管理層發言
Good day, and thank you for standing by. Welcome to the PureCycle Technologies First Quarter 2026 Corporate Update. Please be advised that today's conference is being recorded. I would like to hand the conference over to our first speaker, Eric DeNatale, Director of Investor Relations. Please go ahead.
Thank you, Myla. Welcome to PureCycle Technologies First Quarter 2026 Corporate Update Conference Call. I am Eric DeNatale, Director of Investor Relations for PureCycle. Joining me on the call today are Dustin Olson, our Chief Executive Officer; and Donald Carpenter, our Chief Financial Officer. This evening, we will be highlighting our corporate developments for the first quarter of 2026. The presentation we'll be going through on this call can also be found on the Investors tab at our website at purecycle.com. Many of the statements made today will be forward-looking and are based on management's beliefs, assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions and forward-looking statements that can be found at the end of our First Quarter 2026 Corporate Update press release filed this afternoon as well as in other reports on file with the SEC that 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 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 by phone, you can access it at any time at purecycle.com. We are excited to share updates from our previous quarter with you. With that, I will turn it over to Dustin Olson, PureCycle's Chief Executive Officer.
Thank you, Eric, and good afternoon, everyone. Business momentum entering 2026 is the strongest it has been. Revenues came in above budget, branded customer conversions are accelerating and our confidence in the commercial ramp over the remainder of 2026 has never been higher. The commitments we made are becoming results. The P&G ramp is underway, coffee lids are commercial with multiple customers, branded sales are converting across the portfolio, the branded momentum is real. We continue to make progress toward our mission of transforming the global plastics industry and the results this quarter reinforced that we're on the right path. Let me walk you through the details. Ironton produced 8.4 million pounds of PureFive in Q1, which is up 12% from Q4. We processed approximately 10 million pounds of feedstock input. Both of these numbers demonstrate the continued scaling of our technology.
The planned turnaround at Ironton was completed ahead of schedule and tracking approximately 15% below budget. This is significant. It is the first time we've completed a turnaround ahead of schedule. It speaks to a better understanding of our operations and our core technology, and it's a great example of how the internal improvements we've made are driving external outcomes. This is something that we are increasingly seeing across the business. It's been two years since we've taken a full shutdown across the facility. During this outage, we executed over 170 projects which targeted capacity, reliability and quality. This will pave the way to achieve full capacity within this facility. We also found the plant to be in much better condition than it was two years ago. The vessels that created the most challenge last time required far less intervention this time, which is another testament to our progress.
The long-term resiliency of our core technology is also very strong. One of the most impactful projects was the replacement of the critical seal system. Procurement required some navigation through global supply chain conditions, but we resolved it ahead of the outage. The installation is complete and expected to materially improve reliability going forward. On-site compounding reached mechanical completion in April as well, and we're currently commissioning the asset. This is a strategically important addition to our platform. As customers scale in film and thermoform applications, we will be able to deliver a finished application-ready product reliably and consistently without relying on third parties. The unit economics for compounded products are more attractive than the base resin, and as volumes build, this asset will be a significant contributor to our overall margin profile. Our third-party compounding volumes also ramped to approximately 1.7 million pounds in Q1 with significant month-over-month growth throughout the quarter.
Let's discuss the macro environment because the shifts we're seeing are very dynamic, but also clearly positive for PureCycle. The disruption to global petrochemical supply chains helped us in several specific ways. First, it has improved the co-product pricing. Second, it has reinforced the value of a domestic, stable supply source that is independent of global petrochemical disruption. And third, it has created urgency. Brands and converters all around the world are actively looking for domestic compliant alternatives to global supply. We're seeing this manifest in two ways. Companies that are ready in our pipeline are moving faster with us, and we've received numerous inbound inquiries from customers around the world looking to start the process of qualifying our product. Virgin polypropylene prices have risen roughly $0.25 to $0.35 per pound in the U.S. and $0.35 to $0.55 per pound in Asia and Europe.
