Deal Abstract

Profitable, double sustainable (financial and conservation) company that is raising money. Has been around for 14 years, and recently paid out an annual dividend of $2 on $100 purchase price. Confusing business model, but worth considering for anyone really passionate about recyclables.

Shoutout to J.V. for the tip!



Why Investing/Passing

  1. It Isn’t Growing Fast Enough: It took 14 years to reach $13MM in sales with a $188k in profit in 2017. Revenue allegedly was $20MM in 2018 with $1.1M profit in 2018.
  2. I Don’t Understand the Business’ Core Growth Levers: “We have a complicated business model. Our business model is an aggregation of several types of business. We engage different parties at various stages of the production and consumption cycle. Part of our work resembles that of an agency, in that we seek out and contract with clients (the majority of which are consumer packaged goods companies) that make products (brands) and help them implement sustainability initiatives as part of their marketing objectives. At the same time, we engage a network of collectors who earn charity awards for their efforts in collecting wastes to be shipped to our processing partners’ facilities for recycling. In addition, we are an operations and logistics company and manage hundreds of thousands of pick-ups, check-ins, sorting, warehousing, recycling and delivery of recycled materials nationally. As we focus on many kinds of waste materials that are not commonly recycled (because they generally have not been economical to recycle), we also conduct robust research and development activities to evaluate waste streams and the cost of recycling before we price a collection/recycle program for a given waste stream. Our complex business model requires a high level of coordination and could expose us to operational risks.”
  3. Not My Lunch: Seems like a fine business for anyone who is building a green portfolio. That said, paying $2 dividend on a $100 share means 2% return, which doesn’t pass the return hurdle rate of low-fee

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