-Total Revenues Increased by 19%
-Industrial Segment Reports Record Financial Results
ROCK HILL, SC / ACCESSWIRE / August 14, 2018 / GlyEco, Inc. ("GlyEco" or the "Company") (OTC PINK: GLYE), a developer, manufacturer and distributor of performance fluids for the automotive, commercial and industrial markets, announced today the following financial results for the quarter and six months ended June 30, 2018:
| Quarter ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Sales, net | $ | 3,467,000 | $ | 2,918,000 | ||||
| Gross profit | $ | 394,000 | $ | 477,000 | ||||
| Total operating expenses | $ | 1,326,000 | $ | 1,154,000 | ||||
| Loss from operations | $ | (931,000 | ) | $ | (678,000 | ) | ||
| Net loss | $ | (1,154,000 | ) | $ | (902,000 | ) | ||
| Adjusted EBITDA | $ | (531,000 | ) | $ | (331,000 | ) | ||
| Six Months ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Sales, net | $ | 6,468,000 | $ | 5,208,000 | ||||
| Gross profit | $ | 946,000 | $ | 617,000 | ||||
| Total operating expenses | $ | 2,969,000 | $ | 2,206,000 | ||||
| Loss from operations | $ | (2,023,000 | ) | $ | (1,590,000 | ) | ||
| Net loss | $ | (2,371,000 | ) | $ | (2,011,000 | ) | ||
| Adjusted EBITDA | $ | (1,226,000 | ) | $ | (861,000 | ) | ||
Second Quarter of 2018 Highlights
- Net revenues of $3.5 million were up 19% compared to $2.9 million for the same period last year.- Industrial Segment reported record total revenues of $2.3 million and gross profit margin of positive 21%.
- Consumer Segment reported decreased total revenues of $1.4 million and gross profit of negative 6%.
Second Quarter of 2018 Financial Review
The Company reported that total revenues increased by $549,000 or 19%, from $2,918,000 for the quarter ended June 30, 2017 to $3,467,000 for the quarter ended June 30, 2018. Consumer revenues decreased by $239,000 or 15%, from $1,647,000 for quarter ended June 30, 2017 to $1,408,000 for the quarter ended June 30, 2018. Continuing from the first quarter of 2018, to position the Company for long term success and reach our positive adjusted EBITDA goal, the Consumer Segment focused on operational improvements and expense management during the quarter and deemphasized sales growth. We continue to believe we have a robust pipeline of profitable sales opportunities. Industrial revenues increased $669,000 or 42%, from $1,609,000 for the quarter ended June 30, 2017 to $2,278,000 for the quarter ended June 30, 2018. The increase in Industrial revenues were driven by an increase in the raw materials pipeline and subsequent finished product capacity at the WV facility.
The Company reported that total gross profit decreased from $477,000, representing a 16% gross margin, for the quarter ended June 30, 2017 to $394,000, representing a 11% gross margin, for the quarter ended June 30, 2018. Consumer gross profit decreased from $267,000, representing a 16% gross margin, for the quarter ended June 30, 2017 to negative $(89,000), representing a negative (6)% gross margin, for the quarter ended June 30, 2018. The Consumer gross profit was impacted by a decline in revenues as well as higher production costs due to total feedstock costs, including shipping costs, and certain non-recurring costs to improve long-term operations, including severance and regulatory compliance expenses. Industrial gross profit increased from $209,000, representing a 13% gross margin, for the quarter ended June 30, 2017 to $483,000, representing a 21% gross margin, for the quarter ended June 30, 2018. The Industrial gross profit was positively impacted by increased sales volume, pricing and mix of business.
The Company reported operating expenses increased from $1,154,000, representing a 40% operating expense ratio for the quarter ended June 30, 2017, to $1,326,000, representing a 38% expense ratio for the quarter ended June 30, 2018. On a sequential basis, operating expenses decreased for the second consecutive quarter compared to $1,643,000 for the quarter ended March 31, 2018, and $1,594,000 for the quarter ended December 31, 2017. We expect that operating expenses will decline incrementally over the next few quarters as significant non-recurring projects are completed, and we continue to refine our operations, including actions taken in areas such as staff reductions and changes in responsibilities.