Our feedstock is domestic waste polypropylene from more than 15 U.S. suppliers and is independent of these disruptions. Unlike virgin polypropylene, our product is sourced from domestic waste streams and priced independently of those dynamics. In the current environment, our customers increasingly value the consistency and reliability of our supply as much as the sustainability credentials. HDPE prices have roughly doubled, which will improve our co-product pricing dynamics as well. As you recall from the last call, in 2025, we faced numerous macro challenges. This has reversed. The current macro environment in 2026 is a tailwind, not a headwind. Regulatory momentum continues to build. In California, regulations for SB 54 were finalized earlier this month. Source reduction deadlines are only seven months away and we're seeing increased urgency from brands and converters to get qualified to meet this upcoming mandate.
New Jersey is stepping up to a higher minimum recycled content rate in 2027 also and moving from 10% currently to 20%. Additionally, while New Jersey mandated PCR content for most plastic packaging starting in 2024, it included a temporary exemption for food contact containers. This goes away in January of 2027. Let's take a step back and look at this environment holistically. Three forces are converging: one, commodity pricing is extremely dynamic, creating global market uncertainty; two, regulations across numerous segments are coming from all directions, including Europe, California and New Jersey as well as others; and three, consumers still want sustainable solutions. How will the brands react? Brands will lean into solutions that work. PureCycle's demonstrated technical successes are a clear solution. PureCycle offers three positive contributions to the discussion: very high-quality FDA-grade material with demonstrated performance across a wide variety of segments, a product positively positioned as a regulatory solution and a localized supply that is insulated from global macro disruptions.
Europe for Europe and Asia for Asia are emerging themes, and we are the solution for plastic. Quality matters, and we provide uncompromised material. With regulations coming from every direction, APR certifications are increasingly accepted by regulatory agencies. This macro environment highlights the need for PureCycle. It is helping in the short term, but it is also providing significant tailwinds to our long-term growth plan. Q1 marked the quarter where branded sales moved from isolated wins to a real and growing base. We booked $4.1 million of revenue, our fifth consecutive quarter of sequential growth ahead of internal expectations with branded mix increasing meaningfully within that number. We will be shipping this quarter to Procter & Gamble. We are converting new customers like Plastic Ingenuity and there is more to come. We converted eight new customers across multiple product categories during Q1, branded pricing is robust and above internal targets.
As we move through Q2 and beyond, we have clear line of sight to a growing mix of branded sales and Q2 ramps. These are building a stable base of sales as the ramp becomes more meaningful in the second half. We are reiterating that branded applications with 40 million to 50 million pounds of annual demand are starting to ramp in Q2 and Q3 and another 20 million to 25 million pounds of application capacity will start to ramp in Q3 and Q4. The New Jersey resolution also represents a meaningful pipeline catalyst, which we will cover in more detail when we get to the regulatory update. Our pipeline now stands at approximately 180 active opportunities, up from over 170 at year-end and roughly 100 a year ago. We continue to be bullish about the commercial opportunities in film as we progress through 2026. During the quarter, we ran two industrial trials successfully at different film producers, both were on Bruckner 6-meter lines.
We also ran two pilot lines successfully at different film producers. In all of these trials, the PCT product properties were excellent and comparable to their virgin counterparts. We continue to progress with two of the top five global food manufacturing brand owners on programs related to snack and confectionery packaging and will update the market as we get closer to commercialization. Our relationship with Procter & Gamble is strong and activity is accelerating. They have among the highest standards for quality and reliability in the consumer products industry. They have done extensive testing of our product, and we have passed. The metrics and processes by which Procter & Gamble evaluate suppliers are the gold standard in the industry. The fact that we have achieved commercial qualifications with them is a powerful validation of our technology and our operations. The qualification process with Procter & Gamble took longer than anticipated.
