PureCycle Technologies (PCT) 2026年第三季度财报电话会：营收下滑之际品牌需求放量

受运营可靠性问题限制可销售产出，以及新泽西州推迟食品接触级再生材料含量合规截止日期的影响，PureCycle Technologies（NASDAQ: PCT）2026年第三季度营收出现环比下滑。管理层表示，工厂的两大问题目前均已解决，品牌订单与成本削减正为Ironton工厂下一阶段的产能爬坡提供支撑。

核心要点

• 2026年第三季度营收为230万美元，低于2026年第二季度的450万美元以及上年同期的240万美元。
• 提纯产量环比从450万磅增至520万磅。管理层表示，此前限制生产并影响产品质量的两大可靠性问题均已得到解决。
• 净利润为690万美元，其中包括权证公允价值变动带来的5860万美元非现金收益。营业亏损为3750万美元，调整后EBITDA为负2800万美元。
• 月均运营支出为780万美元，低于公司此前给出的800万至900万美元区间，且低于第二季度的840万美元。
• 处于商业谈判或最终认证阶段的项目在全面达产后潜在年化需求达4500万至5500万磅。管理层表示，这相当于Ironton工厂约40%至50%的产能利用率，并将使该工厂接近盈亏平衡点。
• 截至季度末，流动性总额为1.93亿美元。若计入未提取的2亿美元循环信贷额度，可用流动资金达3.93亿美元。

核心财务数据

业务与运营表现

Ironton工厂的两起可靠性问题限制了第三季度的产量，并降低了部分产出质量，导致无法向品牌客户出货。PureCycle表示，目前两个问题均已解决，工厂运转时间已达到预期目标，生产也与当前的商业需求保持一致。

季度末后，品牌商业化进程取得突破。热饮杯盖项目在10月份获得了首笔整车皮采购订单，管理层预计该项目全面达产后年需求量将达700万至800万磅。一节铁路货运车皮的运载量约为19万至20万磅。

欧莱雅已认证将PureFive用于100%再生材料含量的洗发水瓶盖，预计将于第四季度开始出货；第二项涉及可着色瓶盖的应用正在推进中。宝洁旗下部分当妮（Downy）和汰渍（Tide）洗衣液瓶盖已上架销售，Gain预计随后跟进，第二阶段应用也已展开。

PureCycle还公布了在止汗膏管和薄膜领域的进展。某大型个人护理公司已批准将该公司的白色级产品用于止汗膏管，目前尚待11月份进行最终的工业规模试验。某品牌零食包装膜试验已于11月初成功完成，同时该季度新增了12个薄膜项目。

通过认证的应用数量从6月底的10个翻倍至20个。截至10月底，自7月以来已有67个项目推进了至少一个阶段，并在亚太地区新增了19个项目。

该公司与WM签署了一项为期三年的原料供应协议，自11月起每年采购量最高达2500万磅。管理层表示，该合同锁定了Ironton工厂的部分原料供应，简化了运营流程，并提高了聚丙烯收率。

管理层指引

PureCycle不再预计能在2026年内达到8月份讨论的退出运行率，不过管理层仍预计随后能达到该水平。由于客户供应预测和项目爬坡计划仍在制定中，公司未提供季度营收指引。

管理层表示，第四季度品牌销售额正在增长。部分项目可能在第一季度实现全面达产，其他项目预计将在第一和第二季度继续爬坡。

第四季度项目支出预计约为400万美元（不含取决于泰国项目融资的支出）。2026年全年项目支出目前预计约为5100万美元，而此前指引区间为4500万至5000万美元。第四季度偿债支出预计约为940万美元。

该公司预计月度运营支出将进一步减少，但未提供具体目标。管理层同样拒绝就Ironton工厂扭亏或公司整体调整后EBITDA实现盈亏平衡给出明确时间表。

针对投资额达2.5亿美元的泰国项目，PureCycle表示已在设备和初步工程设计方面投入逾8500万美元。施工许可证已获签发，公司正根据一项具有约束力的条款清单落实最终融资条款。全面施工预计将在完成融资交割后启动，在融资敲定前，额外的可裁量支出将保持暂停。

风险与关注点

新泽西州将其食品接触级豁免期从2027年延长至2030年，导致约15个项目被推迟，这些项目在全面达产后的预期年需求量约为5000万磅。管理层表示，目前4500万至5500万磅的项目储备中，仍有约1000万磅与新泽西州的需求相关，另有500万至1000万磅可能计入2027年预测，约3000万磅目前仍处于暂停或推迟状态。

客户认证周期依然漫长。管理层表示，该流程通常需要一年以上，可能涉及客户内部的10至15个部门。因此，商业化落地时间取决于最终测试、品牌批准、合同签订及客户的产能爬坡计划。

生产一致性同样至关重要，因为大型品牌要求每一批次和每一节车皮都具备可靠的质量和稳定供应。尽管管理层表示第三季度的可靠性问题已基本解决，但Ironton工厂的执行力仍是将认证转化为经常性收入的核心关键。

泰国项目的建设取决于能否以可接受的条款完成项目融资。公司表示，在融资交割之前，项目支出将保持在受限水平。

分析师电话会问答要点

管理层将4500万至5500万磅的潜在年化需求描述为：约三分之一已签订合同、三分之一接近签约、三分之一已商定条款但尚未签字。具体而言，约1000万至1400万磅已处于合同期内，另有1000万磅接近签约，约2000万磅已就条款展开磋商。这批订单分散在约六至八家客户中。

