PureCycle Technologies, Inc. (NASDAQ:PCT) Q1 2024 Earnings Call Transcript

PureCycle Technologies, Inc. (NASDAQ:PCT) Q1 2024 Earnings Call Transcript May 7, 2024

PureCycle Technologies, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the Pure Cycle Conference Call. At this time, all participants are in a listen-only mode. [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, Christian Bruey.

Christian Bruey: Thank you, Jucenda. Welcome to Pure Cycle Technologies First Quarter 2024 Corporate Update Conference Call. I’m Christian Bruey, Director of Corporate Communications for PureCycle. And joining me on the call today are Dustin Olson, our Chief Executive Officer; and Jamie Vasquez, our Chief Financial Officer. This morning, we will be highlighting our corporate developments for the first quarter 2024. The presentation we’ll be going through on this call can also be found on the Investor tab on 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 or 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 first quarter 2024 corporate update press release filed this morning as well as in other reports on file with the SEC that provides 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 Pure Cycle’s actual results in the preliminary financial data set forth herein may be material. You’re welcome to follow along with our slide deck or joining us by phone, you can access it at any time at purecycle.com. We’re excited to share updates from the previous quarter with you, and I’ll now turn it over to Dustin Olson, Purecycle’s Chief Executive Officer.

Dustin Olson: Thank you, Christian. We wanted to start this call by thanking those who came to ironton to participate in the showcase and also thank those that attended virtually. We’re proud of our facility, our team and our progress. I hope you’re able to get a better understanding of our operations by seeing the steel in the ground with your own eyes. Leading into the outage, we were able to establish rates and feed longer periods of time and semi continuously pelletize at approximately 6,000 to 7,000 pounds per hour. We successfully removed co-product 1 and co-product 2 and were able to ramp up our sample deliveries to customers. We were building good momentum as we entered the outage. We are closer to making the promise of PureCycle a reality today than we’ve ever been before.

We’ve demonstrated our ability to run the plant, test different feeds and make good products. We know the technology works at a fundamental level, and our job now is to leverage the improved reliability, expand the capacity of CP2 and run the plant continuously so we can start pushing pellets out of the facility at scale. Our Q4 and Q1 progress was our Q4 to Q1 progress was substantial. We increased the overall production by 6x and continue to learn. We continue to improve the overall efficiency. And while this was a significant improvement quarter-over-quarter, as we move forward post outage, we should quickly see these levels as inconsequential. As we began to make higher levels of pellet production, we did stumble a bit when we first learned how to load railcars at scale.

We cross-contaminated some of the product between silos on the way to filling railcars. This is part of the learning process, and we’ve made improvements to prevent it from happening again. As discussed before, we continue to test the facility by running exclusively post-consumer curbside waste. This feedstock stream has both co-product One and co-product to present and allows us to test the boundaries of the facility. We learn something every time we run a new feedstock. We are getting better at product quality. This is the net result of a lot of activity and requires operational stability to get the best results. We have seen high qualities of product during times of our operation, but since our reliability has been up and down, we struggled some with consistency.

When we’ve got the entire machine running, we start to see quality improve. We expect to see improvements as we restart the plant following the outage. Our outage was very comprehensive. Every learning, every headache, every challenge and every reliability and blip that we’ve experienced over the past 5 months was formulated into a reliability improvement plan. During the outage, we executed over 100 projects, some big, but mostly medium and small jobs that require less than a day or 2. And each job, no matter how big or how small, was important to the facility’s continued improvement. It’s difficult to explain the team’s feeling when you’re almost there or you are there and then something minor creates an interference it slows you down. It’s deflating.

But with this outage, we found a lot of room for optimism because we believe we’ve taken a lot of those items off the table and have improved the reliability of our facility. We did extend the outage partly because we had more cleanup than expected, but mostly because we wanted to give ourselves the best possible chance to run more reliably post outage. We’re currently 2 days away from finishing the last project and restarting the plant, and we expect to start making product next week. On the commercial side, we’re making steady progress. We continue to advance trials across the board with the goal of final commercial product acceptance. If there is one theme that remains steady, the industry supply of recycled product is underserved and the demand for product remains very, very high.

