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PyroGenesis reported a robust fourth quarter in 2024 with significant year-over-year revenue growth and improved profitability metrics. The stock currently trades at $30.25, with InvestingPro analysis indicating the company is undervalued based on its Fair Value model. With a market capitalization of $108.21 million, PyroGenesis operates with a WEAK overall Financial Health Score of 1.28, suggesting room for operational improvements.
Key Takeaways
- Revenue for Q4 2024 increased by 40% year-over-year.
- Gross margin improved significantly, reaching 41.3% for the quarter.
- Net income turned positive, showing a marked improvement from previous losses.
- Operational efficiencies led to reduced SG&A and R&D expenses.
- The stock price showed no movement post-earnings release.
Company Performance
PyroGenesis demonstrated a strong performance in Q4 2024, with revenue reaching $4.22 million, a 40% increase compared to the same quarter last year. The company’s trailing twelve-month revenue stands at $11.08 million, with a gross margin of 32.92%. The full-year revenue rose by 27%, indicating steady growth. The company has focused on product innovation and operational efficiency, contributing to improved financial outcomes. Get deeper insights into PyroGenesis’s financial health with InvestingPro, which offers exclusive ProTips and comprehensive analysis for informed investment decisions.
Financial Highlights
- Q4 2024 Revenue: $4.22 million (40% increase YoY)
- Full Year 2024 Revenue: $15.65 million (27% increase YoY)
- Q4 Gross Margin: 41.3% (18% increase YoY)
- Full Year Gross Margin: 34% (6-point improvement from 2023)
- Q4 Net Income: $145,000 (significant improvement from previous year’s loss)
- Modified EBITDA: Positive $1.8 million (improvement of $9.7 million from Q4 2023)
Outlook & Guidance
Looking ahead, PyroGenesis is focused on strategic initiatives aimed at enhancing profitability and cash flow. Analyst consensus shows mixed sentiment, with price targets ranging from $49.70 to $59.42. The company plans to expand its customer base across various industry segments and position itself as a key player in the industrial energy grid infrastructure. Future guidance shows a projected EPS loss for FY2025 and FY2026, indicating ongoing challenges. Access the full PyroGenesis Pro Research Report, part of InvestingPro’s coverage of 1,400+ US stocks, for comprehensive analysis and expert insights.
Executive Commentary
Steve McCormick, VP Corporate Affairs, emphasized the company’s strong backlog and customer interest, stating, "With a solid backlog in place and continued interest from existing and new customers, we believe we are well positioned for continued improvements in the upcoming fiscal quarters." He also highlighted the company’s ambition to be an essential part of the industrial energy grid infrastructure.
Risks and Challenges
- Continued EPS losses projected for FY2025 and FY2026 could impact investor confidence.
- Reduction in R&D spending might affect future innovation and competitiveness.
- Market conditions and economic uncertainties could pose risks to growth strategies.
Despite the positive financial results and strategic advancements, PyroGenesis’s stock price has not reacted, suggesting that investors may be taking a cautious approach in light of the company’s future projections and market conditions. Investors should note that the next earnings release is scheduled for May 16, 2025, which could provide further clarity on the company’s trajectory.
Full transcript - Navalo Financial Services Group Ltd (PYR) Q4 2024:
Conference Operator: Hello, and welcome to PyroGenesis Fourth Quarter and Fiscal Year twenty twenty four Financial Results and Business Update Conference Call. All participants are in a listen only mode. I would now like to turn the conference over to Rodana You may begin.
Rodana Kafal, Vice President of Investor Relations, PyroGenesis: Thank you, and good morning. I’m Rodana Kafal, vice president of of investor relations for Pyrogenesis. Thank you for joining Pyrogenesis twenty twenty four fourth quarter and year end financial results and business update conference call. On the call with us today are mister Andre Manela, the company’s chief financial officer and mister Steve McCormick, vice president of corporate affairs. The company issued a press release on Monday, 03/31/2025, containing the financial results and a business update for the fourth quarter and year end 12/31/2024, which can be viewed on the company’s website.