管理层强调，这些合作旨在成为经常性的品牌项目，而非现货采购。关于定价和收入的讨论已基本完成，公司认为上述总需求量将使Ironton工厂接近盈亏平衡，但并未给出确切的时间承诺。

在成本方面，首席财务官唐纳德·卡彭特（Donald Carpenter）表示，成本节约主要来自削减承包商和临时工、将维护及其他服务转为内部处理、根据实际货量调整物流和仓储，以及在2027年实施现场制氮。此外，公司总部各职能部门也在整合职责并提升流程自动化水平。

谈及新泽西州法规，管理层将此次延期定性为需求推迟，而非永久性损失。部分品牌正基于其内部可持续发展承诺继续推进再生材料含量计划，而另一些品牌则放缓或推迟了执行步伐。

财报电话会完整实录

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完整财报电话会议逐字稿

管理层陈述

Operator

Good day, and thank you for standing by. Welcome to the PureCycle Technologies Third Quarter 2026 Corporate Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Eric DeNatale, Director, Investor Relations. Please go ahead.

Eric DeNatale

Thanks, Char. I am Eric DeNatale, Director of Investor Relations for PureCycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer; and Donald Carpenter, our Chief Financial Officer. This evening, we will be highlighting our corporate developments for the third quarter of 2026.

The presentation we'll be going through on this call can also be found on the Investor tab of our website at purecycle.com. Many of the statements made today will be forward-looking and are based on management's beliefs and assumptions and information currently available to management at this time. The statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those set forth in our safe harbor provisions and forward-looking statements that can be found at the end of our third quarter 2026 press release issued this evening as well as in other reports on file with the SEC that provide further detail about the risks related to our business.

Additionally, please note that the company's actual results may differ materially from those anticipated, and except as required by law, we undertake no obligation to update any forward-looking statements. Our remarks today may also include preliminary non-GAAP estimates and are subject to risks and uncertainties, including, among other things, changes in connection with quarter end and year-end adjustments. Any variation between PureCycle's actual results and the preliminary financial data set forth herein may be material. You're welcome to follow along with our slide deck or if joining us by phone, you can access it at any time at purecycle.com.

With that, I will now turn it over to Dustin Olson, PureCycle's Chief Executive Officer.

Dustin Olson

Thanks, Eric, and welcome, everyone, to our third quarter call. This is a quarter of real progress at PureCycle. We solved 2 reliability issues that held back production. branded railcar orders started in October, a large global cosmetics company has announced its work with us, and our costs came in below the range given to you priorly.

The quarter itself fell short, but the business is in a stronger position today than it was in August. Revenue came in below what planned. We still expect to reach the exit rate we talked about in August, but not in 2026.

Two things primarily hurt us in Q3. First, 2 reliability issues at Ironton limited production in the third quarter, and they also affected the quality of much of what we made, which meant we could not ship to branded customers for their ramps. That was disappointing, but the important thing is that we solved both of them, and those are 2 of the biggest wins of the quarter. Production is now in line with current commercial demand and the plant is running at our targeted onstream times.

Second, New Jersey extended its food contact deadline in early September. Much of our selling effort for the second half of the year was focused on closing the food contact programs and the extension moved about 15 of them. Roughly 50 million pounds of expected annual volume when at full ramp came out of this year.

Earlier in the year, a large share of what we sold was unbranded material. We have to run the plant ahead of branded demand, both to learn and also be ready when branded orders come. And the unbranded sales are how we clear the inventory rather than store it. Those sales carry very low margins, so whether we sell more or less in the quarter has very little effect on the results. What matters is branded sales, a product a brand has qualified with its name on it.

This is the volume that takes Ironton to breakeven and the volume we build on in 2027 and beyond. Despite New Jersey, that ramp has started in earnest. What has happened since is why I'm encouraged. Our selling effort is now focused on nonfood programs that are furthest along, and they are converting. Branded railcar purchase orders came in October from a very large customer. A large global cosmetics company has announced its work with us, and we expect shipments to begin in the fourth quarter.

Our monthly operations spending came in below the range we previously gave you, and our qualified applications have doubled since the end of June from 10 to 20. Our goals have not changed. Get Ironton through breakeven, prove the unit economics and grow from there.

And yesterday, Fernando Musa became our Executive Chairman. Fernando has been supporting PureCycle as a director for the last 5 years. We have a great working relationship. He has deep experience scaling new technologies and new products, and I can't wait to start digging in with him on a daily basis. I will say more about his role at the end of my remarks.

The plant turnaround in April addressed production rate and reliability across a number of projects and the rate test afterward confirmed the improvements held. As we ramped in the third quarter, we worked through 2 reliability issues. Both are solved and the plant has been running well.

The lower production in the quarter is why we did not have inventory to meet our internal revenue goals. From here, production follows customer orders. As programs convert and ramp, production increases with them. We know how to run our plant, and we know how to make products that our customers want. Our relationships with large brands depend on consistency. These companies are highly sensitive to supply disruption. Having earned their qualification, the job is now to supply each of them reliably through specification on time with every batch and every railcar.