We continue to seek new lanes as well. Given our ability to remove CP1 and CP2 from the feedstock, we have naturally better mechanical and technical properties. This gives us the differential opportunity to sell into both film and fiber. Fill and fiber represent a very challenging product application and have been traditionally underserved by the recycled supply. We’ve tested numerous applications, both internally and externally and found early success. The pictures on the right of this slide show the progress. At the showcase, we showed 2 schools of polypropylene twine and a blanket that was manufactured from our product. Today, we show a colored drug made from a third party and a school of film produced in our Durham lab. There is no better feeling than seeing your resin be transformed into products that people will use.

On the financing side, we’re doing what we said we would do. We are marketing these bonds as a cash instrument for our operations. We’ve reached an agreement on the sale of bonds that will bring forward $30 million of new cash to the operation as well as convert an outstanding loan. Both are positive for PureCycle, and I will let Jaime speak to the details, but this is again another indication of the confidence that our core shareholders have in our technology. The Q1 performance of Ironton can be categorized in 2 areas: first, site reliability and second, co-product 2 removal. We focus the outage to address both of these areas. I would like to note that every time we take an outage, we make substantial improvements. The first outage in June of ’23 mitigated the absorbent bed leaks, the second outage in July of ’23, mitigated the Seale on the shape call.

The third outage in November, installed a screen changer for the final product to Tutor. In each case, we ran into constraints, identified the root cause and then fix the problems. For example, the other — while other areas did impact overall reliability, we didn’t have a single Shibocolumn-related downtime event from July until March. We haven’t had any problems with our absorbent bed plugging on the final product extruder since the November outage. Once the problems are known, we implement solutions to prevent the reoccurrence. We believe this outage will be no different. We attacked the known reliability challenges and also implemented projects that should improve the overall co-product 2 performance. If you first focus on the table at the top right, you’ll find numerous reliability challenges that we faced since the November outage.

This shows the number of days that were lost to fixable reliability items. We use metrics like this to guide our activities and upgrade projects. We implemented a lot of improvements. These problems were known operational headaches. In the case of the final product transfer valve, that valve was first oversized in the original design and then damaged by absorbent bed contamination. As a result of those 2 items, we are forced to run that one valve in semicontinuous operations. We were batching these transfers to the final product at Shuter, which is operationally very challenging. This has now been upgraded. Another major improvement to our facility is the sever level indication repair. This was actually an outage discovery item and led to more work and a new project.

Our level indication was damaged in a way that provided an incorrect level indication to the plant. This negatively impacted numerous aspects of CP2 operations. It was a new item, we added to the scope list after the outage started, but it was important to get it fixed. We upgraded the level to prevent similar failures, and it’s now back in place and ready for service. I’m confident that it will provide much better reliability to the co-product 2 operation going forward. A final series of improvements were made to the seal systems. We continue to add incremental small improvements to these systems to bolster their reliability. This is a central focus area for our site management team and an operation that we watch closely every day. With respect to co-product 2, we made good progress.

We advanced the original planning for the Q2 improvements, but we also completed a separate project that we hope will provide immediate co-product 2 relief. It’s important to reset at first. As we moved into the outage, we were focused on 2 items: first, processing low co-product 2 fees in order to minimize how much we had to take out of the feed and maximizing the manual removal of CP2 from the vessel. We were in a good position with these activities entering the outage. As we started the outage, we thought we had the vessel fully empty. However, unexpectedly, we found material in the bottom of the vessel because of the broken level indicator. While this took time to clean and prepare for maintenance and ultimately, it did extend the outage, it also gave us a measurable insight into the overall system and required improvements.