If you have any questions after the call or would like any additional information about the company, please contact the investor relations department, and we will try as best as possible to answer answer questions that are of public nature. The company’s management will shortly provide prepared remarks reviewing the operational and financial results for the fourth quarter and year end 12/31/2024. I would like to remind everyone that this discussion will include forward looking information that is based on certain assumptions and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or from results anticipated by the forward looking information. Forward looking information provided in this call speaks only as of the date of this call and is based on the plans, beliefs, estimates, projections, expectations, opinions, and assumptions of management as of today’s date. There can be no assurance that forward looking information will prove to be accurate, and you should not place undue reliance on forward looking information.
Pyrogenesis disclaims any obligation to update any forward looking information or to explain any material difference between subsequent actual events and such forward looking information, except as required by applicable law. In addition, during the course of this call, there may also be references to certain non IFRS financial measures, including references to EBITDA, modified EBITDA and backlog, which do not have any standardized meaning under IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more information about both forward looking information and non IFRS financial measures, including a reconciliation of EBITDA and modified EBITDA, please refer to the company’s management discussion and analysis, which along with the financial statements are available on the company’s website at Paragenesis.com and at CedarPlus.ca. Also, a reminder that Paragenesis follows Canadian generally accepted accounting principles or GAAP, where revenue is accrued not on sales, but on a model that reflects a percentage of the work completed for a given contract during the period, which can vary based on both the nature of the projects in house and on the client’s own scheduling and and logistical decisions, both of which can impact production milestone and the company’s ability to book revenue.
During this recent year, the supply chain, logistical, and inflationary uncertainties, those issues have been more frequent and exacerbating. And as stated in previous reports, the company’s revenue are likely to be irregular and unpredictable quarter to quarter as contract related revenue fluctuates based on various reasons, including those just explained. With that, I will now turn the call over to Steve McCormick, Vice President of Corporate Affairs. Please go ahead, Steve.
Steve McCormick, Vice President of Corporate Affairs, PyroGenesis: Good morning. Thanks very much, Rodania, thanks to everyone for joining us today. I’m going start off with a quick review of some of the company’s top line results, followed by a summary of key business activities that occurred during the quarter, before turning the call over to the company’s Chief Financial Officer, Andre Manila. For the fourth quarter of twenty twenty four, the company exited the quarter with revenues of 4,220,000.00 with a net income or profit of $145,000 As stated in yesterday’s news release, this is an increase of 40% year over year and this result represents four consecutive quarters of year over year growth with every quarter in 2024 surpassing its equivalent 2023 quarter. For gross margin, for the fourth quarter was 41.3%, an 18 increase from the 22% margin of the same period one year ago, or an improvement of 78%.
The Q4 margin of 41.3% almost mirrors the 42% margin seen in the third quarter, displaying a margin consistency that the company continues to aim for and supporting the production and cost controls that the company has been undertaking to regain margin momentum, address cash flow challenges and strive for profitability. In comparison to some of the industries we serve or support, the company’s margins were strong. As the aluminum industry is currently reporting 25 margin for the fourth quarter, metals mining is at 33%, Aerospace and Defense is at 14% margin, Iron and Steel is 17%, Renewable Energy Services and Equipment is at 22% margin, and Industrial Machinery and Components is at 39% margin. For the full year, revenue was $15,650,000 This represents a 27% increase in revenue year over year and margin for the full year was 34%, a six point improvement on twenty twenty three’s full year margin of 28%. Now on to backlog, which stands at a very robust 54,400,000.0.
For those that need clarity on backlog, backlog is signed or awarded contracts or what some companies refer to as order book containing future revenues for the company that will be added to the financial results over subsequent quarters. As projects are started or project milestones are reached on a percentage of work completed basis. For context as to why management feels this number is important, for many years PyroGenesis was a company with a backlog that hovered between $5 to 10,000,000. In management’s opinion, a backlog above $50,000,000 indicates improvement in sales efforts, the strength of existing customer relationships, the increasing size of individual contracts, and the wide variety of different types of contracts that companies can secure, which is what the company’s President Peter Pascally is often referred to as the company’s multi legged stool identity. And now on to some key production highlights for the quarter.
