Through strategic purchases, upgrades and expansions, tire recycler GreenMan Technologies Inc. plans to bring itself back in the black in its fiscal year 2005, according to the company's top executives.
GreenMan CEO Bob Davis and CFO Chuck Coppa discussed these strategic moves at a Jan. 20 teleconference covering the company's 2004 financial results. Messrs. Davis and Coppa said two moves in particular-the letter of intent to buy certain assets of Orlando, Fla.-based crumb rubber producer Tires Into Recycled Energy and Supplies (TIRES) Inc. and the pending upgrade of GreenMan's La Vergne, Tenn., facility into a full-service crumb rubber plant-promised big things for the company.
Other improvements, such as the November reopening of the waste wire processing operation in Jackson, Ga.,-closed by fire since March 31, 2003-are fully functioning but occurred too late to improve results for the fiscal year ended Sept. 30, Messrs. Davis and Coppa said.
For the fiscal year, GreenMan reported a net loss of $2.6 million on net sales of $30.8 million vs. a loss of $2.9 million on sales of $29.7 million for fiscal 2003. For the fourth quarter ended Sept. 30, the company lost $834,000 on sales of $9 million, compared with a loss of $386,000 on sales of $8.4 million in the fourth quarter of fiscal 2003.
Part of the problem in the past year, Messrs. Davis and Coppa said, was the continuing lack of funds occasioned by the collapse in early 2003 of Coast Business Credit, GreenMan's primary lender. The completion of a new $9 million line of credit with Laurus Master Fund was announced in June, but again came too late to help the results for fiscal 2004, they added.
GreenMan's letter of intent with TIRES gives the company an exclusive option to buy the TIRES assets over the next 15 to 24 months. In return for that option, GreenMan has issued $200,000 worth of common stock to apply toward the purchase price of the assets.
GreenMan and TIRES have signed a long-term agreement for GreenMan to lease certain equipment from TIRES and provide the crumb rubber producer with scrap tires for feedstock. Both companies will use a previously announced ``good faith deposit'' of $350,000 to prepare and move the leased equipment for use.
TIRES' annual crumb rubber capacity is nearly 60 million pounds.
GreenMan expects the LaVergne upgrades to go on-stream by March or April, according to Mr. Coppa. With the purchase of these assets and the expansion of the LaVergne facility, GreenMan soon should boast annual crumb rubber capacity of well over 100 million pounds, up from the current 50 million, Mr. Coppa said during the teleconference.
Another advantage to the LaVergne expansion, Mr. Davis said, is that it automatically will remove nearly $100,000 of transportation costs every month, because scrap tires collected in Tennessee previously had to be shipped to Georgia for processing.