PyroGenesis Inc. (PYR) Earnings Call Transcript & Summary

Good morning. My name is Mark Paterson. I'm the Chief Legal Officer and Corporate Secretary for PyroGenesis. The Annual Shareholders' Meeting is about to begin. Instructions on the voting procedure will appear on your screens. As with any technology, unexpected glitches may occur, but our service providers for this platform at Lumi are very experienced at running this type of meeting and will help us out as needed. We'll conduct the votes on each of the matters before us by a poll. On each poll, every shareholder who is entitled to vote on the matter has 1 vote in respect of each share entitled to be voted on that matter and held by that shareholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until the end of the discussion on each resolution before casting your vote.

Thank you, Mark. This meeting will now come to order. This is the 15th Annual Meeting of the Shareholders of PyroGenesis Inc. My name is Bob Radin. I'm a member of the Board of Directors. And for the purposes of this meeting, I will be acting as the Chair. I would like to introduce the other current Board members who are present. Andrew Abdalla, Dr. Virendra Jha, Paul Rajchgod, Ben Naccarato, P. Peter Pascali and Nannette Ramsey. Alan Curleigh, the Chair of the current Board of Directors, was unable to attend today. We also have present Mark Paterson, Chief Legal Officer and Corporate Secretary for PyroGenesis; Andre Mainella, Chief Financial Officer of PyroGenesis; Steve McCormick, Vice President, Corporate Affairs; and Jenny Khongkham and Bertrand Gely of TSX Trust Company, the registrar and transfer agent of PyroGenesis, who will act as scrutineers for this meeting. In accordance with notice and access procedures, PyroGenesis has sent all shareholders, through its transfer agent or other intermediaries, a notice of availability of the proxy material for the meeting, and as applicable, a form of proxy or a voting instruction form informing of. We have websites where the meeting materials can be found, how to access the meeting materials online and how shareholders can access a paper copy of the meeting materials. The notice sent to shareholders also contain basic information about the meeting, such as the matters for which a vote will be held. We will forego the reading of the notice as it has been made available to all shareholders of PyroGenesis entitled to receiving such notice, together with other meeting materials, including the management information circular, the form of proxy, PyroGenesis financial statements and the auditor's report thereon. Ms. Khongkham and Mr. Gely have filed with PyroGenesis proof of mailing of all these meeting materials. The declaration as to this meeting is available for inspection by any shareholder. The Secretary will append proof of this mailing to the minutes of the meeting. The corporation bylaws provide that a person present at the beginning of the meeting of the shareholders and representing, personally or by proxy, one or more shareholders holding 5% of the issued and outstanding voting shares of the corporation, shall constitute a quorum for the transaction of business. I will now ask Mark to explain how participants may vote and how questions will be answered.

Thank you, Mr. Chair. Today, registered shareholders and duly appointed proxy holders who are attending the meeting will have the ability to vote online through the Lumi platform. For those of you who have already voted in advance of this meeting, you don't need to do anything today. The poll will stay open throughout the meeting until the last business item has been put to a vote, and the Chair declares voting to be closed. Preliminary results will be provided at the end of this meeting, and final results will be posted on SEDAR+. We've solicited questions from shareholders in advance of this meeting. To the extent there are any questions related to items of business at this meeting, they will be addressed immediately before each item is put to a vote. If there are any questions of a general nature, they may be addressed in a press release in the days following this meeting.

Thank you, Mark. Notice having been served in accordance with Canadian Business Corporations Act and PyroGenesis' bylaws and quorum being present, I declare that this meeting is duly constituted for the transaction of business. The Secretary will annex the scrutineers' report to the minutes of this meeting. The polls are now open. The first item of business is the presentation of the annual audited consolidated financial statements of PyroGenesis for the year ending December 31, 2024, and the auditor's report thereon. These financial statements as well as the related management discussion and analysis are available under PyroGenesis' profile on SEDAR+. I now present to the meeting the financial statements together with the auditor's report thereon. I'll ask the secretary to keep a copy of these financial statements with the minutes of this meeting. Mark, are there any questions in respect to the presentation of the financial statements?

We have not received any questions from participants on this topic.

