Pyrum Innovations AG (PYRUM) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and a warm welcome to the first Deutsche Boerse Scale Summit. My name is Ingmar Grapenbrade, and I'm very pleased to welcome you on behalf of Deutsche Boerse. This new format brings together investors and high-growth scale issuers, enable a direct exchange on strategies, positioning and investment stories. Each presentation will last 20 minutes and will be followed by a 10-minute Q&A session. We warmly encourage everyone to actively participate in this discussion. With that, I'm pleased to welcome the Pyrum Innovations AG represented by CEO, Pascal Klein; and CFO, Kai Winkelmann, who will guide us through the presentation of the company. And with no further ado, I'd like to hand over to Pascal Klein.

Good day, everybody, and thank you all for joining this presentation today. My name is Pascal Klein, CEO and Founder of Pyrum. So I did start this adventure already in 2008 as a student project at that time, and now we are a listed company in the Scale segment in Frankfurt, as you may all know. So I will start to walk you through a general presentation of Pyrum together with our CFO, Mr. Kai Winkelmann. So that's the 2 people which will present the presentation. Kai has joined us in 2021. And as already said myself, I'm in the company since 2008 since the beginning. So what we do and why we do it, I would like to start with the market itself. We recycle tires, but not only tires. We started with tires because it's such a huge market. And with 30.9 million tonnes worldwide, and 3.6 million tonnes in Europe, it was for us a very good first starting point to create new critical resources from waste. So that is what we mainly do. We are -- we see ourselves not only as a recycler and a company that saves CO2, but more and more, also with all the political discussions we have had in the last months, we see ourselves as manufacturer of raw materials that are, I would say, even among the most critical ones in the world. And so let's look first at the market. So what were tires used for in the past. So most of them were burned. That was 35% for a long time. Now we still burn 17% of all used tires in Europe, but that is decreasing. Most cement plants, which burn tires have announced to stop fully the burning of tires until 2030. Granulates, that's what you sometimes see on children's playground, soccer fields and other sport fields. That has been forbidden by the European Union in 2023 with a grace period of 8 years. So we will see that area of granulates made from tires disappear in the next -- yes, it's only 5 years left. What has increased in the last years is the export because as tires are not burned anymore and nobody knows where to put them, more and more exported. So in the last year, that went up from just 10% to 23%. And what also increased dramatically is the unknown part that was 5% to 10%, now it's 23% and that are now mostly tires that are illegally exported, and which I'm very proud of, you now see Pyrum for the first time in the 2025 data with approximately 2% of the German market and hopefully steadily increasing. As granulates are dying out, burning is dying out and export will now be forbidden with new export bans that have just started this year since the 21st of May 2026, there's an export ban for used tires in non-OECD countries, and there are new bans coming in the next years. Why is that the case? It is the European Union has understood that waste is not a waste, waste is a resource -- raw material that can be used for our best, and that's why there are more and more exports ban coming. So I would say all the market is facing towards us, which is, I would say, from the market side and from the political side, we couldn't be in a better situation than the one we are right now. So what are we doing and quickly explain the process. So we are taking in tires from different sources. Our main suppliers are, for example, Schwalbe, Michelin, Conti, et cetera. If you take 1 tonne of tires, you shred them, you get about 150 to 250 kilogram of steel, depending on the input. Truck tires have more steel than car or bike tires, for example. Textile fibers are also sucked out during the shredding process that gives between 0% and 10%, so between 0 and 100 kilogram out of 1 tonne of used tires, that's textile fibers. And on average, you can say that we have 700 kilogram of rubber out of 1 tonne of used tires. That goes then, and that is the whole -- the white part here of the graph. It's what we have invented mainly. That goes to our reactor. And at the end, we get 250 kilograms per hour of ThermoTireOil. That's how we call it. That's our oil and about 310 kilograms of carbon. That carbon is then milled, pelletized and that gives at the end ThermoTireBlack, which is also the name, the public name is recovered carbon black. That is then used to make new tires. So that goes to our offtakers, Continental and Schwalbe, who use our ThermoTireBlack or recovered carbon black, so to say, for new tires. The oil is slightly cleaned and goes today mainly to BASF and BASF makes everything that surrounds us in our daily life from medicines to new plastic to parts for Mercedes-Benz to clothing from VAUDE and even ibuprofen is made, thanks to our oil. So I could name hundreds or thousands of products that are made, thanks to our oil because the oil we [ replace ] is crude oil in the chemical industry. And at the end, we have a gas that is left and that gas is used either in micro turbines or in our combined heat and power plant, and that feeds the electricity needed by our reactors, and it also gives the warmth for the dryer in the pelletizer that makes the recovered carbon black pellets. So what you can remember from that graph is that tires is a critical raw material. And from 1 tonne of tires, we generate 250 kilograms of oil, 310 kilograms of recovered carbon black, average 200 kilograms of steel and 150 kilograms of gas, which is enormous. 