PyroGenesis Inc. (PYR) Earnings Call Transcript & Summary

Good morning. My name is Jean Mayer, and I'm the Vice President, Legal Affairs and Corporate Secretary for PyroGenesis. The Annual and Special Meeting of Shareholders is about to begin. Instructions on the voting procedure will appear on your screens. As with any relatively new 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 end up 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 one vote in respect of each share entitled to be voted on that matter and held by a 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.

Well, thank you, Jean. [Foreign Language] This meeting will now come to order. This is the 16th Annual Meeting of the Shareholders of PyroGenesis Inc. My name is Alan Curleigh. I'm the Chairman of the Board of Directors and for the purposes of this meeting, will act -- will be acting as the Chair. I would like to introduce the current Board members who are present. We have Andrew Abdalla, Dr. Virendra Jha, Paul Rajchgod, Ben Naccarato, Peter Pascali, Nannette Ramsey and Bob Radin. Mr. Pierre Carabin is also present as he is a Board nominee. Pierre is PyroGenesis Chief Technology Officer until this recent retirement. We also have present Jean Mayer, Vice President, Legal Affairs and Corporate Secretary of PyroGenesis; Andrew Minella, Chief Financial Officer of PyroGenesis; Alex Pascali, Chief Operating Officer of PyroGenesis; Steve McCormick, Vice President, Corporate Affairs of PyroGenesis and Jenny Khongkham and Bertrand Gely of the TSX Trust Company, the registrar and transfer agent of PyroGenesis, who will act as scrutineers of this meeting. In accordance with the notice and access procedures, PyroGenesis has sent out all shareholders throughout this transfer agent or other intermediaries, a notice of availability of the proxy materials for the meeting and as applicable, a form of proxy or a voting instruction form otherwise formed and forming of the websites where the meeting materials can be found how to access the meeting the material online and how the shareholders can access a paper copy of the meeting materials. The notice sent to the shareholders also contains 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 Biogenics entitled to receive such notice, together with the other meeting materials, including the management information circular, the form of proxy, PyroGenesis financial statements and the auditor's report thereon. Madame Jhongkham and Mr. Gely have filed with our 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 the proof of the mailing to the minutes of this meeting. The corporation's bylaws provide that a person present at the opening of a meeting of the shareholders and representing personally or by proxy, want or bore shareholders totaling 5% of the issued and outstanding voting shares of the corporation, shall constitute a quorum for the transaction of business. I will now ask Jean to explain how participants may vote and how questions will be addressed. Jean?

Yes. Thank you, Mr. Chair. Today, registered shareholders and duly appointed potholders who are attending the meeting have the ability to go online through the Lumi platform. For those of you that have already voted in advance of the 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 the voting to be quoted. 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. Participants will not be able to ask questions live during the meeting. To the extent there are any questions related to items of business, they will be addressed immediately before each item is put to a vote. Questions of a general nature will be addressed in the press release and the days following this meeting.

Thank you, Jean. Thank you. Notice having been served in accordance with the Canada Business Corporations Act and PyroGenesis bylaws and a quorum being present, I declare this meeting that's 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 a presentation of financial statements. So the first item, as I mentioned, is the presentation of the audited of the annual audited consolidated financial statements of Power Genesis for the year ended December 31, 2025, and the auditor's report thereon. These financial statements as well as related 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 the meeting. Jean, are there any questions in respect of the presentation of the financial statements? Jean have you...

Yes, apologies, I was on mute. Alan, yes, we have not received any questions from participants on this topic.

Thank you very much, Jean. The next item of business is the election of the corporation's directors articles of the Corporation provide that it shall have not less than 3 and not more than 15 directors. It is proposed by both management and the directors that 9 directors be elected to the Board of Directors for the forthcoming year. The following nominees are put forward as candidates to serve as directors for the following year. Mr. Andrew Abdalla, Alan Curleigh, Dr. Virendra Jha Jar; Ben Naccarato, Photis Peter Pascali, Robert Radin, Paul Rajchgod, Nannette Ramsey and Pierre Carabin. Mark, have you received any questions from the participants of the nominations.

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

Thank you. As there are no further discussions, I declare that the nominations closed. May I please have a motion to elect the nominating candidates as directors of the corporation?

I move to have the 9 candidates nominated to be elected as directors of the corporation for the ensuing year.

Thank you, Ben.

I second that motion.

Thank you, Nan. Thank you. And 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 our participants to register their votes. [Voting]

Thank you. The next item of business, I will now move on to the matter of the appointment of the auditors of the corporation. Jean, have you received any questions on the appointment of the auditors?

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

Thank you. May I have a motion then regarding the reappointment of Raymond Chabot Grant Thompson as the auditors for 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.

I second that motion.

