SAVAGE, Minn. — Tire recycler GreenMan Technologies Inc. is poised to become profitable again, maybe even this fiscal year, according to company officials.
"What the last 90 days have confirmed in my mind is that there is no lack of opportunities for GreenMan to become a successful ´green factor´ company," said Lyle Jensen, Greenman president and CEO, in a May 10 conference call. "I am very confident there are more than enough great opportunities out there. We just have to figure out how to complete them."
GreenMan had a net loss of $657,000 on sales of $8.4 million for the first half of its fiscal 2007, ended March 31. That compared to a loss of $2.7 million for the first half of fiscal 2006, on sales of $7.4 million.
For the second quarter ended March 31, the firm was $648,000 in the red on sales of $3.5 million, compared with a second-quarter 2006 loss of $768,000 on sales of $3.2 million.
In the past four years, GreenMan´s first-half losses have ranged from $1.2 million to $1.9 million, according to Jensen. The stronger results this year are especially encouraging because the second quarter-covering the frigid, sluggish winter months-is traditionally the worst for GreenMan. April 2007 crumb rubber sales are up 28 percent over those of April 2006, giving the company hope that the third quarter will be especially strong, he said.
Jensen took his posts at GreenMan in May 2006, replacing Bob Davis. He put together a five-step plan for the company to regain its financial footing; the first four steps included cutting expenses, shutting down the money-losing operations in Georgia and California, and moving the company headquarters to Savage from Lynnfield, Mass. Having the headquarters in Savage put GreenMan management closer to the profitable operations in Minnesota and Iowa, Jensen said at the time.
Laurus Master Fund, GreenMan´s primary lender, also helped the company and showed its belief in GreenMan´s future by deferring a $1.5 million payment on the principal debt, according to Jensen. This takes financial pressure off the company in the short term and allows it to pursue favorable business and investment opportunities.
GreenMan is now on the fifth and final step of its reorganization plan, which involves finding new joint ventures and investment opportunities, according to Jensen.
The company may decide to integrate vertically into crumb rubber products, which earn revenues five to 10 times as much as crumb rubber feedstock, Jensen said. Sales and marketing will be the main challenges to this path.
Other possibilities outlined by Jensen include expanding its operations to include cryogenic as well as ambient grinding, and moving into the plasticized derivatives market to make crumb rubber-elastomer material blends.
GreenMan also is watching developments in pyrolysis-the breakdown of tires under low heat into oil, gas and carbon black-which finally is starting to show some promise after decades of disappointment, Jensen said.