Earnings call transcript: Purecycle Technologies Q2 2025 misses forecasts

Purecycle Technologies Holdings Corp (PCT) reported its earnings for the second quarter of 2025, revealing a significant miss on both earnings and revenue compared to analysts’ forecasts. The company reported an earnings per share (EPS) of -$0.81, far below the expected -$0.208, and revenue of $1.65 million, which was considerably lower than the forecast of $2.7 million. Following the earnings announcement, Purecycle’s stock fell 5% in after-hours trading, closing at $12.35, down from $13. According to InvestingPro data, PCT’s stock has shown significant volatility, with a beta of 1.95, indicating higher market sensitivity than average. The company currently appears overvalued based on InvestingPro’s Fair Value analysis.

Key Takeaways

• Purecycle Technologies reported a larger-than-expected loss in Q2 2025.
• Revenue fell short of forecasts by 38.89%.
• Stock fell 5% in after-hours trading, reflecting investor disappointment.
• Operational improvements and strategic initiatives were highlighted as future growth drivers.

Company Performance

During the second quarter, Purecycle Technologies faced challenges in meeting its financial targets, reporting a significant shortfall in both earnings and revenue. Despite these setbacks, the company emphasized operational improvements, including achieving nearly 90% on-stream times and producing pellets continuously for 65 days. Purecycle also completed a rate test at 14,000 pounds per hour, signaling progress in its production capabilities. InvestingPro analysis shows the company maintains a healthy current ratio of 2.14, indicating strong short-term liquidity, though its overall financial health score remains weak at 1.5 out of 5.

Financial Highlights

• Revenue: $1.65 million, down significantly from the forecasted $2.7 million.
• Earnings per share: -$0.81, missing the forecast of -$0.208.
• Operations and corporate spending reached $39 million, slightly higher than the previous quarter.

Earnings vs. Forecast

Purecycle’s actual earnings per share of -$0.81 was a stark deviation from the forecasted -$0.208, marking a surprise of 289.42%. The revenue miss was equally substantial, with actual figures falling 38.89% short of expectations. This performance represents a significant deviation from previous quarters, where the company had managed to align more closely with market forecasts.

Market Reaction

Following the earnings release, Purecycle’s stock declined by 5% in after-hours trading, closing at $12.35. This movement reflects investor disappointment with the company’s financial performance. Despite recent volatility, InvestingPro data shows PCT has delivered an impressive 111.6% return over the past year and a 28.1% gain in the last six months. The stock remains within its 52-week range, having previously reached a high of $17.37 and a low of $4.5. The broader market trends showed less volatility, indicating that Purecycle’s performance was a key driver of its stock movement.

Outlook & Guidance

Looking ahead, Purecycle is focused on expanding its operational capabilities and product offerings. The company aims to reach a $4 million monthly revenue by the end of Q3 and achieve corporate EBITDA breakeven between Q4 and Q1. Analyst consensus from InvestingPro suggests moderate optimism, with price targets ranging from $13 to $16 per share. Strategic initiatives include growth projects in Thailand and Antwerp and the development of Gen 2 facilities, with a long-term goal of reaching a 1 billion pounds installed capacity by 2029. For deeper insights into PCT’s growth potential and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro.

Executive Commentary

CEO Dustin Olson stated, "Pure Cycle is working. Our tech is transformative, and we’re distancing ourselves from the competition." He emphasized the company’s unique value proposition and its ability to compete with virgin polypropylene facilities, highlighting the strategic importance of their ongoing projects and technological advancements.

Risks and Challenges

• Continued financial underperformance could affect investor confidence and stock price.
• Regulatory pressures for recycled content could impact operational costs.
• Market competition from other recycled polypropylene producers remains a challenge.
• Economic factors and feedstock pricing fluctuations could influence profitability.
• Execution risks associated with international expansion and new facility developments.

Q&A

During the earnings call, analysts inquired about Purecycle’s growth strategy and regional expansion plans. The company clarified its progress in commercial trials, with 17 post-trial applications, and discussed its compounding strategy and customer engagement efforts. Analysts also raised concerns about feedstock pricing and circularity opportunities, which the company addressed by highlighting its competitive advantages in producing high-quality recycled materials.

Full transcript - Purecycle Technologies Holdings Corp (PCT) Q2 2025:

Carrie, Conference Operator: Good evening. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pure Cycle Technologies Second Quarter twenty twenty five Corporate Update Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I would now like to turn the call over to Eric Dinatelle, Director of Investor Relations. Please go ahead, sir.

Eric Dinatelle, Director of Investor Relations, Pure Cycle Technologies: Thank you, Carrie. Welcome to Pure Cycle Technologies’ Second Quarter twenty twenty five Corporate Update Conference Call. I am Eric Duntali, Director of Investor Relations for Pure Cycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer and Jamie Vasquez, our Chief Financial Officer. This evening, we will be highlighting our corporate developments for the 2025.

The presentation we’ll 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 based on management’s beliefs and assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our Safe Harbor provisions and forward looking statements that can be found at the end of our second quarter twenty twenty five 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 statement. Our remarks today may also include preliminary non GAAP estimates and are subject to risks and uncertainties, including among other things, changes in connection with quarter end and year end adjustments.

Any variation between Pure Cycle’s actual results and the preliminary financial data set forth herein may be material. You’re welcome to follow along with our slide deck or joining us by phone, you can access it at any time at purecycle.com. We are excited to share updates from the previous quarter with you. With that, I will now turn it over to Dustin Olson, Pure Cycle’s Chief Executive Officer.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: All right. Thank you, Eric. Thanks for joining the call today. You may notice that my voice is a bit shot as I’m still recovering from a little summer cold. So forgive me ahead of time if I’ve got to go on mute for a moment or two for a cough.

The second quarter was a meaningful period for Pure Cycle as it marked the shift towards growth. We updated the market approximately six weeks ago with the successful capital raise in late June and the announcement of our global growth plans in Asia, Europe and The U. S. This expansion is planned to bring roughly 1,000,000,000 pounds of installed capacity to the market by 02/1930. The reaction from our customers has been very positive, especially from the larger global brands looking for an opportunity to truly move the needle for their brands global sustainability goals.