The next item of business is the election of corporate directors. The articles of corporation provided that there shall be not less than 3 and not more than 15 directors. It is proposed by both management and the directors that 8 directors be elected to the Board of Directors for the upcoming year. The following 8 nominees are put forward as candidates to serve as directors for the following year: Andrew Abdalla, Alan Curleigh, Dr. Virendra Jha, Ben Naccarato, Photis Peter Pascali, Robert Radin, Paul Rajchgod and Nannette Ramsey. Mark, have you received any questions from the participants on the nominations?

No. We have not received any questions from participants on this topic.

As there is no further discussion, I declare the nominations closed. May I please have a motion to elect the nominated candidates as directors of the corporation?

I move that we have the 8 candidates nominated to be elected as directors of the corporation for the ensuing year.

And this is Nannette Ramsey, and I second that motion.

Thank you. You've heard the motion made by Ben Naccarato and seconded by Nannette Ramsey. I will now proceed with the vote. I will pause to allow participants to register their votes. [Voting]

I will now move on to the matters of appointment of the auditors of the corporation. Mark, have you received any questions on the appointment of the auditors?

No. We have not received any questions from participants on this topic.

May I have a motion regarding the appointment of Raymond Chabot Grant Thornton as auditors of the corporation?

I move that Raymond Chabot Grant Thornton LLP, certified public accountants, be reappointed as the independent auditors of the corporation and that the Board of Directors be authorized to fix the auditor's remuneration.

This is Ben Naccarato, and I second that motion.

Thank you. You've heard the motion made by Nannette Ramsey and seconded by Ben Naccarato. I will now proceed with the vote. I will pause to allow participants to register their votes. [Voting]

That brings us to the end of the formal business of the meeting. In a moment, Mr. Steve McCormick, Vice President, Corporate Affairs, will provide an update and an overview of PyroGenesis business affairs. Following that, our scrutineers will announce the results of the voting. I will give you one last minute to cast your votes before we conclude the formal portion of the meeting. [Voting]

The official portion of the Annual General Meeting of the Shareholders of PyroGenesis has now ended, and the voting polls are closed. Thank you all for your participation. I will now hand things over to Steve.