That is one of the main reasons we brought compounding on site, an important investment that we made this year. It is available around the clock, we load directly into railcars, and we make exactly what the customer wants with more than 20 grades formulated in-house. A year ago, a customer's material went to an outside compounder with poor reliability and sample quality. Today, it goes straight to our compounding line on site. We adjust the formulation during the run and the next sample ships with the right documentation and certifications. The product shows it.

One of our senior quality leaders told me recently that Ironton is making the best product that we've ever made, and I agree. Color used to be one of our biggest challenges, and now it's a selling point. A brand does not want 15 different shades of blue at the top of a laundry bottle, and now we know the color they want lot after lot. That control is the biggest single reason qualifications move faster this year.

We continue to make incremental improvements at Ironton. For a long time, the priority was solving the problems of a first-of-its-kind plant and our spending reflected that. With the plant running more consistently, we have found real efficiency on how we spend, and it is beginning to show in the monthly operations spend.

We also signed a 3-year feedstock agreement with WM, the largest recycler in North America for up to 25 million pounds a year beginning this month. We have purchased #5 bales from WM for years, and we've run a few circularity programs with them at sporting events. Most polypropylene feedstock is still bought in the spot market, so a contract like this has been rare, and it secures a portion of supply for 3 years. It also simplifies our operations and improves the polypropylene yield. The relationship is broader than feedstock.

WM has deep relationships with the brands whose packaging ends up in bins, and we're working with WM on circularity programs with those brands. What WM collects, we purify and it goes back into the same product. We do not down cycle, we up cycle. And now we have contracted feedstock, commercial scale purification and on-site compounding in one company. And that combination is why brands can qualify us and we can supply them.

In early September, New Jersey extended the food contact exemption from 2027 to 2030. About 15 food contact programs moved into 2027 and beyond. Some of those brands are continuing on their own timetable and others have deferred. Two of those programs are quick service restaurant clear cold cups. They were fast tracked and qualified over the summer after New Jersey's conditional approval of PureFive in May and then moved out of the fourth quarter into 2027 after New Jersey's food exemption extension. The delay was disappointing, but we qualified. We are ready to ship and the customers continue to show interest in our volume. We expect both programs to begin in the first half of '27.

New Jersey did not change the mandate for nonfood rigid containers, which steps up to 20% recycled content in January 2027. That covers items such as storage totes and containers for detergents and household cleaning supplies. That is where we have redirected our selling effort with initial positive results in October.

In California, they're also adding incentives. Under its packaging law, SB 54, the latest plan submitted by Circular Action Alliance pays $500 a ton from 2027 for post-consumer recycled polypropylene certified by the Association of Plastic Recyclers. It also applies to film. Both states count purified resin because it comes from a physical plastic-to-plastic recycling process and a certified recycled content. Mass balance credits, which are based on bookkeeping rather than physical content, do not count and that works in our favor.

Recycling is not going away. Recycled content regulation has kept moving forward through changes in the administration. Even when ESG has been out of favor, the long-term direction has not changed. I have personally spent a lot of time this year with candidates for governor across several states and the support for domestic recycling, manufacturing jobs and keeping plastic out of landfills came through clearly in every one of those conversations.

Regulation creates urgency, but it's not the only thing driving demand. Two of our larger opportunities, hot lids and deodorant sticks are being driven by the brand's own commitments, not by a state mandate. And the 2 quick-service restaurant cup programs are still moving forward after New Jersey's extension because those brands want recycled content in their packaging regardless of deadline.

For the past year, we have reported on programs as they move through trials toward contract. And this first phase of commercialization taught us how long this cycle typically takes. It is well over a year from the first trial to the program.

A brand qualification runs through 10 to 15 groups inside the customer and every late or offset sample costs precious time. This quarter, the branded programs are converting, and they're converting into ongoing demand for Ironton, not spot purchases. The hot lids program is the best example. We've worked on this for over a year with a compounder that supplies multiple QSR chains. The customers change direction more than once. And when they came back to recycle content, we were the first in line with the color and processing work already done at the lab and industrial scale, a customer with a bag, then a box, then a truck and then a railcar.

A railcar holds about 190,000 to 200,000 pounds and a customer only buys at that level when it trusts every car will match what it tested. Trucks went into the third quarter, the first railcar purchase orders came in October, and the program is expected to reach 7 million to 8 million pounds a year once fully ramped.

A large global cosmetics company has qualified PureFive for shampoo closures, and we expect to begin shipping the resin this quarter. The closures will be made with 100% recycled content. This was a demanding specification, and it had to work on a living hinge cap to match and match the brand's clear and translucent colors. That qualification took well over a year, and it closed because it made the product because we could make a product that behaved exactly like the one it was replacing.

The second application with the same customer, colorable closures is underway, and it should move faster because the people, the questions and the trust are already in place. Procter & Gamble caps for select detergent bottles were on shelves across Downy and Tide brands. Gain is coming next. And it was another color match that we got right. Phase 2 of our work with Procter & Gamble is underway. It is another set of applications larger and equally recognizable. You would find these applications in your home, and we look forward to sharing more about them in the future.

What Procter taught us carries to every customer behind them. We have an inventory depth of certified warehouse, lot-to-lot consistency and the agreed test methods. So questions like a new customer ask are the ones that we've already answered.

A large global personal care company, one of the world's largest consumer product companies, has approved our white for deodorant sticks. The November trial is the last of many industrial scale processing runs. When it passes, the brand tells the converter to start, the converter tells us to ship and the converter then can offer that same grade to other customers inside of its own portfolio. This is how one approval can lead to several programs. This is a very large program, and I believe we are close.