This is a transformative moment and we’re thrilled to bring our product to the world. I want to thank our team for their hard work on this and in particular, thank our new and existing capital partners that participated in the $300,000,000 capital raise. We also continue to see progress on the commercial front as our pipeline advanced. The acceptance of our material continues to strengthen across numerous applications. Our ability to deliver high volumes of FDA and PCR resin with a wide range of material properties through compounding is differential.

We now have numerous applications and post trial negotiations and the backlog of trials continues to build. We currently have 17 customer applications that are post trial discussions with continued plans for second half revenue ramp as these discussions convert into sales. Also notable is that the commercial discussions focus not only on deliveries in 2025, but also capacity reservation for ’26. This is a fundamentally different dialogue when compared to before our successful capital raise. Many of these applications are with brands and products that I expect all of you are familiar with.

Coffee lids, yogurt cups, spouts, container lids, pens, snack bags, tapes, storage totes are only a few of the applications that we’re excited to bring to the market. We also signed our first major commercial agreement with Emerald in this quarter for approximately 5,000,000 pounds of purified resin, which starts to convert into revenue in Q3. Fiber was one of those first major technical compounding achievements, and we’re excited to see those early wins accelerating into increased customer interest. The film market is an enormous opportunity for Pure Cycle and one that we’ve been talking about in recent quarters. Remember, there isn’t a reliable high quality post consumer recycled FDA resin that can be used at scale and chip bags, candy bars and other film applications.

We originally expected trial success in the 2025, but I’m very proud to announce that we achieved our first successful trial in film earlier than expected. And have planned to test two additional larger scale trials in August, one with Bruckner and another with a large global converter, and a third in September. We believe that this is a very large underserved market for both FDA and non FDA applications and are hearing indications of demand from film players for twenty six even before the product has been fully tested. Operationally, the story continues to be one of steady progress at Ironton. As we noted on the capital raise update six weeks ago, Q2 was a strong quarter for our team where we achieved on stream times approaching 90% in both April and May.

We also produced pellets for sixty five consecutive days. In early June, we took a small planned outage to prepare for the second half of twenty twenty five commercial ramp to implement a couple of small reliability improvement projects. We also successfully completed an initial test run at upper limits of the facility with a rate test at 14,000 pounds per hour on August 1. We plan to continue testing the plant at these high levels throughout August and September to map out the requirements at these rates and also raise rates to higher and higher levels in Q3, Q4 to meet the commercial funnel requirements. Overall, the progress that we’re seeing with the trial pipeline, as well as what we’re hearing in our post trial brand discussions is positive and will lead to increased branded sales in the second half of the year.

More importantly, the indications of demand that we are hearing from our customers are strong, gives us increased belief that sales will continue to ramp up leading to and through 2026. The unit economics are branded contracts and what we are seeing with our current discussions continues to support the unit economics we previously laid out to the market. When we announced our capital raise about six weeks ago, we gave a lot of detail to the market regarding our global growth plans. I think it’s important to take a step back and reiterate why the time for growth is now. First, the operational reliability at Ironton has meaningfully improved over the past year, which was exemplified by on stream time approaching 90% in both April and May and sixty five days of consecutive pellet production.

Secondly, the momentum in our commercial trials has continued and that and this gives us increased confidence that demand for recycled polypropylene far exceeds our ability to supply the market. Look, when it comes to growth, I couldn’t be more excited about Thailand. We shifted to Thailand because it allows the fastest speed to market while also minimizing the incremental capital outflow. This project has a high ROIC, gives direct access to Southeast Asia, and ensures PG Procter and Gamble exclusivity for Asia. The brownfield site that we have access to in Rayong has an existing infrastructure, including power, steam, roads, warehousing, fire, compounding assets, a deepwater port, and equally, if not more important, a deep bench of very talented project professionals.

This combined with the low cost nature of Thailand should allow us to bring the project to completion for somewhere between 01/1950 and $1.75 CapEx per pound. This is inclusive of roughly $87,000,000 in long lead equipment that we’ve already purchased, which further reduces the incremental cash outflow. We continue to expect that we should have this facility operational in the ’27. A portion of the capital raise will also be allocated to completing the permitting process in Antwerp and also finalizing the Gen two design for a 300,000,000 plus pound production unit for future facilities. We continue to expect that permitting for Antwerp will be completed in ’26 and the overall project should be completed in ’28.

Design work for the larger lines should be completed in the ’6, which will then kick off construction of our Gen two line, which is expected to complete in 2029. Since the most recent update, we continue to progress plan our growth plan and have already selected our EPCM partners for Thailand and Antwerp. We are measuring the staffing needs for both projects carefully as we scale the future designs and integrate Ironton learnings into the process. This should lead to lower operating costs for each new line and the combination of lower CapEx per pound and lower OpEx per pound should result in very attractive capital returns and positive results for project financing. We continue to make progress with our commercial trials and are now in post trial discussions for 17 customer applications with numerous brands and converters.

These consist of applications for many large global brands. This is consistent with prior guidance where the first half of the year would be about application trials and the second half would be about working to convert those trials into sales and that’s what we’re starting to see. While it’s difficult to precisely time the trial to sales pipeline, we are on track with prior disclosures and are very happy with our trial win percentage. The brands are excited about our product and we are moving into the final gating items for many applications. This is good for the 2025 ramp, but it’s also very good timing as they plan for 2026 volume commitments.

Many of these are with large well known consumer brands with meaningful volume requests north of £5,000,000 per year with the intent to grow thereafter. And other major brands are inquiring about reservations starting at volumes greater than that. When we look at our sales funnel, I think it’s important to look at a couple of different metrics. First, does the funnel continue to progress and build? And secondly, how did the attrition rates look?

On both of these metrics, we see incredible success. Last quarter, we had a meaningful number of active trials convert to post trial discussions, many pending trials convert to active trials, and the backlog of future trials continue to grow as well. Last quarter, we reported 88 active and pending trials with three that were post trial. Now we have 96 active and pending trial and 17 are post trial. Additionally, we have only had one trial drop out of the funnel.

