GlyEco Inc (OTCMKTS:GLYE) Drops Unexpectedly
Between February 2012 and March 2014, GlyEco Inc (OTCMKTS:GLYE) acquired no less than seven facilities and thanks to those acquisitions, they managed to get their glycol recycling technology off the ground. Right now, several years later, progress seems to be good. Or, at least that’s what the press releases would have you believe.
On July 16, the company CEO, David Ide, said that the second quarter of 2015 has been rather good. He announced that he expects some positive figures in the 10-Q (which should be out within the next few weeks) and he promised his shareholders that everyone working at GLYE is dedicated to making the company’s business grow and to bringing it closer to profitability.
Investors couldn’t care less. The volumes immediately after Mr. Ide’s lengthy letter remained dismal and yesterday, when investors did decide to trade GLYE, they didn’t really push it north. Instead, they dragged it down. A sudden burst of activity was witnessed around noon and after a few heavy blows, the ticker found itself at $0.13 per share, 13% below the value at the end of last week. How can this be explained?
The truth is, the report for the first quarter of 2015 is in a rather stark contrast with the optimism spurring out of Mr. Ide’s press release. Here’s a run down of the most important figures:
- cash: $2.5 million
- current assets: $4.4 million
- current liabilities: $1.7 million
- quarterly revenue: $1.3 million
- quarterly net loss: $978 thousand
We shouldn’t overlook the positive things in the 10-Q. The cash reserves are decent enough and overall, the balance sheet doesn’t look too bad. There’s no running away from the fact, however, that the revenues have dropped by a hefty 19% on a year over year basis. This, the management team said, is due to the New Jersey facility. It was briefly closed during Q1 because of plant modifications and there were some disagreements with the landlord. Even if all the issues are ironed out and even if GLYE manage to make its sales grow, there will still be the question of profitability which, as you can see, is nowhere in sight at the moment.
There’s some dilution as well. Between January and April GLYE issued a little over 12 million shares. The majority of them were sold for cash during Q1 at an average rate of about $0.32 per share which is not unreasonable considering the then current price. The 999,667 shares that saw the light of day in April, however, were printed as a result of cashless exercising of warrants. According to the 10-Q, they are unrestricted.
In conclusion, we can safely say that GLYE‘s management team have a lot of work to do before they can turn the company into a truly tempting investment option. Some of you probably believe that they can pull it off and you might just turn out to be right. Even if they do, however, you mustn’t ignore the lack of significant volumes and the sudden and unexpected drops that the ticker has experienced over the years