4 tonnes of tires give you 1 tonne of oil. So that's the shredder. So the plant is 4 units, in fact. Shredder is more or less state-of-the-art unit. The Pyrum thermolysis units what we have invented. Here, the power plant is something that we have co-developed with a gas power plant manufacturer and the mill and pelletizer in blue here is the last piece of the puzzle that we have just accomplished in April this year, and we're just now running on industrial scale. So that is what the plant looks like in real life. So what I just explained here, you see it in real size. So that's the shredder in orange that can process today approximately 600 car tires per hour. So it's not a prototype anymore and not anymore a lab scale unit with 600 tires per hour. In green here, you have our 2 new reactors, our serial reactors that are now copied in each new plant. Then you have in yellow our power plant, which is a huge part of the plant, but it's also there to create the energy to keep our reactors self-sustaining. Then you have the mill and pelletizer in light blue, the oil storage tanks are underground, the control room in red, our new tire storage, which is full today and our maintenance spare parts. So that is what the basic standard Pyrum industrial plant looks like on the picture. We have -- from a patent-wise to protect our technology, we have now 2 patents that exist already, one global patent on our reactor and one patent on our process. And we have just developed 2 new patents that have been declared just in 2024, one together with Continental, the so-called golden recovered carbon black and that we have done hundreds of test runs together with Continental to find the right way to produce recovered carbon black, and that's now our brand name TTB, ThermoTireBlack, and that can be used in forklift tires and soon also in other tires. And we have just declared a patent for carbon fiber reinforced plastics, which will be the next big thing that we will attack after the tires for -- to open a fully new market. If you want to sum up the highlights of our technology and what we were able to achieve since our foundation is we have now the first industrial plant that has reached technical readiness level 9 out of 9. So the higher -- you cannot go any higher. That is a proved industrial technology running on industrial scale for more than 2 years. We have created 2 completely new products, the TTO, so the ThermoTireOil, which can replace crude oil in the chemical industry, for all applications in the chemical industry that you can imagine. And just recently, we received the ISCC EU certification proving that our oil contains 50% biogen content and so our oil can also be used for green jet fuel and green fuels. And the ThermoTireBlack replaces carbon black in the tire and plastic industry. And most people don't know that in the past, 60% to 70% of all carbon blacks came from Russia and that we are really depending on carbon black in many products, not just tires, but also pigments, coating, et cetera. So our plant is now fully self-sustaining energy-wise, the thermolysis part, so our technology, not the shredder that needs external energy. We have -- we were able to get all required certificates in the last 3 years. So REACH, ISO, VDA 6.3, which was the hardest one that's the certification that you are allowed to produce raw materials for the automotive industry that are security relevant. We have ISCC+, ISCC EU for the biogen oil, RSC (sic) [ RCS ] for the textile industry. We got an ESG rating of very good and Fraunhofer Institute has confirmed that we saved the equivalent of 965 kilogram of CO2 per tonne of used tires. And I would say one of our biggest successes in the last 2 years is that we have signed an offtake agreement with BASF for 10 years for the oil for 300,000 tonnes per year. That equals 150 Pyrum Reactors. And today, we have 3 in operations. So we can build, build, build. The oil is sold already for the next plant. Continental the same, a 10-year offtake guarantee for the carbon black. First of its kind in the automotive industry. Usually, you only get 2 or 3-year contracts, volumes 13,000 tonnes per year. That's enough for the next 6 reactors. And with Schwalbe also 10-year offtake guarantee for carbon black. And we just received end of last year the first grant from the European Investment Fund of EUR 29.4 million for our project in Greece. So as you can see, the biggest German tire brands, 2 of the biggest recycling companies in Europe, the 2 biggest tank operators in Europe and the biggest chemical company on this globe work with us or is investor in us. So they cannot all be wrong if you ask me. Partners and customers. So right now, we are building -- we have more than 20 plants in pipeline. 10 projects have already started because everybody is pushing us now to get raw materials, to get oil, to get carbon black and to get energy. We have created 2 new joint ventures with, for example, UNITANK, the biggest tank operator in Germany. In 6 countries now, 4 permitting processes for plants are running right now as we speak. And 3 permits have been granted just recently, all end of last year and beginning of this year. The 3 permits we have received is for the next Pyrum plant in Perl-Besch for the reTire project together with SUAS, the biggest energy -- privately owned energy supplier in Czech Republic in Sokolov next to the German border. And with Thermolysis in Greece, that's 140 kilometers north of Athens. There, we also have the permit already, and we are starting there with the call for tenders and all that stuff. So just the projects that are already running, the 10, is 220,000 tonnes of tires. It's only 6.4% of the European tire market, but really not a lot. We are investing together with our partners over EUR 600 million. And the oil is completely sold already for these 10 plants and the carbon black is already sold at 25%, even though these plants are not built yet. So as we don't have so much time, just a quick summary on where we are standing with the project. SUAS is FID, final investment decision is taking. We are in the final bank contracting phase for the loan part for that, groundwork has already started there. Thermolysis has also secured the financing, and we are now in the call for tenders for the local works like groundworks, streets and all that, that should be accomplished in September so that we can start the actual building of the plant in September. With UNITANK, we have created a joint venture just this year to build 10 plants in Europe. The first one will be in Emleben in Thuringen in Germany, and we are just doing the engineering for that plant right now in which we will have 49% or we have 49% in the joint venture. And VTTI, the biggest LNG terminal operator on that globe, we have finished the first engineering phase, the pre-FEED phase, and we are about to start the Phase #2, which is the FEED phase. With REMONDIS, we will make a plant in Bremen. That was a bit slowed down in the last 6 months, but now it's at same speed again as it has been -- there was a restructuration at REMONDIS. And we are also doing a plant together with the guys from GreenTech in Sweden, and they plan to secure the financing this year and to take FID this year. We will hopefully soon announce a new tire partner -- tire manufacturer partner, and we have signed an MOU with a new big recycling company in April, but who it is and what it will be and where we're not allowed to speak about that right now but hopefully soon. So now I will hand over to Kai for some finances.