Thank you, General Radin, and hello to everyone listening today. I'm Steve McCormick, Vice President of Corporate Affairs. And in a moment, I will be presenting a recap of the previous year, plus I'll provide some insight into the year so far, and we'll do a bit of looking ahead. But first, take a look at our forward-looking statement. Toplining the numbers, as of today, June 26, 2025, the company has 34 years in operation and a lot of things have happened over the past 5 years, in particular. As many investors know, during the past 5 years, the company uplisted to the TSX from the Venture Exchange and opened a second production plant for a total manufacturing footprint now of more than 70,000 square feet, all of which is in Montreal, Quebec, Canada. And in November 2024, the company relocated its head offices also in Montreal to a more convenient downtown location. The company provides technology across a range of solutions with the primary opportunity and the backbone of the company's efforts being the electrification of high and ultra-high temperature industrial processes, and that's furnaces, heating tanks, melting systems, pre-heating applications, post-manufacturing applications, waste destruction, emissions and gas purification and innovative production systems and techniques to make in-demand industrial materials in a cleaner, safer and more efficient manner. And many of these opportunities are common across several different industries, including steel, aluminum, mining, oil and gas, chemicals, cement, plastics, aerospace, defense and manufacturing. You might have seen that number at the previous slide of 22 billion megawatts. Now that seems like an extraordinarily large number, and it is. But for a little context, it represents a little less than 17% of the global total. Other consumption categories such as low-temperature heating or residential and commercial building heating, general transportation, meaning cars and trucks on roadways and especially power plants, comprise the majority of fossil fuel consumption, more than 78% globally. If you're tuned into this website on your computer -- this webcast, excuse me, on your computer, you can see the graph I'm showing on the screen. The usage values are shown in petawatts, and the total global annual fossil fuel consumption is 132 petawatts. Converted into a value directly related to our technology, 1 petawatt equals 1 billion megawatts. So that total overall annual fossil fuel consumption is 132 billion megawatts, of which 22 billion are used by our target market of industrial high-temperature process heating. And by the way, the source for these figures is Tesla, who developed the original slide for their 2023 investor presentation. So that's our opportunity to try to electrify as much as possible of the 22 billion megawatts of industrial process heating sources that are currently being powered by fossil fuels such as diesel fuel and natural gas. Obviously, this is a very long and potentially very lucrative runway, and we're just getting started. Now looking back over the past year. During the year, PyroGenesis continued to innovate, commercialize and expand our offering and service to heavy industry, government and environmental customers. We harnessed our expertise in ultra-high temperature processes to conceive, develop and deliver solutions across a diverse range of business lines. But for today, I just want to highlight a few of those major developments for the sake of time. First, during last year's AGM, we spoke of the leap in power of our plasma torches to 4.5 megawatts. At the time, that was an incredible jump, but clearly, things are just getting started. As subsequent to last year's AGM, in October of 2024, the company initiated a power-level increase yet again after signing a contract for a 20-megawatt plasma torch, a level we understand to be the most powerful commercial plasma torch to ever be built once it's built. This plasma torch is for a customer in the aerospace and defense industries in the U.S. This jump to 20 megawatts represents a 20-fold increase in plasma torch power in just 4 years, a remarkable achievement by any measure. At the same time, our efforts to improve the efficiency and operational capability of our plasma torches continues to bear fruit. Various furnace tests conducted using PyroGenesis plasma torches with a variety of different clients in different industries showed major reductions in energy requirements and a required operational time versus existing natural gas burners that the plasma burners are being tested to replace. So what does that mean? The impact of these 2 developments, the combined power increase and the performance improvements, will have, we believe, a long-term effect on the company's business potential. On the high end, higher-powered plasma torches opens the door to more intensive applications and higher heat industries. And on the lower end, lower costs resulting from higher efficiency and lower CapEx brings the less intensive applications in the smaller industries and with smaller customers into view. So as a result, the total addressable market for the company's offering is expanding at both the high and low ends. Turning to another very significant business line for the company, our next-gen plasma atomization system that produces titanium metal powder for use in additive manufacturing or industrial 3D printing. Since last year's AGM, the NexGen business line has moved all the way to the end of the commercialization path that the company has been on for approximately 7 or more years. A few weeks ago, on May 29, the company announced it had achieved official approved supplier status with Boeing, the giant global aerospace firm. That official supplier status is for our coarse cut titanium metal powder, specifically PyroGenesis Ti64 metal powder with a particle size within the range of 53 to 150 microns, a phenomenal achievement and really the end of one long journey and the start of another. Similar to what I talked about with the dual path of our plasma torches, 2024 saw improvements in key performance parameters of the NexGen system in parallel with the conclusion of its commercialization journey. In March 2025, we announced 3 key data points: increased yield of our key laser-cut powder that typically has a particle size ranging from 15 to 63 microns and which is used in the popular laser bed -- laser powder bed fusion printing process. We call this the laser cut powder. The yield improved by up to 50% over the past year. Number two, increased operational time of our system by more than 25%; and third, a 20% reduction in operational costs. Now last year, at the AGM, we talked about the success of the Quartz Reduction