The 2 quick-service restaurant cup programs are qualified with the converter. That means our material has run on their lines at industrial scale and passed their test. And the converter, which works with these restaurants every single day has done the review. What remains is the brand's own review and the supply agreement, which is under negotiation.

Film is the application insiders said could not be done, and now we're doing it. You cannot take a rigid plastic and mechanically recycle it into a film because it is -- because of what is in the feed will end up in the film and it doesn't work technically. We are different. We purify at the molecular level, so we can. We proved at the pilot scale last year with Bruckner and on the commercial line this year. Our snack film trial with the brand was completed successfully in early November and 12 new film programs have opened in the quarter. We already produced clear film grades and no one else can supply them at scale.

Film as a global market represents billions of pounds a year that no recycler has been able to touch, and we're on the cusp of fundamentally changing how people view the recyclability of film. The initial batch of branded programs represent about 12 million pounds of expected volume at full ramp. And the programs in commercial contract negotiation or final qualification add up to a total of 45 million to 55 million pounds a year at full ramp, which would approach about 40% to 50% utilization that we've described at Ironton.

This is a mix of both neat product as well as compounded product. And I believe this combination of programs that add up to the 45 million to 55 million pounds a year get us pretty close to Ironton breakeven. A large global cosmetics company has also announced its work with PureCycle in a LinkedIn post.

New Jersey's actions set our pipeline back in September and some metrics declined that month. By the end of October, 67 programs had advanced at stage since July. Qualified applications have doubled from 10 to 20 and 19 new programs had opened in Asia Pacific. The setback was real, but our team adjusted and the forward progress is also real.

We're working through the final terms and conditions of the Thailand project financing now, and we'll announce financial close at signing. We have already invested more than $85 million of the $250 million project in equipment and initial engineering. The construction permit was issued in September and groundbreaking and full construction will follow financial close.

In October, I spent 2 weeks with government representatives, the banks, our partners and going through the capital cost and schedule in detail and remain very confident in the $250 million estimate. The Rayong site sits inside of an operating complex, so the roads, utilities and site services already exist. This is why Line 1 will be cost effective. And the infrastructure built alongside that first line is why the second line there should cost materially less than the first.

Local and Southeast Asian demand is real as well. Converters in Thailand make packaging for brands in the United States, Europe and Japan that want recycled content, and they can't find it. They see our plant as a way for them to win the business. On the supply side, the collectors already sort polypropylene alongside PET and polyethylene, but they've got nowhere to go with it. When the plant was built, the stranded polypropylene stream will finally have a home and a circular life.

We have built the foundation to grow beyond Ironton with Thailand first, and then we are going to manage our growth spend prudently. Our other growth projects reached internal milestones in 2026 and discretionary spending on them is on hold until commercial progress at Ironton supports the further investment. With that, I'll turn the call over to Donald.

Donald Carpenter

Thank you, Dustin. Revenue for the third quarter was $2.3 million compared to $4.5 million in the second quarter and $2.4 million a year ago. The sequential decline reflects the operational issues in the quarter that limited the material we had to sell and the New Jersey delays that Dustin described.

Purified production was 5.2 million pounds, up from 4.5 million pounds in the second quarter. Production is now in line with current commercial demand. And as Dustin said, it will follow customer orders from here. Net income for the quarter was $6.9 million, which includes a $58.6 million noncash gain on the change in fair value of our warrants compared to a net loss of $28.4 million a year ago.

Operating loss was $37.5 million against $38.9 million in the third quarter of last year. Adjusted EBITDA was negative $28 million, an improvement of $0.6 million year-over-year. Monthly operations spending averaged $7.8 million in the quarter. That is below the $8 million to $9 million range we gave you and down from $8.4 million per month in the second quarter. As before, it covers cash spend on operations and corporate costs on a consistent basis for all periods. It excludes materials purchases meaning feedstock, virgin polypropylene and compounding additives, which were approximately $2.7 million per month, and it excludes severance and other implementation costs.

We ended the quarter with total liquidity of $193 million, made up of $109 million in cash and cash equivalents, $71.4 million in marketable securities and $12.6 million in restricted cash. That compares to $236.9 million at the end of the second quarter. Including the undrawn $200 million revolving credit facility, total available liquidity was $393 million.

Ongoing operations and corporate spend was $31.4 million, which reflects the $7.8 million per month of operation spending plus $2.7 million per month of materials. Project spend was $13 million with $5.7 million at Ironton, $2.6 million for Antwerp, $2 million for Thailand and $2.7 million elsewhere. Debt service was $3.3 million, including the $1 million fee to extend the revolver. Cash from customers was $4.2 million and working capital and other items were a use of $0.4 million.

Project spend through 9 months was $47.6 million. We expect fourth quarter project spend of approximately $4 million, and it excludes any spend that depends on the Thailand financing. That puts full year project spend at approximately $51 million compared with the $45 million to $50 million range we gave in August. We expect fourth quarter debt service of approximately $9.4 million, which consists mainly of the December revenue bond payment. The first coupon on the 4.75% notes is payable in January and equipment financing payments concluded in September.

The lower operational spending reflects the work of our teams. At Ironton, the team has come to understand the plant much better, and they are taking on more work than outside firms used to do. That means relying more on our own maintenance team and less on contractors and temporary labor, bringing outside services in-house, sizing logistics and storage to actual volumes and moving to on-site nitrogen supply in 2027.