Yes. Hello, everybody. We are coming here to plant economics of a single plant. We expect around EUR 17.5 million in revenues per plant. The major part is the rCB, so the coal that's coming out of the tires. It represents around EUR 10.6 million. The gatefee is important for us. We receive money for disposal of tires, and that's around EUR 2.3 million. That should cover the cost of the shredding part. Steel is around EUR 1.7 million and the oil is around EUR 3 million. The oil is directly going to BASF and can be used in all products you can imagine from medicine to clothing, tires, whatever you can think about that is needed by chemical products. Direct costs are actually estimated by around EUR 2.6 million, mainly included here is the energy consumption for shredding, the milling and pelletizing. As Pascal already said, the reactor itself is self-sustaining. The gas is used for that. So we are transforming the gas into energy. That's fed back into the pyrolysis units and then the pyrolysis plant is self-sufficient. Heat and energy is also used at the plant site. OpEx cost is around EUR 5.2 million. Half of that is staffing costs. So we expect an EBITDA of EUR 9.7 million for our plant. As we publish financial figures on Friday for Q1, I'm here just allowed to talk about the figures for 2025. We doubled our revenues in the last year from EUR 2 million to EUR 4.1 million. We expect that this year we will again have a big move upwards to EUR 6.5 million to EUR 9.5 million. That depends how quick the new pelletizing part for the rCB will be functional in full. Operating output was EUR 4.3 million, total output comparable to the last year as other own work capitalized has dropped. This will increase when we start the next projects after signing plant purchase agreements. So total output is estimated between EUR 12 million and EUR 18 million for 2026. The other operating income was influenced last year by governmental grant by EUR 2.9 million. Expenses of materials slightly went down. Personnel expenses, we have more staff than in the year before. So it increased by around 12%. And we have in total an EBITDA slightly better than the previous year at EUR 5.2 million. EBIT, EUR 8.7 million after EUR 8.9 million and net results, minus EUR 10 million comparable to the previous year. EBIT is estimated between minus EUR 8 million and minus EUR 10.5 million for this year. And we expect to be EBITDA positive in 2027. So we're coming to highlights and outlook comparison and put together, let's say, what are the next steps? The next steps is getting access to funds to finance the second half of the rollout plan on Pyrum. It always depends if we build more own operated plants or more partnerships. Actually, we have a lot of projects in the air. So it's mainly driven by partners. Completion of the Bank Due Diligence, that's crucial. So we are waiting for finalizing the mill and pelletizing part, especially transportation that we can finalize the due diligence now. The infrastructure funds are always in our view. So we are always discussing with infrastructure funds if there are some possibilities, if it makes sense for us also and with strategic investors. As you might have seen during the last capital increases, Schwalbe as the biggest tire manufacturer for bicycle tires increased its stake in Pyrum. So I hand over to Pascal.