Please note that projects or potential projects previously announced that do not appear in this summary update or within the MD and A or outlook should not be considered at risk. Noteworthy developments can occur at any time based on project stages and the information presented is merely a reflection of information on hand of some but not all projects. And projects not mentioned may simply not have passed milestones worthy of discussion. Starting with a very brief reminder of the company’s business strategy, Pyrogenesis leverages an expertise in ultra high temperature processes to create a technology ecosystem for heavy industry, Spanning early stage pilot to full commercialization, the solution set is concentrated under three verticals that align with economic drivers that are key to heavy industry. First, for the energy transition and emission reduction vertical, which focuses on fuel switching for helping heavy industry change their energy mix to include more electrically powered process steps or add more renewable energy to their grid by utilizing the company’s electrically powered plasma torches and its biogas upgrading technology.
During the quarter in this vertical, PowerGenesis had a couple of very notable announcements. Obviously, one of the company’s biggest announcements in its history and the one that has helped drive the backlog up above the $50,000,000 plateau, on October 21 the company announced a contract valued at approximately $27,000,000 for the development of a plasma torch system powered at an incredible 20 megawatts. For an existing US client that regularly serves as a prime contractor for the US government and who provides technology and test services geared to solving critical defense, military, aeronautics and space exploration challenges. And this is the same client that had ordered a 4.5 megawatt plasma torch from PowerGenesis back in August of twenty twenty three, which at that time was the company’s highest powered plasma torch ordered. As the company has stated several times, a plasma torch at this 20 megawatt power level, based on the company’s own research, represents one of the most powerful, if not the most powerful, plasma torches ever to be produced commercially.
On November 19, the company announced a contract with one of the three largest steel manufacturers globally to assess the applicability of Pyrogenesis plasma torches for use in the customer’s electric arc furnace or EAF steel making and casting processes. The client’s goal is to determine how or where plasma can be used in the steps following the EAF process which turns scrap metal and direct reduced iron into molten steel. Of note, PowerGenesis has previously been awarded official supplier status to this client as part of the build up to this contract. In the waste remediation vertical, which provides technology for the safe destruction of hazardous materials and the recovery and dollarization of underlying substances such as chemicals and minerals that can be reused or resold. The company’s development in the fourth quarter included a $1,000,000 after sales component contract related to the company’s plasma based waste destruction systems that are installed or being installed on the US Navy’s fleet of Gerald R.
Ford class aircraft carriers. And in December, the company completed commissioning of the plasma torch system to destroy harmful perfluoroalkyl and polyfluoroalkyl substances, or PFAS for short, which are widely known as the forever chemicals due to a strong molecular bond that resists degradation and which have been connected to worldwide health issues. This particular plasma torts, which was part of a previously announced $2,250,000 contract, was operating at full capacity and had, to the date of the announcement, helped successfully destroy more than 300 tonnes of PFAS contaminated materials at the client’s facility. And finally, for commodity security and optimization. This is the vertical that provides technology to aid in the recovery of viable metals and in the optimization of production output, both of which are meant to improve the availability of critical minerals such as titanium, aluminum, silica and others that are essential for modern manufacturing.
While there are no announcements during the quarter, post quarter end the company announced it had produced the first material from its fumed silica reactor project, which was designed to produce commercial grade fumed silica from quartz in a single eco friendly step, while eliminating the use of harmful chemicals currently used in the conventional production method. And later, the company released performance data for 2024 for its next gen plasma atomized metal powder production system, which outlined improved results including increased yields of up to 33 to 50% for its key titanium metal powder used in the later laser power bed fusion printing process, what the company refers to as the laser cut powder, increased operational uptime of more than 25%, and a reduction of operational costs by approximately 20%. To read about these and other events and updates, as well as ongoing projects not discussed on this call, please refer to the corresponding section of the news release or the management discussion and analysis, in particular the outlook sections of those documents. I’ll be back at the end for some final thoughts, but at this point I’d like to turn the call over to the company’s Chief Financial Officer, Andre Manila, to discuss the financials in more detail.
Andre?
