PureCycle Technologies (NASDAQ:PCT) reported lower third-quarter revenue after production problems at its Ironton plant and a New Jersey regulatory delay disrupted its sales plans. Management said the issues have been resolved, but the company no longer expects to reach its previously discussed production and sales exit rate in 2026.
Chief Executive Officer Dustin Olson said two reliability issues limited production and affected product quality, leaving PureCycle unable to ship some material to branded customers. The company has since shifted its sales effort toward non-food applications following New Jersey’s extension of a food-contact exemption from 2027 to 2030.
Revenue Declines Despite Higher Production
Third-quarter revenue was $2.3 million, down from $4.5 million in the second quarter and $2.4 million a year earlier. Purified production rose to 5.2 million pounds from 4.5 million pounds in the second quarter.
PureCycle reported net income of $6.9 million, compared with a net loss of $28.4 million a year earlier. The latest result included a $58.6 million non-cash gain from changes in the fair value of warrants. Operating loss narrowed to $37.5 million from $38.9 million, while adjusted EBITDA was negative $28 million, an improvement of $0.6 million year over year.
Monthly operations spending averaged $7.8 million, below the company’s prior $8 million to $9 million range and down from $8.4 million in the second quarter. Chief Financial Officer Donald Carpenter said the measure excludes materials purchases, which averaged approximately $2.7 million per month, as well as severance and other implementation costs.
Carpenter said PureCycle is reducing reliance on contractors and temporary labor, bringing more maintenance and services in-house and adjusting logistics and storage to actual volumes. The company also plans to move to on-site nitrogen supply in 2027.
Customer Programs Shift After New Jersey Delay
Olson said approximately 15 food-contact programs, representing roughly 50 million pounds of expected annual volume at full ramp, moved beyond the company’s original timetable after New Jersey’s decision. Two qualified quick-service restaurant cold-cup programs moved from the fourth quarter into 2027, with shipments now expected to begin in the first half of that year.
Non-food rigid containers remain subject to a New Jersey recycled-content requirement that rises to 20% in January 2027, Olson said. PureCycle has redirected sales efforts toward those applications and other programs farther along in qualification.
Olson said branded rail car purchase orders for a hot-lid program arrived in October. The program, involving a compounder that supplies multiple restaurant chains, is expected to reach 7 million to 8 million pounds annually at full ramp. He also said PureCycle expects to begin shipping resin in the fourth quarter for shampoo closures qualified by a large global cosmetics company. During the question-and-answer session, Olson discussed PureCycle’s relationship with L’Oréal.
PureCycle’s initial batch of branded programs represents about 12 million pounds of annual volume at full ramp. Including programs in final qualification or contract negotiations, the pipeline totals 45 million to 55 million pounds annually, which Olson said would approach 40% to 50% utilization at Ironton and bring the plant close to break-even.
Those volumes are not all under signed contracts. Olson told analysts that approximately 10 million to 14 million pounds were under contracts, another 10 million pounds were close to being contracted, and terms for a further 20 million pounds had been discussed but not signed. He said the broader pipeline includes roughly 10 million pounds of New Jersey-related demand that continued to advance despite the extension.
Olson declined to provide a timetable for Ironton or companywide adjusted EBITDA break-even, citing uncertainty around customer ramp schedules. He also declined to give fourth-quarter or first-quarter revenue guidance.
Liquidity and Thailand Financing
PureCycle ended the quarter with $193 million in total liquidity, including cash, marketable securities and restricted cash, down from $236.9 million at the end of the second quarter. Including its undrawn $200 million revolving credit facility, available liquidity was $393 million.
Carpenter said the company expects approximately $4 million in fourth-quarter project spending, excluding spending dependent on Thailand financing. That would put full-year project spending at approximately $51 million, above the $45 million to $50 million range given in August.
PureCycle is working through final financing terms for its $250 million Thailand project, where it has already invested more than $85 million in equipment and engineering. Olson said the company has a binding term sheet and plans to pause significant additional spending until financing closes. Discretionary spending on other growth projects is also on hold while Ironton ramps.
The company also named longtime director Fernando Musa executive chairman. Olson said Musa, a former leader of Braskem America and Braskem globally, will support PureCycle’s commercial ramp.
About PureCycle Technologies (NASDAQ:PCT)
PureCycle Technologies, Inc (NASDAQ:PCT) is a recycling technology company focused on converting waste polypropylene (PP) into recycled resin with properties designed to be comparable to virgin polypropylene. Its technology is intended to remove color, odor and other contaminants from used plastic, expanding the potential for recycled PP in applications that traditionally rely on virgin materials.
The company processes post-consumer and post-industrial polypropylene feedstock into purified recycled polypropylene products.
