PyroGenesis Announces 2024 Third Quarter Results
Total Quarterly Revenue of $4 million, up 9% year-over-year.Record Backlog of $54.9 million.Gross Margin of 42%.Cost-Cutting Results in Over $3 Million in Recurring Annual Savings.
Continued Momentum in Military, Aerospace, and Waste Destruction Businesses
MONTREAL, Nov. 06, 2024 (GLOBE NEWSWIRE) -- PyroGenesis Canada Inc. ("PyroGenesis") (http://pyrogenesis.com) (TSX:PYR) (OTCQX:PYRGF) (FRA:8PY), a high-tech company that designs, develops, manufactures and commercializes advanced plasma processes and sustainable solutions which are geared to reduce greenhouse gases (GHG) and address environmental pollutants, today announces its financial and operating results for the third quarter ended September 30, 2024.
"2024 continues to demonstrate favourable momentum for PyroGenesis, both for revenue as well as for revenue backlog from our order book, which surged to a new all-time high at quarter's end because of continued confidence by recurring military and aerospace customers, and sustained interest in waste remediation, furthering 2023's resurgence of that business line," said P. Peter Pascali, President and CEO of PyroGenesis. "The sequential revenue progress seen so far in 2024 has resulted in three consecutive quarters of year-over-year growth, with five of the last six quarters exceeding the previous quarter. And we've done this while cutting costs significantly."
"Our third quarter 2024 results, with revenue up and costs way down, reflect the investments we've made in cost-cutting initiatives, a disciplined focus on operational efficiency, and of course the execution of our strategy that deploys our expertise in ultra-high temperature applications to multiple industries around the world. As we continue to grow revenue quarter to quarter while simultaneously reducing costs, we put ourselves in an even better position to expand market share over the long-term as energy transition and emission reduction efforts expand," added Mr. Pascali. "With an escalating demand for significantly higher plasma torch power levels, as evidenced by our post-quarter end contract announcement of a $27 million 20MW plasma torch order, we are entering a new growth phase for plasma applications, and we will work diligently to ensure that the appropriate operational stage is set to unlock multi-year growth trajectories."
PyroGenesis is also announcing that its name has changed from PyroGenesis Canada Inc. to PyroGenesis Inc. Additionally, the Company is pleased to announce that it has moved its headquarters to a larger office location in downtown Montreal. More information on the changes to the company name and headquarters is located further below.
KEY Q3 2024 FINANCIAL HIGHLIGHTS
Revenue of $4 million, up 9% vs. Q3 2023, the 3rd straight quarter of year-over-year growth
All-time High Revenue (Order) Backlog of $54.9 million of signed and/or awarded contracts as at November 6, 2024, reflecting rapid acceleration in the power needs for military, space exploration, and the heavy industry sectors undergoing energy transitioning
Gross margin of 42%, a 13-point improvement from Q2 and 12-point improvement YOY
EPS loss of $0.02, net loss of $3.9 million, an improvement of 38% compared to $6.3 million loss during the same quarter a year ago
SUBSEQUENT EVENTS
Post quarter end, in October 2024 [news release dated October 21, 2024], the Company announced a contract valued at approximately $27 million for the development of a plasma torch system powered at 20 megawatts, from an existing U.S. client which provides technology and test services geared to solving critical defense, military, aeronautics, and space exploration challenges. The client, which previously ordered a 4.5MW plasma torch system from PyroGenesis in August 2023 [news release dated August 1, 2023], regularly serves as a prime contractor for the U.S. government. A plasma torch at this 20 megawatts power level, based on PyroGenesis' own research, represents one of the most powerful (if not the most powerful) plasma torches ever produced commercially. The project was expected to start within 30 days of the news release, with an estimated duration of 3 years.
Post quarter end, in October 2024 [news release dated October 31, 2024], the Company provided an update on the Repriced Warrants. As a result of the repricing, 1,457,500 of the Repriced Warrants have been exercised, for total proceeds to the Company of $1,093,125.
Q3 2024 PRODUCTION AND SALES HIGHLIGHTS
Q3 2024 continued the positive revenue growth trend that began in Q2 2023. Q3 2024 marks the 6th straight quarter of revenue improvement compared to the low revenue mark of Q1 2023, with five of those six quarters, including this Q3 2024, surpassing the previous quarter's revenues:
The Company operates primarily within three business verticals that align with economic drivers that are key to global heavy industry:
1. Energy Transition & Emission Reduction:
fuel switching, utilizing the Company's electric-powered plasma torches and biogas upgrading technology to help heavy industry reduce fossil fuel use and greenhouse gas emissions,
2. Commodity Security & Optimization:
recovery of viable metals, and optimization of production methods/processes geared to increase output, maximize raw material usage, and improve the availability of critical minerals,
3. Waste Remediation:
safe destruction of hazardous materials, and the recovery and valorization of underlying substances such as chemicals and minerals.
