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GlyEco Reports Third Quarter 2017 Results

Total Revenues Increased 136% for the Quarter
Organic Revenues Increased 5% for the Quarter
Loss from Operations for the Quarter was Negatively Impacted by a Regulatory Remediation Charge and Investments to Support Future Growth

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

Quarter ended

September 30,

2017

2016

Sales, net

$

3,284,670

$

1,388,980

Gross profit

$

408,093

$

106,473

Total operating expenses

$

2,163,354

$

799,826

Loss from operations

$

(1,755,261

)

$

(693,353

)

Net loss

$

(2,056,546

)

$

(699,091

)

Adjusted EBITDA

$

(586,424

)

$

(336,112

)

Commenting on the third quarter 2017 results, Ian Rhodes, President and Chief Executive Officer said, "Continuing the trend noted in the first half of 2017, total and organic revenue increased in the third quarter of 2017 compared to 2016. Our gross margin ratio increased to 12% from 8% and our operating expense ratio, excluding the $780,000 expense related to a one-time, estimated equipment remediation efforts to comply with newly promulgated West Virginia regulations, decreased to 42% from 58%. The $780,000 remediation accrual is management's current best estimate and the actual expense and related cash outflow in future periods could be materially different. A positive outcome of this remediation effort is that after its completion, we expect to have feedstock that could have a value of up to $300,000, which is dependent on pricing at the time, and which would be a reduction to the expense recorded in the current period. The senior management team is diligently pursuing a number of options and strategies to mitigate the potential exposure of this non-cash charge and as we progress in any one direction, we will advise shareholders promptly of any such developments."

Continued Mr. Rhodes: "More important, we have made significant investments during the quarter to support the future growth of our Company, including adding personnel in both customer facing and support functions and consulting and other costs associated with systems and other infrastructure projects, all of which had a negative impact on our third quarter results."

Mr. Rhodes added, "From a capital and liquidity standpoint, during the third quarter, we significantly reduced our debt as we closed our rights offering that raised aggregate gross proceeds of approximately $2.29 million, including $670,000 in cash and $1.62 million in redemption of previously issued notes. We also repaid the remaining 8% promissory notes issued in December 2016 through a combination of shares of our common stock at a per share price of $0.08 and cash. As a result of these transactions, the previously issued $1.7 million 8% notes have been repaid in full."

Effective January 1, 2017, the Company has two segments, Consumer and Industrial. Presented below are the third 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

$

1,455,849

$

2,076,852

$

(248,031

)

$

$

3,284,670

Cost of goods sold

1,307,099

1,817,509

(248,031

)

2,876,577

Gross profit

148,750

259,343

408,093

Total operating expenses

713,885

1,144,255

305,214

2,163,354

Loss from operations

(565,135

)

(884,912

)

(305,214

)

(1,755,261

)

Total other expenses

(152,171

)

(49,998

)

(98,463

)

(300,632

)

Loss before provision for income taxes

$

(717,306

)

$

(934,910

)

$

$

(403,677

)

$

(2,055,893

)

Third Quarter of 2017 Highlights

  • Total Revenues increased by $1,895,690 or 136%, from $1,388,980 for the three months ended September 30, 2016 to $3,284,670 for the three months ended September 30, 2017.

  • Consumer Revenues increased by $66,869 or 5%, from $1,388,980 for the three months ended September 30, 2016 to $1,455,849 for the three months ended September 30, 2017.

  • Gross Profit increased from $106,473 for the three months ended September 30, 2016 to $408,093 for the three months ended September 30, 2017. All operating segments were Gross Profit positive for the quarter.

  • Adjusted EBITDA decreased by $250,312, from $(336,112) for the three months ended September 30, 2016 to $(586,424) for the three months ended September 30, 2017.

  • Repaid in full the previously issued $1.7 million 8% notes through a combination of stock and cash.

Third Quarter of 2017 Financial Review

The Company's sales for the quarter ended September 30, 2017, were $3.3 million compared to $1.4 million for the quarter ended September 30, 2016, representing an increase of $1.9 million, or approximately 136%. The increase in Net Sales was almost entirely related to the businesses and assets acquired in December 2016.

The Company reported a gross profit of $408,000 for the quarter ended September 30, 2017, compared to a gross profit of $106,000 for the quarter ended September 30, 2016, representing an increase in our gross margin of 12% compared to 8% in the three-month period ended September 30, 2016.

The Company reported operating expenses of $2.2 million for the quarter ended September 30, 2017, compared to $800,000 for the quarter ended September 30, 2016, representing an operating expense ratio of 65% compared to 58%. The operating expenses were negatively impacted by a $780,000 expense related to estimated equipment remediation efforts to comply with West Virginia regulations that became effective June 30, 2017, investments during the quarter to support the future growth of our Company, including adding personnel in both customer facing and support functions and consulting, costs associated with systems and other infrastructure projects and amortization of intangibles related to the businesses and assets acquired in December 2016.

The Company reported an operating loss of $1.8 million for the quarter ended September 30, 2017, compared to a $700,000 operating loss for the quarter ended September 30, 2016.

The Company reported a net loss of $2.1 million for the quarter ended September 30, 2017, compared to a net loss of $700,000 for the quarter ended September 30, 2016.

The Company reported adjusted EBITDA of $(0.6) million for the quarter ended September 30, 2017, compared to $(336,000) for the quarter ended September 30, 2016.