We use this information to pivot and to initiate and finalize a separate project that we believe will increase our CP2 removal capacity. In addition to this one project, we also implemented several other minor reliability improvements that should improve the overall system reliability. At the end, today, we have options, and we have more options than we expected to have post outage. We can rely on our original solution, which provided approximately 3,000 to 5,000 pounds per day of removal capacity. But now we can add to that the new capacity which we estimate at 10,000 to 20,000 pounds per day. We believe these improvements, coupled with lower co-product 2 feedstocks give us the opportunity to eliminate the co-product 2 removal capacity as a plant limitation coming out of the outage.

This is earlier than we originally forecasted. We used commercial production from Q1 to initiate final qualifications with our growing customer base. We have many customer samples out for review and are working directly with them to gain final approval. We still show good improvement on our product quality, the fact that we can successfully remove both CPI and CP2 from the feedstock is the best indication of our product value over mechanical recycling alternatives. And while we have had some challenges with product quality during the quarter, most of this was due to learning the new operations of moving product through site supply chain and inconsistency due to reliability challenges. During the last few weeks of March, between the ironstone showcase and the outage, we were able to demonstrate much more consistent quality by managing the site up play chain more smoothly.

Our commercial team continues to hunt for new customer lanes and improved market destinations. And we know that our product has superior properties to mechanical recycled alternatives that are currently being sold between $0.80 and $1.20 per pound. Two areas of particular interest are film and fiber. Film and fiber are very challenging applications and traditionally underserved markets due to the high technical requirements. We continue to show good progress, both internally at our derm facility and externally developing these products. These products are important for the market and represent approximately 40% of the global supply. In other words, approximately 40% of the global market is currently without significant recycled supply due to existing technical limitations.

As discussed on prior calls, we continue to work within FDA requirements to define our process and work toward expanding the conditions of use and available feedstock to make FDA quality product, but we wanted to highlight the information that was shared during the Aronson Showcase. Our internal studies show that regardless of the feedstock is food grade or nonfood grade, we show substantial reductions of key substances of interest. The graph shows the effectiveness of our process. We have already received LNO for our process and are looking to expand with additional data reviews and submission to the FDA. As you can see from the 2023 data, the recycled supply is lagging the total production. Today, the industry averages less than 10% of recycled supply to the market.

The discussion is the same around the world. And while I’m proud of our industry’s efforts on PET and HDPE, there is still a lot of opportunity with polypropylene, and the regulations are coming. Several states have already adopted requirements for recycling, and we expect more will follow. All of this indicates that the marketing timing for PureCycle is good. The demand for our product is strong and we are well positioned to take advantage of it. At this point, I will transition the presentation to Jaime for the financial update.

Jaime Vasquez: Thank you, Dustin. On Slide 11, we show our liquidity position at the end of the third quarter compared to year-end 2023. At the end of the recent first quarter, we had approximately $25 million of unrestricted cash, excluding cash collateral. Our day-to-day cash outlays, shown in the second and third bullets on the side of the table totaled $27.6 million, which was in line with expectations in the fourth quarter of 2023. And lastly, on May 6, we reached an agreement with Pure Plastics LLC for the sale of $37.5 million notional value of bonds at a price of $800 for every $1,000 of notional value, which will provide additional liquidity of $30 million. The raise of additional liquidity includes an exchange of the pure plastics term loan, which has a maturity date of December 2025 into revenue bonds, and the pure plastics term loan has an outstanding balance of $45.5 million, which includes paid-in-kind interest.

The exchange also values the revenue bonds at $800 for every $1,000 of notional value. The early termination of the Cure Plastics term loan results in a prepayment penalty as required in the pure plastics loan agreement. Both parties agreed to warrant in lieu of cash for the prepayment penalty, which helps to preserve cash. Overall, we are pleased with the agreement as it helps to simplify the capital structure and importantly, provides additional liquidity as Iron ton comes out of the planned outage. And as Xyronton is able to demonstrate production of meaningful volumes, we believe that there will be more opportunity to sell additional revenue bonds. And now I’ll turn it back to Dustin for concluding remarks.

Dustin Olson: This is a very active quarter for PureCycle. We made considerable operational progress. We opened our doors and hosted a large group for our showcase, and we executed a significant outage to improve continuous operations. Our site is now ready to go. We are excited about the next steps, and we’ll now open the floor to questions.