Within each vertical the Company offers a selection of solutions at different stages of commercialization:
The information below represents highlights from the past quarter for each of the Company's main business verticals.
Energy Transition & Emission Reduction
In September, the Company acknowledged that EarthGrid, a plasma tunnel-boring technology and infrastructure development company, was its client, as part of an announcement congratulating EarthGrid on its signing of a joint venture with Enertech, a Kuwait-based investment entity, to deploy infrastructure projects in four phases across the United States, Europe and the Middle East. According to EarthGrid's own announcement on September 17, 2024, the first two phases of the projects consist of an estimated US$18 billion in US infrastructure projects. Previously, in a press release date January 16, 2020, PyroGenesis had announced that it had received a $667,000 non-refundable down payment under a master agreement for multi-year multi-plasma torch purchases from an undisclosed client, now revealed as EarthGrid. At the time of this earlier announcement, EarthGrid's name was withheld for competitive and confidentiality reasons.
Post quarter end, in October 2024 [news release dated October 21, 2024], the Company announced a contract valued at approximately $27 million for the development of a plasma torch system powered at 20 megawatts, from an existing U.S. client which provides technology and test services geared to solving critical defense, military, aeronautics, and space exploration challenges. The client, which previously ordered a 4.5MW plasma torch system from PyroGenesis in August 2023 [news release dated August 1, 2023], regularly serves as a prime contractor for the U.S. government. A plasma torch at this 20 megawatts power level, based on PyroGenesis' own research, represents one of the most powerful (if not the most powerful) plasma torches ever produced commercially. The project was expected to start within 30 days of the news release, with an estimated duration of 3 years.
Commodity Security & Optimization
In July, the Company announced that HPQ Polvere had signed a letter of intent with Evonik Corporation, a global specialty chemicals company. HPQ Polvere's primary initiative is the Fumed Silica Reactor (FSR) project that PyroGenesis has been designing, engineering, and constructing to convert quartz into fumed silica in a single and eco-friendly step. PyroGenesis previously announced in a press released dated May 30, 2024, its intent to exercise its right to convert its annual royalty rights into a 50% ownership stake of HPQ Polvere pursuant to a design and development agreement. The objective of HPQ Polvere's letter of intent with Evonik is to outline the basis of collaboration during the FSR pilot scale phase with the goal to validate the ability of the FSR to produce low-cost, low-carbon material acceptable to Evonik's specifications.
In September, the Company announced the signing of a $1 million first-phase contract with an entity engaged in the production of graphite, for which PyroGenesis will design and deliver a customized pilot-scale plasma reactor and associated testing system. Upon the successful completion of the first phase, the next step would be negotiation of a contract for the development of a full-scale graphite production plant for which PyroGenesis has exclusive rights. Additionally, PyroGenesis has negotiated a 10% royalty on future gross revenues generated from an initial commercial graphite production plant built by the client, and a 5% royalty on any subsequent plants. Graphite is a critical mineral widely used across manufacturing.
Waste Remediation
In July, the Company announced the signing of a 2-stage contract for a land-based plasma waste-to-energy system with a European consortium. The first stage consists of a conceptual and preliminary design phase for approximately $2 million, which commenced in Q3 2024 and is scheduled to last no more than one year. The design phase will determine the order of magnitude cost estimate of the system construction, expected to range between $120-160 million depending on the system's capacity and other details. The design of the Plasma Waste-to-Energy System is based on the Company's Plasma Resource Recovery System (PRRS), a waste-to-energy technology that eliminates toxic compounds while transforming waste into reusable products such as syngas and chemicals such as methanol.
Post quarter end, in October 2024 [news release dated October 10, 2024], the Company announced the receipt of a purchase order of approximately $1,015,000 for after-sales component production related to the US Navy aircraft carrier contract. The components are scheduled to be produced and delivered to the client by March 2025.
Q3 2024 FINANCIAL HIGHLIGHTS
Through the quarter and most of 2024, the Company continued to monitor its selling, general and administrative expenses in order to maximize savings and reduce expenses. A year-to-date savings of over $3 million was realized mainly from a change in the directors' and officers' insurance, a reduction in professional fees, consulting and other expenses, along with adjustments to staffing and optimal use of employees. These are savings the Company will benefit from every year going forward.