Business Update

As previously reported, the Company's facilities sustained minimal damage from the recent hurricanes and are up and running. We continue to keep those impacted by the recent hurricanes in our thoughts and prayers.

Our West Virginia facility was on-line for the entire second and third quarters and was a significant driver of our sales growth during the third quarter.

We have completed the buildout of our sales team and are now focused on providing them with the tools to identify opportunities and grow sales, including training and product literature.

In response to the growing transportation needs of our company and the continued tightening of the third party long-haul trucking market, we successfully launched GlyEco Logistics and entered the long-haul trucking market in the 3rd quarter of 2017. We believe this will improve our customer service and more effectively manage our transportation costs.

We continue to focus on scaling our business in such areas as operations and customer care to effectively support the expected sales growth in the coming quarters.

About GlyEco, Inc.

GlyEco is a 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
September 30, 2017 and December 31, 2016

September 30,

December 31,

2017

2016

(unaudited)

ASSETS

Current Assets

Cash

$

181,671

$

1,413,999

Cash - restricted

22,435

76,552

Accounts receivable, net

1,561,422

1,096,713

Prepaid expenses

288,133

340,899

Inventories

905,297

644,522

Total current assets

2,958,958

3,572,685

Property, plant and equipment, net

4,072,413

3,657,839

Other Assets

Deposits

436,450

387,035

Goodwill

3,822,583

3,693,083

Other intangible assets, net

2,398,541

2,794,204

Total other assets

6,657,574

6,874,322

Total assets

$

13,688,945

$

14,104,846

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable and accrued expenses

$

2,464,156

$

961,010

Due to related parties

6,191

Contingent acquisition consideration

1,767,458

1,821,575

Notes payable – current portion, net of debt discount

108,575

2,541,178

Capital lease obligations – current portion

365,811

6,838

Total current liabilities

4,706,000

5,336,792

Non-Current Liabilities

Notes payable – non-current portion

2,978,782

2,963,640

Capital lease obligations – non-current portion

1,185,179

3,371

Total non-current liabilities

4,163,961

2,967,011

Total liabilities

8,869,961

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 September 30, 2017 and December 31, 2016

Common stock, 300,000,000 shares authorized; $0.0001 par value; 164,415,465 and 126,156,189 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

16,442

12,616

Additional paid-in capital

45,685,287

42,603,490

Accumulated deficit

(40,882,745

)

(36,815,063

)

Total stockholders’ equity

4,818,984

5,801,043

Total liabilities and stockholders’ equity

$

13,688,945

$

14,104,846

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

Three months ended

September 30,

Nine months ended

September 30,

2017

2016

2017

2016

(unaudited)

(unaudited)

(unaudited)

(unaudited)

Sales, net

$

3,284,670

$

1,388,980

$

8,493,088

$

4,145,741

Cost of goods sold

2,876,577

1,282,507

7,468,406

3,968,501

Gross profit

408,093

106,473

1,024,682

177,240

Operating expenses:

Consulting fees

149,233

13,479

368,195

114,902

Share-based compensation

129,707

258,613

361,241

856,848

Salaries and wages

539,651

277,058

1,246,252

816,069

Legal and professional

152,797

50,255

501,528

192,152

Tank remediation

780,000

780,000

General and administrative

411,966

200,421

1,112,307

736,802

Total operating expenses

2,163,354

799,826

4,369,523

2,716,773

Loss from operations

(1,755,261

)

(693,353

)

(3,344,841

)

(2,539,533

)

Other (income) and expenses:

Interest income

(108

)

(326

)

Loss on debt extinguishment

146,564

146,564

Interest expense

154,068

5,761

573,671

17,739

Gain on settlement of note payable

(15,000

)

Total other expense, net

300,632

5,653

720,235

2,413

Loss before provision for income taxes

(2,055,893

)

(699,006

)

(4,065,076

)

(2,541,946

)

Provision for income taxes

653

85

2,606

6,031

Net loss

$

(2,056,546

)

$

(699,091

)

$

(4,067,682

)

$

(2,547,977

)

Basic and diluted loss per share

$

(0.01

)

$

(0.01

)

$

(0.03

)

$

(0.02

)

Weighted average number of common shares outstanding - basic and diluted

148,727,226

118,838,577

134,709,077

106,102,370

GLYECO, INC. AND SUBSIDIARIES

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (non-GAAP)
For the three and nine months ended September 30, 2017 and 2016


Three Months Ended
September 30,

2017

2016

Net loss

$

(2,056,546

)

$

(699,091

)

Interest expense, net

154,068

5,653

Loss on debt extinguishment

146,564

Tank remediation (1)

780,000

Income tax expense

653

85

Depreciation and amortization

259,130

98,628

Share-based compensation

129,707

258,613

Adjusted EBITDA

$

(586,424

)

$

(336,112

)

1. This is an expected one-time expense related to estimated equipment remediation efforts to comply with new West Virginia regulations.


Nine Months Ended
September 30,

2017

2016

Net loss

$

(4,067,682

)

$

(2,547,977

)

Interest expense, net

573,671

17,413

Loss on debt extinguishment

146,564

Tank remediation (1)

780,000

Gain on settlement of note payable

(15,000

)

Income tax expense

2,606

6,031

Depreciation and amortization

756,517

254,397

Share-based compensation

361,241

856,848

Adjusted EBITDA

$

(1,447,083

)

$

(1,428,288

)



1. This is an expected one-time expense related to estimated equipment remediation efforts to comply with new West Virginia regulations.

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.