So the attrition rates have been incredibly low. This speaks to our ability to meet the customer requirements as well as how much our customers want a quality recycled product. We’re introducing a couple of new terms, but one of them is serviceable addressable market. The serviceable addressable market of our sales funnel is currently £4,800,000,000. And while that’s an enormous number that continues to build quarter over quarter, it’s still only a fraction of the £200,000,000,000 global market.

Last quarter, we talked a lot about the excitement we have regarding our ability to make film, which is an underserved market for recycled material. Since the last update we had our first industrial trial success in film, which positions us well, sorry, positions us well for commercial success going forward. I was actually at a facility a while ago and got to see the equipment running. And I have to say, it was just awesome. These moments fuel our team and give everyone confidence in our products that we’re building.

I remain very bullish on our potential for non FDA and FDA BOPP film. We’re moving as fast as we can to qualify film across numerous customers by working our product into their highly congested production schedules for industrial trials. We have two large scale BOPP trials scheduled for August, one with our partner Bruckner, which we mentioned last quarter, and another with a large global converter,

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: and

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: a third scheduled for September in The U. S. The conversations with brand owners have increased in film even in front of these trials, and some have even begun to communicate interest in securing volume reservations for 2026 and beyond. The overall backlog of potential trials also has continued to increase since last quarter. And after our successful capital raise, many brand owners are inquiring about capacity commitments from our facilities beyond Ironton.

I would like to pause for a moment and highlight this point. Global brands have they they manage massive systems in extremely competitive markets. To do so successfully, they require high levels of efficiency and consistency from everyone that touches their system. And like all of us, are judicious with where they spend their time. The fact that we can deliver a no compromise drop in replacement products with FDA and PCR certifications, and that we have significant volume pipeline planned that solves major regulatory consumer and investor related demands is awesome.

We provide the value proposition that they need. In July, we announced a partnership with Emerald Carpets, who is one of the largest installers of tradeshow carpets in the country. The large scale commercial supply agreement that we have with them is for approximately £5,000,000 per year of Pure V Choice resin beginning this quarter. Emerald consumes roughly 50,000,000 pounds of polypropylene per year, so there’s a lot of room for us to grow the partnership and I can tell you both parties are interested in doing so. There’s also a unique opportunity with Emerald to create true circularity over time.

And I give them a lot of credit for really chasing this activity in the market. With true circularity, we can take their unused carpets and use them as feedstock to produce recycled resin for their future demand. This is an exciting development and one that we hope to iterate with other commercial partners over time. The success with Emerald is also a good reminder of the regulatory pressures that are beginning to come into play for consumers of polypropylene. California recently mandated 5% recycled content for all their carpets sold in the state with a stated goal of increasing that over time.

Pure Cycle is a solution for California and other states that that decide to follow suit. During the second quarter, PureCycle earned GreenCircle’s recycled content certification for nearly 30 grades of PureCycle resin and co products one and two. This is an independent certification verifying that greater than 90% of our feed comes from qualified PCR feedstocks. Customers just want to know that their product is truly coming from post consumer curbside, And they know it’s extremely difficult to procure high quality final product made at scale from PCR feed. We hear this in the market all the time, and we know this is a differential value proposition for Pure Cycle.

The reality is that Pure Cycle is processing PCR feedstock day in and day out at Ironton, and we’re happy to get this certification to add to our docket of successful certifications. Overall, we’ve made tremendous progress with our commercial pipeline and we continue to expect a commercial ramp in both Q3 and Q4 with increasing visibility on potential demand from our customers for 2026 and beyond. We recently received board approval to initiate a project to bring compounding operations to Ironton by the end of the year. This is a great project. This is expected to increase our on-site compounding capacity to approximately 100,000,000 pounds and will be primarily focused on film, thermoforming, and injection molding applications.

This decision came in large part due to our commercial conversations. First, it’s becoming clearer every day that our customers want compounded material across multiple application types and grades, and therefore our third party our existing third party capacity would be insufficient to meet their needs. Secondly, as we progress with larger blue chip companies, their volume indications require higher volumes and therefore require rail, which can be more cost effectively and more reliably managed through compounding at Ironton. This expansion will not only help to improve our logistics and our ability to serve our customer needs, but we believe it will realize cost savings in excess of $4,000,000 per year and improve the overall quality management activities. The expected payback on this project is less than two years.

The announcement today on our compounding expansion is a reflection of the commercial progress on specific trials and speaks to the confidence that we see in the demand ramp to come. As previously disclosed, we achieved on stream times approaching 90% in both April and May before taking a brief outage in June. The Ironton facility has been back up and is ramping into higher production levels for Q3. We initiated a number of rate tests and successfully ran at levels at 14,000 pounds per hour nearing nameplate rates on the August 1. Like with all rate tests, we move to a new level and then we evaluate product quality, reliability, and operability at these levels.

And then we do it over again, we optimize, we learn, and we improve along the way until it becomes the new norm for operations. We’ve been doing this successfully for two years now. I can’t say enough with how proud I am of our operational successes. This is not a game that’s won with a single home run. It takes practice, diligence, some occasional strikeouts, and a series of endless singles.

These accomplishments position us well for when we ramp our production in conjunction with the commercial ramp. Overall, the second quarter marked an important inflection point for Pure Cycle. We successfully raised $300,000,000 in capital, which should allow us to begin our growth beyond Ironton and bring our Pure V resin to the global marketplace. We have structured our growth plans in a manner that we believe creates the best balance between speed to market, cost and overall returns. As we laid out in late June, we continue to see a path to roughly a billion pounds of installed capacity by the 2029 and should provide roughly $600,000,000 of run rate EBITDA.

