UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 2, 2019 (April 1, 2019)
GLYECO, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 000-30396 | 45-4030261 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
| P.O.
Box 387 Institute, West Virginia |
25112 | |||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (866) 960-1539
n/a
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
On April 1, 2019, GlyEco, Inc. issued a press release announcing its financial and operational results for the fiscal year ended December 31, 2018 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Form 8-K (including Exhibit 99.1) is being “furnished,” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| 99.1 | Press Release of GlyEco, Inc., dated April 1, 2019 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 2, 2019
| GlyEco, Inc. | ||
| By: | /s/ Richard geib | |
| Name: | Richard Geib | |
| Title: | Chief Executive Officer | |
Exhibit 99.1
GlyEco Reports Results for Full Year Ended December 31, 2018
GlyEco Completes the Sale of Consumer Segment Assets
Industrial Segment Posts 11% Revenue Growth with 5% YoY Gross Margin Improvement
Institute, WV / ACCESSWIRE / April 1, 2019 / GlyEco, Inc. ("GlyEco" or the "Company") (OTC Pink: GLYE), a developer, manufacturer and distributor of performance fluids for the automotive, commercial and industrial markets, announced today the following financial results for the full year ended December 31, 2018. The Company completed the sale of its assets related to its consumer segment effective January 11th, 2019. The following results reflect the continuing operations of the Company which has previously been referred to as the Industrial Segment:
| Full Year ended Dec 31, | ||||||||
| 2018 | 2017 | |||||||
| Net Sales | $ | 6,457,484 | $ | 5,806,907 | ||||
| Gross profit | $ | 1,285,179 | $ | 885,166 | ||||
| Total operating expenses | $ | 3,946,139 | $ | 5,154,782 | ||||
| Loss from operations | $ | (2,660,960 | ) | $ | (4,269,616 | ) | ||
| Net loss from continuing operations | $ | (3,452,426 | ) | $ | (5,078,281 | ) | ||
| Net loss | $ | (5,313,936 | ) | $ | (5,181,535 | ) | ||
| Adjusted EBITDA from continuing operations | $ | (1,565,227 | ) | $ | (2,330,947 | ) | ||
Full Year 2018 Highlights
| ● | Net revenues of $6.5 million were up 11% compared to $5.8 million for full-year 2017. |
| ● | Total gross profit was $1,285,000, or 20% of revenues, compared to $885,000, or 15% of revenues, for 2017. |
| ● | Adjusted EBITDA, a non-GAAP measure, was $(1,565,000) compared to $(2,331,000) for 2017. |
2018 Financial Review
The Company reported total revenues increased by $650,000 or 11%, from $5,807,000 for full-year 2017 to $6,457,000 for full-year 2018. Sales growth was driven by increasing capacity utilization at the WV ethylene glycol plant which grew net revenues by $401,000 or 11% YoY and by the WEBA division which grew sales of chemical additives by $249,000 or 11% YoY. Total sales of $3,929,000 at the WV facility for 2018 included $59,000 in sales of finished anti-freeze from the newly-operational blending facility. This facility came online in October 2018 and with be a primary engine for sales growth, along with the ethylene-glycol plant and the WEBA operation, going forward.
The Company reported total gross profit increased from $885,000, representing a 15% gross margin, in 2017 to $1,285,000, representing a 20% gross margin, in 2018. The increase in gross margin was driven by scaling operations at the WV plant through increased production and sales volumes. The facility remains well below its operational capacity with fixed costs comprising a large portion of overall production costs. We expect fixed costs per unit to reduce significantly as we increase production throughout 2019.
The Company reported operating expenses decreased from $5,155,000 to $3,946,000, for 2018. We expect to significantly reduce operating expenses throughout 2019 to better match the level of corporate overhead with the remaining business operations.
The Company reported a net loss of $3,452,000 for 2018, compared to a net loss of $5,078,000 for 2017.
The Company reported adjusted EBITDA of $(1,565,000) in 2018, compared to $(2,331,000) for 2017. Both figures reflect only continuing operations entering 2019.
