Introduction:
PyroGenesis ($PYR) will experience superior price appreciation in 2022 due to; Investments in silicon with $HPQ, PyroGenesis Additive, strong balance sheet and Insider ownership, its ability to drive significant near and long-term growth, and its diversification in multiple revolutionary industries with new revenue streams that have never existed.
Thesis:
Have you ever heard of the 4th state of matter? didn't think so... let me introduce you to Plasma! You may recall hearing about the 3 states of matter: solids, liquids, and gasses, but what is Plasma? Simply it's what the stars in our solar system like our Sun, and lightning consist of. Plasma is essential because it can either break down and separate materials into their primary states or can transform multiple materials into atomized powders for the manufacturing of many products for many industries.
This is the best Picks and Shovels play on the renewable energy revolution and the “greening” of the planet over the long term. What investors should understand is that harnessing the power of plasma technologies is fundamental to enabling next-generation technologies in the advanced materials industries, and riding the tailwinds of revolutions happening right now like; Electric Vehicles, Renewable energy, Space exploration, Green House Gas (GHG) reductions, and 3D printing to name a few. This makes the company very Antifragile because it doesn't rely upon one sector, but will reap the benefits from the S-curve adoption of disruptive innovations.
Investment and partnership in HPQ (Silicon):
I am sure you have heard of the Chip Shortage by now, and you should know that these “Chips” are purified Silicon in integrated circuits(semi-conductors). However, the biggest markets for Silicon are the aluminum industry, Silicone additives (for sealants, lubricants, and many other products), and Renewables making up the current 3rd biggest silicon market share.
Silicon is classified as a multibillion-dollar business opportunity. Market demand for HPQ produced nanopowders and nanowires is estimated to reach US $1B by 2022, expanding at a CAGR of 38.9% between 2019 – 2024.
$PYR developed a PUREVAP Quarts Reduction Reactor (QRR) with $HPQ to process low-quality quarts into highly valuable, and high purity Silicon for many essential reasons such as but not limited to:
- The renewable industry in solar panels is necessary for the function of converting sunlight to power, it is even used in wind turbines for bearings.
- Silicon is critical to the transformation of EV batteries like fumed silica, and in high silicon anodes such as Tesla’s to reduce charging times and produce longer ranges.
- A specialty high-tech material needed for NASA’s space shuttle project, silicon nitrides spheres for ultra-low friction, lightweight, and is extremely thermal resistant properties
- Demanding non-ferrous applications like Aluminum to withstand high mechanical stresses corrosive and wearing properties.
Without the Plasma technologies, PyroGenesis is developing the industry is desperately falling behind, as the shortage for this material (deficit of over 100’000 tons) can't keep up causing the prices to soar. With the growing demand of over 20% annually, Silicon is essential for our daily human activities and our renewable future.
The process to get silicon for these purposes is extremely energy-intensive, requires very pure forms of quarts, and requires massive investments in infrastructure. PyroGenesis collaboration and strategic investment with HPQ are solving these high capital risk issues to make more pure forms of silicon cheaper producing higher ROIC, and a greener more efficient process for the economy. This is also a strategic move because now that $PYR has a joint venture and an invested interest between HPQ no one company could be acquired from a hostile takeover without approval from both companies.
PyroGenesis Additive:
PyroGenesis Additive is the inventor of Plasma Atomization, specializing in providing plasma atomized spherical metallic powders with some of the most spherical, pure, dense, and highly flowable properties, which are highly sought after in the Additive Manufacturing industry for Aerospace, Medical, and Military use.
ARK Invest even classified 3D printing as a revolutionary platform technology that will usher in the Third Industrial Revolution. This market is expected to grow to upwards of 490 billion in just 3 years a 35-94X.
Pyogenesis is the material enabler allowing for such high-performance materials to be atomized so that they can be useful as feedstock for these new industrial revolutions.
Balance sheet, growth, and Ownership:
With a solid balance sheet of 26MM (on March 31st, 2021) of Cash on hand, they have more than enough to cover capital expenditure run-rates, and its short-term assets exceed its short-term liabilities of only $787k. With a market cap of ~500 Million, this is still a relatively small company that is will grow significantly by disrupting and providing so many critical materials for the future.
2020 revenues increased by nearly 270% year-over-year to $17.8 million, generating a net income from operations (before share-based compensation) of $2.9 million. That momentum continued into the first quarter of 2021 with revenues of $6.3 million as compared to revenues in the same period last year of $0.70 Million or a 900% increase quarter over quarter. Their backlog of signed contracts increased to over $25 million from $7 million a 357% increase in the pipeline.
The CEO Peter pascal owns 42% of the company, collectively individual insiders own 50% of the total company outstanding shares showing very strong conviction and skin in the game.
Driving significant near and Long-term growth:
PyroGenesis can Identify new areas of concern that can be uniquely addressed such as PFAS chemicals a newly classified waste stream of forever chemicals that are detrimental to the environment and can cause cancer in humans, and other toxic hazardous waste such as bioweapons.
The Plasma torches are at the cruces of this technology to reach temperatures upwards of 5000 degrees C, which is crucial for two additional business lines providing near-term revenue in the metal industry that is Iron-ore pelletization, and aluminum dross recovery. Its estimated one torch provides upwards of $7 Million in value add over its service life, and the current market for iron ore pellet production alone is $10Billion.
The company is also highly experienced in (M&A) Mergers and Acquisitions. Recently it acquired a company called Air Sciences that captures organic waste gas (biogas) from landfills, agricultural waste, and wastewater sludge and upgrades it to RNG that can be purified for use in your home. This is interesting because governments are now mandated by law to incorporate minimum amounts of RNG creating huge demands. Global biogas market size was $25.5 billion in 2019 and is projected to reach $31.69 billion by 2027, exhibiting a CAGR of 5.30% during the forecast period.
PyroGenesis has a Golden ticket Inside the fence advantage, to cross-sell other products such as PYR’s plasma waste reduction process for the US military who have never made an exception to introducing foreign technologies on its naval carriers (arguably the highest technological platforms on earth)
These extra revenue streams will compound over time and produce cash-flow uniquely positioned to PyroGenesis. The long-term global movement to reduce the world’s carbon footprint is both aligned with the near-term government promotion and funding of environmental technologies & infrastructure projects.
Summary:
In conclusion, PyroGenesis is uniquely positioned to capture significant revenue streams in the highest growth rate markets of our time. With a strong balance sheet and multiple end markets with growing demands and in some cases deficits, this is a high reward to minimal risk investment. Do not miss out on this small company that will ride the wave of renewable energy technologies and is enabling those very revolutions to take place by providing companies with the materials possible for transitioning the world to renewable energy and many industries alike.
This is not financial advice. Everything in this note is purely for educational and entertainment purposes.
Sources: PyroGenesis, HPQ Silicon, Reuters, ARK Invest.
#Growth Contest 2022