Their standards are exacting and there are no shortcuts. But clearing those standards matters. The rigor of their approval process means that the specifications we validated now apply broadly across the brand portfolio, and we expect future application approvals to move considerably faster as a result. This quarter, we achieved final approval for commercialization of two Procter & Gamble applications. Tide caps for select bottles will begin shipping in Q2 and Vicks ZzzQuil caps will follow in the second half of 2026. We are also in the process of qualification with three additional applications, which are going well, and we expect many more beyond that. Additionally, we recently achieved the highest purity grade through CosPaTox testing. CosPaTox is a consortium focused on the intersection of cosmetics, packaging and toxicology that has formulated a standardized voluntary safety evaluation guidance for the use of PCR in cosmetic products and detergent packaging.
This milestone was the result of a collaborative effort between Procter & Gamble and PureCycle, with both teams jointly preparing and submitting samples for evaluation from the Ironton facility. Through the testing, our dissolution process produced the highest grade material. We are the first recycler to achieve this, and that means our resin is pure enough for leave-on cosmetics. Achieving the highest possible CosPaTox grade underscores the quality and consistency of our product and reinforces its suitability for demanding cosmetic applications. We are deeply appreciative of Procter & Gamble's support and excited for the ramp ahead of us. All of these qualifications matter. They are proof points for Procter & Gamble, but also for other customers. When other brands see the product passing the highest quality standards and they see supply disruptions and regulations coming, they start calling.
We're very excited about our recent announcement with Plastic Ingenuity. To put this in context, the market for hot lids in North America is massive. There are over 50 billion coffee cups consumed annually in the U.S. alone. Plastic Ingenuity services many of these brands, including some of the largest in the world. Part of their decision to move forward with us was the positive reception they received from numerous QSRs and restaurant chains when they showcased the sustainable lids at the SPC IMPACT conference in Nashville two weeks ago. The market response validated the demand. Coffee lids are available with 25% to 100% PureFive ultra resin, which gives brands options to buy what they need. Beyond hot lids, we have finished trials on additional applications as well, including cold lids, which is a rapidly growing category, as well as food trays and meat trays. We're seeing significant opportunity to commercialize across their product portfolio.
QSRs carry significant plastic packaging exposure in California. With that mandate seven months away, we're seeing real urgency from a number of brands actively looking for compliant supply. We completed our first international sale in Q1. The initial purchase was over 300,000 pounds of PureChoice resin for a product line we've sold previously into. Over three million items are being produced. Discussions are ongoing around additional applications and a broader relationship. Not only was this a successful project, it was also a much-accelerated timeline for qualification and approval. The model here is simple and mirrors what we've done successfully before: start with a qualification of a single application, demonstrate the product works and then broaden into sustained commercial relationships. We've already seen this play out with Churchill, a trusted partner where we started small with shipments to events like the CFP National Championship game and other one-off sports and entertainment venues.
That success has now matured into a broader, more meaningful commercial relationship that continues to grow into materially significant pounds that continue to ramp through the rest of this year. The progression with Churchill has directly led to increased brand recognition. Companies and organizations see the product working at scale in the real world, and it accelerates their decision to move forward. New Jersey remains in review and we continue to progress positive discussions with all levels of the New Jersey government. I personally met with numerous government officials, including the Governor, the Governor's office and the DEP, and I am very encouraged by the new administration's drive for efficiency, efficacy and impact. I remain very optimistic about our progress here. When this resolves, it will open a phased ramp of incremental demand as customers progress through the qualification process and prepare for 2027 regulation changes.
This will make New Jersey a circular state. The broader regulatory landscape continues to advance and timelines are getting very real. California's signature recycling bill called SB 54 requires 10% source reduction by 2027. That is only seven months away with increases to 20% in 2030 and 25% in 2032. Those source reduction targets can be achieved partially through recycled content. With our APR certification, PureFive resin qualifies as recycled content under SB 54, and we're seeing increased urgency from brands and converters who need to meet this mandate. We have had direct conversations with the Governor and his office about PureCycle's role in meeting the state's recycling targets and recycled content mandates. In New Jersey, the post-consumer recycle requirement increases to 20% in 2027 and the food contact exemption expires in early 2027. Both states have excluded mass balance from the definitions of recycled content, which means PureCycle is one of the only compliant suppliers at scale for food-grade recycled polypropylene.
