MONTREAL, Aug. 15, 2022 (GLOBE NEWSWIRE) -- PyroGenesis Canada Inc. (
http://pyrogenesis.com) (TSX: PYR) (NASDAQ: PYR) (FRA: 8PY), a high-tech company (hereinafter referred to as the “Company” or “PyroGenesis”), that designs, develops, manufactures and commercializes advanced plasma processes and sustainable solutions which are geared to reduce greenhouse gases (GHG), is pleased to announce today its financial and operational results for the second quarter ended June 30th, 2022.
“We have posted Q2 2022 revenues of $5.8M,” said Mr. P. Peter Pascali, CEO and Chair of PyroGenesis. “Our backlog remains above $35M, a significant level and our pipeline continues to expand. Despite gross reported revenue continuing to be impacted by delayed client and contract decisions related to ongoing international and regional logistical and resourcing headwinds, our margins are at a level that puts us among industrial technology and manufacturing industry leaders. The 43% quarterly gross margin illustrates the combined strength of the company’s production process and the strategy and care taken with contract negotiations. Our trailing twelve-month (TTM) gross margin is a very healthy 32.4% despite the inclusion of the unusually low Q4 2021 gross margin of 18% that was seen as a result of the cost and resource synchronization process for Air Science Technologies acquisition (now Pyro Green-Gas). Both this quarter’s gross margin, and our TTM, are well above those of many of our contemporaries including the high-profit industries we primarily serve: the aluminum industry at 22.7%, iron and steel at 31.5%, and aerospace and defense at 22.8%.1”
Mr. Pascali remarked, “Concurrently, two of our flagship product lines, the NexGen plasma atomized metal powder system and our plasma torch system for iron ore pelletization furnaces, achieved long-anticipated milestones, placing both on the threshold of full commercialization and widespread adoption. Even more exciting is the momentum around reducing greenhouse gas emissions and fossil fuel use in heavy industry which continues to grow like never before. With the Inflation Reduction Act – the combined climate change and inflation-fighting bill recently passed by the US Congress – billions of dollars for clean energy research and implementation across several industries, billions more for targeted grant and loan programs to accelerate the transition to clean electricity, and extensive incentives to reduce emissions from industrial manufacturing processes – especially among the large emitters that PyroGenesis serves – are about to become law. We are well placed to benefit from this opportunity2.
Q2 2022 results reflect the following highlights:
- Revenues of $5,847,180,
- Gross margin profit of $2,499,273 or 43% of revenue,
- Cash, cash equivalents and publicly traded shares at June 30, 2022 of $9.4M
- Backlog of signed and/or awarded contracts of $35.3M
Post-Quarter End Events
On July 5, the Company achieved a major milestone when it confirmed delivery and arrival of its plasma torch system to one of the world’s largest producers of iron ore. This delivery, for the $1.8M order made by a multi-billion-dollar international producer of iron ore pellets who has committed to reducing its greenhouse gas emissions, is in preparation for first-ever live site usage and site acceptance testing (SAT) of plasma in the pelletization process – a major upstream step in the steelmaking process. The delivery comes after the client – who has over ten (10) iron ore pelletization plants globally, each possibly requiring up to 50 plasma torches, or more than 500 torches in total – conducted extensive modeling, simulations, business case development, and live factory acceptance tests of plasma torches over the course of a year, as a potential solution toward meeting their carbon reduction goals. The Company also previously disclosed that it has provided a cost estimate for 36 plasma torches to that same Client, at a value range of $95-115 million.
On July 18, the Company provided a corporate update to its 3D printing metal powders business unit. The update indicated that, with the Company’s NexGen plasma atomization system now capable of production titanium powder at commercial bulk order scale, discussions are now underway between the Company and its European commercial partner Aubert & Duval for full distribution agreements, including broader distribution planning, order planning, and logistics. Additionally, the update indicated the Company has reached the final phase of the lengthy metal powder qualification process with a global aerospace company, with an anticipated end date during Q4 2022. If successful, the qualification will certify the Company’s metal powders for use by the Client and its component suppliers. The update also indicated the Company has commenced general inventory production of titanium metal powder, has started discussions with a major distributor for Asian market expansion, is pursuing ISO 13485:2016 certification for medical device usage, announced an intention to produce aluminum alloy powder, and is pursuing a strategy to build and operate a metal powder manufacturing facility in Europe.
OUTLOOK
The first half of 2022 has proffered an unusual combination of events and results.
The Company – as with much of the industrial technology and manufacturing sectors – has felt the repercussions of macro-economic headwinds that have affected the planning, logistics, and spending of its customers and of its sales pipeline targets.
These conditions have weighed, at times heavily, on both the Company’s top and bottom lines, with potential or planned sales being impacted by customer resourcing, staffing, and purchasing delays, and with continued governmental and logistical issues preventing other customers from finalizing contract negotiations or taking delivery of their fully completed orders – orders that represent significant revenue and income to the Company once they can be moved out of our warehouse.
What was anticipated to be a major growth first half, has adjusted to be more of a modest stage-setting for the second half of the year and into 2023, as existing and prospective customers moved back their planning and decision-making in the quarter to accommodate their own interruptions.
However, in parallel, and in contrast, during the last quarter the Company achieved some of its greatest corporate milestones – achievements that are considered major advancements for both PyroGenesis and its customers’ industries, and which are anticipated to provide potentially large sales bursts through to and beyond 2023.
These achievements include producing and delivering plasma torches for the first-ever in-factory use within an iron ore pelletization furnace – a major upstream step in the steelmaking process – and the movement from sample size to commercial-scale batch production of titanium metal powder production for 3D printing and additive manufacturing, from the Company’s plasma atomization system.
These milestones continue to set the company up for the accelerated business growth that the previous three decades of research and development have made possible.
Importantly, as the global economy transitions out of the disruption stage it has found itself in for several quarters, we see a return to logistical and resourcing stability for our heavy industry and government customers throughout the rest of 2022 and 2023, but with a renewed sense of urgency.
Our value proposition remains the same, yet with the events of 2020-2022 revealing the precariousness of the world’s supply chain, fossil-fuel energy availability, workforce, and material cost certainty, the Company’s technology offering looks even better positioned.
Our ability to help impact and remake several of the major priorities facing heavy industry – priorities that have fallen further behind during these past two years – such as greenhouse gas emissions reduction, fuel switching to combustion-free electric sources, improved value recovery of metal waste-streams, enhanced metal production output from the same input, safe destruction of pervasive chemicals, and more rapid and higher quality metal powder production for component weight reduction – leaves us excited about our recent critical milestones and our long-term positioning.
All of these factors, bolstered by the quickening global push towards fossil fuel reduction at both industry and government levels that further showcases the PyroGenesis advantage, allows Management to state with continued conviction that despite the challenges seen in the year’s first half, the company believes opportunities for PyroGenesis continue to expand.
To note, until such time as the Company produces consistent recurring revenue or continuous large scale orders and can offer forward-looking guidance, we will continue to provide an Outlook that is more descriptive, with a combination of actual achievements combined with working opportunities, and less focused on financial numbers.
