Third Quarter 2026 Business Update Conference Call - PYROGENESIS CANADA INC

Explicit Guidance:

• No explicit numerical guidance provided for full-year 2026 revenue, earnings, margins, or cash flow.
• Management states the company is "on track to close out 2026 strongly" but defers specific financial metrics to "updates in that regard in the very near future."
• No guidance provided for share count, dividends, or buybacks.

Business-Segment Outlook:

• Additive Manufacturing (Titanium Powder): Executing an operational scale-up "several times larger" than current capacity; goal to attract capital to finance this expansion; targeting recurring demand by developing repeat customers and expanding suitability across laser bed powder fusion, electron beam melting, and direct energy deposition; three new clients secured in Q3 with post-quarter repeat orders.
• Materials Production (Fume Silica): Leveraging newly acquired 50% ownership of HPQ Pulver to solidify long-term rights; holding "very high expectations" for the fume silica reactor (FSR) technology; potential projects identified with a global manufacturer, a joint venture partner, an end-user, and a Middle Eastern customer.
• Energy Transition: Supplying plasma torches to European mining/metallurgy clients for non-ferrous metals and critical minerals; focus on decarbonization and the circular economy.
• Waste Processing: Pyro Green Gas subsidiary completed the operational liability period for the Tata Steel hydrogen production project (99.9999% purity); responsibility formally transferred to the client.
• Backlog: $39.9 million backlog (as of Nov 12, 2026) expected to be recognized over periods ranging from 6 to 36 months.
• Strategic Focus: Four primary priorities for the remainder of the year: executing the backlog, converting commercial opportunities into contracts, maintaining cost discipline, and building shareholder value.

Market and Competitive Outlook:

• Demand Trends: Expecting continued demand for critical materials (titanium powders) and sustainable metallurgy solutions; additive manufacturing sector showing momentum with recurring orders.
• Pricing and Costs: Anticipating compressed gross margins industry-wide (32–41%) due to higher input costs for energy, commodities, and shipping; specific price spikes noted for copper (+25% YoY), new aluminum (+7.5%), and scrap aluminum (+23%).
• Supply Chain: Ongoing international shipping lane disruptions due to security threats expected to persist, impacting production and logistics costs.
• Competitive Positioning: Strategy to build "critical mass" across project ranges and de-risk offerings by expanding into multiple additive manufacturing applications.

Macro / Industry Outlook:

• Economic Landscape: Management acknowledges a "continuously fluctuating economic landscape" where client cash flow and scheduling challenges may cause revenue irregularity quarter-to-quarter.
• Revenue Recognition: Anticipates continued irregularity in quarterly revenue due to the percentage-of-completion accounting model, which ties revenue booking to project milestones, client scheduling, and logistical decisions.
• Sector Performance: Heavy industry and manufacturing sectors expected to maintain resilient but compressed margins as they manage input cost inflation.

Strategic Initiatives:

• M&A/Asset Acquisition: Completed acquisition of 50% ownership in HPQ Pulver (finalized prior to Q3 close) to secure long-term rights to fume silica reactor technology.
• Capital Strategy: Actively seeking capital to finance the operational scale-up of the additive manufacturing (titanium powder) division.
• Product Expansion: Expanding product offerings to cover three major additive manufacturing applications (LBEF, EBM, DED) to de-risk the business.
• Cost Reduction: Continuing to reduce operational costs via employee compensation reductions, lease/manufacturing facility cost optimization, and securing government grants.

Risks and Headwinds to Outlook:

• Revenue Volatility: Quarterly revenue fluctuations remain a key risk due to project timing and client scheduling; revenue recognition is irregular based on milestone completion.
• Input Costs: Continued inflation in energy, commodities (copper, aluminum), and shipping costs poses a risk to margin compression.
• Supply Chain Disruptions: International shipping lane security threats may delay project execution and increase logistics expenses.
• Execution Risk: Future results depend on the successful execution of large-scale projects and the conversion of the $39.9M backlog into recognized revenue.
• Accounting Model Sensitivity: Revenue accuracy is susceptible to client scheduling changes and logistical delays affecting production milestones.

Management Tone on the Future:

• Confidence Level: Cautiously optimistic; management describes the nine-month period as the "best revenue total since 2022" and expresses confidence in closing 2026 "strongly."
• Strategic Shift: Emphasis on shifting from isolated project reliance to a "diversified business model" supported by multiple commercial platforms (torches, Navy programs, additive manufacturing).
• Growth Outlook: Explicitly views the current quarter as setting the stage for "next level growth" in the additive division, driven by a multi-fold operational scale-up.
• Hedges: Consistently hedges expectations regarding quarterly results, reiterating that revenue will fluctuate based on the "nature of projects" and client scheduling.

Miscellaneous:

• Accounting Note: Revenue is reported using Canadian GAAP (percentage-of-completion), leading to potential irregularity quarter-to-quarter compared to cash flow or sales models.
• Investment Adjustments: Fair value adjustments related to investments (e.g., HPQ Silicon) are noted as significant in 2025 but less impactful in 2026; no significant fair value changes expected in 2026 based on current trends.