The volume contingent on New Jersey approval has increased and now stands at 25 million to 50 million pounds. That number has grown since last quarter, and I believe it will continue to grow. Two large brands have moved as far as they can to the qualification approval process without regulatory clearance in hand, positioning themselves to move quickly once New Jersey resolves. Both are motivated by the same deadline: the food contact exemption sunsets in early 2027. This combination of powerful and near-term demand catalysts creates a real urgency for customers. A quick update on our global growth projects: the Ironton turnaround was completed ahead of schedule and is tracking below budget. The improvement projects incorporated during this outage are targeting higher reliability, production rates and product quality. Our Thailand facility remains on track for mechanical completion by the end of 2027, operational commissioning in Q1 of 2028 and production in Q2 through Q4 of 2028.
Construction is expected to break ground in the second half of 2026. The total investment is currently expected to be around $250 million. The Belgium facility also remains on track. Permits are expected near year-end 2026, construction expected in Q1 of 2027 and mechanical completion by the end of 2028. Total investment remains in line with prior disclosure of approximately $350 million. We were awarded a EUR 40 million grant from the European Innovation Fund for the Belgian facility construction and finalized the documentation in April. On Gen 2, our initial design estimates continue to validate the economics and we're working through the more advanced design work. At this time, I'll turn it over to Donald, our Chief Financial Officer, for the financial update and some commentary on our capital position. Donald?
Thank you, Dustin. This quarter, we are introducing operational KPIs alongside our financial results to give you a clearer view of how the business is performing. We will continue to refine and expand these disclosures as the business scales. For additional context to the KPIs, 'feedstock processed' measures purification-ready material delivered into the purification process. 'Other production' captures co-products one and two and other salable material recovered from the feedstock stream. This is an incremental revenue source that improves our overall yield and per-unit economics at Ironton. Together with PureFive production, these metrics give investors a more complete view of Ironton's throughput. Year-over-year production grew approximately 95%, while monthly operations spending grew only 6%. That divergence is operating leverage emerging in the business. As we run more pounds through a largely fixed cost base, our cost per pound falls.
At the same time, branded sales are lifting revenue per pound. Those two trends are converging and that convergence is the foundation of the unit economics improvement we expect as the commercial ramp accelerates through 2026. Net loss for Q1 was $33.4 million compared to net income of $8.8 million in Q1 2025. The prior year period included a $56.7 million favorable change in the fair value of our warrants. Adjusted EBITDA was negative $30.9 million compared to negative $25.5 million in Q1 2025. The year-over-year change is primarily driven by approximately $3 million of higher project development costs running through the P&L. Included in adjusted EBITDA for the quarter is approximately $7 million of project development costs that were expensed through the P&L. These are primarily professional services, project team labor and facility costs related to our Thailand, Belgium, Augusta and PreP development activities.
As these projects advance toward construction authorization, a greater portion of these costs will shift to the balance sheet as they become capitalized. We've included a reconciliation of adjusted EBITDA in the press release. We ended Q1 with total liquidity of approximately $131 million, which includes $90 million of cash and cash equivalents, approximately $31 million of excess cash invested in marketable securities and $10 million in restricted cash. That compares to approximately $182 million of total liquidity at the end of Q4. Total operations spending came in at approximately $8.8 million per month in Q1 and within our $8 million to $9 million per month expectations. Importantly, we held this monthly range for Q1 even as production volumes increased and feedstock and other variable cost growth was absorbed within our ongoing operations. This metric captures our ongoing operational run rate separately from project-related spending, much of which is largely discretionary and is shown separately.
