Greenwave Technology Solutions Releases Shareholder Update

Rhea-AI Summary

Greenwave Technology Solutions, Inc. is on track to generate record revenues in FY 2024 with the upcoming full operation of a second shredder expected to double the company's ferrous metal processing capacity. Recent developments include impressive growth in revenues, volumes, and profits at Virginia Beach and Cleveland yards, the commencement of operations at a non-ferrous processing facility, and the acquisition of Baltimore Scrap Corp. for $177 million. The company aims to expand its footprint of metal recycling facilities and scale its technology platform, Scrap App, to new markets.

Positive

• Greenwave is poised to achieve record revenues in FY 2024.
• The second shredder is expected to double the company's ferrous metal processing capacity.
• Recent developments include impressive growth at Virginia Beach and Cleveland yards.
• The acquisition of Baltimore Scrap Corp. for $177 million supports the company's expansion strategy.
• The company plans to expand its footprint of metal recycling facilities and scale Scrap App to new markets.

Negative

• None.

Market Research Analyst

Greenwave Technology Solutions, Inc.'s announcement of expected record revenues in FY 2024, along with the operational commencement of a second automotive shredder, indicates a strategic expansion that could significantly enhance the company's market position. The shredder's capacity to double Greenwave's ferrous metal processing and potentially increase revenue by 30% on shredded steel is a notable development for investors. The shredding process adds value to scrap metal, making it more desirable to steel mills and foundries, hence improving profit margins.

The reference to the acquisition of Baltimore Scrap Corp. by a competitor for $177 million underscores the consolidation trend in the scrap metal industry and highlights the potential for increased valuations for companies like Greenwave. In a consolidating market, companies with robust infrastructure and strategic growth plans, like Greenwave, could become attractive targets for acquisition or could benefit from increased pricing power.

Greenwave's emphasis on structured deals to minimize dilution and cash flow impact reflects a prudent financial strategy that could resonate with shareholders concerned about equity value preservation. The use of seller's notes as a preferred form of consideration for acquisitions could also suggest a strategic approach to growth without over-leveraging the company's balance sheet.

Financial Analyst

Investors should consider the implications of Greenwave's revenue growth and expansion strategy on the company's financial health and stock performance. The expected increase in revenues and margins due to both organic growth and strategic expansion, including the use of technology platforms like Scrap App to scale operations, is poised to improve the company's earnings profile and cash flows. This, in turn, could lead to a re-rating of the stock by the market, potentially increasing its price-to-earnings ratio.

However, investors must also weigh the risks associated with the capital expenditures required for the expansion, including the costs of the second shredder and potential acquisitions. While the management's focus on avoiding overpayment for acquisitions and minimizing dilution is reassuring, the execution of this strategy will be critical to its success. The ability to generate sufficient cash flow to support expansion while maintaining financial stability will be a key factor in assessing the company's growth prospects.

Furthermore, the comparison with Baltimore Scrap Corp.'s acquisition price provides a benchmark for evaluating Greenwave's market value. As Greenwave continues to grow and possibly seeks to acquire or be acquired, understanding the valuation multiples within the industry will be crucial for investors assessing the potential return on investment.

Environmental & Regulatory Compliance Expert

The expansion of Greenwave's recycling capabilities through the addition of a second shredder not only has financial implications but also aligns with global sustainability trends and the increasing importance of environmental compliance in the industry. The processing of end-of-life vehicles and the recycling of ferrous and non-ferrous metals contribute to the circular economy, potentially positioning Greenwave favorably in markets that are increasingly regulated for environmental reasons.

Investors should consider the long-term benefits of investing in companies that are contributing to resource efficiency and waste reduction. Greenwave's operations could benefit from potential regulatory incentives or avoid penalties associated with environmental compliance. Additionally, the company's established licenses and contracts could provide a competitive edge in securing stable input materials and output contracts, which are critical in the recycling industry.

However, investors should also be aware of the costs associated with maintaining compliance with environmental regulations, which could increase as operations expand. The need for ongoing investment in technology and processes to meet regulatory standards could impact profit margins and investors should monitor how Greenwave manages these challenges as part of its growth strategy.