Business Update
The Company executed the sale of its consumer segment assets effective January 11th, 2019. In doing so, the Company exited the business of retail distribution of antifreeze via route delivery trucks. This divestment will allow the company to focus on the remaining business units including the ethylene glycol plant in WV, the finished-fluids blending facility and the WEBA additive operation. The resulting company is designed around true vertical-integration with the ability to meet the full needs of a large-scale, industrial customer. Going forward, the company will report as a single segment with two highly-integrated subdivisions; Commodity Chemicals and Finished Performance Fluids. In addition to external customer sales, the WV glycol plant and WEBA additives subsidiary will supply the blending facility with raw materials to create more-profitable, downstream finished fluids. The new blending facility provides the Company with capacity to blend up to 6 million gallons of finished antifreeze per year to meet the needs of large customers.
“The sale of the consumer segment assets marks the completion of a strategic shift for our company that was over a year in the making. Our focus moving forward is on maximizing the value of our production assets, including the West Virginia glycol plant, WEBA additive business and new high-capacity blending facility. The new company structure allows us to offer a full range of glycol-based products on an industrial scale which will facilitate large strategic partnerships in the weeks and months to come.” said Mr. Geib, President and Chief Executive Officer.
About GlyEco, Inc.
GlyEco, Inc. is a chemical company focused on technology development and manufacturing of coolants, additives, and related performance fluids. We serve and support the automotive, heavy-duty, and industrial markets with an unwavering commitment to customer service and quality. GlyEco Inc., located in Institute, West Virginia, is a vertically integrated company which manufactures ethylene glycol, additives, and finished fluids. Maintaining control over all core ingredients of its glycol-based performance fluids, and directly managing all aspects of the manufacturing process allows GlyEco Inc. to offer our customers the highest value with competitive costs.
For further information, please visit: http://www.glyeco.com
To assist investors and other interested parties in staying informed about GlyEco, the Company distributes, by e-mail, press releases and other information. To be added to the Company distribution list, please contact us at info@glyeco.com.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "believe," "expect," "anticipate," "plan," "potential," "continue," or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in the Company's filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond the Company's control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as required by federal securities laws.
Contact:
GlyEco, Inc.
Brian Gelman
Corporate EVP and Chief Financial Officer
bgelman@glyeco.com
866-960-1539
SOURCE: GlyEco, Inc.
GLYECO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2018 and 2017
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 237,648 | $ | 111,302 | ||||
| Cash – restricted | — | 6,642 | ||||||
| Accounts receivable, net | 215,336 | 731,439 | ||||||
| Prepaid expenses | 137,067 | 336,648 | ||||||
| Inventories | 238,895 | 270,409 | ||||||
| Current assets from discontinued operations | 1,760,100 | 1,132,956 | ||||||
| Total current assets | 2,589,618 | 2,589,396 | ||||||
| Property, plant and equipment, net | 2,562,618 | 2,478,380 | ||||||
| Other Assets | ||||||||
| Deposits | 49,081 | 396,646 | ||||||
| Goodwill | 2,937,288 | 2,937,288 | ||||||
| Other intangible assets, net | 1,721,000 | 2,146,279 | ||||||
| Noncurrent assets from discontinued operations | — | 2,465,045 | ||||||
| Total other assets | 4,707,369 | 7,945,258 | ||||||
| Total assets | $ | 9,859,033 | $ | 13,013,034 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 2,845,856 | $ | 2,446,693 | ||||
| Customer deposits | 274,103 | — | ||||||
| Contingent acquisition consideration | 815,670 | 1,509,755 | ||||||
| Notes payable – current portion, net of debt discount | 2,080,071 | 232,267 | ||||||
| Capital lease obligations – current portion | 494,131 | 377,220 | ||||||
| Current liabilities from discontinued operations | 586,019 | 539,980 | ||||||
| Total current liabilities | 7,095,850 | 5,105,915 | ||||||
| Non-Current Liabilities | ||||||||
| Notes payable – non current portion | 2,783,744 | 2,779,126 | ||||||
| Capital lease obligations – non current portion | 749,992 | 1,085,985 | ||||||
| Noncurrent liabilities from discontinued operations | — | 174,505 | ||||||
| Total non-current liabilities | 3,533,736 | 4,039,616 | ||||||
