PyroGenesis reports strong Q3 results with increased revenue, record backlog, and cost savings

From GlobeNewswire: 2024-11-06 21:44:00

PyroGenesis Canada Inc. reports total quarterly revenue of $4 million, up 9% year-over-year with a record backlog of $54.9 million and a gross margin of 42%. Cost-cutting measures have resulted in over $3 million in recurring annual savings, leading to continued momentum in military, aerospace, and waste destruction businesses.

The company saw its revenue increase for the third consecutive quarter in 2024, reflecting a surge in confidence from recurring military and aerospace customers and interest in waste remediation. PyroGenesis has also changed its name to PyroGenesis Inc. and moved to a larger headquarters in downtown Montreal.

Post-quarter end, PyroGenesis announced a $27 million contract for the development of a 20MW plasma torch system from an existing U.S. client. The company has also provided an update on the Repriced Warrants, with 1,457,500 warrants exercised for total proceeds of $1,093,125.

Q3 2024 marked the 6th consecutive quarter of revenue growth for PyroGenesis, with a focus on three main business verticals: Energy Transition & Emission Reduction, Commodity Security & Optimization, and Waste Remediation. The company offers various solutions within each vertical to help heavy industries reduce emissions and increase efficiency. PyroGenesis received a $667,000 down payment from EarthGrid for multi-year multi-plasma torch purchases. A $27 million contract was also secured from a U.S. defense contractor for a 20MW plasma torch system, one of the most powerful commercially produced. HPQ Polvere signed a letter of intent with Evonik Corporation for a Fumed Silica Reactor project.

PyroGenesis signed a $1 million contract for a pilot-scale plasma reactor with a graphite producer, securing royalties on future commercial plants. The Company also signed a contract for a land-based plasma waste-to-energy system with a European consortium. Additionally, a $1,015,000 purchase order for after-sales components related to a US Navy aircraft carrier contract was received.

PyroGenesis realized over $3 million in savings YTD by monitoring expenses. Over 4 million existing common share purchase warrants were repriced, with the exercise price reduced to $0.75 per share. The Company also closed a $2.8 million non-brokered private placement and provided an update on the exercised Repriced Warrants.

The Company purchased 100% control of Drosrite International for $1.00. PyroGenesis entered an exclusive agreement with Drosrite International to distribute Drosrite™ systems in Saudi Arabia and the Middle East. The company also changed its name to PyroGenesis Inc. and moved to a new headquarters in Montreal. In Q3 2024, revenue was $4.0 million, with $11.4 million for the nine-month period ending in September. The revenue increase was mainly from DROSRITE™, torch-related products, and SPARC™ sales. In Q3, 2024, revenue will be recognized over approximately 3 years as the Company fulfills long-term contracts. Cost of sales and services decreased to $2.3 million, with a $1.7 million gross profit. In the nine months ending September 30, 2024, costs increased to $7.9 million, with a rise in direct materials and employee compensation.
Selling, General and Administrative expenses in Q3, 2024 totaled $5.0 million, a $2.6 million decrease from Q3, 2023. The nine-month period ending September 30, 2024 saw expenses of $9.7 million, an $11.8 million decrease from the prior year. Share-based compensation expenses decreased by $0.5 million and $1.4 million for the three and nine-month periods, respectively. Share-based payments expenses are impacted by the vesting structure of stock options. Depreciation on property and equipment decreased for the three and nine-month periods ended September 30, 2024, compared to the prior year. R&D costs decreased for internal projects in Q3, 2024. Finance expenses increased in Q3, 2024 due to interest accretion. Strategic investments resulted in gains in Q3, 2024, but losses in the nine-month period. Other income includes a gain on settlement of legal proceedings. Comprehensive loss for Q3, 2024 improved by $2.3 million due to various factors, including increased revenue and decreased expenses. In the first nine months of 2024, the Company reported a gross profit of $3.6 million, a decrease in SG&A expenses by $11.8 million, and a decrease in R&D expenses by $1.0 million. Net finance expenses increased due to a revaluation of balance due on business combination. Liquidity as of September 30, 2024, stood at $0.04 million, with a net working capital deficiency of $10.4 million.

The Company’s term loan balance decreased by $100,952 since December 31, 2023, due to the reimbursement of a loan. In 2023, the Company closed private placements for $3,030,000 and $1,250,000, with average interest expenses at 10%. The Company maintains a credit facility bearing interest at 8.45%, expecting no changes in structure within the next twelve months.

PyroGenesis’ strategy focuses on providing technology solutions to heavy industries to address carbon and waste reduction programs, supported by governments and industry commitments. Key markets include aluminum, steelmaking, defense, and aeronautics. As products reach commercialization, the Company aims to attract influential customers while controlling expenses for profitable growth.

