This article has been updated.
A car seat recycling deal with a major retailer helped boost TerraCycle’s recovered commodity sales by over $3.5 million last year, according to a financial report.
That was just one takeaway from a recent financial filing from the Trenton, N.J.-based company, which specializes in recycling hard-to-recycle materials, mostly plastics. TerraCycle US recently released its annual report covering 2019. The document covers TerraCycle US, not the financial results for parent company TerraCycle LLC, which operates in 20 countries.
In 2019, the company’s net sales were $27.12 million, up 35% from 2018, according to the report. Its net income was $3.24 million, up from $1.15 million in 2018.
TerraCycle US has four different divisions through which it brings in revenue. The following are the year-over-year results for each division:
Sponsored Waste Programs: Brand owners pay TerraCycle US to establish and operate nationwide collection programs for those companies’ products and/or packaging.
- Net sales: $9.36 million
- Sales change from 2018: +33%
- Income (before taxes): $3.82 million
- Income change from 2018: +47%
Zero Waste Boxes: Consumers purchase postage-paid boxes and mail products to TerraCycle US for recycling.
- Net sales: $6.15 million
- Sales change from 2018: +70%
- Income (before taxes): $1.26 million
- Income change from 2018: +119%
Regulated Waste: This division helps consumers recycle streams such as fluorescent lamps, bulbs, batteries, scrap electronics, organic waste, medical waste and others.
- Net sales: $6.79 million
- Sales change from 2018: -5%
- Income (before taxes): $58,000
- Income change from 2018: -65%
Material Sales: This division generates revenue by selling recovered commodities collected through the Sponsored Waste and Zero Waste Boxes programs – most commonly combinations of HDPE/PET and PE/PP – to manufacturers. Usually, TerraCycle US retains ownership of the plastic until it is processed into pellets by a third-party company, at which point TerraCycle US sells the pellets to a manufacturer. The pellets often go into plastic lumber or containers. In rare cases, TerraCycle US sells the scrap to a reclaimer. For example, it has sold Akshar Plastic, one of its major contracted processors, certain PP and PE blends.
- Net sales: $5.81 million
- Sales change from 2018: +156%
- Income (before taxes): Loss of $377,000
- Income change from 2018: Improved from loss of $1.33 million in 2018
Other key report takeaways
Car seat event impacts: Net sales for the Material Sales division were so much higher in 2019 because of a one-time deal with a major retailer to recycle car seats. TerraCycle US didn’t identify the retailer in its annual report, but it previously said recycled car seats were collected at about 4,000 Walmart stores in 2019. According to USA Today, Walmart ended its first-ever car seat trade-in event early because of overwhelming response. The TerraCycle US annual report disclosed the car seat event brought TerraCycle US 8.5 million pounds of baby car seats for recycling.
Marine plastics sales: The TerraCycle US report noted the reliance on commodity values means the Material Sales division traditionally generates lower margins than the others, which have more unique product offerings that can be priced at a premium. However, TerraCycle US also manages the recycling of rigid marine plastics, which can then be sold at a premium. Through its three-year-old partnership with Procter & Gamble, the brand owner uses recycled marine plastics in a number of its packages. In 2019, TerraCycle US sold 35 tons of recycled marine plastics, generating about $600,000 in revenue. “Given the premium price that P&G and others have committed to pay for these beach plastics, our parent company and we are able to finance multi-country collections and invest in personnel to manage the complex supply chain,” according to TerraCycle’s report.
Top buyers of recycled plastic: The top buyers of TerraCycle US’s recovered plastics in 2019 were Atlanta-based Nexus Fuels, which uses a pyrolysis technology to break the material down into chemicals; Akshar Plastic, a Bloomington, Ill. plastics reclaimer and compounder; and Ultra-Poly Corporation, a Pennsylvania plastics reclaimer with a capacity of over 170 million pounds per year.
COVID-19 impacts: TerraCycle US applied for and received a Paycheck Protection Program loan, one of the U.S. Small Business Administration (SBA) programs intended to help businesses survive the economic shutdown from the coronavirus pandemic. About $750,000 of the loan will be used to cover payroll, in addition to rent on the Illinois office and various warehouses, interest on the Trenton building mortgage, and utilities. “During March and April, we have experienced a short-term decrease in collections of waste,” the company stated. “We anticipate that we will continue to experience decreases in collections while states continue to have shelter-in-place and similar requirements limiting activities. However, we are hoping to mitigate that longer-term by incentivizing collectors to continue collecting now and to amass inventories of recyclables to position us well for when schools and offices reopen.”
This article has been updated to clarify that the financial report covers TerraCycle US, which is a subsidiary of TerraCycle LLC. It does not cover financial results of the parent company, which operates in 20 countries.
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