LYNNFIELD, Mass.-Still hemorrhaging money despite robust sales and technology improvements, tire recycler GreenMan Technologies Inc. is adopting a "more-for-less" business plan to reduce expenses while concentrating on core operations, according to its top executives.
GreenMan is cutting back on its more far-flung scrap tire collection operations, raising prices to tire-derived fuel customers and reducing staff at its LaVergne, Tenn., plant. That unit remains unprofitable despite the Lynnfield-based company´s hopes to turn it into a full-service crumb rubber facility.
Within the next month or so, GreenMan will make a final decision on the disposition of the LaVergne plant, Bob Davis, GreenMan president and CEO, and Chief Financial Officer Chuck Coppa said during a recent teleconference. The decision could be anything from closing the facility to taking on a partner there, they said.
For the second quarter of fiscal 2005 ended March 31, GreenMan reported sales of $7.6 million, up from $5.9 million for the second quarter of 2004. For the six-month period, sales were $15.7 million, an increase from the $13.7 million posted for the first half of fiscal 2004.
Despite the sales hike, however, the company´s financial results are dismal. For the 2005 second quarter, GreenMan reported operating and net losses of $1.2 million and $1.9 million, respectively. This compares with operating and net losses of $820,000 and $1.3 million in the second quarter of 2004.
For the six months, operating and net losses tripled from the figures for the year-ago period. First-half operating losses grew to $2.3 million in 2005 from $749,000 in 2004. Net losses increased to $3.7 million from $1.5 million.
These figures compare with full-year losses of $2.6 million in fiscal 2004 and $2.9 million in fiscal 2003.
Transportation costs for scrap tire hauling are skyrocketing thanks to higher fuel prices, Davis said. Fuel costs are creating greater demand for the company´s TDF, but GreenMan´s customers demanded a change from two-inch to one-inch tire chips, which allow greater volume of TDF to coal.
GreenMan made the necessary adjustments at its Jackson, Ga., and Savage, Minn., tire processing operations, Davis said, but those adjustments cut processing capacity in half, to 10 tons from 20 tons an hour.
The company is increasing its TDF prices by 15 to 30 percent and dropping customers that won´t agree to the increase. It also is walking away from tire collection contracts with customers that are too far from GreenMan´s processing and collection centers, Coppa said.