Thank you, Kai. Thank you. Kai is always speaking about a little summary at the end. So our goal now is to increase our output of recovered carbon black of our TTB. That has started now with the final audits that we have passed with Continental in May. So the volumes are rising now month after month. So for the moment, the capacity of rCB that we can produce is enough for the ramp-up plan. There will be a slight modification in the mill and pelletizer in August, and that fits with the ramp-up plan. So hopefully, in September, then we will be at 100%. But you all have to know, it's not just the plant that needs to work, also the offtakers like Schwalbe and Continental, they don't buy 100% from one day to the next. After the audit, then they have to bring it into the plants, and that also takes some weeks and months for some plants. Yes. FID with SUAS is an important step now as we started there already. In Greece, the same. It's also planned that the plant starts there this year. And yes, we are working a lot on the European side for the new end-of-life vehicle regulation, which obliges new cars to be made out of old cars. These are a certain percentage. We hope that, that will come out this year, and that will give a big push to our business. EU Waste Shipment Regulation has come out in May, which helps us with the export ban for tires. And a very good thing for us also is the new Circular Economy Act, Ecodesign regulations, they will take in tires this year. So tires will be regulated and we will have also a green footprint that is also completely working towards us. So that's a summary of the main results in the last year, I would say. That's for those who didn't listen. So that's a summary page. And I would say that's it. So we can go to the Q&A session.

Okay. Thank you very much for the presentation. And ladies and gentlemen, now it's your turn. We are opening the Q&A session. [Operator Instructions] And we already received some. I'll read them out. The first question is what is the balance of energy of your recycling process? For example, how much energy do you need for this process and where it is coming from? And how many energy is contained in our output products in comparison?

