A series of setbacks in 2023 will make way for PyroGenesis Canada Inc.’s (PYR-T) “most robust sales pipeline we’ve ever had” in 2024, CEO Peter Pascali said during its Q4 2023 financials call Tuesday with investors.

The Montreal-based company employs electric-powered plasma for sustainable applications such as producing battery-grade materials, providing alternatives to fossil fuel-powered equipment and waste remediation.

Revenue in 2023 fell to $12.3 million compared to $19 million in 2022. Similarly, revenue decreased from $3.3 million in Q4 2022 to $3 million in Q4 2023.

Sales slowed year-over-year due to completion of projects and a sale of intellectual property. Though its revenue decreased compared to 2022, PyroGenesis’ strategic investments paid off, ensuring the company’s comprehensive losses were kept at $28.5 million in 2023, compared to $32.2 million in 2022.

Despite the shrinking margins and not signing all of its anticipated contracts in 2023 – enough to make Pascali ask, with tongue firmly planted in cheek, “Who would sign up for this?” – he projected a brighter future based on a backlog of contracts worth $28.8 million and signs of greater interest from customers in heavy industry.

“Notwithstanding these numbers, I’m extremely positive about what the future holds for the company and how we’re positioned to address that future,” Pascali said on the call.

Coping with the economic turbulence

He also referenced constrained supply chains, labour supply issues and rising interest rates as major blows to PyroGenesis that the company and its clients are recovering from.

Its gross margin in Q4 2023 stood at 23 per cent, creating a profit of $0.7 million, contrasted with a 15 per cent margin in the same period in 2022 generating $0.5 million in profit.

But its gross margin for the year 2023 stood at 28 per cent leading to a profit of $3.4 million, contrasting with a 43 per cent margin in 2022, resulting in $8.1 million in profit.

Pascali noted PyroGenesis' current numbers are in line with expectations.

To save millions of dollars, PyroGenesis delisted from the Nasdaq in November 2023 and tasked its procurement department to cut costs for equipment purchases by 10 per cent. Though it was “very challenging” to slash the budget and maintain the quality of its product, Pascali said the procurement team “knocked it out of the park.”

The company’s costs were decreased “significantly” and PyroGenesis leveraged its project portfolio to de-risk its operations, he added. It obtained its first contracts in the cement and chemicals industries and patented its 3D printing process in the U.S.

An update on its technology

In Q4 2023, the company made substantial progress on its two major projects: the PUREVAP Quartz Reduction Reaction (QRR) pilot plant and the Fumed Silica Reactor (FSR).

The QRR process creates silicon by subjecting quartz to a plasma reactor. The process was scaled up 2,500 times from laboratory-scale testing, achieved purity over 99.9 per cent and was found to use 25 per cent less raw materials compared to conventional methods.

FSR, which converts quartz into fumed silica (a thickening agent) using a plasma reactor, was deployed on a laboratory scale and produced a milestone batch comparable to commercially available fumed silica. The achievement “validated a critical milestone,” Pascali said.

PyroGenesis expects the FSR pilot plant to be operating in Q2.

PyroGenesis’ expectations

While PyroGenesis’ revenues are not where the company wants them to be, Pascali said, the company has “good momentum.” Its $28.8-million sales pipeline is a source of particular optimism.

The trend to decarbonization in heavy industry such as aluminum, steelmaking, manufacturing, cement and chemicals has fuelled a surge in interest for the plasma torches. PyroGenesis will focus on attracting customers in industrial markets as a result.

In 2024, PyroGenesis will continue its focus on the energy transition, commodities recovery and waste remediation.

In the short-term of one to three months, this means:

• developing an aluminum remelting furnace solution using plasma instead of natural gas;
• engaging with a large global steelmaker in its intent to use PyroGenesis in a fuel transition study;
• negotiating a contract with a client for a plasma torch deal worth over $10 million;
• potentially handling an order for laser cut titanium metal powder from a global organization expected to occur in Q2; and
• creating a silicon-based sustainable cement additive to replace fly ash in a project with Progressive Planet.

In the mid-term (three to six months), its next steps are:

• continuing talks with aluminum manufacturers to conduct tests of its Drosrite aluminum dross processing systems within the clients’ factories, and with aluminum manufacturers for potential purchase of Drosrite;
• discussing the sale of a Plasma Resource Recovery System with a European company. The contract for the technology that turns municipal solid waste into energy and chemical products may be valued from $25 million to $30 million; and
• engaging in negotiations with a company interested in PyroGenesis’ Plasma Arc Waste Destruction System to clean up waste from seawater.

“As the decarbonization trend continues to mature, we are well positioned as a company with deep experience in the field, a key factor to customers as the scale of projects amplifies,” Pascali concluded.