract flexibility. Polypropylene contracts are generally one year, and we intend to optimize over time.
This concludes the question-and-answer session. I'd like to turn it back to CEO, Dustin Olson for closing remarks.
I appreciate everybody dialing in today. We've had a lot of prepared remarks. I know there's a lot that you're going to have to go through. We are always very available for your questions. So sleep on it tonight, call back tomorrow, and we'll do more. I think you can tell from our comments how excited we are and how confident we are about 2026. So buckle up, enjoy the ride. 2026 will be a great year for PureCycle. Thanks, everybody.
Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.