NBT Equities Research has initiated coverage on GlyEco, Inc., (GLYE) a glycol waste management & recycling technology company that has initiated a MAJOR consolidation play for the leading glycol recycling companies in North America. We start coverage with a Strong Buy $8.50 2013 target at 22X .40 EPS @55 million shares (fully diluted) and long term 2015 $22.50 Target based on DCF model of $60MM 2015 EBITDA or 12X Upside from the current $1.90 price-per-share. They are currently in silent period during an equity raise.
We think we have found the NEXT $Billion Waste Management/Republic Industries consolidator in America. Waste Management (WM) was the first and Republic Industries (RSG) the second. Both of these companies made their founders $billionaires and early investors millionaires many, many times over.
For many reasons, we think GLYE is the next $Billion market cap company in waste management—but this time investors get a GREEN or CLEANTECH company that has actual economics and PROFITS...who would have of thought you can BE green and MAKE green (given the Solyndra’s of the world.) We will publish our full NBT Research Report early next week but I wanted to get you the gist of our investment thesis today.
So guess what—there is a market based solution to glycol recycling with ZERO government loans that we figure can generate a $Billion or more in shareholder value...
...but THIS time you and I get a chance to invest our hard earned emerging growth capital at the beginning of the consolidation cycle as if we were buying early shares like the Waste Management (WM) and Republic Industries (RSG) investors in the 80’s and 90’s.
Who says there is no time machine for growth investors?
Note: I have followed glycol recycling since we started to research my last book “Billion Green” on Cleantech/Green Investing. What attracted me so much to the recycling glycol idea was:
A) There is a HUGE amount of very toxic glycol in the world to recycle—5 billion gallons worldwide and 700 million gallons in the US every year.
B) Virtually EVERY country in the world MANDATES recovery and recycling—glycol is a very hazardous liquid chemical that KILLS most everything it is exposed to.
C) There is MANDATED use of recycled glycol in most State and Federal governments, including the military and HUGE demand for “green” recycled anti-freeze products in transportation fleets and for retail auto owners who prefer to purchase recycled products for their car like oil or anti-freeze.
D) As such there is MORE DEMAND than supply—always a good thing in building a profitable business.
The ONE thing missing from this cottage industry (hundreds of small local recyclers) was
A) Technology to turn old glycol into Type 1 quality “virgin” glycol—i.e., the “good stuff” that is worth $500+ per barrel.
B) A significant enough amount of Type 1 recycled glycol to meet North American and world demand.
C) Somebody to put the whole enchilada together to get to the critical mass of recycled Type 1 glycol necessary to meet North American and worldwide demand.
Well THAT is the value proposition of GlyEco—their patent-pending GlyEco Technology takes all kinds of glycol feedstock and turns the vast majority of that feedstock to ASTM Type 1 recycled glycol ready to be turned into
1) Recycled plastic containers
2) Polyester Fabrics
3) Recycled Antifreeze
4) Glycol concentrate for a whole host of applications
Now add in the consolidator business model and John Lorenz. Mr. Lorenz is 30 year veteran of solid waste industry and this GLYE play is NOT his first consolidation rodeo. He founded Environmental Waste of America—now Waste Management. Early investors in Waste Management made literally millions on their initial investments... John has ONE more waste consolidation company in him and GLYE is it!
Add a very deep team with 67 years of waste management and glycol recycling industry experience, patent pending technology that revolutionizes the entire $3.5 billion US glycol recycling industry...and combine the top 12-14 players under ONE GLYE roof and you have the GLYE strategy down cold.
Just the United States consolidation and recycling technology upgrades alone gets GLYE to .40 EPS in the first year—and they are 1/3 of the way to their 12 acquisition target as of today.
By 2015 they are at @$70 million gross revenues domestic--$45 million NET revenues from International partners...and somewhere north of $60 million EBIDTA. Put an 8X EBITDA value on this and we are half way to $1 billion market cap.
Now think international—a market that is 7X the US market. GLYE has plans to by 2016 have international revenues in EXCESS of US—and 100% of that international revenue is PURE PROFIT—a 12.5% licensing fee from partners all over the world. By 2016 international NET profits—GlyEco’s 12.5% NET royalty on international recycler partners using the GlyEco system—almost DOUBLE the GROSS revenues of North America (
according to the Investor Presentation they 8k’d last week).
Put EVERYTHING together in a bow and GLYE is a first: an extremely profitable Cleantech company with GREAT private market economics and NO government subsidies or loans—just mandates that glycol users DON’T DUMP toxic glycol in our rivers, streams, lakes and dumps.
In our opinion, GLYE IS the next $Billion Cleantech company...and the FIRST one to get theirs the old fashioned way...WITHOUT tax credits or government loans!
Halleluiah—strongly encourage you to
pick up shares UNDER $2.50 and HOLD EM. Check out their website at
glyeco.com.
| GLYE.OB | 10:17am EDT | 1.97 |  0.05 | 2.60% | 1,875 |