In July, the Company announced a repricing of up to 4,107,850 existing common share purchase warrants (the "Repriced Warrants"), wherein the exercise price of those Repriced Warrants was reduced to $0.75 per share. Of the Repriced Warrants, (i) 697,500 warrants were to expire on October 19, 2024, (ii) 2,380,350 warrants expire on March 7, 2025, and (iii) 1,030,000 warrants expire on July 21, 2025. The Repriced Warrants were also amended to provide that if at any time before their expiry date, the closing price of the Company's Common Shares on the Toronto Stock Exchange ("TSX") is greater than $0.9375 (such amount being 125% of $0.75) over any 5 consecutive trading days, the Company will be entitled, within 15 days of the occurrence of such event, to accelerate the expiry date of the Repriced Warrants to the date that is 30 days following the date that notice of such acceleration is provided.
In July, the Company announced the closing of a $2.8 million non-brokered private placement consisting of the issuance and sale of 3,505,750 units at a price of $0.80 per unit. Each unit consists if one common share of PyroGenesis, and one common share purchase warrant, entitling the holder to purchase one common share at a price of $1.20 during the twelve months following the closing date of the private placement.
Post quarter end, in October 2024 [news release dated October 31, 2024], the Company provided an update on the Repriced Warrants. As a result of the repricing, 1,457,500 of the Repriced Warrants have been exercised, for total proceeds to the Company of $1,093,125.
Q3 2024 OPERATIONAL HIGHLIGHTS
In July, the Company announced purchase of 100% control of Drosrite International, a US-based private company, for $1.00. Drosrite International had already been, on an accounting basis, a subsidiary of the Company, but legally a stand-alone entity. An exclusive agreement was entered into between PyroGenesis and Drosrite International on August 29, 2019, under which Drosrite International received the required rights from PyroGenesis to manufacture, market, sell and distribute Drosrite™ systems and technology to the Kingdom of Saudi Arabia, and certain other countries in the Middle East.
In July, the Company announced that its subsidiary Drosrite International LLC was renamed PyroGenesis International LLC.
CORPORATE NAME AND ADDRESS CHANGE
PyroGenesis' corporate name has changed from PyroGenesis Canada Inc. to PyroGenesis Inc. Simultaneously, the French version of its name has changed from PyroGènese Canada Inc. to PyroGènese Inc.
"This change to our name is a subtle but indicative change," noted Mr. Pascali. "With sales across 21 countries and counting, this name change is part of an initiative to better express in all areas of communication that we are an internationally focused company with global reach."
This name change does not involve any restructuring, change of control, or other corporate reorganization. This decision solely pertains to a more inclusive and internationally resonant brand image. The name change does not affect trading of the Company's shares. The shares will continue to trade on the TSX under the symbol PYR and through the OTCQX under the symbol PYRGF. It is currently expected that the new corporate name will be effective on the Canadian and US capital markets as of November 11, 2024, with no change to the stock symbols.
Additionally, the Company is pleased to announce that it has recently moved its headquarters to a larger office location in downtown Montreal. The move comes as a result of the Company having outgrown its previous headquarters after more than 30 years in Montreal's historic Griffintown neighbourhood. The new office location resides in the heart of downtown near Montreal Central Station, the Queen Elizabeth Hotel, and the Bell Centre arena (home of the Montreal Canadiens), and provides more modern amenities and a smarter office layout, while also providing easier access for employees and customers that use public transit.
PyroGenesis' new corporate headquarters are located at 1100 René-Lévesque Boulevard West, Montréal, Québec, Suite 1825, H3B 4N4. Phone numbers will remain the same, with 514-937-0002 as the main line.
FINANCIAL SUMMARY
1. Revenues
PyroGenesis recorded revenue of $4.0 million in the third quarter of 2024 ("Q3, 2024"), representing an increase of $0.3 million compared with $3.7 million recorded in the third quarter of 2023 ("Q3, 2023"). Revenue for the nine-month period ended September 30, 2024, was $11.4 million, an increase of $2.1 million over revenue of $9.3 million in the same period of 2023.
Revenues recorded in the three and nine-months ended September 30, 2024, were generated primarily from:
Three months ended September 30
Variation
Nine months ended September 30
Variation
2024
2023
2024 vs 2023
2024
2023
2024 vs 2023
High purity metallurgical grade silicon & solar grade silicon from quartz (PUREVAP™)
221,627
415,415
(193,788
)
717,861
1,388,854
(670,993
)
Aluminium and zinc dross recovery (DROSRITE™)
503,230
118,745
384,485
1,493,918
324,296
1,169,622
Development and support related to systems supplied to the U.S. Navy
344,540
1,003,592
(659,052
)
1,626,149
2,168,820
(542,671
)
Torch-related products and services
1,310,709
950,290
360,419
4,979,766
2,682,979
2,296,787
Refrigerant destruction (SPARC™)
705,027
104,784
600,243
956,918
360,075