The split isolates ongoing operations from the discretionary capital deployment we're making for Thailand, Belgium, Augusta and Gen 2 efforts. The Q1 quarterly total of $27.4 million reflects an annual incentive compensation payout of $1.3 million in addition to the ongoing monthly rate. Q2 will include the Ironton turnaround spend, which is tracking below budget and reported separately from the operations spend. Q2 will also include the scheduled SOPA bond debt service payment of approximately $9 million on June 1. We have flexibility to monetize a portion of our SOPA bond holdings to offset some of this outflow. Project spend totaled approximately $14 million for the quarter, below the $19 million to $20 million quarterly expectations, primarily due to timing. Fiscal year 2026 project spend expectations of $39 million to $45 million are unchanged, and the majority of remaining project spend is discretionary.
In April, we extended our public and private warrants to March 17, 2027, and lowered the redemption trigger price to $14.38 per share, bringing them in line with the Series A warrants. These warrants now share the same expiration date with approximately $273 million in total potential proceeds available through that date. Beyond the warrants, we have meaningful financing optionality. Our $200 million revolving credit facility remains undrawn and available through September 2027, and we have approximately $75 million in revenue bonds available to monetize. Equipment financing payments will also step down in the second half of 2026 as existing leases mature, reducing our ongoing capital costs. On Thailand, conversations with a local Thai bank have continued to develop well. We are actively progressing the project financing and are encouraged by the alignment we are seeing as we work on finalizing terms and conditions. We will provide updates as appropriate. With that, operator, please open the line for questions.
分析師問答
Our first question comes from the line of Andres Sheppard from Cantor Fitzgerald.
Congrats on all the recent progress. Dustin, I want to start maybe — so on the call, you mentioned the pipeline now stands at about 180 active opportunities and that branded sales are starting to convert. Curious if you could help us understand what the conversion funnel looks like, maybe over the next three to six months, what type of customers and applications are close? Just a little more visibility into that.
Thanks for the question, Andres. I'm really excited about this. We have a lot of activity underway. The compounding assets that we put in place are giving us the opportunity to make exactly what the customers are looking for. On the film side, if you've ever opened up a film wrapper and seen that it's white on the inside — it's called cavitated film — we can make that. In order to seal the film around a candy bar wrapper, you have to have sealant film. We've made that. We're trialing with virtually all of the film producers in the U.S. at this point, and it's going well. The interesting thing about film is that brands are driving that discussion. So it's less about us pushing it to a converter to see if it works and more about brands hearing that we can do it and starting to pull it through. On thermoform cups, we've talked a lot about coffee lids. Those are straightforward for us to make.
It's hard to get to the point where we are, but that's a good product for us across colors and clarity — hot lids, cold lids and clear cup lids — and that's an emerging trend. We have many customers testing to see if the clear cup can work with our material and if the coffee lid fits right on the container, and it's going well. For impact grades — where you need material that won't break when dropped but won't crush when stacked — we are producing viable grades for things like butter tubs, cream cheese and yogurt. That's a tricky grade to make, but we're doing it and customers are excited because it's a drop-in replacement for virgin resin. There are also injection grades. We discussed Tide caps earlier; that is meaningful progress with Procter & Gamble. The work with them has made us better at operations, supply chain and quality. This will translate to other detergent manufacturers and other injection-molded brands. If you walk through the grocery store and look at the variety of packaging we can make, it's really inspiring.
Very thorough. I appreciate it. Maybe as a follow-up, a two-part question. First, on Thailand: can you give us a bit more color on where you are in the financing process and how you are thinking about the timing? And second, around New Jersey: you alluded to it on the call. When might we expect a decision sooner rather than later?
This is Donald. I'll take the first part on Thailand. I'm really excited about the progress we've made as it relates to financing. We put together a very comprehensive data room. We have weekly dialogues with the Thai bank. They have reviewed the data room extensively and provided feedback, and we believe the indicative conditions are achievable. We're looking forward to finalizing the terms while continuing to add to our LOIs for feedstock and offtake.
We've done a solid job here, Andres. Donald has taken a strong position and put together a clean data room. The relationships in Thailand are strong, and we've met with them in person multiple times. The dialogues are constructive and it's a relationship developing well. As for New Jersey, it's going well. We've had many active discussions and have good relationships at all levels. The new administration is focused on efficiency and impact. We engaged with the prior administration in September and late October and hoped to convert before November, but the election and transition paused that progress. The new administration has now started and is aligned. We believe it's moving in the right direction and are optimistic it will close soon.