We have successfully advanced our commercial trials and are ramping revenue at Ironton. We are excited for this next stage of the journey and I’m incredibly excited about the recent developments and more confident than ever what the future holds for Pure Cycle. With that, I’ll turn to Jamie for the financial presentation.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Thank you, Dustin. As we mentioned, we had a successful capital raise in June, which significantly bolstered our liquidity position. As you see on Slide 12, we ended the quarter with $298,000,000 of cash on the balance sheet, including $284,000,000 of unrestricted cash. Earlier in the quarter, we also sold $11,900,000 face value of our revenue bonds at a price of $88 for net proceeds of $10,500,000 and we still hold about $87,000,000 of revenue bonds that we plan to sell in the future to further support our growth initiatives. Our operations and corporate spend was around $39,000,000 which was slightly higher than the $37,000,000 spent in the previous quarter.

We anticipate that our operational spend will remain at similar levels, adjusted for increased spend associated with the ramp up of commercial sales. Additionally, we expect growth capital spend to slowly increase over the next several quarters. We are working on detailed project plans and will provide more insight once the spend curves associated with those plans are finalized. I would now like to turn the call back to Carrie, who will open the call for questions.

Carrie, Conference Operator: Your first question will come from Andres Sheppard with Cantor Fitzgerald.

Andres Sheppard, Analyst, Cantor Fitzgerald: Hey, everyone. Hey, Dustin. Hey, Jamie. Congratulations on the quarter and all the great progress. Dustin, you touched on this a little bit on the call, but I’m wondering, can you give us maybe a bit more detail on the growth plans, how you have progressed them since you last updated the market?

Thanks.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes. I mean, Andres. Appreciate the compliment. Look, I mean, we’re just really excited to get moving with growth. I mean, we’ve talked about effectively three growth projects, Thailand, Antwerp and then our Gen two facilities.

And we’re just really well positioned. We’ve done a lot of work over the last several years to secure good sites that are ready to go. And now we’ve got Ironton at a place where it’s going to support that activity and give us the confidence to move forward these projects. So if you look at Thailand in particular, I mean, look, I mean, this is a great facility. It’s an integrated polypropylene producer.

They’ve got compounding. It’s a relatively low cost install for this project because they’ve got much of the infrastructure already available to us. So we can drop our purification facility right in and get ready to go. So that leads to a high ROIC, a good cash generation straight out of the gate. And then everything else is right.

I mean, we’ve got good infrastructure, we’ve good roads, we’ve got good steam, we’ve got a deep port access. And look, deep port access is really important Andreas. If you think about if you just take a step back and you think about where is plastic pollution the biggest problem, typically people lean toward Asia because the waste handling facilities just aren’t as developed as the rest of the world. And so if you look at some of these great groups around the world, like the Alliance on Plastic Waste and other notable organizations, they’re putting a lot of effort and a lot of money into fixing that problem. And so what that means for us is that over the next ten, twenty, thirty years, we expect there to be just an enormous amount of new capacity added to collect, sort and process waste, which means that our facilities in Thailand are going to be perfectly positioned to purify an endless growth of supply of seed from that region.

And so I’m super excited about Thailand. I just think it’s going to be a flagship big mega facility for us into the future. And we’re just starting off now, but we’re starting off the right way. The other notable point with Thailand is, and I mentioned it in my starting comments, but we have an incredible team and partner with IRPC. Not only do they have the right facility, they have the right people.

And so when it comes to building the project, they’ve got loads of experience. Mean, decades of experience at each critical position in order to do this successfully. And then on the operations side, they run a really good facility. I think that the coordination between the two companies on staffing levels and supporting these projects is going to be really strong. And we’ve already started to do that.

I mean, this team is already getting started learning our project and helping us to find ways to deliver it on time and on cost. When it comes to the other two costs or the other two projects, Andres, Antwerp is in the heart of the recycling universe. I mean, it’s right in the middle of it. Europe is a leader when it comes to demand for recycling capacity and we are going to be a strong supplier of good quality product there. We’ve got to go through the permitting process.

It’s different in every region. With Europe, you’ve really got to nail down the engineering, submit for permit, wait, and then start building. So that’s why it’s a bit delayed. But we’re very optimistic about the returns and acceptance in that region. And then lastly it’s Gen two.

And look this is where like we really start to nod to the future Andres. I mean Gen two and we don’t know the size of the plant yet. We’re doing the engineering there to decide if we want to go 300 or bigger annualized capacity. But this facility is going to have an incredible cost structure. And so those customers that partner with us early and get started early, we’re going to have a lot of volume for them at competitive pricing.

And I believe that this is going to lead to not only competitive operating costs, but also extremely competitive CapEx facilities. So look, our goal is to get pure cycle projects to be competitive with virgin polypropylene facilities. So that in the future when polypropylene starts to grow, they will look at a pure cycle facility as opposed to a new virgin facility. Great question. Thank you for that.

Andres Sheppard, Analyst, Cantor Fitzgerald: No, thank you, Justin for that very elaborate answer. Appreciate all the color. Maybe one more for me. I think the big question that I think most of us probably have on the call is I’m wondering if you can maybe give us a bit more granularity on the 17 applications that you disclosed are post trial. How should we think about the gating items here before commercialization?

And maybe how would you characterize the likelihood of success? Thank you.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes. So look, mean, first of all, we’ve continued to invest in our commercial team. I think that we’re building a first class team. We are starting to formalize the process for evaluating the funnel, getting very strategic for how we look at different customer segments and really starting to distill into which applications are going to make the most sense. And so I’m really proud of the team for the work that they’ve done there.

I mean, look, the way to look at the 17 trials is it’s working. I mean, if you take a step back twelve months ago, people were wondering if the product would even work. And now we’re talking about post trial success conversations. Like that’s a substantially different place than we were a year ago. And so right out of the gate, the first take should be, oh, okay, the tech works, customers are using it, customers are approving it from a trial perspective, and now they’re in further conversations.

And that’s very positive. Okay, the other thing that you should take from that table is look at the different lanes. I mean, we can literally play in just about every major lane in the market. And so then getting trial success in each of these lanes will just give us flexibility to go where it makes the most sense. And we’ll be doing that.