The Company reported an operating loss of $931,000 for the quarter ended June 30, 2018, compared to a $678,000 operating loss for the quarter ended June 30, 2017.
The Company reported a net loss of $1,154,000 for the quarter ended June 30, 2018, compared to a net loss of $902,000 for the quarter ended June 30, 2017.
The Company reported adjusted EBITDA of $(531,000) for the quarter ended June 30, 2018, compared to $(331,000) for the quarter ended June 30, 2017.
Six Months of 2018 Financial Review
The Company reported total revenues increased by $1,260,000 or 24%, from $5,208,000 for the six months ended June 30, 2017 to $6,468,000 for the six months ended June 30, 2018. Consumer revenues decreased by $99,000 or 3%, from $3,246,000 for six months ended June 30, 2017 to $3,147,000 for the six months ended June 30, 2018. Industrial revenues increased $1,337,000 or 52%, from $2,549,000 for the six months ended June 30, 2017 to $3,886,000 for the six months ended June 30, 2018. Sales growth was significant in the Industrial Segment on a year over year basis and we expect continued growth in the coming quarters led by the Industrial Segment.
The Company reported total gross profit increased from $617,000, representing a 12% gross margin, for the six ended June 30, 2017 to $946,000, representing a 15% gross margin, for the six months ended June 30, 2018. Consumer gross profit decreased from $459,000, representing a 15% gross margin, for the six months ended June 30, 2017 to $82,000, representing a 3% gross margin, for the six ended June 30, 2018. The Consumer gross profit was impacted by a decline in revenues as well as higher production costs due to total feedstock costs, including shipping costs, and non-recurring costs to improve long-term operations, including severance and regulatory compliance expenses. Industrial gross profit increased from $157,000, representing a 7% gross margin, for the six months ended June 30, 2017 to $865,000, representing a 22% gross margin, for the six months ended June 30, 2018. The Industrial gross profit was impacted by increased sales volume, pricing and mix of business in 2018 as well as approximately $200,000 of production costs in 2017 that were not fully absorbed into inventory, but rather expensed while the facility in Institute, West Virginia was off-line during the first 2 months of 2017 for infrastructure related capital improvements.
The Company reported operating expenses increased from $2,206,000, representing a 42% operating expense ratio for the six months ended June 30, 2017, to $2,969,000, representing a 46% expense ratio for the six months ended June 30, 2018. We expect that operating expenses will decline incrementally over the next few quarters as significant non-recurring projects are completed, and we continue to refine our operations, including actions taken in areas such as staff reductions and changes in responsibilities.
The Company reported an operating loss of $2,023,000 for the six months ended June 30, 2018, compared to a $1,590,000 operating loss for the six months ended June 30, 2017.
The Company reported a net loss of $2,371,000 for the six months ended June 30, 2018, compared to a net loss of $2,011,000 for the six months ended June 30, 2017.
The Company reported adjusted EBITDA of $(1,226,000) for the six months ended June 30, 2018, compared to $(861,000) for the six months ended June 30, 2017.
Business Outlook and 2018 Guidance
"During the past three months, our realigned management team conducted a thorough assessment of our business. Together we have revised our strategic vision on how to move forward, including, leveraging our core competitive advantages to grow our business, increasing our focus on reducing costs and strengthening our strategic partnerships," said Ian Rhodes, President and Chief Executive Officer.
The previously announced antifreeze blending project at the Company's facility in Institute, WV is expected to be completed and the first customer delivery made during the month of September. The WV antifreeze blending project provides the Company with a significant increase in antifreeze production capacity.