Congrats again on the quarter.
Our next question comes from the line of Hassan Ahmed from Alembic Global Advisors.
First question about the macro volatility we've been seeing since early March. It impacts polypropylene directly, with many facilities across the Middle East impacted and broader effects on oil prices and NGL supply. Would love to hear your views, drilled down to PureCycle: what it means to you from the cost side and from the demand side. I would imagine more customers are intrigued by your product offering, so I'd love your perspective.
This is a very dynamic period. Many are waiting on the sidelines hoping the disruption ends quickly. We're seeing destocking, particularly in China, and global pricing has changed. The arb between the U.S. and Asia is closing or has reversed depending on the region. From PureCycle's perspective, oil and polyethylene have direct impacts on our co-products. Co-product one has some exposure to oil markets and co-product two has exposure to polyethylene markets. In the U.S., polyethylene has doubled, which makes co-product two more valuable. Increased virgin polypropylene pricing is a tailwind and creates opportunities in customer discussions. However, many branded customers and contracts we develop are effectively feedstock-plus priced and are largely independent of global supply chain items because our feedstock is locally sourced. Customers appreciate that hedge and the stability of recycled content material.
We're also seeing relationships seeded over the past three to four years start to bear fruit globally. We have a strong team in Europe and Asia and discussions about exports from Ironton or accelerating approvals for Thailand are underway. Asian customers, who often rely on China, are nervous about supply and pricing and have been reaching out to diversify, which bodes well for us. Nationalization trends — Europe for Europe and Asia for Asia — also support localized, compliant supply, and that should help our traction in those regions over the next couple of years.
That was very helpful, Dustin. As a follow-up on a micro level, what did you accomplish during the Ironton turnaround? I'd love to hear the scope of work and standout projects. With this behind you, what should we expect in terms of production rates and top-end capacity coming out of the outage?
Ironton was a major event. We opened nearly every piece of equipment. It was cleaner than expected, which bodes well for long runs without unexpected outages. We completed over 170 jobs focused on quality, reliability and capacity. We solved many of the initial plant headaches and added small improvements that increase reliability. The site team executed the plan well and improved our positioning. Regarding capacity, we expect to increase rates coming out of the outage. We upgraded an undersized pump, improved heat integration and cleaned all heat exchangers on site. We also implemented numerous seal improvements that required an outage to execute. Over the last two years we've done several rate tests touching 12,000 pounds per hour (about 75% capacity) and 14,000 pounds per hour (about 90–95% capacity). Those tests informed our outage plan and targets. We'll test and validate the ramp in May, June and Q3, and we're excited about the prospects.
Our next question comes from the line of Eric Stine from Craig-Hallum Capital Group.
This is Luke on for Eric. Could you talk about any other states besides New Jersey and California that have potential regulatory catalysts on the horizon that could unlock meaningful revenue opportunities?
There is activity across several states. Washington and Oregon have legislation in place, and Massachusetts and Colorado are considering measures. New York also has ongoing discussions. Many of the traditional states are adopting APR certification as the marker for recycled content, and we've already achieved that certification. New Jersey and California are particularly influential in shaping the broader market, but demand-side regulations are emerging across a range of states.
Got it. As a follow-up, you have opportunities in several verticals that could drive step-change growth. If you had to force-rank applications you expect to be most meaningful in the near term, say the next 12 to 18 months, what would that list look like?
There are two ways to view it: near-term revenue drivers and long-term strategic categories. In the short term, injection-molded applications like Tide caps and other detergent caps are significant and ready to scale. Coffee lids and cold cups bridge near-term and long-term because of the enormous volume in that space and the proven technical fit. Film is a major long-term opportunity; we are the only scalable PCR solution for film and have run successful tests on Bruckner 6-meter lines, which are challenging and important. Our Ironton compounding asset will unlock more film opportunities. The impact grade — for products that must resist drop and crush like butter tubs and yogurt tubs — has emerged as unexpectedly valuable in the last several months. It's hard to make and we've been successful. Lastly, retort testing (sterilization tests) shows we perform well due to low contaminant levels, which differentiates us and will be valuable in the long term.