Well, thank you. You've heard the motion made by the 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]

Thank you. I will now move forward on to the matter of the approval of the unallocated awards under the corporate's long-term incentive plan, reviewable for 3 years of the LTIP. Jean, have you received any questions on the approval of all unallocated awards under the corporation's long-term incentive plan renewable for 3 years of the LTIP?

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

Thank you. And may I have a motion regarding the approval of all unallocated awards under the corporation's long-term incentive plan renewal for 3 years of the LTIP?

I move that all unallocated awards under the corporation's long-term incentive plan and the renewal for 3 years of the LTIP be approved.

I second that motion.

Thank you, Ben. You've heard the motion made by the 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]

Thank you. I will now move on to the matter of the ratification of grants made since June 21, 2025, under the corporation's long-term incentive plan. Jean, have you received any questions on the ratification of grants made since June 21, 2025, under the corporation's long-term incentive plan?

We have not received any questions from participants on the topic, Mr. Chair.

Thank you. May I then have a motion regarding the ratification of grants made since June 21, 2025, under the corporation's long-term incentive plan?

I move that the ratification of grants made since June 21, 2025 under the corporation's long-term incentive plan be approved.

I second that motion.

Thanks, Ben. Thank you again. You have heard the motion made by the 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]

Thank you. I will now move on to the matter of the amendment to increase the limit under the corporation's long-term incentive plan. Jean, have you received any questions on the amendment to increase the limit under the corporation's long-term incentive plan?

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

Thank you. May I have a motion then regarding the amendment to increase the limit under the corporation's long-term incentive plan?

I move that the amendment to increase the limit under the corporation's long-term incentive plan be approved.

I second that motion.

Thank you, Ben. Thank you, Nan. You've heard the motion made by the 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]

Thank you. That brings us to the end of the formal business of this meeting. In a moment, Steve McCormick, our Vice President, Corporate Affairs of the corporation, will provide an update and overview of Power Genus' business affairs. Following that, our scrutineers will announce the results of the voting. I will give you 1 last minute to cast your votes before we conclude the formal portion of this meeting. [Voting]

The official portion of the Annual and Special 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. Steve?

