PureCycle Technologies, Inc. ~ Neutral

Industrials • Pollution & Treatment Controls • USA • NASD

Business Summary

PureCycle Technologies, Inc. is commercializing a patented purification recycling technology (the Technology), originally developed by The Procter & Gamble Company, for restoring waste polypropylene into resin with near-virgin characteristics, called ultra-pure recycled (UPR) resin. Its process includes two steps: Feed Pre-Processing (Feed PreP) and the use of the Technology for purification. The Feed PreP step will collect, sort, and prepare polypropylene waste (feedstock) for purification. The purification step is a purification recycling process that uses a combination of solvent, temperature, and pressure to return the feedstock to near-virgin condition through a novel configuration of commercially available equipment and unit operations. The purification process puts the plastic through a physical extraction process using critical fluids that both extract and filter out contaminants and purify the color, opacity, and odor of the plastic without changing the bonds of the polymer. PCT 0.00%↑

Financial Summary

BRIEF: For the three months ended 31 March 2024, Purecycle Technologies Inc revenues was not reported. Net loss increased from $25.8M to $85.6M. Higher net loss reflects Change in fair value of warrants increase from $4.8M to $13.9M (expense), Depreciation increase from $1.3M to $8.3M (expense), Operating costs - Balancing value increase of 79% to $12.9M (expense). Basic Earnings per Share excluding Extraordinary Items decreased from -$0.16 to -$0.52.

Fundamentals ~ April 5, 2024

PureCycle Technologies reports losses per share of -0.62. Its return on invested capital is -8.65%. These values are calculated over a trailing 12-month period.

Valuation^{Q ~} March 21, 2025

PureCycle Technologies Inc Ordinary Shares earns a 3-star quantitative star rating, illustrating our stance that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a 41% premium over our quantitative fair value estimate of 5.48 USD per share; however, this estimate should be taken with a pinch of salt due to its very high uncertainty rating.

The company's balance sheet weakens our quantitative valuation. Excessive leverage heightens financial risk, potentially undermining a firm's value. For example, the firm's current ratio of 0.6 falls in the bottom 10% globally. This suggests the company may struggle to cope with economic distress and may need to reinvest in additional inventory. We believe this is a sign that shares could be expensive.

The company's valuation metrics are an additional cause for concern. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's price to cash ratio of 85.2, a core component of valuation, falls in the top 10% compared with peers globally. The company's available liquid assets are low relative to the stock's market value. Depending on the absolute cash balance, the company could also face a liquidity shortage if economic circumstances take a turn for the worse. This characteristic further promotes our unfavorable price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. This outperformance may signify a bull trap, in light of other detractors from our model.

Economic Moat^{Q ~} March 21, 2025

With its quantitative economic moat rating of none, this business is unlikely to consistently outearn its cost of capital without structural protection from competition. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.

Business Description

PureCycle Technologies Inc is a Florida-based corporation focused on commercializing a patented dissolution process to physically separate the polymer from other plastics, color, and contaminants (the Technology), originally developed by The Procter & Gamble Company (P&G), for restoring waste polypropylene into resin with near-virgin characteristics, called PureFive resin. PureFive resin represents the family of recycled resin products produced, including ultra-pure resin and other grades used for compounding to meet customer specifications, which has similar properties and applicability for reuse as virgin polypropylene. It has a single operating segment, which encompasses integrated business activities related to the recycling of polypropylene into resins.

PureCycle Technologies, Inc. Website