Operator: [Operator Instructions]. Our first question comes from Hassan Ahmed, Alembic Global Advisors.

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Q&A Session

Hassan Ahmed: Dustin, obviously, super busy quarter for you guys, really appreciated the rent showcase. Obviously, rightly so, the focus right now is on improving operations, fixing all the stuff that you guys are fixing. But my question is more about, as you’re sort of coming up the learning curve, just the communication side with — the Street, what are you guys thinking in terms of more consistency with regards to how you communicate with — the Street? Meaning would it be sort of the right strategy to maybe give monthly sort of production updates Because, look, I mean, in the last update, we heard that in January and February, you guys produced around 1 million pounds, right? And then today, it’s roughly close to 1.3% in Q1. So March was around $300,000. So just broadly speaking, how are you thinking about consistency with regards to communications and what form will that take?

Dustin Olson: If you think about the time line of Q1 for us, it’s only been a few short weeks since we had the ironton showcase. And so we had 2, let’s say, big communications to the market during Q1, both with the first — the fourth quarter review and then shortly after that, the ironton Showcase. And then we rolled right into the outage. And so for us, we had expected to do some communication following the outage, but the timing between this review and the outage end was too short. So what you can expect going forward is that we will do more periodic updates to the market over the course of Q2.

Hassan Ahmed: Fair enough. Fair enough. And now a two part question. One on sort of you guys sort of flexing the system per se, meaning you guys talked about how the recent sort of improvements that you guys have carried out with regards to CP2 removal capacity. Your sort of operating rates will improve by, call it, 10,000 to 20,000 pounds per day. So obviously, your production will improve. My question is that are you sort of also considering flexing the feedstock side of things as well, we’re maybe procuring certain feedstocks, maybe potentially at a higher price, which may not have the same amount of CP2 in them. So that’s one part. And a little sort of divergence from that, as you’re going through all of these processes, how should we think about Augusta and lessons learned from ironton and how potentially quickly you may be sort of up and running in Augusta.

Dustin Olson: Yes. So let’s talk about fee rates and the impact of co-product too. You can imagine when we started the system when we were limited to the manual removal of CP2 to 3,000 to 5,000 pounds per day, if you end up with any co-product 2 in the fee, let’s say, 5% to 10% coproduct 2, your overall fee rate will be substantially limited. And that’s effectively what we saw when we started up out of the November outage as we saw considerable, let’s say, restrictions on co-product to removal, which throttle our feed. We’re really excited. I mean we’re really excited about the improvements we’ve made during the outage, not only have we, let’s say, incrementally improve the reliability of co-product 2 extrusion process throughout the quarter.

But during the outage, we implemented a lot of, let’s say, small improvements to improve the reliability. But more importantly, we modified the system based on what we learned so we can increase the amount of volume that we can take out. And that’s going to directly translate once we get it up and running successfully, that will directly translate to improved feed rates to the plant. Okay? So we’re very excited like that. On the feedstock side, we continue to see lots of opportunities here, okay? The market has been — there’s ample supply of feedstock in the market. It gives us the flexibility to choose to what we want to run. And so we will be looking at different feedstocks to bring in the plant and minimize the CP2 limit. Having said that, with respect to price, it is true that some of the feeds come at an increased price, okay?

And we may choose to purchase some of those depending on our situation of the plan. But it should also be noted that there are more affordable solutions that we can deploy at the plant and off-site through tolling partners to reduce the amount of CP2 and low-priced feed. So I mean if you look at the #5 bale price right now, it’s on the order of $0.04 to $0.06 per pound — and we have the flexibility then to either toll that to remove CP2 or potentially process it on site to remove CP2 at very affordable prices, okay? And so that still allows us to purchase the low-priced feed remove quite a lot of the co-product to out of that stream and also have the same impact on rates to the plant, okay? So we’re chasing all of those avenues. And I think that we’re going to find a nice balance.