Andre Manela, Chief Financial Officer, PyroGenesis: Thank you, Steve, for the comprehensive operational overview. Now let’s turn our attention to PyroGenesis’ financial performance for Q4 twenty twenty four and the full year. And as highlighted in the operational updates, we continue to make strong progress across all verticals, translating into improved financial results. In this section, I’ll walk you through our revenue growth and cost management, providing insights into our performance for the quarter and the full year. For the full year 2024, we are pleased to report sustained revenue increases and operational improvements.
Our revenue saw another quarter of sequential growth, with Q4 increasing to $4,200,000 up from $3,000,000 of revenue in the same period last year. This momentum contributed to a total annual revenue of $15,700,000 which is a year over year increase of $3,300,000 or almost 27%. Key highlights for this Q4 compared to Q4 of twenty twenty three include Droshite sales increasing by $1,900,000 driven by significant progress with our Saudi customer, successful client site trials and higher spare parts and service orders. Biogas upgrading and pollution controls related sales increased by $600,000 due to the advancement of the company’s gas desulfurization project. Offsetting factors include a reduction in revenue from systems supplied to the U.
S. Navy, torches and refrigerant destruction due to either the current stage of the project or due to the project being completed and delivered. For the full year, we saw continued expansion across key business segments. Dross Wright related sales increased by $3,000,000 reflecting the successful execution of ongoing projects, completion of trials and incremental revenue from storage services and spare parts. Torch related products and services increased by $1,800,000 and saw strong growth benefiting from strategic projects and key milestones reached throughout the year, including the successful completion of the PFAS destruction project and advancement on the 4.5 megawatt Torch project.
However, we also saw year over year reductions in Pure VAP and U. S. Navy project totaling $1,700,000 which is a reflection of the current phase of the projects. As of 03/31/2025, the backlog stands at 54,400,000 and it’s important to note that a large part of it is in foreign currency. In fact, 87% of that amount is in US dollars.
A significant portion of the backlog relates to our energy transition through electrification initiatives as we collaborate with industry leaders. Now let’s discuss gross margin and expenses. For Q4, we are pleased to report a gross profit of $1,700,000 which represents 41% of revenue, an improvement compared to 23% gross margin reported in Q4 twenty twenty three. The improvement was driven by a reduction in direct material costs and a decrease in the amortization of intangible assets. From an annual view, the gross margin was 34% versus 28% in fiscal twenty twenty three and also due to the reduction of amortization of intangible assets in addition to the employee compensation used in the manufacturing process.
Our SG and A expenses for the quarter totaled $1,300,000 a sharp decline from $9,400,000 in Q4 twenty twenty three. This reduction was attributed to several factors. A substantial reduction in the expense for expected credit loss, which varied favorably by $3,800,000 following the receipt and settlement of previously provisioned receivables. Also, the absence of a $2,700,000 goodwill impairment charge that was recorded in Q4 twenty twenty three. In addition to the absence of a change in assumption of $500,000 to the royalty receivables also recorded in 2023, And in the current quarter, the company also recognized a foreign exchange gain of 500,000.0 due to the FX rate of the Canadian versus the US dollar.
The other expense category decreased because of the company’s insurance premiums. And finally, improved cost optimization across legal, consulting and professional expenses helped to reduce the SG and A expenses for the quarter. This commentary was the main reason for the year over year variation whereby SG and A decreased from 31,000,000 down to $11,000,000 The variation in the expected credit loss alone accounted for $12,000,000 of this change, in addition to the share based expense variation for an extra $1,000,000 benefit. Net R and D expenses were reduced to $72,000 compared to $500,000 for Q4 of twenty twenty three, as the company focused on prioritizing strategic initiatives. This decrease is explained by the reduction in employee compensation, materials, and equipment costs as the company continues to carefully evaluate opportunities while managing resource allocation.
This translates to an annual net R and D expense of $800,000 versus $2,200,000 spent in all of 2023. In terms of quarterly finance costs, it remained stable at $250,000 representing a slight decrease due to the interest accretion and reevaluation on the balance due on business combination. Interest on lease liabilities and the convertible loan decreased as the maturity dates approaches and the capital diminishes. The accretion on the convertible loan increased given that the loan was outstanding for all of Q4 twenty twenty four as opposed to a very short time in December 2023. This translated to an annual net finance expense of $1,100,000 The fair value adjustment of strategic investments resulted in a modest loss for Q4, but showed a $500,000 improvement compared to Q4 of twenty twenty three.