| Total liabilities | 10,629,586 | 9,145,531 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred stock: 40,000,000 shares authorized; $0.0001 par value; no shares issued and outstanding as of December 31, 2018 and 2017 | — | — | ||||||
| Common stock: 300,000,000 shares authorized; $0.0001 par value; 1,358,597 and 1,322,264 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 136 | 132 | ||||||
| Additional paid-in capital | 46,539,845 | 45,863,969 | ||||||
| Accumulated deficit | (47,310,534 | ) | (41,996,598 | ) | ||||
| Total stockholders’ equity (deficit) | (770,553 | ) | 3,867,503 | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 9,859,033 | $ | 13,013,034 | ||||
GLYECO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the years ended December 31, 2018 and 2017
| Years Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Net sales | $ | 6,457,484 | $ | 5,806,907 | ||||
| Cost of goods sold | 5,172,305 | 4,921,741 | ||||||
| Gross profit | 1,285,179 | 885,166 | ||||||
| Operating expenses: | ||||||||
| Consulting fees | 94,292 | 415,516 | ||||||
| Share-based compensation | 376,500 | 523,613 | ||||||
| Salaries and wages | 1,931,371 | 1,617,168 | ||||||
| Legal and professional | 874,728 | 795,835 | ||||||
| Tank remediation | — | 780,000 | ||||||
| General and administrative | 669,248 | 1,022,650 | ||||||
| Total operating expenses | 3,946,139 | 5,154,782 | ||||||
| Loss from operations | (2,660,960 | ) | (4,269,616 | ) | ||||
| Other expenses: | ||||||||
| Loss on debt extinguishment | — | 146,564 | ||||||
| Interest expense | 778,360 | 662,052 | ||||||
| Total other expense, net | 778,360 | 808,616 | ||||||
| Loss from continuing operations before provision for income taxes | (3,439,320 | ) | (5,078,232 | ) | ||||
| Provision for income taxes | 13,106 | 49 | ||||||
| Net loss from continuing operations | (3,452,426 | ) | (5,078,281 | ) | ||||
| Loss from discontinued operations, net of income taxes | (1,861,510 | ) | (103,254 | ) | ||||
| Net loss | $ | (5,313,936 | ) | $ | (5,181,535 | ) | ||
| Basic and diluted loss per share from continuing operations | $ | (2.58 | ) | $ | (4.46 | ) | ||
| Basic and diluted loss per share from discontinued operations | $ | (1.39 | ) | $ | (0.09 | ) | ||
| Basic and diluted loss per share | $ | (3.97 | ) | $ | (4.55 | ) | ||
| Weighted average number of common shares outstanding- basic and diluted | 1,339,238 | 1,137,696 | ||||||
GLYECO, INC. AND SUBSIDIARIES
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (non-GAAP)
For the years ended December 31, 2018 and 2017
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA
| As Reported | ||||||||
| Years Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Net loss from continuing operations | $ | (3,452,426 | ) | $ | (5,078,281 | ) | ||
| Interest expense | 778,360 | 662,052 | ||||||
| Loss on debt extinguishment | — | 146,564 | ||||||
| Tank remediation (1) | — | 780,000 | ||||||
| Provision for income taxes | 13,106 | 49 | ||||||
| Depreciation and amortization | 719,233 | 635,056 | ||||||
| Share-based compensation | 376,500 | 523,613 | ||||||
| Adjusted EBITDA | $ | (1,565,227 | ) | $ | (2,330,947 | ) | ||
| (1) | This is an expense related to estimated equipment remediation efforts to comply with new West Virginia regulations. |
Presented above is the non-GAAP financial measure representing earnings before interest, taxes, depreciation, amortization and stock compensation (which we refer to as “Adjusted EBITDA”) and the reconciliations of Adjusted EBITDA to net loss. Adjusted EBITDA should be viewed as supplemental to, and not as an alternative for, net income (loss) and cash flows from operations calculated in accordance with GAAP.
Adjusted EBITDA is used by our management as an additional measure of our Company’s performance for purposes of business decision-making, including developing budgets, managing expenditures, and evaluating potential acquisitions or divestitures. Period-to-period comparisons of Adjusted EBITDA help our management identify additional trends in our Company’s financial results that may not be shown solely by period-to-period comparisons of net income (loss) and cash flows from operations. In addition, we may use Adjusted EBITDA in the incentive compensation programs applicable to many of our employees in order to evaluate our Company’s performance. Further, we believe that the presentation of Adjusted EBITDA is useful to investors in their analysis of our results and helps investors make comparisons between our company and other companies that may have different capital structures, different effective income tax rates and tax attributes, different capitalized asset values and/or different forms of employee compensation. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items, particularly those items that are recurring in nature. In order to compensate for those limitations, management also reviews the specific items that are excluded from Adjusted EBITDA, but included in net income (loss), as well as trends in those items.