There might be a little bit of feedstock purchasing at the beginning, but then quite a lot of focus on tolling to remove CP2 as we move forward. With respect to Augusta, really, when you — when an outsider would come in and look at our plant today, they would say, well, it looks the same to me. But the reality is that when you look inside the pipe, if you look inside the equipment, you really get into the details of the operation. We’ve made a lot of really small changes that will improve operability. These are things, Hassan, that help the operator to be more successful, help the operator to have higher reliability, so they don’t have to focus on this one valve. That product transfer valve is a great example of this is something that will cost no more money for Augusta.

It will cost no more money for our site, but it will relieve significant pressure on operations to operate that valve. And so all of these small projects that we’re doing across the plant are advising the final design for Augusta. And while we’re not in a position today to talk about the impact on price, the impact on CapEx per pound or any of that, we believe that we’re seeing substantial — we’re learning a lot about what our plant can do, which will advise us to be smarter about the future designs that will help us improve the overall project standing. So what we’re doing currently with Augusta is we continue to work closely with KBR. KBR has turned out to be a very good partner for us to find good, novel, effective and efficient solutions to not only integrate the learnings from Ironton into Augusta, but to even improve a comment.

Operator: Our next question comes from Gerry Sweeney at Roth.

Gerry Sweeney: Sticking with the CP2 question. Looking at Slide #6. The way I understand your commentary and looking at the slide, you made some improvements for the removal of CP2 to amount of 10,000 to 20,000 pounds a day, right? That is enough that you can run the system, you may have to include low CP2 feedstock material to optimize it. But it also appears that later this summer or Q2, you can make additional improvements to remove a higher amount of CPI, which I would assume reduces the need, maybe not eliminate, but reduces that need for lower CP2 feedstock as well. Am I looking at that correctly?

Jaime Vasquez: Yes. Gerry, I think it’s a good line of questions. And let’s do some math on CP2 just to get the basic volumes and potential here. So if we purchase a feedstock that has 10% CP2, and we’re able to remove 5,000 pounds per day. That means you can see 50,000 pounds per day of feed. And that’s about, I don’t know, 20% capacity, 15% to 20% capacity. If you’re able to remove 20,000 pounds per day of feed, then that would — and it’s a 10% co-product 2 stream, then you would be able to see effectively 200,000 pounds per day of feed, okay? Now look, we’re not giving guidance on where we will be exactly on the feeds because the feed concentration for CP2 moves around. It can be anywhere from as low as 2% to as high as 15% on the feedstocks, okay?

So you can imagine how that can create quite a variable to the overall rate to the plant. But given where we are, the improvements that we made, we believe it will be a — once we put it in service and prove that it works, we believe that it will be a substantial improvement to our ability to remove co-product 2, okay? And this will have a direct impact on our overall rate regardless of feed, and if the fee is at the 5% or lower level, which is very feasible, it gets you to a point where CP2 is no longer a constraint for feed for the facility.

Gerry Sweeney: The other question was, have you been able to run the system in — have you been able to run any parts of the system going to shut down. I get that you had to power it up in different things, but specifically around the CP2 removal enhancements, have you been able to test it out, run it to troubleshoot things, et cetera.

Jaime Vasquez: Yes. So we have run portions of the plant primarily on the prep side. We continue to run the prep periodically to fill our silos and be ready for feed. We have also, over the last 1.5 weeks, done a lot of work for pre-start-up checks and ready to start activity. So these are largely operational and mechanical final checkouts to make sure that the systems are ready to run, and our team has done that. We’ve already pressure checked the facility to know that it is in — it’s ready for operations. So some of the traditional start procedure items, we have done ahead of time because we could do it in parallel. But to answer your question, I think a bit more directly is when you have the plant down like we did for this outage, you’re really not able to run portions of purification because it’s all interconnected. And so we did do individual equipment checks, but we didn’t run any pieces of the process and a sizable way during the outage.

Gerry Sweeney: On the trial side, obviously, you’re working with offtakers, et cetera. Can you maybe just give us a little bit of detail where some of those potential offtakers are in their qualification process?