In our corporate functions, people are absorbing more of the work as we consolidate certain roles and set outside services to a routine level. We are implementing cost efficiencies across the organization. Capital at Ironton is limited to committed work and to projects that lower our operating costs. The results should show in monthly operations spending each quarter.

We will give a 2027 project spend range with our fourth quarter results. It depends mainly on the timing of the Thailand financing and growth spending overall is directionally lower. Our capital structure is unchanged from the June refinancing. In August, we extended the maturity of the $200 million revolving credit facility to September 30, 2028, and it remains undrawn.

Beyond cash and the revolver, potential future sources are approximately $76 million of revenue bonds we hold and equipment financing on prep equipment with an original cost of $67.3 million. We do not assume either in our liquidity plan. The Thailand investment incentives are in place and the construction permit was issued in September. More than $85 million of the $250 million project is already invested in equipment and engineering and full construction starts once the financing closes. We are working through the final terms now, and we will announce financial close at signing.

Our other growth projects are ready for their next step. The work we did in 2026 took them to the point where the next step is a larger commitment, and that is the natural point to hold discretionary spending while Ironton ramps. This is a deliberate capital decision, not a change in our plan. It keeps our capital focused on Ironton today. And because the groundwork is done, we can move quickly into the next phase as commercial progress at Ironton supports it.

To close, spending is coming down. And while Ironton ramps, growth spending is limited to Thailand and the committed cost of our other projects. With that, back to you, Dustin.

Dustin Olson

Thanks, Donald. We have 4 priorities for the fourth quarter and into 2027. First, deliver on customer orders. The orders are in hand, shipments have begun and the work now is to ship them consistently. Second, convert the programs closest to contract. We're in final contracting in some large nonfood programs. Third, keep reducing costs. Monthly operations spend came in at $7.8 million in the third quarter, and we expect continued progress. Cost is largely in our control and the lower our cost, the less revenue we need to break even, the stronger the unit economics we prove and the less capital the business requires.

We also believe future plants, Thailand, in particular, will have lower cost than Ironton. So every improvement here carries forward. That is how we reduce the cash the business uses by growing branded sales on a lower cost structure, and that remains the goal. Finally, close the Thailand financing. The incentives and construction permit are in place, and we are working through the final terms now.

As I mentioned at the start, Fernando Musa, who has been on our Board since 2021, has stepped into the role of Executive Chairman. Fernando ran Braskem America, the leading polypropylene producer in the United States and then ran Braskem globally. He joined Braskem the year it launched its renewable polyethylene, and he helped take the product from first plant to the shelves on consumer brands. Scaling a business is what he does best.

I've said many times how proud I am of the strength of our Board. It's a differential asset. And we've done this before. When Ironton had operational problems to solve in 2022, the Board brought in Dan Coombs as Executive Chairman, and the plant came through the start-up with his help. Fernando steps into the same role for commercial ramp. I couldn't be more thankful for the support that Dan provided us to get us -- to get the plant up and running and to serve as Chairman or more excited to partner with Fernando. Having Fernando alongside our management team makes us a stronger company.

Our plan for this year counted on New Jersey food contact programs to reach breakeven. And the extension took about 50 million pounds a year of that demand off the table, but we didn't slow down. We moved quickly to the rest of the pipeline. And because it is broad, we were able to redirect the programs outside of New Jersey and outside food contact. Those customers were not waiting on us, so the shift takes time, but it is working. The programs we are shipping, contracting or qualifying would approach 40% to 50% of Ironton utilization at full ramp. At the same time, we're cutting costs, which lowers the volume we need. We are growing branded revenue and cutting costs, and I believe this will get us to Ironton breakeven. The pipeline is there and the customers are pulling.

Now at this time, I would like to hand it back over to Char so we can open the phone to questions.

Operator

[Operator Instructions]

Our first question comes from the line of Andres Sheppard of Cantor Fitzgerald.

分析师问答

Andres Sheppard-Slinger

Congrats on the quarter. Dustin, I wanted to start maybe with the L'Oreal post. Congratulations, very exciting to see a global brand putting its name next to yours publicly. I guess I'm wondering, can you talk a bit more about that relationship? How do the first applications come together? And more importantly, what comes next with them?

Dustin Olson

Yes. Thanks, Andres. L'Oreal is a really exciting project for us. If you recall, L'Oreal has been a strong supporter of PureCycle for a long time. I mean, probably approaching a decade. They took volume out of the FEU. They trialed early samples. They saw the promise of the technology early, and they leaned in and stayed with us.

L'Oreal is also one of those customers that's just -- it's got one of the most recognizable highest quality brands in the world. And it demands a high-quality product. And so similar to what happened with Procter & Gamble in terms of the length it takes to qualify, I mean, L'Oreal basically holds to the similar standards. And so it took a while to get qualified, but we went through all the processes. We spent the time required to get the analytical results, the processing results the brand approval results. And ultimately, we delivered a product that has great color, great opacity, great processability, and it's going to be used in some of the products.

I mean -- quite frankly, I'm thankful to L'Oreal for continuing to develop this relationship with PureCycle. And I'm just ecstatic to have our name next to theirs on the shelves. I can tell you from a personal perspective that my daughters buy a lot of their products. And so our household will be buying PureCycle product back via that channel as well.

