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GlyEco Reports Second Quarter 2017 Results

  • Total Revenues Increased 122% for the Quarter
  • Organic Revenues Increased 25% for the Quarter
  • 49% Improvement in Adjusted EBITDA for the Quarter

ROCK HILL, SC / ACCESSWIRE / August 14, 2017 / GlyEco, Inc. ("GlyEco" or the "Company") (OTC PINK: GLYE), a leading specialty chemical company, announced today the following financial results for the quarter ended June 30, 2017:

Quarter ended June 30,
2017
2016
Sales, net
$
2,918,097
$
1,313,863
Gross profit (loss)
$
476,854
$
(66,604
)
Total operating expenses
$
(1,154,498)
$
(978,912)
Loss from operations
$
(677,644
)
$
(1,045,516
)
Net loss
$
(902,226
)
$
(1,042,976
)
Adjusted EBITDA
$
(331,191
)
$
(648,807
)

Commenting on the second quarter 2017 results, Ian Rhodes, President and Chief Executive Officer said, "The second quarter of 2017 marked the first full quarter of operations for our Company since the December 2016 business and asset acquisitions. Our second quarter 2017 financial results were positively impacted by the continued growth and further cost management efforts within our existing business. Total revenues and organic revenues increased significantly for the quarter and key measures of profitability, including gross margin and adjusted EBITDA also improved during the quarter. Our gross margin ratio increased to 16% from (5%) and our operating expense ratio decreased to 40% from 75%." Mr. Rhodes continued, "We have made meaningful progress during the first half of 2017 in reaching one of our key financial goals - positive quarterly adjusted EBITDA - and believe we are well positioned to achieve this goal in the second half of 2017."

Effective January 1, 2017, the Company has two segments, Consumer and Industrial. Presented below are the second quarter 2017 financial results for each segment as well as reconciling items to the consolidated results.

Consumer
Industrial
Inter Segment
Eliminations
Corporate
Total
Sales, net
$
1,647,263
$
1,608,502
$
(337,668
)
$
-
$
2,918,097
Cost of goods sold
1,262,853
1,516,058
(337,668
)
-
2,441,243
Gross profit
384,410
92,444
-
-
476,854
Total operating expenses
540,387
325,556
-
288,555
1,154,498
Loss from operations
(155,977
)
(233,112
)
-
(288,555
)
(677,644
)
Total other expenses
(6,133
)
(30,923
)
-
(186,329
)
(223,385
)
Loss before provision for income taxes
$
(162,110
)
$
(264,035
)
$
-
$
(474,884
)
$
(901,029
)

Second Quarter of 2017 Highlights

  • Increased Revenues by $1,604,234 or 122%, from $1,313,863 for the three months ended June 30, 2016 to $2,918,097 for the three months ended June 30, 2017.
  • Increased Consumer Revenues by $333,400 or 25%, from $1,313,863 for the three months ended June 30, 2016 to $1,647,263 for the three months ended June 30, 2017
  • Increased Gross Profit (Loss) from $(66,604) for the three months ended June 30, 2016 to $476,854 for the three months ended June 30, 2017. All operating segments were Gross Profit positive for the quarter.
  • Increased Adjusted EBITDA by $317,616 or 49%, from a loss of $(648,807) for the three months ended June 30, 2016 to a loss of $(331,191) for the three months ended June 30, 2017.

Second Quarter of 2017 Financial Review

The Company's sales for the quarter ended June 30, 2017, were $2.9 million compared to $1.3 million for the quarter ended June 30, 2016, representing an increase of $1.6 million, or approximately 122%. The increase in Net Sales was due to organic revenue growth of $333,000, or approximately 25%, and $1.3 million of sales related to the businesses and assets acquired in December 2016.

The Company reported a gross profit of $477,000 for the quarter ended June 30, 2017, compared to a gross loss of $(67,000) for the quarter ended June 30, 2016, representing a gross margin ratio of 16% compared to (5)%. The gross profit margin for the Consumer segment was positively impacted by increased sales and proportionately lower costs. The gross profit margin for the Industrial segment was negatively impacted by certain lower margin business. The Company is currently negotiating pricing changes to this lower margin business.

The Company reported operating expenses of $1.2 million for the quarter ended June 30, 2017, compared to $1 million for the quarter ended June 30, 2016, representing an operating expense ratio of 40% compared to 75%. Continued scaling of the business through increased sales positively impacted the operating expense ratio.

The Company reported an operating loss of $678,000 for the quarter ended June 30, 2017, compared to a $1 million operating loss for the quarter ended June 30, 2016.

The Company reported a net loss of $902,000 for the quarter ended June 30, 2017, compared to a net loss of $1 million for the quarter ended June 30, 2016.

The Company reported adjusted EBITDA of $(331,000) for the quarter ended June 30, 2017, compared to $(649,000) for the quarter ended June 30, 2016.

Business Update

Our West Virginia facility was on-line for the entire second quarter and we are now focused on sales opportunities and feedstock sourcing to increase the capacity utilization of this facility as we move into the second half of 2017.

We have substantially completed the buildout of our sales team, including at the regional and national levels, and expect increased revenues in the second half of 2017.

With our sales team and higher production capacity assets both in place, we are focused on scaling our business in such areas as operations and customer care to effectively support the expected sales growth in the second half of 2017.

Subsequent to the end of the quarter, the Company announced the closing of its rights offering, which occurred on August 4, 2017, and raised aggregate gross proceeds of approximately $2.29 million, including $670,000 in cash and $1.62 million in redemption of previously issued notes, from the sale of 28.6 million shares of common stock at a price of $0.08 per share. The Company plans to use the net proceeds for general working capital purposes.