Jaime Vasquez: Yes, I probably won’t get into the specific details about specific customers, but maybe let me describe the process a little bit. Okay. We have made a lot of product at the feedstock evaluation unit in preparation for the commercial plan, and we had very good — we had very limited volume to share that with our customers. And so that was primarily focused on core customers and less to the broader market. And so as we started to make commercial products — even our core customers, they have an interest in seeing the commercial-grade product at scale so they can have confidence that it is sufficient or similar enough to the FEU that they can bring it into their operation. But as we start to talk to customers outside of that core network, like they haven’t had a chance to run our product yet because it was in such limited volume during the FEU.

And so we’re starting to get that material out to a much wider base of customers. Many customers, when you talk to them are like, “Hey, we’re ready for Pure Cycle. We’re excited to start testing your materials because they haven’t been able to yet. And so we are at the beginning of those stages with those customers. And I’ll tell you, it’s very difficult to predict the, let’s say, the curve for adoption of the products. Each customer is very unique. Each customer has a different level — a different standard for analysis and approval. And so we’re working with many, many of them that are at different places. I will say that we have expanded our supply into compounding, okay? And polypropylene compounder is a pretty significant portion of the market.

And they are, let’s say, notorious for taking lots of different types of feed blending them together to make a good product. And so they’re — let’s just call them like recipe experts, and they are often quicker and more adaptable to variations in product quality or early adoptions. And so we feel good about that as an outlet for sales over the course of Q2 and Q3.

Operator: Our next question comes from Brian Butler at Stifel.

Brian Butler: First one, just when you think about the post fixed plan, is there a long-term solution for CPT that’s still — are CPT 2 that’s still supposed to be implemented? And what kind of time line is that on?

Dustin Olson: Yes. So that’s a good question. Let’s maybe kind of go back to what we’ve said previously and let’s say, reset the stage there. We originally could manually remove 3,000 to 5,000 pounds per day of products, okay? And we told the market that we have a solution in mind that we will implement during the course of Q2, but we were not more descriptive on the timing than that, okay? That project is still in play. That project is executable over the course of May if we choose to do it. Most of the equipment has arrived, most of the engineering is complete. We’ve even started to dig the foundations for that. And that project is kind of, let’s say, ripe for execution. And if we do choose to execute it, it will not take another outage because we made all the properties during this outage to do it.

Having said all that, — we added another project to this outage based on what we learned from discovery during the outage. I mean, when we opened the settler, — quite frankly, we expected it to be empty, but it wasn’t, okay? And what we found is that there was a level indication device in that vessel that just wasn’t working properly. And so when we learned that, we were able to then pivot think through what we had seen over the last 4 months and then refocus our efforts into another project that we implemented during the outage, okay? So the long-term solution — the question I ask is, is there a plan for a long-term solution. But the long-term solution may have been installed during the outage. We still have to test it, we still have to make sure it works, but we have more confidence in its ability to work now than we did before, and we’re very optimistic about it.

If it works properly, then we may have the long-term solution already in place. If it doesn’t do everything that we need or we need more capacity to remove CP2, then we’ll go ahead and execute the project that we plan on implementing in Q2 anyway. But we’re holding back on that until we see the progress of this implementation to see how it operates.

Brian Butler: And then maybe can we talk about now that you’re going to roll this into ramp up production at some level in 2Q. Is this going to be a revenue-generating quarter? And how should we think about maybe facility costs as well as corporate cost in the second quarter?

Dustin Olson: Yes, that’s a good question, Brian. We are excited about our ability to ramp the plant of once we finish the outage. We did extend the outage, okay? We know that we extended it on purpose because we wanted to make sure we had as many of the reliability headaches resolved as we could to give us the best chance possible to move forward, okay? With respect to revenue generation and commercial sales, this gets back a little bit to Gerry’s question, okay? We are sampling product to a lot of customers, okay, like — and we get feedback from all of them. And typically, the way it works is they ask for a small sample, then they ask for a bigger sample than they ask for a truck and they ask for a railcar and then they ask for a lot, okay?