Andres Sheppard-Slinger

Very helpful. And maybe just as a quick follow-up, Dustin, I do want to maybe touch on New Jersey. So New Jersey clearly had a real impact on the quarter. Similar question, can you give us a bit more color on maybe what happened there? And what does the path forward look like?

Dustin Olson

Yes. I mean New Jersey is disappointing, okay? We have built a pipeline around New Jersey. We had an extremely strong fourth quarter plan for PureCycle because of New Jersey. And when they made that decision in September, quite frankly, it shocked us. We were very surprised by that move, and we had to pivot, okay?

Now PureCycle's product is very diverse. It can be used in lots of different applications. It can be used virtually in any polypropylene application. And because of the work that we've done technically to prove that, like we've got a pipeline available to backfill for what we lost in New Jersey. I mean 50 million pounds on 107 million pound plant is a lot of volume, okay? But being able to replace that with contracts that add up to 45 million to 55 million pounds in a relatively short order is no small feat, and it's a real credit to the quality of our product and what our team can do.

With New Jersey, we're in steadfast alignment with New Jersey. We talk to them all the time. We've had numerous conversations with all levels of officials in the state all the way from the New Jersey DEP and up to the Governor, okay? We've had lots of conversations there. And early on, we got a lot of strong progress with them with getting our product counted as recyclable. But then this decision to delay the food quality mandate was challenging for us. I've been to several conferences since this broke, and I've talked to just a lot of people in the industry on how this impacted them. And I think this has had a pretty wide impact across the country.

The reality is a lot of converters, a lot of brands, a lot of suppliers have put a tremendous amount of time, capital, effort, blood, sweat and tears into getting ready for that regulation. And when it pulled, it pulled a lot of supply off the table, a lot of demand off the table, which led to a reduction in supply, not just at PureCycle, but at a lot of companies across the spectrum.

I think there's going to be a lot of movement with New Jersey. I think that a lot of independent industry associations, whether it be truck drivers or it's plastic recycling associations or brand associations, I think there's a lot of lobbying happening in New Jersey right now. Quite frankly, there's some pretty simple things that we can do to get the ball rolling rather than wait for 3 years, but we have to wait and see.

At the end of the day, it is disappointing for Q3, and it will be disappointing for Q4 as well. But it's not really an indication of what's to come. Recycling is not going away. You see regulations dropping all over the world, okay? We obviously see California. We've seen Colorado, Washington, Oregon, who knows what happens in the future political climate. You even see things happening in Europe and in Asia. In Asia, it's almost unheard of to see this sort of thing happened. We see a lot of interest with companies in Canada because they have regulations there. And quite frankly, Mexico is also leaning towards some regulations as well.

So this is a delay and not a devastation. And so we're well prepared for it. I think we pivoted really nicely in Q3, and I think that you'll be pleased with the results irrespective of what happened in New Jersey.

Operator

Our next question comes from the line of Hassan Ahmed of Alembic Global Advisors.

Hassan Ahmed

Before I get into my question, I just wanted to congratulate Fernando on his appointment as Executive Chairman. I've known him for years, have a lot of respect for him, going all the way back to the Braskem days. And congratulations to you guys for him to be involved at PCT.

So my first question, Dustin, just around this 45 million to 55 million pounds of annualized demand that you guys highlighted, just want to understand how much of that is already under firm purchase orders or binding contracts versus still, call it, in qualification or under negotiation?

Dustin Olson

Yes. So I had a little cheat sheet here, so I'm going to do some math on the run. We've got about 10 million to 14 million pounds that are under good contracts, okay? We've got another 10 million pounds that's very close to being contracted. And the final 20 million contract terms have been discussed, but it's not signed yet, okay? So I would probably characterize that as 1/3, 1/3, 1/3, okay, nearly. But all 3 of the 1/3 are having contract negotiations for contracted demand.

So this is not spot. This is not like a railcar here and a railcar there. This is steady demand that's been approved by the brand that will deliver month over month over month. And like I said, when you look at -- because we've done all the -- we've done most of the commercial negotiations in terms of pricing and revenue generation out of this. I mean when you add up those 45 million to 55 million pounds, you get really close to an Ironton breakeven number. And that's exciting for us because that's what we've been driving for, and we're starting to see contractual clarity to get us to that point.

And again, Hassan, remember, the 50 million pounds of New Jersey demand that came off the table in Q4 was another batch of programs that would have added to this, okay? So we talked quite a bit in the last quarter about our exit ramp in Q4, and we feel very comfortable and confident in that until the September surprise with New Jersey.

Hassan Ahmed

Understood. Very helpful. And as a follow-up, maybe a quick one for Donald. Donald, you've been obviously on the CFO seat now for a couple of quarters. Just want to get a better sense, as you've sort of worked in that role with the team over there, can you talk a bit about some of the work that you've done on cost structure improvement, where you've sort of spotted some savings and how we should think about, call it, the business' cash needs coming down from here?

Donald Carpenter

Yes. Thanks for the question. Look, we have an outstanding team in operations. They have met monumental challenges to get a first-of-its-kind plant going. We were in situations where we had to sometimes throw money at challenges to get through them. But now that they've learned the plant and understand the plant, they put that problem-solving skill set into cost optimization.