Thank you, Mr. Chair, and good morning to everyone listening today. I am Steve McCormick, Vice President of Corporate Affairs for PyroGenesis. And in a moment, I will be presenting a snapshot recap of some of the events that have occurred over the 12 months since the last in 2025. But first, here's our forward-looking statement. Please read at your leisure. A quick reminder of the company's business strategy. PyroGenesis develops industrial technology with the primary opportunity and the backbone of the company's efforts being the electrification of ultra-high temperature industrial processes which currently used 22 billion-megawatt hours of fossil fuels per year. Those processes include things such as industrial furnaces, heating tanks, melting systems, pre-heating applications, post manufacturing applications, waste destruction systems, emissions control and industrial material production. Many of these opportunities are common across multiple industries where heating, melting or reheating of materials are required, including aluminum, steel, cement, chemicals, plastics and manufacturing. If you're wondering how we arrived at such a number, that 22 billion-megawatt hours is the amount of fossil fuels used by just on consumption category, industrial, high-temperature process heating. It seems like a very high number, but it is just 1 of the various fuel consumption categories and represents only 17% of the global total of 132 billion-megawatt hours of fossil fuels used each year around the world. other consumption categories such as low temperature heating for residential and commercial buildings, general transportation, meaning cars and trucks and especially power plants comprise the majority of fossil fuel consumption more than 78% globally. The source for these figures is Tesla, who developed the original slide using this data for their 2023 Investor Day presentation. to meet the opportunity of electrifying industrial processes that are currently being powered by fossil fuels, such as diesel, fuel, oil and natural gas, the company leans on its legacy of research, development and deployment of leading-edge plasma technology. With its 35 years of experience, PyroGenesis has perfected methods that harness the incredible potential of a process that can reach 10,000 degrees Fahrenheit, turning the raw power of plasma into valuable technology that could help solve a wide range of problems across multiple heavy industries. In fact, over just the past few years alone, the number of technologies the company has developed has expanded significantly. This has led to a categorization of all the current and potential solutions into 3 distinct business lines, energy transition, which encompasses most of the effort to replace industrial fossil fuels as well as materials production and waste processing, which are more self-explanatory. If you're watching the live webcast, you can see a breakdown of the different technology solutions within each business line. And now for the recap. Looking back over the past year, PyroGenesis continued to innovate, serve its existing client base and attract new clients across several new industries. Today, over the next 15 or so minutes, I want to highlight just a couple of the major developments in each business area from the past year. Looking first at the energy transition business line. In the previous 2 AGMs, we'd spoken of the leap and power of our plasma torches from less than 1 megawatt back in 2020 to the more recent 4.5-megawatt system and then a huge jump for an upcoming project to a 20-megawatt plasma torch, which by our research will be the most powerful plasma torch ever built commercially. Speaking of the 4.5-megawatt torch, it is so far the largest, most powerful plasma torch ever built by PyroGenesis and was successfully completed and delivered to our client in late January of 2026. The client is a U.S.-based innovation hub for the U.S. government and for customers in the aeronautics, aerospace and defense industries. Now as we continue development efforts to produce even higher powered plasma torches, we also know that higher power alone isn't enough. We must prove operational efficiency for our clients within all power ranges, and we've been doing just that. We've shown this graph before. It explains how the total addressable market for plasma torches can grow as our technology improves -- as the power level increases, higher powered plasma torches opened the door to more intensive higher heat applications and industries. And second, as the cost of the plasma towards decreases the less intensive applications in the smaller industries and for smaller companies can also be addressed by plasma. But there's a third variable, and that's the efficiencies that can be gained by a customer from using plasma as their heat source. These efficiencies can affect both the low end and the high end of the market because if the efficiencies are large enough in the business case for switching to plasma changes significantly from emission reduction and electrification to overall operational improvement. To that point, in March '26, we released results from a live furnace testing program using plasma torches conducted with our clients, Rio Tinto and Alcoa. Now we've released test results before from various clients in different industries but these latest results are perhaps our most important yet. The results confirm significant reductions in key operational metrics when compared to existing natural gas burners. The results show that plasma improves overall thermal performance, leading to a significant energy savings and shorter melting times, reduces drops generation and all without compromising metal quality. This study was, in fact, presented by Rio Tinto and Alcoa at the Minerals and Metals Society Annual Conference in March and was subsequently published in academic journals. So a tremendous result over the past year on the innovation front. On the operational and sales front, since last year's AGM, the company won and started several new contracts, including 2 separate systems for the cement industry. We've noted in the past that we believe the cement industry holds a lot of promise with their high level of fossil fuel-generated emissions being a major industry concern. The company also completed and delivered 2 major and important torch systems -- the previously mentioned 4-point megawatt and the first plasma system ever to be trialed by Constellium, a leading global aluminum manufacturer. Instellium's testing program is underway, and we look forward to seeing some good results there. Now over to materials production. It's been a busy 12 months on a couple of key fronts. And first, I'll talk a little bit about metal powder production as there were some very interesting developments there. At last year's AGM, we announced improvements to 3 key data points for our next-gen plasma atomization system, which produces our titanium powder, increased yield of laser cut powder by up to 50% and increased operational uptime by more than 25% and reduced operational costs by 20%. Since then, improvements have continued to be made. And in April of this year, we announced a further 20% reduction in operational costs of the next-gen powder production system. So we've reduced operational costs by about 40% versus 2023. And this has allowed us to be more competitive in what has become a very competitive pricing environment. And that has helped contribute to securing more contracts, which are outlined in the graph. Of particular note is the contract announced December 15, 2025, and -- that contract was for what we call off-cuts. -- off cuts are powders produced during the plasma atomization process but which are of a particle size not currently being used by the existing range of commercial 3D printers that are used in industrial additive manufacturing. But because it comes from the next-gen system, it's still very high-quality titanium powder, and we have been stockpiling it on the assumption that 1 day, there just might be a market for it, which has become a reality. So the ramifications are that not only are we reintroducing stockpiled metal that was essentially a byproduct back into the supply chain. We now have, along with our fine and coarse cut titanium powders