Key performance indicators are used to monitor organizational performance. Industry depth, new industry engagement, customer depth, and new customer engagement are important metrics. PyroGenesis has penetrated industries like mining, aerospace, automotive, and chemicals, with a cautious approach to engaging new customers based on access to capital and operational history. PyroGenesis assesses new technology ideas and start-up customers based on commercialization potential, revenue sharing, and access to capital. Scientific studies like CFD are crucial for customer acquisition. Monthly recurring revenue is a key goal, with parts and components representing the largest source. Revenue mix diversification and growth from existing customers are priorities. Cost controls, enhanced sales and marketing efforts, and macroeconomic conditions impact the Company. Military conflicts in the Middle East and Eastern Europe create global economic uncertainty. The Company monitors these events and believes they increase interest in its solutions. In the near term, PyroGenesis is working on payments for outstanding major receivables and developing plasma torch solutions for metal manufacturing, including aluminum remelting furnaces. The company is also conducting live furnace tests with major aluminum companies and is in discussions for potential partnerships for tunnel boring and iron ore pelletization torch trials.

The aluminum industry is seeking decarbonization solutions, with PyroGenesis offering retro-fitting of plasma torches in existing furnaces and the sale of new plasma-based furnaces. Despite challenges such as flooding and power outages, trials for replacing fossil-fuel burners with plasma torches in iron ore pelletization furnaces are ongoing with Client B. Steel and iron ore industries are experiencing decreased demand and prices but are expected to rebound in 2025 with a shift towards low-carbon steel production. Client A has paused trials for the foreseeable future amid the unstable demand environment for ore. Client A resumes plasma investigation in pelletization furnaces pending ore price future, demand, and strategic priorities. Company presents new plasma ideas to Client A for additional applications. Client C, a global market leader, working with PyroGenesis on plasma decarbonization initiatives. Company awarded official supplier status to Client C for an impending initiative. With live furnace plasma trials and new interest, Company’s position in steelmaking and iron ore industries remains strong.

SPARC Refrigerant Waste Destruction System negotiations ongoing with Middle Eastern customer for hazardous refrigerant destruction. Plasma-Based Glass Valorization negotiations with Canadian entity for plasma furnace. Plasma Resource Recovery System discussions with European company for plastics pyrolysis. Mining Industry Parts Manufacturer decarbonization successful tests conducted, negotiations for plasma torch system sale underway.

“FSR” Project completed commissioning of pilot plant for fumed silica production. Drosrite Systems discussions ongoing with aluminum manufacturers for dross processing systems. Critical Mineral Production discussions with producer for plasma use in mineral production. Titanium Metal Powder discussions ongoing with companies in North America and Europe for potential sales.

SPARC Refrigerant Waste Destruction System negotiations with US-based distributor for hazardous refrigerant destruction. e-Waste Recycling negotiations for scalable system development for energy equipment recycling. Plasma-Based Glass Recycling advanced negotiations with global glass recycling leader. Furnace Electrification Co-Venture negotiations with global energy equipment manufacturer.

Plasma-Based Glass Recycling advanced negotiations with global glass recycling leader. Furnace Electrification Co-Venture negotiations with global energy equipment manufacturer. Silicon, Nano-Silicon, and Silica Production discussions ongoing with potential customers for advanced silicon production methods. Customers include global automaker, US battery manufacturer, and raw material supplier to construction materials industry. PyroGenesis has signed a 2-stage contract for a plasma waste-to-energy system with a European consortium, with design costs estimated at $2 million and construction costs ranging between $120-160 million. The system is based on the Plasma Resource Recovery System, which transforms waste into reusable products like syngas and methanol.

The Company is in talks with a European entity to supply plasma torches for a waste-to-energy initiative. The entity has partnered with a German technology company to establish 300 plants producing 1 million tons of hydrogen in the coming years. Projects not mentioned in the update are not considered at risk.

PyroGenesis is a high-tech company specializing in advanced plasma processes for reducing greenhouse gases. Their technologies are used in iron ore pelletization, aluminum, waste management, and additive manufacturing. With ISO certification and shares traded publicly, PyroGenesis remains a leader in sustainable solutions and technology development.

This press release contains forward-looking statements regarding PyroGenesis’ projects and partnerships. While management’s beliefs and expectations are reflected in these statements, uncertainties and risks may cause actual results to differ. Factors affecting results include regulatory factors and risk factors detailed in PyroGenesis’ filings. Investors should not rely solely on forward-looking statements for investment decisions.



Read more at GlobeNewswire:: PyroGenesis Announces 2024 Third Quarter Results