During early August, the Company experienced an environmental issue related to the processing of raw materials at its Institute, WV facility, which resulted in the Company shutting down production at the facility. The Company is working with regulatory agencies, its landlord and site services provider, and raw materials suppliers to address this issue and currently expects production to resume in late August or early September.
As a result of the above-noted business assessment, and related actions, and the WV facility production shutdown, the Company has updated its guidance for full year 2018:
- Net Revenues for 2018 is expected to be at the low end of the previously provided guidance of $14.0 million and $16.0 million.
- Quarterly adjusted EBITDA is not expected to be positive in the second half of 2018, but is expected to be positive in the first half of 2019.
The Company completed a reverse/forward stock split in July.
About GlyEco, Inc.
GlyEco is a developer, manufacturer and distributor of performance fluids for the automotive, commercial and industrial markets. We specialize in coolants, additives and complementary fluids. We believe our vertically integrated approach, which includes formulating products, acquiring feedstock, managing facility construction and upgrades, operating facilities, and distributing products through our fleet of trucks, positions us to serve our key markets and enables us to capture incremental revenue and margin throughout the process. Our network of facilities, develop, manufacture and distribute high quality products that meet or exceed industry quality standards, including a wide spectrum of ready to use antifreezes and additive packages for the antifreeze/coolant, gas patch coolants and heat transfer fluid industries, throughout North America.
For further information, please visit: http://www.glyeco.com.
To assist investors and other interested parties in staying informed about GlyEco, the Company distributes, by e-mail, press releases and other information. To be added to the Company distribution list, please contact us at info@glyeco.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "believe," "expect," "anticipate," "plan," "potential," "continue," or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond the Company's control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as required by federal securities laws.
Contact:
GlyEco, Inc.
Ian Rhodes
President and Chief Executive Officer
irhodes@glyeco.com
866-960-1539
GLYECO, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, 2018 and December 31, 2017
| June 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 142,933 | $ | 111,302 | ||||
| Cash - restricted | — | 6,642 | ||||||
| Accounts receivable, net | 1,532,603 | 1,546,367 | ||||||
| Prepaid expenses | 355,008 | 360,953 | ||||||
| Inventories | 547,878 | 564,133 | ||||||
| Total current assets | 2,578,422 | 2,589,397 | ||||||
| Property, plant and equipment, net | 3,877,605 | 3,897,950 | ||||||
| Other Assets | ||||||||
| Deposits | 436,800 | 436,450 | ||||||
| Goodwill | 3,822,583 | 3,822,583 | ||||||
| Other intangible assets, net | 2,021,543 | 2,266,654 | ||||||
| Total other assets | 6,280,926 | 6,525,687 | ||||||
| Total assets | $ | 12,736,953 | $ | 13,013,034 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 2,835,449 | $ | 2,921,406 | ||||
| Contingent acquisition consideration | 1,503,113 | 1,509,755 | ||||||
| Notes payable - current portion | 2,057,802 | 297,534 | ||||||
| Capital lease obligations - current portion | 452,522 | 377,220 | ||||||
| Total current liabilities | 6,848,886 | 5,105,915 | ||||||
| Non-Current Liabilities | ||||||||
| Notes payable - non-current portion, net of debt discount | 2,898,582 | 2,953,631 | ||||||
| Capital lease obligations - non-current portion | 972,573 | 1,085,985 | ||||||
| Total non-current liabilities | 3,871,155 | 4,039,616 | ||||||
| Total liabilities | 10,720,041 | 9,145,531 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Preferred stock; 40,000,000 shares authorized; $0.0001 par value; no shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | — | — | ||||||