For the full year, the adjustment resulted in a $200,000 loss, improving by $80,000 from fiscal twenty twenty three, excuse me. The decrease is due to changes in the market value of our HPQ and BGF shares. Also note, in April, the company completed a block sale of nearly 3,800,000.0 shares of HPQ for proceeds of $660,000 Moving now to other income. During the year, the company settled a legal claim with a third party, which is also a customer of the company. As a result, PyroGenesis received $1,500,000 And of this amount, 1,200,000.0 was recognized as a gain and the remainder was to settle the accounts receivable balance.
Moving on to our comprehensive income for Q4, we reported an income of 100,000 a favorable improvement of $9,900,000 compared to the same quarter last year. This was driven by increased revenue, higher margins, significantly reduced SG and A expenses and finance costs, as described earlier. And finally, for Q4 twenty twenty four, we also saw notable improvements in modified EBITDA, which came in at a positive $1,800,000 an improvement of $9,700,000 from Q4 twenty twenty three. The full year modified EBITDA improved to a loss of $1,900,000 up from a loss of $24,400,000 in 2023, and that’s an improvement exceeding $22,000,000 The improvement in Q4 modified EBITDA, which was driven by the same factors contributing to the EBITDA, which is essentially the decrease in comprehensive loss and adding back similar amounts for depreciation and amortization. This quarter’s EBITDA adds back share based expense and changes in fair value of strategic investments for a non cash total of approximately $1,200,000 That wraps up the financial highlights for Q4 and fiscal twenty twenty four.
Thank you. And now, I’ll hand it back to Steve for any further remarks.
Steve McCormick, Vice President of Corporate Affairs, PyroGenesis: Thanks, Andre. I’m pleased to report on behalf of management that PyroGenesis fourth quarter and year end financials has kept the company well on track. And while there is much work still to do to ensure continued momentum in the type of long term success and profitability to which the company aspires, there are many positive data points coming out of 2024 supporting this optimism. The company reversed the revenue downtrend of 2023 with a 27% revenue improvement year over year. Revenue has grown for four successive quarters and for six quarters out of the last seven.
Margins continue in the targeted territory above 40%. Cost cutting, efficiency measures, receivable collection and project advancement continued to have a positive effect and combined to help produce a profit during the fourth quarter, a major improvement versus a loss of almost $10,000,000 in the same period a year ago, while also serving to help address the cash flow constraints that the company and many others have experienced in this current economic climate. And lastly, that the concurrent advancements in power levels and the gains in efficiency and performance revealed during the quarter have worked together to help the company attract both larger clients in more intensive heavy industries who have greater process demands and whose needs can now possibly be met by plasma while also attracting smaller clients with lower heat and lower power demands who could benefit from the performance improvements and the resulting cost and efficiency benefits to make their business cases for using plasma much more viable. The net result is the continuing expansion of the overall addressable market for plasma at both the higher and lower ends of the heavy industry client spectrum. As stated by the company’s president, Mr.
Peter Pascali, in yesterday’s news release, with a solid backlog in place and continued interest from existing and new customers, we believe we are well positioned for continued improvements in the upcoming fiscal quarters. We are committed to making PyroGenesis not just the go to supplier of ultra high temperature technology to the world’s leading companies, but also to be an essential part of the final mile of industrial energy grid infrastructure during the coming period of major grid expansion and widespread changes to the industrial energy mix. On behalf of the company and our Board of Directors, I’d like to affirm that the company remains committed to driving shareholder value and continues to focus on innovating, improving efficiency, growing a customer base, and engaging with existing and potential new customers around the world on a variety of new business opportunities. Thank you once again for joining today, and I’ll now pass it back to Radeana Capao. Radeana?
Rodana Kafal, Vice President of Investor Relations, PyroGenesis: Thank you, Steve, and that will mark the end of today’s call. We look forward to providing you with additional updates in the very near future. A reminder to submit to any questions you may have about the company and its projects to our Investor Relations department. Thank you again, and have a good day.
Conference Operator: Ladies and gentlemen, that concludes today’s conference call. Thank you for your participation. You may now disconnect.
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