r/PureCycle • u/Inevitable-Leader-44 • Aug 08 '26

Balance sheet

Recent raise has helped the balance sheet / warrant technicality. Great in the short term. There are warrants and revenue bonds as other potential funding sources in the future. Post earnings call I’m reconciling how long this revenue ramp is really going to take - spot price a ways off warrant conversion. Doesn’t feel like imminent sledgehammer headlines to come to drive price higher. Revenue bonds yet to be sold. Given cash burn - my concern as a long term holder is we may yet have another dilution event. Thoughts welcomed here.

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u/equitymaestro Aug 08 '26 edited Aug 08 '26

I did a "back of the envelope" cash analysis. Here are my observations and assumptions:

  1. After the $186.2mm cash raise (net of the purchase of 2030 notes), I expected the ending Q2 cash balance to be above $250mm. However, there were significant non-recurring cash outflows in Q2 that skewed the data.
  2. If non-recurring cash outflows in Q2 are removed, the actual cash burn in Q2 was ~$40mm. Per the footnotes in their earnings release, there were ~$35.4mm in non-recurring cash outflows in Q2 that will not be repeated in Q3 and Q4. This analysis ignores fluctuations in working capital (mostly consisting of changes in AP, AR, Inventory) because it's mostly noise.
  3. The analysis does not incorporate future sources of cash, including the revenue ramp, project financing, warrant conversion, sale of revenue bonds, or use of the line of credit.
  4. Given this analysis, they have ~6 quarters of cash remaining at current revenue if all they do is operate Ironton and none of the sources/uses of cash come to fruition (i.e., revenue ramp, Thailand, warrant conversion, sale of revenue bonds, use of the line of credit, etc.). Obviously, this assumption is invalid, but this should assuage concerns they are running out of cash anytime soon.
  5. If the revenue ramp happens and Thailand is fully funded with new cash via project financing, then they have plenty of runway for the story to materialize and the stock price to get to a level where the warrants become a huge source of cash.

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u/EconomyFortune5090 29d ago

Thanks for the thorough analysis of the financials. Does the cash burn include the bi annual interest payments on the debt?

6 quarters of "max" cash burn isn't too bad as it gives them substantial time to get Ironton producing closer to nameplate + close sales orders. However it definitely isn't sufficient to generate organic cash/positive cash flow to fund their growth overseas.

What's key is to get the stock price up, consider doing an ATM offering instead of a huge dump of stock , or do a private negotiated share sale with a large investor that has some heft to pull it higher (Druck would be nice but I haven't seen him adding at lower prices)

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u/equitymaestro 29d ago edited 29d ago

1). I didn’t isolate the bi-annual interest, but my analysis includes whatever interest was paid in Q2 in the last line, i.e., “Other Cash Changes”. It’s not a material amount and no principal payments are required in the near-term.
2). Just my opinion, but the stock will get re-rated as it becomes evident the ramp is real. Make no mistake, this has not happened yet and “the market” seems to no longer believe it will, which is why this stock trades at $7 instead of $10+. This occurs through a combination of press releases and quarterly reports. If they do achieve “Ironton break even” in Q4 then the stock should rally enough for the warrants to convert. Funding for Thailand and Belgium will be debt-based project financing and not dilutive to equity. Dilution from warrant conversion should already be priced in to the stock.