| Common stock, 300,000,000 shares authorized; $0.0001 par value; 1,332,749 and 1,322,304 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | 133 | 132 | ||||||
| Additional paid-in capital | 46,384,483 | 45,863,969 | ||||||
| Accumulated deficit | (44,367,704 | ) | (41,996,598 | ) | ||||
| Total stockholders' equity | 2,016,912 | 3,867,503 | ||||||
| Total liabilities and stockholders' equity | $ | 12,736,953 | $ | 13,013,034 | ||||
GLYECO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2018 and 2017
| Three months ended June30, | Six months ended June30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
| Sales, net | $ | 3,467,380 | $ | 2,918,097 | $ | 6,468,390 | $ | 5,208,418 | ||||||||
| Cost of goods sold | 3,072,941 | 2,441,243 | 5,522,041 | 4,591,829 | ||||||||||||
| Gross profit | 394,439 | 476,854 | 946,349 | 616,589 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Consulting fees | 25,553 | 165,536 | 74,144 | 218,962 | ||||||||||||
| Share-based compensation | 121,573 | 94,548 | 241,461 | 231,534 | ||||||||||||
| Salaries and wages | 554,182 | 363,546 | 1,216,413 | 706,601 | ||||||||||||
| Legal and professional | 211,041 | 187,740 | 541,480 | 348,731 | ||||||||||||
| General and administrative | 413,398 | 343,128 | 895,430 | 700,341 | ||||||||||||
| Total operating expenses | 1,325,747 | 1,154,498 | 2,968,928 | 2,206,169 | ||||||||||||
| Loss from operations | (931,308 | ) | (677,644 | ) | (2,022,579 | ) | (1,589,580) | |||||||||
| Other expenses: | ||||||||||||||||
| Interest expense | 222,226 | 223,385 | 331,276 | 419,603 | ||||||||||||
| Total other expense, net | 222,226 | 223,385 | 331,276 | 419,603 | ||||||||||||
| Loss before provision for income taxes | (1,153,534 | ) | (901,029 | ) | (2,353,855 | ) | (2,009,183) | |||||||||
| Provision for income taxes | - | 1,197 | 17,251 | 1,953 | ||||||||||||
| Net loss | $ | (1,153,534 | ) | $ | (902,226 | ) | $ | (2,371,106 | ) | $ | (2,011,136) | |||||
| Basic and diluted loss per share | $ | (0.87 | ) | $ | (0.88 | ) | $ | (1.79 | ) | $ | (1.97) | |||||
| Weighted average number of common shares outstanding - basic and diluted | 1,332,749 | 1,031,016 | 1,328,099 | 1,020,671 | ||||||||||||
GLYECO, INC. AND SUBSIDIARIES
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (non-GAAP)
For the three and six months ended June 30, 2018 and 2017
| Three Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| GAAP net loss | $ | (1,153,534 | ) | $ | (902,226 | ) | ||
| Interest expense | 222,226 | 223,385 | ||||||
| Income tax expense | - | 1,197 | ||||||
| Depreciation and amortization | 278,633 | 251,905 | ||||||
| Share-based compensation | 121,573 | 94,548 | ||||||
| Adjusted EBITDA | $ | (531,102 | ) | $ | (331,191 | ) | ||
| Six Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| GAAP net loss | $ | (2,371,106 | ) | $ | (2,011,136 | ) | ||
| Interest expense | 331,276 | 419,603 | ||||||
| Income tax expense | 17,251 | 1,953 | ||||||
| Depreciation and amortization | 554,911 | 497,387 | ||||||
| Share-based compensation | 241,461 | 231,534 | ||||||
| Adjusted EBITDA | $ | (1,226,207 | ) | $ | (860,659 | ) | ||
Presented above is the non-GAAP financial measure representing earnings before interest, taxes, depreciation, amortization and stock compensation (which we refer to as "Adjusted EBITDA") and the reconciliations of Adjusted EBITDA to net loss. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, net income (loss) and cash flows from operations calculated in accordance with GAAP.
Adjusted EBITDA is used by our management as an additional measure of our Company's performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our Company's financial results that may not be shown solely by period-to-period comparisons of net income (loss) and cash flows from operations. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to many of our employees in order to evaluate our Company's performance. Further, we believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results and helps investors make comparisons between our company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in net income (loss), as well as trends in those items.
SOURCE: GlyEco, Inc.