And you’ll be seeing that over the coming months. When it comes to conversion to sales, I mean, it’s happening. Okay, look, lot of the lot of the 17 successful trials are in late stage discussions. A lot of brands are excited to get moving and they’re just working through the supply chain and the inventory management procedures, the logistics. Do I receive it by box?

Do I receive it by truck? Or do I receive it by rail? All of these things happen. How do I bring pure cycle in and then also work out the incumbent? These things take time.

And the technical success we’re having is leading the way to good discussions in all those regions. And I feel very good about the ramp up that we’ve discussed in the past. Look, we’ve talked extensively about what we expect to get in terms of the ramp in the second half. And we still feel good about it. Okay, are there going to be movements here and there and some customers in and replacing others?

Maybe. Are we going to have some trials that we emphasize more than others? Maybe. But at the end of the day, we are starting to ramp right now. And we still feel good about the ramp that we’ve discussed in the past.

Andres Sheppard, Analyst, Cantor Fitzgerald: Excellent. Thank you so much, Dustin. Really appreciate it and congrats again on all the progress. I’ll pass it on. Thank you.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Thanks, Andres.

Carrie, Conference Operator: Your next question will come from Hassan Ahmed with Amblek Global.

Hassan Ahmed, Analyst, Amblek Global: Afternoon, Dustin. Things seem to be progressing along extremely well. My first question is around commercialization, right? Couple of things that you said on the call intrigued me a lot. You talked about the serviceable addressable market being around £12,800,000,000 and like you rightly said, for an industry that’s, call it, pounds 185,000,000,000, 190,000,000,000, that’s just scratching the surface.

So, I guess my question is that, as you inked this sort of commercial agreement with Emerald, GBP 5,000,000, their needs are 50,000,000. I mean, how are you guys thinking about parceling the sort of production out? Meaning, the pace with which things are going and what you’re alluding to, I mean, you’d be able to sign these commercial agreements with a variety of guys, it seems. Mean, demand is there, they’re just going to sort of scoop this up, right? So how is your commercial team thinking about picking and choosing the right sort of customers?

How are you thinking about what it entails to actually get the best deals, right? And how to sort of maybe even grow in pricing, right? Because, I mean, it’s a very unique sort of place to be in commodity chemical land, where the demand so exceeds what you’re producing, that in theory, mean, the pricing power is with you?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yeah. I mean, that’s a great question, Hassan. I mean, in a way, it’s a it’s a little bit about the decommoditization of polypropylene. I mean, we are not commodity polypropylene. We are a specialty product.

It’s in short supply. And there’s a lot of demand for it in the market. I think that when you think about the overall segment choices for us, I think it’s a bit it goes in a couple of different ways. First of all, with Ironton, I mean, goal is to show that we can make it in all of these applications. Okay, we want to be able to show the automotive sector that we can make a bumper and that our odor is good enough to go on the inside of a car.

We want to show the textile market that we can make fiber reliably both in single strand non woven staple, and it could go into cars and the carpet. It can go into these high reg areas like California for the 5%. We just want to show them it can work. And then the same thing with food grade applications like dairy and yogurt and all these different things. These are these are highly technical applications.

You don’t want the yogurt to break when it drops on the floor. So you got to add some impact modifier to make sure it’s got the right quality so that it won’t break. And all of these things are questions that our customers ask, and they want to know that it works. Okay, so first off, we want to show that technically we can do it. And I think that in so many different ways we are doing really well there.

Now when it comes to how much do you deliver to each segment, Look, I mean, I would tell you that I think that there is a high valued customer willing to pay high prices in every single segment. Now, depending on the segment, it may not be as deep as another. For sure consumer facing FDA grades it’s a deeper pool than in some of the other segments. But still there are deep segments. There are deep value customers in some of these segments that we can target.

So I think that we can really work to manage the overall margin across each segment. And then we will choose which segment to dive into to maximize the margin at volume. Okay. When it comes it comes to IRONTON I want to highlight a really important point that we’re that we’re basically announcing for the first time. And that is the in house compounding of material.

Look, when you recycle material, it’s a fundamentally different feedstock and it needs fundamental work to get it ready for the customer. Sometimes you need to add whitening. Sometimes you need to add impact so it doesn’t break. Sometimes you need to add tensile strength so the fiber doesn’t break. Sometimes you need to change the MFI.

Sometimes you need to add a different kind of virgin material. We have all of these flexibilities. What we’re learning from the customers is, dang, they like us. They like the brand. They like the circularity.

They like what we’re doing. And if we can make a product that really meets what they need and they can drop in, then we win. And with this compounding solution, look, this is not replacing the third party compounding that we’ve talked about in the past. This is just as an increment and to be able to do this at scale with rail, with big brands that have big demand, it’s awesome. And so I just think that we’re in a great place, Hassan.

We’ll figure out how to maximize margins so we can maximize value to the shareholder. And we’re doing that by creating an incredible slate of optionality through our funnel. And we’re going to get better and better quarter over quarter at defining the funnel, adding to the funnel, and then choosing which areas we focus on. Great question.

Hassan Ahmed, Analyst, Amblek Global: No, that’s phenomenal and unique situation to be in. And sort of question around where you just left off, I mean, the compounding opportunity seems very interesting as well. I mean, it’s almost like on the pricing side, you could get batch economics for a bulk chemical, right? So my question is, you’ve initiated that GBP 100,000,000 sort of project, as you called it, for compounding. Could you give us a sense of, A, how long this is going to take?

And B, the capital outlay? And part and parcel with that, C, I guess, would this be something that you’d consider at the other sort of growth projects that you are considering, be it out in Asia or Europe or the like? I mean, this going to be the model?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes. I mean, let’s answer the first questions first. We expect to have the compounding project done by the end of the year with startup in Q1. We do not expect it to impact our compounding operations with the third party. And if we did get pinched and we needed more compounding capacity, we have another alternative that we can turn on to pull in additional capacity.

It’ll come at a fee, but we have that as an option developed right now. So it should be on by the end of the year. When it comes to whether or not this will be part of the future discussions, look, I think so. We’ve got to evaluate this. We got to see how it plays into all the projects.