Reactor, or QRR, with the successful conversion of quartz to silicon in a single step that was achieved in 2023, which led to a pour of the silicon successfully in October 2023 that validated the previous project milestones. We also talked at that time a little bit about the evolving Fumed Silica Reactor project with the construction of the pilot plant underway. For those unfamiliar, fumed silica is a particle size additive powder with a large surface area used worldwide as a thickening agent in thousands of products such as adhesives, powdered foods, paints, inks, instant coffee, cosmetics, milk shakes and more. And it's used to increase strength and viscosity and flow control. Well, a lot has happened since last year, and construction of the fumed silica reactor pilot plant, which converts quartz into fumed silica in a single step without the use of harmful chemicals was completed, commissioned and operated successfully. Fumed silica was produced and was then successfully moved through the system automatically and into the material collection baghouse. Product samples were produced and delivered to Evonik, the leading global manufacturer of fumed silica who had requested samples and who verified the material subsequently as fumed silica suitable for next steps. And now additional tests and changes are being made to the fumed silica reactor to gradually increase the grade of the fumed silica. We believe that the advantages inherent in the PyroGenesis fumed silica reactor process are very strong, so strong that even the striking visual on screen that compares our process to the traditional method for producing fumed silica doesn't quite do the justice. As we move forward with system optimizations over the coming weeks and months, we hope to provide even more evidence of the advantages to our investors and to our potential customers. Over the past year, the company has announced several new projects and customers, including major global leaders in the aluminum, steel, power supply, environmental service industries, names such as Norsk Hydro, GE Vernova, Boeing and others who remain confidential for now. We also entered new industries, adding customers in graphite production and environmental services. For the latter, while PyroGenesis has worked with numerous customers in various types of waste management in the past, this particular client has an advanced and extremely broad array of services that puts them in a category at a level we have not worked with before. This is a major corporation that provides comprehensive environmental and utility services to cities around the world. So it was worth noting as a separate industry. Turning to revenue. Full year revenue for 2024 reached $15.7 million. That represented an increase of 27% year-over-year versus 2023. The company also saw a period between Q1 of 2023 and Q1 of 2025, where 6 of the 8 quarters showed revenue increases on the previous quarter. We like the trend, and we continue to push forward to bring revenue levels to where we expect them to be. Turning to backlog. Project backlog is at an extremely robust $52 million as of the Q1 2025 earnings period. This represents an 85% increase to the backlog from a year previous. Backlog, for those unfamiliar, means future revenue for projects signed and awarded, but not yet completed. This is very different from pipeline, which is a guess at potential sales and is very speculative and not an indicator we generally use. As a reminder, for many years, the company's backlog averaged approximately $7 million. Then in the third quarter of 2019, the backlog shot up past $25 million, and it's never dipped below that level since. In fact, it's been above $50 million since Q3 of 2024. So there's a lot of products, projects and a lot of revenue in front of us. Looking ahead, we have strong confidence for this year, next year and beyond. And that's because the industrial electrification and energy transition movement continues to grow at a pace approximating 10% a year. Supporting the market growth is growth in the rationale for energy transition. It's not just about CO2 reduction or limiting greenhouse gases anymore. It's a structural change that involves many facets, using electricity to drive benefits and improve outcomes in logistics, efficiency, cost, energy security and more. While one company may be trying to improve their carbon footprint, others may be aiming to streamline their energy sources, reduce their shipping and fuel costs and storage, improve their workplace conditions, eliminate particulates in the air inside factories, increase the speed of the material heating and melting and ensuring that they will have a constant, reliable source of energy. The strong backlog, assuring a flow of projects and revenue for many quarters to come and the announced new project sales so far in 2025, underlines management's confidence. In addition to the follow-ups on the big milestones we reached over the past year, we have a variety of different catalysts and potential catalysts on the horizon. These include continued plasma torch developments, the latest results of the fumed silica reactor pilot plant, product test runs, potential new products, projects within the Middle East region and many others. For more information on potential projects on the horizon, please refer to the outlook section of the first quarter financial report where numerous other projects and potential projects were referenced. This will conclude the year-end recap portion of the meeting. I want to thank you for your time and listening today. I'll now pass it back to the Chair. Mr. Chairman, General, back to you.

Thank you, Steve. That was a very insightful presentation. I will now ask Mr. Gely, one of the scrutineers of the meeting, to present the preliminary results of the voting. The final results will be posted on SEDAR+.

Thank you, Mr. Chairman. As Mr. Chair, we, the scrutineers of this meeting, hereby declare that on a preliminary basis, each of the 8 nominees for election as director has received a vote of at least 99% of all shares voted in favor of their election. At least 99% of the votes were cast in favor of the reappointment of Raymond Chabot Grant Thornton as auditors of the corporation for the ensuing year and to authorize the directors to fix the auditor's remuneration. Over to you, Mr. Chairman.

Thank you, Mr. Gely. Before we close, on behalf of the Board, I'd like to thank PyroGenesis' management team for their continued support and leadership and thank all our employees for their hard work and dedication. It has truly been an honor for me today to chair this AGM. Thank you all for joining us today, and have a wonderful rest of your day. Thank you. This concludes the meeting.