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September 13, 2004 02:00 AM

GreenMan execs upbeat despite 3rd quarter loss

Miles Moore
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    GreenMan Technologies Inc.'s third-quarter and nine-month financial results are harbingers of a return to profitability for the tire recycling firm, according to company officials.

    ``It's not the bottom line we hoped for, but it is progress and it is welcome,'' said GreenMan CEO Bob Davis during a conference call with shareholders and analysts Aug. 18. Mr. Davis and company CFO Chuck Coppa also predicted the company would return to the black in fiscal 2005, which begins Oct. 1.

    Lynnfield-based GreenMan posted a third-quarter net loss of $336,000, which nevertheless was a 65.4-percent improvement over the $971,000 net loss in last year's third quarter. Sales for the period rose 12.6 percent to $8.06 million from $7.16 million.

    For the nine months ended June 30, GreenMan posted a loss of $1.8 million, improved from a $2.51 million loss the previous year. Sales for the period inched up 2 percent, to $21.8 million from $21.3 million.

    Helping GreenMan immeasurably, according to Messrs. Davis and Coppa, was the $9 million financing deal it inked June 30 with Laurus Master Fund Ltd., a New York-based institutional lender. Coast Business Credit, GreenMan's previous primary lender, collapsed early in 2003, leaving the tire recycler scrambling for funds for well over a year.

    ``GreenMan has a new lease on its financial life,'' Mr. Davis said. ``We can now focus solely on performance improvements at every GreenMan location.''

    The two company projects left hanging by the collapse of Coast Business Credit-restoration of waste wire processing operations at GreenMan's Jackson, Ga., facility and conversion of its LaVergne, Tenn., plant into a full-service crumb rubber operation-are now completely on track, Messrs. Davis and Coppa said.

    Once those projects are complete, GreenMan will have a production capacity of 70 million to 80 million pounds of material annually, including crumb rubber, granulates and recycled wire, they said. Current capacity, they added, is between 40 million and 50 million pounds.

    Increasing crumb rubber capacity in Tennessee will eliminate the need for GreenMan to ship some 4 million scrap tires annually from Tennessee to Georgia, according to Mr. Davis. This not only will eliminate steep transportation costs for the company but also will allow it to expand its scrap tire gathering efforts in Georgia, South Carolina and northern Florida, he said.

    GreenMan also plans production improvements at its operations in Iowa, Minnesota and California to tackle higher-value and more diversified markets, both officials said. Athletic and playground surfaces, molded goods and asphalt rubber are particularly bullish markets for the company, they said, though it maintains major accounts in the leachate and tire-derived fuel markets.

    ``We have a solid backlog of orders on all the products we manufacture,'' Mr. Davis said.

    GreenMan has a permanent base of approximately 150 employees. Current employment is approximately 180 because of temporary positions during the busy season, Messrs. Davis and Coppa said.

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