One of Canada’s largest commodities-focused processors, eCycle Solutions, says a recent business acquisition will allow it to quickly expand ITAD services across the country.
Mississauga, Ontario-based eCycle Solutions on Oct. 15 acquired Refreshtek, which specializes in ITAD for small- and medium-sized businesses. A company focused on commodities recovery, eCycle Solutions has operating plants in four provinces, with its main shredding and separation line in Mississauga, near Toronto.
Michael Collins, president and CEO of eCycle Solutions, said the acquisition was a better strategy than eCycle Solutions growing its own small ITAD business.
“I think this is a much quicker to market for us, and it brings us that expertise and that experience that we need in order to grow this business quickly,” he said.
The deal was the second in October involving a major player in the Canadian market. On Oct. 1, Global Electric Electronic Processing (GEEP) Canada and the Shift Group, which is made up of end-of-life processor Shift Recycling and ITAD provider Revolution, merged to form Quantum Lifecycle Partners.
Why the Refreshtek deal made sense
A privately owned business, eCycle Solutions has operating plants in Chilliwack, British Columbia (east of Vancouver); Airdrie, Alberta (near Calgary); Mississauga, Ontario (near Toronto); and Salaberry-de-Valleyfield, Quebec (near Montreal).
Before the acquisition, eCycle Solutions only dabbled in asset management services, with about 80-85% of its business recovering commodities from devices, Collins said. The company processes substantial amounts of e-scrap managed by Canadian extended producer responsibility programs.
By the time Collins joined eCycle Solutions in June 2018, the e-scrap market had already begun experiencing significant changes, including those caused by China’s National Sword campaign. Downstream outlet closures, commodity price drops and product lightweighting were driving a fairly significant shift in the business’s profitability, he said.
The company identified ITAD services as a growing market that didn’t stray too far from eCycle Solutions’ core competency of electronics recycling, he said. And company leaders saw Markham, Ontario-based Refreshtek as “an ideal fit” for an acquisition, he said. Owned and led by Mark Yeomans, who has decades of experience in the industry, Refreshtek primarily served businesses in the Toronto area. The NAID-certified company, which focuses on IT asset refurbishment and reuse, had a lot of repeat customers.
“It’s a strong, consistent business that was performing well in conjunction with what our core competency was at eCycle Solutions in the electronics recycling space, and it just became a really nice fit for us to build on,” Collins said.
The companies also did business with each other. By the time of the Oct. 15 acquisition, Refreshtek was sending all of its end-of-life devices to eCycle Solutions for processing, although that only amounted to five or six gaylords a month because of Refreshtek’s reuse focus.
Growing the ITAD business
Yeomans is staying with Refreshtek, now a division of eCycle Solutions, to help with integration and expansion, Collins said. The deal, the financial terms of which Collins couldn’t disclose, add up to 21 Refreshtek employees (at peak times) to eCycle Solutions’ peak workforce of 500.
The acquisition allows eCycle Solutions to sell devices with warranties directly to end users and retailers, including small kiosks at shopping malls, he said.
The company plans to expand Refreshtek’s ITAD services across eCycle Solutions’ footprint. The ITAD processing will be co-located with eCycle Solutions’ facilities in Alberta and Quebec. Refreshtek and eCycle Solutions will retain their separate sites in Ontario.
In British Columbia, eCycle Solutions will keep its plant in Chilliwack, which is east of Vancouver, and open a separate Refreshtek facility in Vancouver, Collins said. The new facility, between 5,000 and 10,000 square feet, is expected to be fully operational by mid-2020.
“We anticipate we’ll be fully integrated across the country by the end of the first quarter 2021,” Collins said.
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