So we have gone through the budget line by line, and we have looked at, "Hey, where are we using outside services? Where are we using temporary labor? Where can we take work in-house? Can we do some of our maintenance projects with the internal team?" And the team has responded. They've made commitments to shed a lot of these third-party costs and pull that cost in-house. Additionally, we've looked at small projects where we can bring nitrogen supply in-house and things like that. We'll continue to look at these small optimizations that we can make that will help us manage our variable costs.

On the corporate side, I mentioned it in my remarks, we have people that are assuming additional responsibilities. We are looking at process automation. We are doing things that oftentimes you see a mature company do in their transformation phase. And we have a very talented employee base that has leaned in really hard. Furthermore, when Dustin talks about Ironton breakeven and improving the economics, we can do that from the cost side as well. So Dustin, every improvement he makes on the pipeline, we can contribute to that breakeven calculation dollar for dollar on the cost side as well.

Operator

Our next question comes from the line of Jeffrey Campbell of Seaport Research Partners.

Jeffrey Campbell

My first one is, Dustin, it sounded like the 50 million in New Jersey demand is not a complete loss. Some of this is going to recover in 2027, if I understood your remarks correctly. So my question is, should some of these volumes come through, are they in addition to the 45 million and 55 million pounds of demand that you just articulated with Hassan.

Dustin Olson

Yes. So that's a great question, Jeff. About 10 million of the 45 million to 55 million is New Jersey demand, okay, that stayed with us and is still continuing to ramp. And that's a brand decision, okay? So part of it is still there. The other -- let's call it, the other 40 million of New Jersey that's been delayed or on hold. Yes, another probably 5 million to 10 million is in our 2027 forecast, okay? And the other 30 million is on, let's just say, pause or delay until the brands give us further instruction.

What I'd say is that as we got into this discussion with different brand owners, ask them why and when could it change? It took -- I mean, look, this change in New Jersey took everybody by surprise, including brands. And so it took everybody a bit of time to wrap around what their strategy was going to be. Many of these brands have made public-facing comments about what they intend to do on sustainability. And that was, in some cases, predicated on what was going to happen in New Jersey.

And so while some of them may delay until 2030, a lot of them upon reflection and looking at their personal commitments are like, "No, we're going to keep moving forward with this." And so there have even been a couple of customers that initially gave us some, I think we're going to delay type comments, that have come back to a sense and say, "No, we're going to move forward." The difference is the pace, okay?

When New Jersey gave us the recycled content, let's say, badge in April, May, I mean, the flood of calls that came to us was extreme. Everybody needed us to get in and qualify right now in order to be ready for the fourth quarter. So what changed is, in many cases, not necessarily the appetite to convert, but the speed with which they have to. So instead of rushing to get it done in Q4, they're going to do it in Q1 or Q2 or in some cases, they're going to wait until 2030, okay? But I see more and more brands looking at the overall cost of this program and the impact to their brand and still stepping up to say, no, we want to go forward. We want to do this. Good question, Jeffrey.

Jeffrey Campbell

And sort of related to that, and I think you may have alluded to it to some extent, the response to the New Jersey extension demonstrates that some customers are only recycling when regulators require them to, but others are continuing to prepare to recycle regardless. I'm just wondering, is PCT making any effort to prioritize relationships with the latter sort of customers versus the former?

Dustin Olson

No, for sure. Yes. I mean, first of all, the way you described it is 100% accurate. Some brands will move forward irrespective of regulation and some brands will not, okay? There are some brands in the market that will only move forward when they're forced to. And there are some brands that will move forward because they know it's the right thing to do, it's good for their brand, it's good for their marketing, it's good for their public image.

And so for us, I mean, there's a very natural tie for customers that are like-minded to stick together. And so brands that have a high sustainability framework within their culture are brands that we naturally attract to. And so we're a good supplier for them. We're good partners together. We think the same way, and we're definitely leaning into that.

I would tell you that L'Oreal and Procter are 2 great examples of that. I mean, L'Oreal is kind of famous for the statements that they've made publicly about their sustainability goals. And I can tell you, working with them, they are really committed to it. And the same goes for Procter & Gamble. And so you've got companies like that, that continue to move forward, and we're natural partners with, and we're going to lean in and support them because they're first in, and we're going to be partners for a long time because of that.

Jeffrey Campbell

If I could sneak one last one in. I just wondered, the third quarter '26 operational issues, did they expose any previously unknown problems? And if not, how is predictability of production being improved? Because as you suggested, it's hard to imagine major brands increasing their exposure to PureFive until they're confident that production is going to be reliable?

Dustin Olson

Yes, I think that we'll pass that. I think that the issues that we resolved in Q3 had been some nagging headaches that we've dealt with peripherally that hit us pretty hard in Q3. What's exciting to me about it is that we put together a couple of really strong tiger teams and they went after it, and they solved the problem in a very fundamental way. And our performance since that solution has been quite good.

I think also from an analytical perspective -- like brands, they demand consistency, they demand quality, they demand -- they just want to know that what they're getting on a day-to-day basis is going to be the same. And so one of the areas that we've added considerable progress is in our analytical capabilities through Durham and also in Ironton. I mean we track our pellet as well as anybody in the industry, okay? We have got loads of data that show our ability to deliver odor, color, haze, capacity, performance, processability. We've got lots of statistical charts that say that we can do this reliably.

