A company that focuses on hard-to-recycle materials says new partnerships with brand owners and increased sales of mail-in recycling boxes drove better financial results during the first half of 2019.
New Jersey-headquartered TerraCycle US reported $11.2 million in net sales during the first six months of the year, up 18.8% over the same period in 2018. Its income before taxes was $2.3 million, up 174.7%. Its gross profit margin was 56.5%, up from 45.2% from a year ago.
The semi-annual report was filed on Sept. 24 with the U.S. Securities and Exchange Commission (SEC). TerraCycle reports financial information to the SEC because it launched a $25 million stock offering last year. As of Sept. 24, 2019, the company has raised over $9 million from the sale of the securities.
TerraCycle collects difficult-to-recycle materials mostly via mail-in in programs. It then aggregates and sorts material before sending it to processors and then on to manufacturers.
Most of its revenue comes from four separate operating segments. The following are first half 2019 financial numbers broken down by segment (income numbers are before taxes):
Sponsored Waste Collection Programs
- Net sales: $4.4 million, up 45%
- Income: $1.8 million, up 108%
This TerraCycle segment is also called brand partnerships or Brand Sponsored Collection Programs. Through it, brand owners pay the shipping, sorting and processing costs incurred when consumers mail their products to TerraCycle for recycling.
Consumers receive charity points they can use to make donations to nonprofit groups.
To drive the 2019 sales increase in this segment, TerraCycle signed deals with the following companies to launch programs: Calbee, Earth Animal, Gillette, LOL Surprise, Limelife by Alcone, Mountain House, Weleda, Martini & Rossi Frose, and Herbal Essences.
Zero Waste boxes
- Net sales: $2.8 million, up 61.8%
- Income: $1 million, up 98.8%
This division focuses on selling prepaid shipping boxes to consumers who want to mail in recyclables not sponsored by a brand owner. The price of the box covers the costs of material handling and processing.
TerraCycle also provides private-label box services for companies and distributors that seek to offer a recycling option as part of their sale or service.
During the first half of the year, sales of boxes through the website continued to grow and now average $300,000 per month, according to TerraCycle.
Additionally, the company signed new partnerships to provide private-label boxes for the following companies: Williams and Sonoma (for recycling of coffee capsules), Dillard’s (beauty products), Vans (footwear), GrainPro (feed bags), Reebok (clothing), GPJ Experiential Marketing (name tags and lanyards), Nature Valley (candy and snack wrappers), Barilla (plastic packaging and compost), HBI International (cigarette waste).
- Net sales: $273,000, down 80.4%
- Income: Loss of $845,000, down 54.8%
This segment is responsible for selling recyclables (usually plastics) collected through the sponsored waste and Zero Waste boxes programs. Most often, an outside recycling company will process the scrap plastics into pellets on behalf of TerraCycle, which then sells the pellets to manufacturers for injection molding or extruding into containers or plastic lumber (in rare cases, the plastics reclaimer will outright buy the scrap materials from TerraCycle).
TerraCycle attributed the large decrease in material sales during the first half of 2019 to the timing of closing large deals. “While two larger sales were finalized in the first half of 2018, we [were] in the process of completing equally large deals in the second half of 2019, which will put us in line or potentially above the total revenue of the prior year,” according to TerraCycle.
This year, this segment also launched its largest retail recycling program, working with Walmart to collect car seats at 4,200 stores.
Company staff have continued to find buyers for TerraCycle’s recovered materials faster than predicted and budgeted, according to the company. “This performance has produced savings in expected cost of revenues and reduces budgeted warehouse spend,” according to the semi-annual report.
- Net sales: $3.5 million, down 5.3%
- Income: Loss of $11,000, down 104%
This segment manages lamps and bulbs, batteries, scrap electronics, organic waste, medical waste and other materials.
This decrease was “partially impacted by the disruption of moving to new systems to integrate with the rest of the company.” TerraCycle on Oct. 31, 2017 acquired Chicago-based Air Cycle Corporation for $3.3 million and used it to launch the current regulated waste division.
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