PyroGenesis Canada Inc. (TSX:PYR, NASDAQ:PYR) said its third-quarter financial results included C$7.5 million in revenue, and that it has a $26 million backlog of signed or awarded contracts and a 73% quarterly gross margin.
The quarter that ended September 30, 2022 also saw PyroGenesis record a gross margin profit of $4.1 million, plus cash, cash equivalents and publicly traded shares of $8.3 million.
PyroGenesis CEO P Peter Pascali said the Montreal-based company delivered another quarter of strong margins against a difficult logistical and inflationary environment for heavy-industry manufacturers and their customers.
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“With our strong production margins firmly established, and our operational and sourcing approaches proven again as not just viable, but sustainable and secure, we can remain squarely focused on maturing the commercialization plan of the past two years,” Pascali said in a statement.
He said this means turning a very large pipeline into signed new business; finalizing various ventures that have been in long-term testing, planning, or negotiation; and moving certain R&D initiatives into more fully-realized, customer-ready solutions.
PyroGenesis said the potential contract pipeline has expanded significantly, which, along with the 73% quarterly gross margin, serves to demonstrate how the company’s careful yet committed approach to diversification allows for various guards against rising inputs – both direct and macro – such as labour, currency, and supply-chain disruption-related costs.
“Certain of our customers are experiencing implementation/order delays due to the continued infrastructure, personnel, and parts availability challenges affecting industries across the spectrum,” Pascali said.
“We remain confident in our positioning and long-term plans, given our above-industry average margins, continuing introduction of torch niche solutions, and a focus on large companies seeking technology solutions for greenhouse gas emissions reduction and production output optimization. Combined with the upcoming commencement of major trials of our key plasma products, and near completion of various testing and certification processes by other clients, we continue to see a positive future.”
Outlook
The company said that despite the worldwide macro-economic headwinds made worse by international supply chain volatility – both of which have affected its clients’ planning, logistics, and spending – PyroGenesis continues to demonstrate the ability to execute productively in 3Q.
It maintained its focus on production efficiency, steady progression towards full commercialization of its emerging business lines, the pursuit of innovation, and expanding the relationships with existing and potential clients.
PyroGenesis said it expects continued growth due to:
- Heavy industry commitment to fossil fuel-related carbon reduction measures;
- Aluminum producers, steelmakers, and other metal producers seeking technology solutions to improve output percentages of primary, secondary, tertiary, and unprocessed waste from other mineral production sources previously thought exhausted; and
- A global shift back to electricity-based power that will be a boon to PyroGenesis’ electricity-ready solutions, which are proven to be effective and efficient.
“This underscores our belief that we are well positioned with respect to both our recent critical milestones and our long-term positioning,” the company said.
PyroGenesis expects to hit milestones that have been in the works for several quarters, including the first-ever in-factory trials of plasma burners within an iron ore pelletization furnace – a major upstream step in the steelmaking process – with two separate global iron ore producers; the conclusion of the certification process for the company’s titanium metal powders from a major global aerospace firm; and the potential sale of various aluminum-industry solutions related to metal dross processing and fuel-switching.
The company said that, until it produces consistent recurring revenue or has continuous large-scale orders, it would not be prudent to provide an outlook focused on financial numbers.
Overall strategy
The company said it has evolved from its early roots as a specialty-engineering firm to become a provider of robust technology eco-systems for heavy industry that helps address strategic goals of carbon emission reduction.
The company said its strategy seems to be timely, as many governments are increasingly funding and promoting environmental technologies and infrastructure projects.
Also, global aluminum demand is anticipated to grow by 80% by 2050 and with industry carbon-reduction targets not yet on track to meet their goals, aluminum producers must find ways to improve their efficiency, and increase their yield of high-quality metal from current production – all while lowering their carbon footprint, according to PyroGenesis.
PyroGenesis said its mainstay plasma torch offering provides a technology-driven solution to metal producers seeking to reduce their reliance on volatile natural gas prices and diesel supply chain. These metal producers are targeting all areas of their operations that require metal melting or heating, while concurrently eliminating fossil fuel emissions.
Contact the author at susie@proactiveinvestors.com