So if I see the full question, it is also what is better about burning tires, if I may add that because I prepared already the answer. There are so many things that are bad about it. Just the fact that for 1 tonne of used tires, you create 2.6 tonnes of CO2. And with everything that you burn is gone forever, you do that once and it is done forever by taking out the resources of the tires. And we use them in the circle, you can use that endless. We are on a planet that has no endless resources, so we should save them as good as we can. From energy side, from the whole plant, the whole plant needs about 20 gigawatt-hour per year, and we can produce 12 of them ourselves, so more than half. So as I already said during the presentation, the shredder is roughly 8 gigawatt-hour, and those we cannot cover.

Thank you very much. And the next question from the same person, [indiscernible], do you need to raise further equity to pursue your business plan? Or are you fully funded? When are you planning to reach cash flow breakeven?

Okay. So as you might have seen in the presentation, the 10 projects that are already live need about EUR 600 million in investment -- in cash for investments. We expect that around 65% to 70% can be financed by project finance, the rest needs to be covered by equity. So it depends if we build own plants, then we have the bigger capital needs directly at the accounts of Pyrum or if we work together with partners where the finance and big chunks of the equity is coming from the partners. So actually, it is not planned to have, let's say, a next capital increase. We have done a capital increase in December last year that we can reach the position of, yes, cash flow positive. But if we want to further grow, and you see in the presentation that we want to further grow, there are several models that could result in capital increases and capital needs into the AG or injections into daughter companies, as example, with infrastructure funds. So it is not easy to answer with a yes or no.

Maybe if I may add here, we have the joint venture with UNITANK to build 10 plants in Europe. And Pyrum can have up to 49% of each of these plants. It always depends once the plant is finally permitted and planned and FID is taken, then Pyrum has the choice whether we have 10%, 15%, 20% or up to 49% share in that new plant. It depends on how much equity Pyrum can bring at that moment.

Thank you very much. And one other question is, what is the main bottleneck of growth? Is it input material? Permitting capital? Can you elaborate?

I would say we have no bottleneck in the input. We have no bottleneck in the output. The only bottleneck we have is in structuring the financing. That is really the biggest brake as we have a permitted plant in Germany, which is among the highest demands for the permitting procedure. Czech, we have received the permit. In Greece, we have received the permit. Permit-wise, it was a huge issue, but it isn't anymore. Offtake agreement is also not an issue anymore. It's really just to build the financing.

Thank you. And in that direction, how can you scale bigger plants or more plants?

That is more a financial question. If you had endless financial resources, we would build it differently. We would build much bigger plants and decentralized tire centers where you just collect the tires, shred them and bring them to one giant Pyrum facility, but that costs enormous amounts of money, and that is really concentrating the risk on one plant, which nobody shares. So no investor wants to have such a big, concentrated risk on one side. So it's more or less the investment structure and investors we have today that pushes us more in the direction to make smaller -- more and smaller plants.

And to add to this, bigger plants in Pyrum's case means more reactors, not bigger reactors because we have reached the final setup for the reactors. So it's a scale up on one plant side if we talk about bigger plants.

Okay. So we switch to one last question. How do you plan to finance the rollout of major projects without creating excessive dilution for shareholders?

Yes. As example, we have access to debt, especially through BASF that we, as example, could use as equity in projects like in Czech. And so it will always be a mix. But yes, another opportunity is that we have, let's say, 2 candidates where we purely sell plants to them and that would also generate cash for further Pyrum-owned plant.

Okay. Thank you very much. And due to the lack of time, we come to the end of this event. But there are more questions in the chat, and we hand them over to Investor Relations at Pyrum. Thank you very much to all the participants for your interest in the company. Thank you to Mr. Klein and Mr. Winkelmann for your presentation and the time to answer the questions, the answers I will forward to you. I, from my side, wish you a successful day and hand over to Mr. Klein for some closing remarks.

Thank you very much for the chance to present here. And I'm also sorry that we cannot answer all the questions, but we are really limited in time here. So if we get the answer -- the questions afterwards, we will try to answer them afterwards in written. Thank you very much.