But the reality is that the moment that we started to turn on compounding about a year ago, we really started to find great traction. And we found great traction with our customers, and they started to see us with a different lens of reliability. Instead of them having to make adjustments to the recycled material coming in, We can make them on our site and make it easier for them. And think they love it. And look, when it comes to thin wall injection, look, the plastic industry has been thin walling plastic applications for decades, more and more and more every year in order to minimize the amount of plastic used and that requires higher performance polymers.

We’re going to be able to do that with our compounding operations because we have such a clean product coming out of purification. When it comes to thermoforming, it’s very difficult to get MFIs less than 10. We can do that. And then when it comes to film, you need less than 10 MFI and also highly pure product. Look, we’re in a position that’s just truly unique.

And we’re seeing successes. And I think you’re right that the successes that we’re seeing in these applications in Ironton are going to translate to potentially the same customers in different regions. I mean, look, we have a lot of customers that are saying we’re a global brand. We make the same thing around the world. We want it to look the same, smell the same, process the same.

We want it to be the same. And I just don’t think there are many recycle solutions that can say that they’re going to be able to provide a global solution that enables their customers to have a no compromise kind of lower anxiety changeover to recycle sustainability products. I think we’re truly unique there.

Hassan Ahmed, Analyst, Amblek Global: Perfect. Thank you so much, Justin.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Thanks, Sasan.

Carrie, Conference Operator: Your next question will come from Eric Stine with Craig Hallum.

Luke, Analyst Representative, Craig Hallum: Hey, this is Luke on for Eric. I appreciate you taking the questions. So first your capacity obviously seems to be in high demand at Ironton right now, which could give you the luxury of being selective. So how are you thinking about customer diversification playing out? Do you expect to be servicing maybe a select few customers at higher volumes at Ironton?

Or do you think realistic to plan on converting a greater portion of that trial pipeline into maybe lower volume commercial contracts?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes. So look, I think it’s a great question. I think to a certain extent, those customers that move fastest are going to have the first bite of the apple, that’s first. And so we’re starting to see a lot of capacity reservation cleanup in 2026. So I think there’s a bit of a rush to get a piece of the pie.

That’s good for us. I also think that there will be some segments that are naturally deeper with margin than others. I think FDA, I think FDA film, I think some of the other consumer facing brands will obviously be there, But don’t lose sight of some of the other big brands. I mean, automotive has a major regulation kind of waterfall coming their way in 2018 and ’30. And in order for them to be successful there, they have to start now.

And so I just think that in every single segment, there are going to be pieces of that segment that see enough value in the sustainability in order to pull and still create good margin across the board.

Luke, Analyst Representative, Craig Hallum: Right. That’s helpful. So I guess just for our second question here, switching gears a little bit to the Gen two facilities. Can you maybe talk about some of the challenges you anticipate of scaling to a 300,000,000 plus pound facility? Obviously, you’ve learned a lot from Ironton and aren’t starting from scratch, but what are some of the major areas to focus on just to ensure execution?

Thanks.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes. Well, look, I mean, it is a fundamentally different place where we are today than where we were when we started building and designing Ironton. Today we’ve seen a commercial scale run. We know how it works. We know its quirks.

We know what we can do to make even Ironton better on a day to day basis. And we’re going to implement that into the next two lines in Antwerp and Thailand. So out of the gate, the reliability of those other lines will be improved. When it comes to a fundamental understanding of our process, we are extremely deep. Okay.

We have learned a lot through the commercialization of Ironton, but also through the acceleration of learning and development, research and development out of Durham. I mean Durham is an incredibly valuable facility for us. Our R and D team has grown and gotten better and better year over year. And it’s because of the fundamental research. I mean, there’s qualitative research and then there’s fundamental research.

We have done fundamental research on our process to understand how the molecule behaves at different regimes. And that gives us the confidence to scale it up into much, much higher levels. And I will tell you that our team is extremely confident in our ability to scale different pieces of the unit operation to get to a much larger scale. And quite frankly, that’s why we haven’t decided how big of a plant we want to make. It’s still open as to what that number will be and that will ultimately come down to a cost optimization decision for us in the next say six to twelve months.

Luke, Analyst Representative, Craig Hallum: Got it. Color is very helpful. Thank you. I’ll turn it over.

Carrie, Conference Operator: Your next question will come from Jim Shun with TD Cowen.

Jim Shun, Analyst, TD Cowen: Hey, guys. Thanks for taking my questions. Can you just update us on what the 2H ramp actually looks like now? Does Q3 look like Q2 and then Q4 is significantly better? Then is the I think in the past, think you talked about EBITDA breakeven for Ironton in the third quarter.

And then at the corporate level being EBITDA breakeven, I believe late Q4, early Q1, is that target still on track?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes, that’s a good clarification question, Jim. I appreciate that. When we talked in the last quarter, I think that we disclosed twelve weeks ago or so that we expected Q1 and Q2 to be consistent and largely they are. I mean, Q2 is a small increase over Q1, but effectively the same level. We anticipated that and expected it.

And then when it comes to Q3 and Q4, we see ramp in both quarters. Okay, we’re already seeing higher revenue numbers in Q3 than what we did in as far as run rate than what we did in Q2. We expect that to continue. With respect to the exiting Q3, what we said is that we believe that we could exit Q3 at the $4,000,000 per month revenue level. I think that that still makes sense.

We’ve done a lot of work to continue to minimize costs. I mentioned that in terms of the inline compounding, that’s going to help us quite a bit to get to breakeven. And we’ve seen good progress with our trials. Ultimately, of the timing for that depends on when the customers turn on and how quickly. I think that we’ve got good line of sight being one month into the quarter that we’re going to see pretty good run rates at the September.

Whether we get the $4,000,000 in September or at the October, Like, I don’t know, but I know that we’re on the right trajectory. And then with respect to Q4 and Q1, what I disclosed last time was that we think that we can get to corporate breakeven in the Q4 to Q1 timeline. I think that’s still very much in play. I mean, look, we have these we set lots of internal goals for ourselves. And look, everything is a goal that we aim for.