The Company also repaid the remaining 8% promissory notes issued in December 2016 through a combination of shares of its common stock at a per share price of $0.08 and cash. The Company issued 2,754,500 shares in exchange for a total of $220,360 in principal and interest and repaid the balance in cash in the full amount of $52,467. As a result of these transactions, the previously issued 8% notes have been repaid in full.

About GlyEco, Inc.

GlyEco is a leading specialty chemical company, leveraging technology and innovation to focus on vertically integrated, eco-friendly manufacturing, customer service and distribution solutions. Our eight facilities, including the recently acquired 14-20 million gallons per year, ASTM E1177 EG-1, glycol re-distillation plant in West Virginia, deliver superior quality glycol products that meet or exceed ASTM quality standards, including a wide spectrum of ready to use antifreezes and additive packages for antifreeze/coolant, gas patch coolants and heat transfer fluid industries, throughout North America. Our team's extensive experience in the chemical field, including direct experience with reclamation of all types of glycols, gives us the ability to process a wide range of feedstock streams, formulate and produce unique products and has earned us an outstanding reputation in our markets.

For further information, please visit: http://www.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, 2017 and December 31, 2016

June 30,
December 31,
2017
2016
(unaudited)
ASSETS
Current Assets
Cash
$
77,590
$
1,413,999
Cash – restricted
41,090
76,552
Accounts receivable, net
1,326,549
1,096,713
Prepaid expenses
372,454
340,899
Inventories
1,527,802
644,522
Total current assets
3,345,485
3,572,685
Property, plant and equipment, net
3,915,894
3,657,839
Other Assets
Deposits
433,390
387,035
Goodwill
3,822,583
3,693,083
Other intangible assets, net
2,530,429
2,794,204
Total other assets
6,786,402
6,874,322
Total assets
$
14,047,781
$
14,104,846
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses
$
1,691,546
$
961,010
Due to related parties
-
6,191
Contingent acquisition consideration
1,786,113
1,821,575
Notes payable – current portion, net of debt discount
1,718,496
2,541,178
Capital lease obligations – current portion
354,735
6,838
Total current liabilities
5,550,890
5,336,792
Non-Current Liabilities
Notes payable – non-current portion
2,919,069
2,963,640
Capital lease obligations – non-current portion
1,281,381
3,371
Total non-current liabilities
4,200,450
2,967,011
Total liabilities
9,751,340
8,303,803
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, 2017 and December 31, 2016
-
-
Common stock, 300,000,000 shares authorized; $0.0001 par value; 131,204,275 and 126,156,189 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively
13,121
12,616
Additional paid-in capital
43,109,519
42,603,490
Accumulated deficit
(38,826,199
)
(36,815,063
)
Total stockholders' equity
4,296,441
5,801,043
Total liabilities and stockholders' equity
$
14,047,781
$
14,104,846


GLYECO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2017 and 2016


Three months ended June
30,
Six months ended June
30,
2017
2016
2017
2016
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Sales, net
$
2,918,097
$
1,313,863
$
5,208,418
$
2,756,761
Cost of goods sold
2,441,243
1,380,467
4,591,829
2,685,994
Gross profit (loss)
476,854
(66,604
)
616,589
70,767
Operating expenses:
Consulting fees
165,536
58,863
218,962
101,423
Share-based compensation
94,548
317,471
231,534
598,235
Salaries and wages
363,546
282,561
706,601
539,011
Legal and professional
187,740
43,124
348,731
141,897
General and administrative
343,128
276,893
700,341
536,381
Total operating expenses
1,154,498
978,912
2,206,169
1,916,947
Loss from operations
(677,644
)
(1,045,516
)
(1,589,580
)
(1,846,180
)
Other (income) and expenses:
Interest income
-
(165
)
-
(218
)
Interest expense
223,385
7,366
419,603
11,978
Gain on settlement of note payable
-
(15,000
)
-
(15,000
)
Total other (income) expense, net
223,385
(7,799
)
419,603
(3,240
)
Loss before provision for income taxes
(901,029
)
(1,037,717
)
(2,009,183
)
(1,842,940
)
Provision for income taxes
1,197
5,259
1,953
5,946
Net loss
$
(902,226
)
$
(1,042,976
)
$
(2,011,136
)
$
(1,848,886
)
Basic and diluted loss per share
$
(0.01
)
$
(0.01
)
$
(0.02
)
$
(0.02
)
Weighted average number of common shares outstanding - basic and diluted
128,876,960
112,772,095
127,583,831
99,679,783

GLYECO, INC. AND SUBSIDIARIES
Reconciliation of Adjusted EBITDA
For the three and six months ended June 30, 2017 and 2016

Three Months Ended June 30,
2017
2016
Net loss
$
(902,226
)
$
(1,042,976
)
Interest expense, net
223,385
7,201
Gain on settlement of note payable
-
(15,000
)
Income tax expense
1,197
5,259
Depreciation and amortization
251,905
79,238
Share-based compensation
94,548
317,471
Adjusted EBITDA
$
(331,191
)
$
(648,807
)



Six Months Ended June 30,
2017
2016
Net loss
$
(2,011,136
)
$
(1,848,886
)
Interest expense, net
419,603
11,760
Gain on settlement of note payable
-
(15,000
)
Income tax expense
1,953
5,946
Depreciation and amortization
497,387
155,769
Share-based compensation
231,534
598,235
Adjusted EBITDA
$
(860,659
)
$
(1,092,176
)

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.