Three viable powder products from every production run, which, of course, maximizes the revenue generated for each run and from each batch of raw material. Less goes to waste, more goes to use, and that represents even greater sustainability for the plasma atomization process. As a side note, if we break out those muddle powder contract by industry, you can see the diversification that has started to take hold -- it's been a slow build, but there's been more and more industries starting to use high-quality titanium and that's a good sign for the future of additive manufacturing and for PyroGenesis. Now let's talk about fume silica -- for those unfamiliar, fumed silica is a particle size powder, extremely light, very fluffy, used worldwide as a thickening agent in thousands of both industrial and consumer products, everything from adhesives and glues to paints, inks, but also in powdered foods, instant coffee, milk shakes, cosmetics, toothpaste and thousands of more products. our genesis invented a system to convert courts into fumed silica in a process that was greatly reduced compared to the complex multistep process used by most conventional producers of fumed silica. And the process is done without the use of any of the harmful chemicals that have relied on a conventional fumed silica production. Last year, we talked about how the construction of the fumed silica reactor pilot plant have been recently completed -- it was commissioned and was operating successfully. In the year since, we've issued a number of announcements that taken together, showed how rapidly our engineers have been able to accelerate down the path to commercialization. The net result is that in less than a year, the fumed silica reactor pilot plant has advanced from producing fumed silica far below commercial standards to surpassing 3 commercial product grades and advancing on the fourth. -- an incredible achievement and 1 that has caught the attention of key industry players. We had announcements during this period that outlined the various negotiations taking place between PyroGenesis and those entities, including the potential formation of joint ventures for fumed silicon production. I'm not going to extrapolate any further on this due to ongoing negotiations and certain nondisclosure agreements, but fun silica certainly is a very interesting product, made all the more exciting by the completely emission-free chemical-free way that PyroGenesis is making this happen. So stay tuned. A new entry to materials production is Carbon Black. This is a little complicated. I'll try to summarize. Carbon Black is 1 of the most important commodities worldwide. It often resides in the top 50 list of industrial chemicals manufactured worldwide based on the annual tonnage amount produced. It's usually produced using combustion and decomposition of coal tar and other types of very heavy petroleum oils. It's a big market, valued at approximately USD 24.5 billion in 2025 and is projected to reach about $36 billion by 2033. Now Carbon Black is used mostly in rubber manufacturing, specifically for vehicle tires, which are comprised of 25% to 30% Carbon Black. In fact, it's what gives tires the black color. Other key use for Carbon Black is batteries, particularly for lithium-ion batteries, where it's used as a conductive material to help boost the energy density of the battery and to dissipate heat. The Carbon Black used in batteries is very high quality and difficult to produce. In April of 2026, PyroGenesis announced the successful production of battery-grade carbon black and hydrogen from a proprietary plasma toric system. This was achieved using both a natural gas and a methane-powered plasma torch as the primary hydrocarbon feedstock, which is then directly converted into Carbon Black and hydrogen without the need for a secondary raw material feedstock or additives. In other words, the plasma itself is the raw material to make the carbon black and that had never been accomplished before only a DC plasma torch without any additives. We then had a third-party independent testing lab review the material, and they concluded that the Carbon Black met quality levels well above battery-grade requirements. This system was designed by prior genesis on behalf of its client, a Canadian company exploring alternative use of carbons for commercial applications. Obviously, it's early days, but we expect some momentum to pick up regarding this business line in the future. Finally, we have our waste processing business line waste processing business line started making a comeback a few years ago after several years of dormancy and the momentum has only continued. Like metal powders, the last year saw a lot of diversification in waste processing contracts from plastics to chemical or for agents to biomass, batteries, steel and more. This speaks to both the tightening restrictions on landfills and disposal rules as well as to the versatility of plasma in safely destroying or valorizing waste material. One of the big achievements of the year was the unveiling of PyroGenesis-Spark system, which is the central technology in New Zealand's newly launched national refrigerant destruction facility. Spark for steam plasma arc, refrigerant cracking is a system that safely destroys end-of-life refrigerant gases such as CFCs, HFCs and HCFCs from air conditioning and cooling systems. New Zealand traditionally stored then shipped these gases to Australia for processing and the new facility will allow for safe localized processing for the first time ever. Across all business lines, the last 12 months served clients across many different industries, including several new industries such as cement, plastics, nuclear, electronics, batteries, and contract manufacturing and additive manufacturing. Management believes this is indicative of the growing reach of Plasma solutions and the continued overall expansion of the energy transition, materials production and waste processing sectors. Revenue continued to recover over the past year. In fact, the company has reported 4 consecutive quarters of revenue growth over the previous quarter and backlog Project backlog is at a robust $43.1 million as of the Q1 2026 earning period reported May 7. For those unfamiliar, backlog means future revenue for projects that are already signed and awarded but the projects themselves have yet to be completed. So the revenue hasn't been received. This is different from pipeline, which a lot of companies use, which is a guest that potential sales is very speculative and not an indicator that we use. These are actual signed contracts. As a reminder, for many years, the company's backlog averaged approximately $7 million. It shot up past $25 million in 2019 and has never dipped below that since. And in fact, it's been well above the $40 million mark since Q3 of 2024. So that means there's a lot of great projects and a lot of revenue out in front of us. And with that, I will conclude the year and review snapshot. I want to thank you for your time and for listening today. And I will now pass the mic back to the Chair, Mr. Chair person, over to you.

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

Chair, we, the scrutineers of this meeting, hereby declare that on a preliminary basis, each of the 9 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 Thorton as auditors of the corporation for the ensuing year and to authorize the directors to fix the auditor's remuneration. At least 98% of the votes were cast in favor of the approval of all unallocated awards under the corporation's long-term incentive plan, renewal of the 3 years of the LTIP. At least 98% of the votes were cast in favor of the ratification of grants made since June 21, 2025 under the corporation's long-term incentive plan. And at least 97% of the votes were cast in favor of the amendment to increase the limit under the corporation's long-term incentive plan.

Well, thank you, Mr. Gely. Before we close, on behalf of the Board, I'd like to thank agent management team for their continued support and leadership and thank all of our employees for their hard work and dedication. And thanks to you all for joining us today, and have a wonderful rest of the day here. Thank you very much. This meeting is concluded.