We push for $4,000,000 per month was the first goal because that gets us pretty close to breakeven for Irton and then 8,000,000 per month is the goal for breakeven at the corporate level. And I think that we still feel pretty good about that over the coming quarters.

Jim Shun, Analyst, TD Cowen: Okay, great. Thanks for that. And then can you just talk about what your goals for orders would be in the third quarter? And then what’s the pushback you’re getting from customers? Is it price?

Is it, you know, like melt flow? Is it, you know, consistency? What are you getting? What is the pushback from customers?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yeah, that’s a good question. I mean, we obviously have lots of discussions trying to understand what their incumbent resin looks like. How does it perform and how can we emulate that through our compounding operation? And so there’s always a lot of back and forth and sometimes that can take longer than expected. Mean, look, I mean, sometimes we get the compounding recipe perfect out of the gate.

And it’s like drop in day one, awesome go. And other times it takes a couple of different trials to get there. We certainly experienced that with fiber. With respect to pushback like, I mean, there’s a lot of discussions. And I think that I would boil down most of it to bureaucracy.

Okay. Each bureaucracy and comfort level. Each company and each brand especially well established global brands have been around forever. I mean, they’re calling hard for success is doing it consistently and reliably. And so they’ve just got a whole host of requirements to move into that you have to move through before you get get the sales point.

So that’s part of it. And the bureaucracy there is very real. I mean, we’re clicking through a lot of these, the green circle is very important. The FDA is very important. The compounding recipe is very important.

The consistency is very important. Like even things like getting the compounding on-site is important because when they think about sending the material to a third party and handling it multiple times, they’re concerned about that because it may not be as reliable from a quality perspective as it would be for handled all in house without as many turnovers. So all of that has been part of the discussion. And then at the end of the day, the brand has to make a decision. Do I want this product to meet my sustainability goals?

Will it help me in terms of reduced scrap, better messaging, better connection with customer? And then can I trust them to deliver it month over month reliably? And that’s what I call comfort level. And I think that that comfort level comes with time and conversation and discussions over and over and over. And then also making improvements on our side to be better in the back office, be better with invoicing, better with inventory management.

And we’re making progress on all of those fronts. So I wouldn’t look at it like major pushback anywhere. I would look at it like a funnel that is filling up really fast. There’s a lot of ways behind us in terms of new volume and new opportunities and new applications. And then the customers that are coming through the end of the funnel, they’re getting much more comfortable with our products and excited about what this can mean for their operation.

Jim Shun, Analyst, TD Cowen: Okay, that’s great. And then any like any goals or targets for orders in Q3 or the back half or anything like that?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: So look, I mean, I think that goes back to your first question on kind of what is our revenue expectation and orders from finished products should be consistent with what we’re looking at from a revenue ramp perspective.

Jim Shun, Analyst, TD Cowen: Okay, great. Thank you very much.

Carrie, Conference Operator: Your final question will come from Jeffrey Campbell with Seaport Research Partners.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Thanks for taking my call and really exciting progress. First, the circular supply that you noted with Emerald is certainly meaningful. Separately, looking at recent feedstock data, we’ve seen evidence in mechanical recyclers have been increasing uptake of PPE feedstock which we assume is largely downcycled. Is this a competitive concern for PCT or can you obviate this as you move to the increased volumes that you’ve been talking about?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: So let’s start with Emerald. Emerald is great. I mean, one, it’s a new customer with real demand with a unique value proposition to their market and an opportunity to create true circularity. And circularity is the thing that everybody is looking for. And this is going to be, I think, a shining example of that.

And by the way, in the conference circuit, there’s already a little bit of a buzz generating about our ability to serve that market and create circularity across the board. So I’m incredibly optimistic about this and I think it’s going to grow over time. Also like just a shout out to the Emerald team. They’re good people who are innovative and excited about moving forward. And I see them being, let’s say, kindred spirits in this world of entrepreneurship and doing something new and exciting.

And I think that we’re going to work really well together. You bring up a great question with respect to feed and mechanical recycling and some of the uptake. I mean, first of all, would tell you that there’s a lot of mechanical recyclers if you look at it globally that are having trouble differentiating themselves in an increasingly competitive feedstock environment. And so you start to see some of the players fall away. With respect to the competition in The US, there’s obviously going to be movements in the feedstock market every day depending on what’s happening.

I think that at the end of the day Pure Cycle makes a highly differential product that can go into a number of markets that mechanical recyclers can’t touch. And I think that that will put us in a unique position where we ought to have a lot of feedstock power in order to, let’s say, pay for the feedstock and still make great margin on the final product. The other thing I’d like to remind you of is we really, especially for some of the longer term projects in Europe and in Thailand, I mean, and also in The US, we’re leaning into what we call the feedstock plus pricing model, which is effectively feedstock yield adjusted plus a marker. And so what that means is our customers recognize that feed is fundamentally different than oil and that they need to be sensitive to the feedstock changes in order to have reliable supply. What that does for us, especially for the higher brands, is it allows us to effectively pass along the feedstock swings to our customer, which I think additionally gives us a good pricing and margin protection capability and also puts us in a good competitive position

The only reason that our customers are willing to do this is because of our product quality. If we had a lower end down cycle product quality, I don’t think that they’d be willing to eat that feedstock cost. But because we can get into FDA, we can get into some of these higher consumer facing products, we can get into BOPP like nobody else can, I think it’s a differential conversation that’s going to be good for Pure Cycle?

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Yeah, I think that makes a lot of sense frankly. And just a follow-up on the circularity part, Is it reasonable to think that as circularity develops that this could actually be a less expensive feedstock to source because it would be presumably a much better qualified feedstock rather than digging through giant piles and trying to sort everything out?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yeah, look, that’s a great question. Mean, one of the things that this brings up is when you have a good partner, then you have the opportunity to partner with them in smart, innovative ways to help build the product so it’s more circular. And so there are things that we can do together with Emerald because we’re talking and we’re communicating and not only are we creating circular naturally, we’re also building a product that is more circular. That’s awesome. Okay, that’s awesome.

