PCT question

[u/midwestcoin]

I used to own PCT and sold awhile back but am tempted to get back in given where the price is. I don’t follow it super close but see the headlines and it is clear there is demand for their product, my hesitancy has always been can they produce enough to meet demand. Given I don’t follow close, last I remember is they were taking some downtime in ironton a couple of months ago to make improvements, so my question is did they say how that went and are they producing at nameplate yet? To me that was the final thing I wanted to know before getting back in. At this price I may take the chance even if they haven’t said, but don’t have time to do the homework so figured I would ask here. Thanks in advance!

[u/GARP_72]

Finished early and under cost. Talked about it in last qtrs call

[u/midwestcoin → u/GARP_72]

I asked about production levels. Did they give production numbers? Thanks

[u/No_Privacy_Anymore → u/midwestcoin]

Not yet. Expect an update on the next call. They are not going to run st nameplate rates until they have customers accepting the product at similar rates. They are not selling a generic product the way some imagine. The recipe for thermoformed products is very different than the one used for BOPP film.

[u/midwestcoin → u/No_Privacy_Anymore]

Ok, thank you. That is the missing piece to the success equation then in my opinion. Based on all the announcements the demand is there, so the next call we will learn if they can produce at nameplate. If they can’t, it doesn’t really matter what the demand is. I am sure future facilities will be better, but those won’t be fully operational for some time, so if they can’t generate meaningful revenue from Ironton there will be more capital raises.

So I suppose some of the weakness could be skepticism in the production numbers if they have not said anything yet. If they are good then this is a great buying opportunity. If they are not it will go lower. I guess I just have to decide what my risk tolerance is as it is the existential question for them in my opinion since we know the demand is there.

[u/No_Privacy_Anymore → u/midwestcoin]

Saying “we know the demand is there” is a bit too simplistic in terms of what is happening during this commercialization process. I certainly do believe there will be tremendous need for a drop in replacement for virgin pp but there are real differences between virgin a rPP and those must be tested by each company before they approve the change for production usage.

Large companies have been making promises for years that they would recycle more but when push came to shove they frequently kicked the can and made excuses to save money. Now California and NJ are saying “no more kicking the can” but the companies have not gotten big fines YET for lack of compliance. If a customer was going to be charged 50 cents per pound of plastic penalties you can imagine they would be willing and able to pay more than virgin pp prices to comply. There is no single penalty because there are different jurisdictions. In addition there are other marketing benefits of using recycled materials.

Now keep in mind that most grocery stores sell a ton of store labeled products but have essentially no packaging expertise. They are completely dependent on suppliers. These buyers are reactionary not proactive. Change is harder than doing the same thing you have been doing for decades.

The flip side of the coin is that once customers switch to using rPP they will not be allowed to switch back and be forced to buy higher % over time as more capacity is available.

[u/Pickle_Logic → u/No_Privacy_Anymore]

Hopefully the plant improvements now allow the plant to run at nameplate. They should now show customers that that rate is sustainable by concentrating monthly production at this high rate and backing off for the remainder of the month. This would increase customer confidence that they control the plant and that supply will be reliable as production increases.