Our next question comes from the line of James Schumm from TD Cowen.
You have some timelines for the ramp. Can you give a better sense of what the ramp actually looks like? How long does it take to get to full run rate or the annual run rate? Is it in Q2, Q3 or Q4? What does the ramp look like?
It's difficult to predict precisely because the ramp timing depends on customers' ramp schedules. What we've said previously still holds: Q1 and Q2 look largely the same and Q3 and Q4 are when volumes and revenue start to increase meaningfully. Many customers are trialing now and will begin commercial ramps at different speeds, but we have enough line of sight to expect Q3 and Q4 to be strong given the regulatory backdrop and customers' need to comply.
You noted Procter made you better during the qualification process. What does that actually look like — why is your product better — and what needs to happen to get some orders across the finish line with Procter or other customers?
We have orders with Procter — we're fully qualified on both Tide caps and ZzzQuil and have a PO for delivery in late May or early June for Tide caps. When I say Procter made us better, I mean the rigor they require in areas such as supply chain management, inventory, lab testing, quality control and documentation. Their approval process demands thorough answers, additional procedures and stronger controls. Building those capabilities improves us not only for Procter but for all customers. Procter does not tell us how to operate the plant, but they require robust processes and documentation across the business. Our team has become very good at that and continues to improve.
Lastly, you cited about 180 pipeline opportunities. What's the pushback you're getting from customers? What's holding them back from placing orders? You mentioned New Jersey, but what else?
Every customer has a different process and different drivers. It's not so much pushback on the product as it is the qualification and validation steps they require. For food contact applications, customers often require extended testing like putting food in a cup and letting it sit for three to six months to validate performance over time. Some customers also request detailed LCAs or third-party certifications and want thorough documentation of feedstock and process. We are getting much better at answering these questions. Our lab in Durham helps us respond technically, and we have far fewer unknowns now. Many customers are completing qualification and converting to branded applications; you'll see more of those announcements throughout the year.
Our last question comes from the line of Jeffrey Campbell from Seaport Research Partners.
Congratulations on the continued operating success. On the EU recycling regulations, enforcement confidence is sometimes questioned. What is your take on enforcement and compliance in the EU?
It's hard to predict government actions exactly, but right now there's strong support for demand-side regulatory efforts. California, New Jersey, Washington, Oregon and Colorado are advancing policies and have helped set fundamentals for the U.S. There's bipartisan support for recycling — even in traditionally red states — and Europe is also advancing recycling quickly. Beyond sustainability, some of the push is driven by nationalization concerns and reducing dependency on external supply chains. In Asia, EPR legislation is popping up in places like India, Indonesia and Thailand. This momentum is global and not a fad. PureCycle should see tailwinds from this trend over the next decade.
Given the new customers and increasing commercial traction, is there any chance revenue guidance could be raised as 2026 progresses?
We are not providing updated revenue guidance today. The timing and magnitude of the ramp remain variable, particularly with New Jersey pending. Internally, our 2026 plan is achievable and we are executing against it. We will provide updates as clarity increases and the commercial ramp progresses.
This concludes our Q&A portion, and I would like to turn it back to Dustin Olson for closing remarks.
Thank you, Myla. Thank you for listening in today and for all of your continued support. Overall, this is a strong quarter for PureCycle across all aspects of the organization. We exceeded our internal plan and are confident in our 2026 outlook. We know that this year is critical to unlocking the flywheel that allows us to capitalize on the immense opportunity to revolutionize plastic; the operational performance, the commercial conversions, the macro tailwinds, the regulatory momentum and the capital access all point in the same direction. The hard work is paying off. The branded momentum is real, and we're just getting started. Thanks, everybody.
Thank you for your participation in today's conference. This concludes the program. You may now disconnect.