And we’re in that process of ramping up. What I can tell you is that we’ve got a lot of hooks in the line with a lot of customers, and we’re listening to them. We’re working with them to advance the qualification process and the approval process as quickly as possible. I’ll maybe hand over part of the question to Jamie with respect to the facility cost and where we stand from that perspective.

Jaime Vasquez: We’ve been running probably around $8.5 million a month in terms of just cash expenses. And it seems to be a steady state. I’d like to think as we’re operating more efficiently, that those costs will come down somewhat. It’s hard to tell because we haven’t been running continuously. But just based on some of the things that we’re seeing, we think that costs will come down a bit.

Brian Butler: Okay. And with the new debt, that sufficient capacity to run for how long?

Jaime Vasquez: With the additional liquidity, well, that additional liquidity, the $30 million, if we’re running, call it, $8 million a month, that gives us several months. And in the interim, we’re still actively looking at marketing the bonds. So hopefully, as Ironton continues to operate, the opportunities, we’ll have more opportunities to sell additional bonds.

Brian Butler: Okay. And then maybe one last one. Just when you think about — you talked about Augusta a little bit and as we reset expectations on the ramp of Ironton, how should we think about the ramp in, I guess, the build-out of Augusta as well as kind of your development projects beyond Augusta, — what is the right way to think about that time line-wise just even at a very high level?

Dustin Olson: Yes. At a high level, the work that we’ve been focusing on the last several months has been on finalizing the engineering packages for Agusta to ensure all of the Ironton implementation has been included in that design, okay? And so that really has been the focus. As we change engineering companies and partner with KBR, we’re finding that relationship to be quite good, quite helpful, and we’re implementing a lot of good learnings there. When it comes to the overall expansion of the business, I mean look, it’s fair to say that everybody is waiting and watching for Ironton, okay? So all of our partners, in some cases, our partners have been extremely helpful on the technical side. I’ll speak specifically to SK in that respect.

We’ve spoken about this in the past. SK comes with a lot of technical expertise, and they’ve been helpful as we have worked through some of the AR challenges. So in varying degrees, our partners are helping us get rent going. They are also waiting and watching for Ironton to go, and they’re continuing to progress the ground game to be ready when we’re ready, okay? So the way I would project it, we’re not going to give guidance on dates for Augusta. — or dates for JVs. But the way that I would describe it is we are very excited about our growth potential and so are our partners. Once we show Ironton can operate reliably and at scale, okay? And so we believe that we’ve got the, let’s say, the dock loaded and ready to go and ready to move forward once we get past the early operational reliability challenges.

Operator: Next question. Our next question comes from Thomas Boyes at TD Cowen.

Thomas Boyes: So maybe if you could just give a bit more color on the cross contamination that you had experienced. Was this just the mixing of, say, Pure 5-rated resident with lower quality when you were loading everything up? Or how does that come about?

Dustin Olson: Yes. I mean that’s right, Thomas. I mean, basically, as we were learning how to operate the facility, I mean to be honest with you, we had a lot of challenges with that the final product valve that transfer valves. I mean that product transfer valve forced us into semicontinuous operations because the valve was oversized and not working properly. And so that meant that we had to have the final product at Shooter up and down a lot. And as you do that, you do a lot of things that are — you make life more challenging than it needs to be. So in some cases, we had reliability issues with additive packages to where not all products were made with additive. And in some cases, we were on one feedstock moving into one silo.

And as we were transitioning to another feedstock, we didn’t move out of that side a little quickly enough in order to minimize the cross-contamination. And so I would say that the majority of the issues that we faced there was on, let’s say, equipment reliability, meaning the shoe was up and down and then also learning how to more effectively predict the transition moments between seeds and then operationally manage it in the silos. And at the end of the day, this is a fairly small amount of volume that was cross-contaminated and we’re working to move that material to the market to move on. But those were some of the early challenges. We don’t expect that to be a concern going forward.