And with respect to a value of feedstock. Yeah, I think that’s an opportunity. I mean, I would tell you, like, don’t know. Don’t know the entire carpet space or specifically, I don’t know what Emerald is doing with all of their carpet right now necessarily. But a lot of other carpet manufacturers send this material to the landfill.

And so they pay to get rid of it. And so there’s certainly going to be at least I believe there will certainly be an opportunity to find an economic optimum that works for both. I mean, like cut their costs so it doesn’t go to the landfill and cut our costs because the feedstock is lower. That’s true partnership and that’s a good opportunity that you create when you go fully circular.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: And let me ask one final quick modeling question. Are you still thinking about a $1.36 a pound as sort of an average price? I’m asking that because of feedstock plus I’m wondering if that’s changing any of those dynamics. Thanks.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yeah, I think that we still feel comfortable with what we’ve said previously which is that $1.36 that we announced a couple years ago. Ultimately that $1.6 led to an EBITDA projection or an EBITDA expectation And we’re keenly aware of that and managing it. I would tell you that as the feedstock moves up and down, we see those numbers move a little bit, okay, on average. And quite frankly, it gets a little complicated when you start bringing compounding into the mix because the overall ASP might be a little bit low for the compound. But then when you calculate it up for the per pound of PCT, it can be a bit better.

But generally speaking, I mean, we’re still holding to the numbers that we’ve mentioned in the past. We still see great volume for the branded products that we end up making. And I think that all the things that we’re doing to cut costs out of business, create good feedstock flexibility and feedstock optionality, as well as final product optionality by getting it tested and qualified in lots of different segments is going to put us in a really nice position to preserve the margin over the long run. And honestly, that’s what we’re focused on. There’s a whole lot of short term focus that people are interested in.

So are we. We pay a lot of attention to what’s going to happen in this next quarter and the quarter after that and the quarter after that. But when you really pause for a moment, helicopter up and look at the long arc of pure cycle, I mean, we feel extremely good about our ability to serve the market and generate great value for the shareholders.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Great. I appreciate it.

Carrie, Conference Operator: Your next question will come from Gerry Sweeney with ROTH Capital.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Hey, Dustin. Thanks for sliding me in there at the end here.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: No problem, Jerry. How are doing?

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Doing great. I’m trying to do a little vacation, so multitasking. But I wanted to take a slightly different tact. And I understand all the trials, the pipeline and all that. And I think you kind of alluded to it earlier, but at some point, do you even narrow the aperture of some of the markets you’re going for and after you maybe delineate what’s the best options, best areas, the best returns?

Because a billion pounds is great in 02/1930. But at some point, do you actually start narrowing down where you want to sell some of this product into to get the best optionality? In other words, maybe a little bit less is more and can actually speed things up. Have you discussed that at all internally from a strategic perspective?

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yeah, look, I think it’s a good question. I think that we’re moving the funnel through very efficiently. I think the funnel is growing. I think it’s progressing step to step. So And I think we’re moving quite fast.

And ultimately, we are working through the things that we talked about before to ensure that we hold pace on that. Yeah, look, I definitely believe that we will find markets that we will focus into and that’ll ultimately be a long term evaluation of the margin and earnings capability for Pure Cycle as to who we choose to partner with. And for Ironton, I think that it’s a little bit more of a broad stroke because we’re not only finding the specific lane, but we’re also proving that we can walk in many different lanes. And look, I think that’s important for a couple of reasons. One, it gives us a great opportunity for price discovery across the different applications.

So we really get good insight into what that segment is willing to pay. But quite frankly, when you’re talking about building to a billion pounds, you’ve got to have a lot of lures in the water in order to build up that pipeline demand. And I think that the work that we’re doing right now at Ironton, it is awesome for what it means for the future of the company, because we’ll be so many steps ahead when it comes to commercializing Thyline, Antwerp and Gen 2s.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: Yep, that’s fair. I just had I was just curious. And the second thing, one thing that caught my ear, and I don’t know if it’s relevant or not, the Thailand facility, I think you said it gives exclusivity to Procter and Gamble in Southeast Asia. I don’t know what that meant, if it’s important, but just curious if you can elaborate on.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Look, we’ve disclosed this. No, no, you got it right. Yeah, we’ve disclosed this. Our relationship with Procter is very strong. We continue to work with them.

By the way, we continue to progress all these projects with Procter and we’re very excited about all of that. But one of the things in the license agreement, which I believe is public is that as you build capacity into specific regions, it clicks off exclusivity for the life of the patents in those regions. And so as we build in Europe and as we build in Asia and as we’ve already built in North America, it gives us further and further exclusivity in the region. So that’s another very important point for this expansion plan is it really prepares the path for the long term.

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: I got you. So what you’re saying is by building a plant in Thailand gives you exclusivity on the technology, the original sort of base technology that you licensed from Procter and Gamble. Is that the way to read it? Yes,

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: that’s right. I

Jamie Vasquez, Chief Financial Officer, Pure Cycle Technologies: was looking at something else, the opposite. They had some type of exclusivity on product or volumes, but understood. Okay, perfect. Thank you.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Yes. Thanks, Sherry.

Carrie, Conference Operator: And that concludes the Q and A portion of today’s conference. I will now turn the call back over to CEO, Dustin Wilson, for any closing remarks.

Dustin Olson, Chief Executive Officer, Pure Cycle Technologies: Look, thank you for bearing with me my voice and my summer cold for this call. It was just six weeks ago that we updated the market on the capital raise and gave updates on operations commercial projects. And even today, just six weeks later, we’ve seen real substantive progress. We’re proud of that. Pure Cycle is working.

Our tech is transformative, and we’re distancing ourselves from the competition. Our operations and commercial plans are becoming clear and are ramping. Our growth plan is established and wildly exciting and we are poised for a great decade. It’s now time for us, employees, investors and believers in Pure Cycle to change the world on a grand scale and make history. Thank you all for your attention today and look forward to talking to you again in a few weeks.

Carrie, Conference Operator: Thank you for your participation. This does conclude today’s conference call. You may now disconnect.

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