PyroGenesis Announces 2022 Fourth Quarter and Year End Results

  • European Metal Powders Production: Throughout 2022, the Company continued to evolve its strategy,  first announced in July 2022, for European market expansion for its titanium metal powder line of business – with the goal to eventually build and operate a metal powder production facility in Europe. Subsequent to year-end 2022, in Q1 2023 the Company  announced expansion of its strategy team, with the hiring of a key Europe-based executive with a long track-record across sales, marketing, and business process in the metals industry, particularly the aerospace, space, and defense markets.

  • Quality Management Process Certification: In November 2022, the  Company passed its annual quality audit for two key international standards: ISO 9001:2015, and AS9100D, the latter being a quality management designation specific to the aerospace industry. The audits encompassed all of PyroGenesis’ facilities for the purpose of meeting compliance with the existing quality management designations. Additionally, as a result of this audit, the Company’s newest facility located at 9371 Wanklyn St. in LaSalle, Quebec, was officially added to the ISO 9001:2015 certification. Separately, the Company continues on its path to become ISO 13485:2016 certified, a Quality Management System designation required by most manufacturers within the medical devices and related services industry.

Financial

  • Private Placement: In October 2022, the Company completed a non-brokered private placement consisting of the issuance and sale of 1,014,600 units of the Corporation at a price of $1.30 per unit, for gross proceeds of $1,318,980 to the Company. The closing price of the common shares of the Company on October 18, 2022, the last trading day prior to the closing of the private placement, was $1.17. Each Unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder to purchase one common share at a price of $1.75 until October 19, 2024. The issued common shares and warrants as well as the common shares underlying the warrants are subject to a statutory hold period of four months and one day from the date of closing, in accordance with applicable securities legislation.

Outlook

Consistent with the Company’s past practice, and in view of the early stage of market adoption of our core lines of business, we are not providing specific revenue or net income (loss) guidance for 2023.

In 2023, we continue our plan to increase sales, marketing, and R&D efforts in-line with– and in some cases ahead of – the growth curve for industrial change related to greenhouse gas reduction efforts. This includes expanded technology offering and capabilities across the industrial value chain, using an updated strategy that sees the Company bundle its solution-set into verticals that represent key economic drivers for heavy industry.

Overall Strategy

PyroGenesis provides technology solutions to heavy industry that leverage off of the Company’s proprietary position and expertise in ultra-high temperature processes. The Company has evolved from its early roots of being a speciality-engineering firm to being a provider of a robust technology eco-system for heavy industry that helps address key strategic goals.

Aligning Business Lines to Economic Drivers

As interest in the Company’s products has increased and the variety of uses for its core technologies has expanded, the Company has evolved its strategy to concentrate its solution set under three categories. These categories represent economic drivers that are key to global heavy industry:

1.  Energy Transition & Emission Reduction:

  • fuel switching, utilizing the Company’s electric-powered plasma torches and biogas upgrading technology to help heavy industry reduce fossil fuel use and greenhouse gas emissions.

2.  Commodity Security & Optimization:

  • recovery of viable metals, and optimization of production to increase output, to maximize raw materials and improve availability of critical minerals.

3.  Waste Remediation:

  • safe destruction of hazardous materials, and the recovery and valorization of underlying substances such as chemicals and minerals.

Within each category the Company offers several solutions at different stages leading up to commercialization, including the partial list in the diagram below:

Solution Ecosystem

The Company believes its strategy to be timely, as multiple heavy industries are committing to major carbon and waste reduction targets at the same time as many governments are increasingly funding environmental technologies and infrastructure projects – all while both are making efforts to ensure the availability of critical minerals during the coming decades of increased output demand.

While there can be no guarantee, the Company believes this evolution of its strategy beyond a greenhouse gas emission reduction emphasis, to an expanded focus that encapsulates the key verticals listed above, both improves the Company’s chances for success while also providing a clearer picture of how the Company’s wide array of offerings work in tandem to support heavy industry goals.

PyroGenesis’ market opportunity remains large, as major industries such as aluminum, steelmaking, manufacturing, and government require factory-ready, technology-based solutions to help steer through the paradoxical landscape of increasing demand and tightening regulations and material availability.

As more of the Company’s offerings reach full commercialization, PyroGenesis will remain focused on attracting influential customers in broad markets, and ensuring that operating expenses are controlled to achieve profitable growth.

Financial Summary

Revenues

PyroGenesis recorded revenue of $3.3 million in the fourth quarter of 2022 (“Q4, 2022”), representing a decrease of $3.9 million compared with $7.2 million recorded in the fourth quarter of 2021 (“Q4, 2021”). Revenue for fiscal 2022 was $19.0 million a decrease of $12.1 million over revenue of $31.1 million compared to fiscal 2021.

Revenues recorded in fiscal 2022 were generated primarily from:
 (i)PUREVAP™ related sales of $6,272,697 (2021 - $6,138,111)
 (ii)DROSRITE™ related sales of $1,912,807 (2021 - $7,940,771)
 (iii)support services related to systems supplied to the US Navy $1,288,356 (2021 - $7,522,809)
 (iv)torch related sales of $5,558,210 (2021 - $2,084,511)
 (v)biogas upgrading & pollution controls of $3,347,443 (2021 - $6,800,090)
 (vi)other sales and services $633,990 (2021 - $582,058)

Q4, 2022 revenues decreased by $3.9 million, mainly as a result of:

  • PUREVAP™ related sales decreased by $0.1 million due to the project nearing its completion, with the phase of the project being mainly testing,
  • DROSRITE™ related sales decreased by $1 million due to customer delays in funding for the construction of the onsite facility,
  • Support services related to systems supplied for the US Navy decreased by $1.3 million due to a revision in the cost budget which effects the revenue recognized by percentage completion. As of December 31, 2022, the customer has not provided a firm purchase order for the change in project scope, however, the Company expects to do so in 2023, and
  • Biogas upgrading and pollution controls related sales decreased by $3.1 million due to clients requesting additional modifications prior to installation and commissioning, as well as continuous testing to achieve desired results.

Fiscal 2022 revenues decreased by $12.1 million, mainly as a result of:

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