This article first appeared on GuruFocus .
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue for Q2 2026 increased 47% year-over-year to $4.4 million, marking the best second quarter since 2022.
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First-half 2026 revenue grew 55% year-over-year to $9.3 million, already surpassing the total for the first nine months of 2025.
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SG&A expenses decreased 27% year-over-year in the first half, demonstrating improved operating leverage.
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Backlog remains strong at $40 million, with 88% in U.S. dollars, providing multi-year revenue visibility.
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The company achieved successful production of battery-grade carbon black and graphite, expanding its technology portfolio.
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New titanium powder supply agreement with an Asian materials company opens potential for multiple tons per year in sales.
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Comprehensive loss improved by $5.3 million in the first half of 2026 compared to the prior year.
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EBITDA loss narrowed significantly, improving by over $6 million in the first half of 2026.
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R&D expenses were reduced by 57% in the quarter, while investment tax credits increased.
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The company is exploring a potential joint venture for Middle East distribution, indicating expansion opportunities.
Negative Points
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Gross margin remained flat at 32%, with no improvement despite revenue growth.
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Backlog declined from $43.1 million to $40 million, indicating a slowdown in new orders.
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Net finance expenses turned to a loss of $0.3 million in Q2 2026, compared to income of $0.8 million in Q2 2025.
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Revenue from biogas upgrading and pollution control systems decreased due to project timing.
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The company still reported a comprehensive loss of $1.1 million in Q2 2026, though improved.
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SG&A expenses increased in certain areas, including professional fees, travel, and share-based compensation.
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The company faces ongoing margin pressure from rising input costs, especially copper and aluminum.
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Supply chain disruptions, including threats to the Suez Canal and Strait of Hormuz, pose risks to operations.
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The company's revenue recognition model leads to irregular quarterly results, which may concern investors.
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The company is still not profitable, with a modified EBITDA loss of $0.5 million in Q2 2026.
Q & A Highlights
Q: What drove the significant revenue growth in Q2 2026, and how does this compare to previous periods? A: Steve McCormick, VP of Corporate Affairs, reported that Q2 2026 revenues reached $4.4 million, a 47% increase year-over-year, marking the best second-quarter performance since 2022. For the first six months of 2026, revenue totaled $9.3 million, outpacing 2025 by 55% and already surpassing the total revenue for the first nine months of 2025. Growth was driven by increased revenue from SPARK systems, torch systems, dross recovery, and US Navy development programs, partially offset by lower contributions from biogas upgrading projects due to project timing.
Q: Can you provide details on the company's backlog and its expected revenue recognition timeline? A: Andre Mannella, CFO, stated that as of August 6, 2026, the backlog stood at $40 million, down from $43.1 million in Q1, with 88% denominated in US dollars. This backlog is expected to be recognized over approximately the next three years as the company satisfies performance obligations under long-term contracts. The modest decline reflects successful conversion of backlog into revenue during the quarter, demonstrating strong execution and continued revenue visibility.
Q: How did the company's cost management and SG&A expenses perform during the quarter? A: Andre Mannella highlighted that SG&A expenses totaled $3.1 million in Q2 2026, a 14% reduction from $3.6 million in Q2 2025. Excluding credit loss and depreciation, the cash fixed cost reduction was approximately $1 million, or 25%. For the first six months, SG&A declined 27% to $5.4 million. This improvement was driven by lower employee compensation from reduced headcount, better workforce utilization, lower office expenses, higher government grant recoveries, and reduced insurance costs, demonstrating improved operating leverage as revenue grows.
Q: What were the key business developments in the materials production segment during Q2 2026? A: Steve McCormick highlighted several developments: In April, the company announced a titanium powder supply and distribution agreement with an Asian materials company for three powder cut sizes targeting the electronics market, with potential for multiple tons per year. Additionally, PyroGenesis announced successful production of battery-grade carbon black and hydrogen using its plasma torch system, followed by production of high-quality battery-grade graphite from that carbon black. The company also provided an update on its next-gen titanium powder strategy, including interest from a corporation for Middle East distribution or production, potentially as a joint venture.
Q: Can you elaborate on the waste processing segment's new technology announcement? A: Steve McCormick discussed the June announcement of new technology to convert contaminated biomass to syngas. This innovation expands the available biomass feedstock by treating materials contaminated with paint, solvents, and chemicals like melamine. The high-temperature waste-to-energy gasification technology treats contaminants in the produced syngas, which can be used for electricity generation or production of chemicals, fertilizers, methanol, ammonia, and synthetic fuels. The project is a collaboration with Innofibre and the CCTT at Cegep de Trois-Rivieres, featured at the launch of their new $14 million pilot facility, the only one of its kind in North America.
Q: What were the main drivers of the improved EBITDA and comprehensive loss figures? A: Andre Mannella reported that Q2 2026 EBITDA improved to a loss of $0.6 million from a loss of $3.6 million in Q2 2025, while modified EBITDA improved to a loss of $0.5 million from $2.1 million. Comprehensive loss improved to $1.1 million from $3.1 million, a $2 million improvement. These improvements were driven by stronger revenues, lower SG&A expenses, and gains recognized in other income, including a $0.9 million gain from lease modification and $80,000 from equipment sale. For the first half, comprehensive loss improved by $5.3 million, EBITDA by over $6 million, and modified EBITDA by over $4 million.
Q: How did gross margins perform, and what factors influenced them? A: Andre Mannella noted that gross margin was 32% for both Q2 and the first half of 2026, in line with management's expectations and project mix. The comparative quarter in 2025 included a one-time subcontracting adjustment and revenue recognized with minimal costs, while the current period had no such adjustments. Steve McCormick added context that across heavy industry, margins are compressed due to rising input costs, with copper up over 50% and aluminum up over 25%, and supply chain disruptions from security threats in the Suez Canal and Strait of Hormuz. Industry margins range from 8% in aerospace and defense to 40% in metal mining.
Q: What is the company's outlook for the remainder of 2026? A: Steve McCormick, quoting President and CEO Peter Pascale, stated that after a strong first half, the company is carrying momentum into Q3 by driving new business across more customer sectors and executing against its forward order book. Management has removed millions of dollars from the recurring cost base over the past few years and continues to identify opportunities to streamline production operations and improve the bottom line. The focus remains on executing the $40 million backlog, advancing commercial opportunities, and maintaining disciplined cost management to create long-term shareholder value.
Q: Can you explain the changes in net finance expenses and strategic investments? A: Andre Mannella explained that net finance expenses totaled $0.3 million in Q2 2026 compared to net finance income of $0.8 million in Q2 2025, primarily due to the non-recurrence of a $1 million one-time finance income in 2025 related to business combination revaluation. Excluding that item, financing costs were consistent with the evolving capital structure, including higher secured loan financing offset by lower costs from convertible debentures and lease liabilities. Changes in fair value of strategic investments were not significant in 2026, compared to substantial losses in 2025 related to the HPQ Silicon investment, reflecting the absence of those unusually large losses.
Q: What were the key drivers of revenue growth by product line in Q2 2026? A: Andre Mannella detailed that Q2 revenue growth was driven by SPARK revenue increasing $0.7 million due to commissioning and on-site support activities, torch systems increasing $0.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