And when you're talking to the big brands, that are very, very brand conscious, you've got to show that data. And I think that this has been a, let's say, an unheralded success because we're able to show that in a very big way. Thanks for the question.

Operator

Our next question comes from the line of Luke Persons of Craig-Hallum Capital Group.

Luke Persons

This is Luke, on for Eric. So first, you talked about a 40% to 50% utilization range for your latest stage programs once fully ramped. How concentrated is that? And how do you plan to balance customer diversification at Ironton with prioritizing some of your top volume opportunities?

Dustin Olson

Yes. Yes. So I mean the -- we have a very -- I'm trying to frame your question. So your question is how concentrated are the customers that we're delivering on the 40 million to 50 million? And how will we manage that at the Ironton operation?

Luke Persons

Yes. Just basically, what sort of the customer concentration look like for that utilization rate you kind of talked about?

Dustin Olson

Yes. So the customer concentration -- okay, I see, how many customers do we have? The 40 million to 50 million effectively adds up from 6 to 8 customers. So it's on the order of, let's say, less than 10 million per customer, okay? And some of them are a little smaller, some of them are a little bigger, but that's the way to think about that.

Luke Persons

Okay. That's helpful. And I guess just for like a second one here. Do you expect to invest any more than the $85 million spent so far for Thailand besides the project financing that you expect to close? And if so, when should we expect that to be incurred?

Donald Carpenter

Yes. I'll take this one, Dustin. As I mentioned in my remarks, I think we have gotten the projects to internal milestones where we will pause spending and await financing. So for Thailand, we're going to look to -- once we have the line of sight on financial close, that will be the milestone in which we decide to spend additional capital there. The remaining capital to be spent is just committed expenses on the existing projects, a bit of project team and some remaining engineering work to take us through the end of this quarter.

Operator

Our next question comes from the line of James Schumm of TD Cowen.

James Schumm

So Dustin, a lot of moving parts here. Can you just offer some help on how you see revenue progressing maybe in the fourth quarter and the first quarter?

Dustin Olson

Yes. Look, I mean, we're still in the process of really nailing down the month-by-month projections of revenue, okay? What I can say is that the branded sales are ramping in the fourth quarter. Some of them will be at full ramp in the first quarter, but others will be ramping from first quarter, second quarter, okay?

So we're not going to give revenue guidance right now in terms of month-by-month projections, quite frankly, because we don't have them yet. We're still working with the customer to nail down the supply forecast and when these things will ramp up. But what we're confident in is that the 45 million to 55 million pounds is qualified good product that's in contract negotiation right now or is actively shipping.

James Schumm

Okay. And then like -- I know maybe it's tough and the visibility isn't great. But like when would you -- what is your best guess on when Ironton would break even? And then if you had a guess on when the company EBITDA breakeven could happen, when would that be?

Dustin Olson

Yes. I mean it's just really hard, Jim. I would tell you that we are still kind of working through the New Jersey challenges and building the pipeline so we can get to first Ironton breakeven with the 45 to 55 and then get to the corporate breakeven beyond that. It's very difficult for us to say when that will happen, okay? So I just don't think that we're going to be able to give a firm comment on that question.

James Schumm

Okay. Understood. Is there -- just lastly, what happens if you can't get local Thai financing? What would be the next steps there?

Dustin Olson

Well, look, I mean, we've got a very well-developed project in Thailand. And Thailand is in a position where they benefit strategically on numerous levels by having a project like this. It's oil independence. It's removing waste from their landscape, which is a highly tourist-driven type operation that builds infrastructure for different plastic handling on the front-end side, like -- Thailand is very, very ready for a project like this, and they're leaning into it.

And if you go and you look at many of the bank's public declarations for where they intend to put capital in the future in Thailand, I think you'll find sustainability near the top of the list because it's such an existential threat for the country. I mean with respect to the relationship that we have, with the term sheet that we have, we have a binding term sheet. We're working through the details with a bank. And because of that, we feel confident in our ability to close that deal. We wouldn't have gotten to this place if there wasn't interest on both sides. And so we believe this is moving like we expect it to move, and we're going to continue to take it to close.

Donald, do you have anything else to say on that?

Donald Carpenter

I think you covered most of it, Dustin. What I'd say -- what I'd reiterate based on what you said is we did get a binding term sheet, right? And those are not issued unless the project is viable. They dug into a tremendous amount of the due diligence. And so we're just in the process of working through those final terms and conditions. These things take time, and we're not going to rush through it until we get to terms that are acceptable for both parties.

Dustin Olson

Yes. And I guess the practical answer is that we're going to pause spending until we get the financing done. So you shouldn't expect to see a lot of spending on Thailand until the project financing closes.

Operator

I am showing no further questions at this time. I would now like to turn it back to Dustin Olson, CEO, for closing remarks.

Dustin Olson

Look, I know a lot has happened in this quarter and the company. Quite frankly, we responded. We fixed the problems. We redirected our selling effort. We won orders and we brought costs down. It's taken longer than any of us wanted, but look at where we are. We're commercializing phase with branded customers. Railcars are moving. Our product is on the shelves and some of the biggest brands in the world are putting their names next to ours. We're working towards the breakeven metrics that prove Ironton's economics from 2 directions, both the revenue side as well as the cost side.

Beyond the near term, this is a very large and growing polypropylene market with recycled content regulation taking effect over the next decade, and no one else can do what we do. We are a one-of-one solution. Thank you for your support.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.