Company on track to generate record revenues in FY 2024

Second shredder will be fully operational soon and is expected to double Greenwave's ferrous metal processing capacity

CHESAPEAKE, Va., Feb. 13, 2024 /PRNewswire/ -- Greenwave Technology Solutions, Inc. ("Greenwave" or the "Company") (Nasdaq: GWAV), a leading operator of metal recycling facilities in Virginia, North Carolina, and Ohio, today released the following shareholder update:

Dear Greenwave Shareholders,

We are pleased to report that Greenwave is off to strong start in 2024 and is on track to generate record revenues this year. A few recent developments we'd like to highlight:

• Both our Virginia Beach and Cleveland yards continue to post impressive growth in terms of their revenues, volumes, and profits – we expect they will soon become two of our top performing locations.
• We recently commenced operations of a metal baler, wire stripper, and three sheers at our non-ferrous processing facility, enabling us to generate more revenues with higher margins on our aluminum and copper products.
• Greenwave generated more than $200,000 in revenue from cars purchased through our wholly-owned subsidiary, Scrap App, Inc. ("Scrap App"), during the first 130 days since it launched, as it continues to capture market share for end-of-life motor vehicles. Scrap App is currently available in the Hampton Roads and Cleveland markets. We intend to expand Scrap App to other strategic markets in the near future.
• In the coming days, we expect Virginia Dominion Power will inform of us of the final date on which our second automotive shredder will be connected to the power grid and can commence operations. Our existing automotive shredder is the same make and model – an American Pulverizer 60x85 – providing us expertise in its operation and maintenance. Given this experience, we expect our second shredder will be fully operational shortly after being connected to the power grid and is expected to double Greenwave's ferrous metal processing capacity. By shredding the steel which we currently sell unshredded, we anticipate that we will be able to generate approximately 30% more revenue with significant margins on that steel volume.

In August 2023, Baltimore Scrap Corp. was acquired for $177 million plus working capital and other adjustments_(1). While Baltimore Scrap Corp. is larger than Greenwave – it operates 17 yards, four shredders, and processes 600,000 metric tons of scrap each year – we believe this acquisition supports management's view that Greenwave's expansion strategy has the potential to create significant value for its shareholders.

Once our second shredder commences operations, we believe Greenwave will have the requisite infrastructure and cashflows to expand it footprint of metal recycling facilities. As a technology platform, Scrap App has the ability to scale to multiple new markets with minimal capital investment – we do not have to open a new facility, purchase additional equipment, or hire a team of people when we expand to a new market. We believe the expansion of Greenwave's footprint and Scrap App, along with the second shredder commencing operations, will be the primary growth drivers for our revenues – and, likely, margins – in 2024.

Central to Greenwave's growth strategy are the principles that a) we do not overpay for acquisitions and b) any deal we pursue must be properly structured to minimize dilution and limit impact to cashflow. Our goal is to utilize seller's notes as our preferred form of consideration as we expand – we do not expect to win every deal, nor should that be our objective. We intend to spend the time and energy required to ensure the deals we pursue are fairly priced, properly structured, and have the potential to create significant value for our shareholders.

Similar to most industries, there has been a tremendous amount of consolidation in scrap metal companies over the past several years. Greenwave is now one of the largest independent chains of scrap yards remaining in the country, with significant market share in our key markets. Further, we believe there is significant value in our licenses, municipal and corporate contracts garnered over our 20 year operating history, robust infrastructure, and team of seasoned experts. 

We believe the next few months will be transformative for Greenwave and look forward to sharing our progress and developments.

We thank all of our shareholders and appreciate your continued support.

To an exciting 2024,

Danny Meeks
Chairman and Chief Executive Officer
Greenwave Technology Solutions, Inc.

(1)   https://www.recyclingtoday.com/news/sims-baltimore-scrap-acquisition-usa-metal-recycling-mid-atlantic/

About Greenwave

Greenwave Technology Solutions, Inc., through its wholly owned subsidiary Empire Services, Inc. ("Empire"), is a leading operator of 13 metal recycling facilities in Virginia, North Carolina, and Ohio. The Company's recycling facilities collect, classify, and process raw scrap metal (ferrous and nonferrous) and implement several unique technologies to increase metal processing volumes and operating efficiencies, including a downstream recovery system and cloud-based ERP system.

Steel is one of the world's most recycled products with the ability to be re-melted and re-cast numerous times. Recycling steel provides key environmental benefits over virgin metals, including reduced energy use, lower CO2 emissions, lower waste, and conserving natural resources. Greenwave's customers include large corporations, industrial manufacturers, retail customers, and government organizations. The Company plans to aggressively expand its footprint of locations by acquiring independent, profitable scrap yards in the coming months. For more information, please visit www.GWAV.com.

Forward-looking Statements

This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements about its revenue growth, opening of additional locations, margin expansion and cashflow projections. These statements are identified by the use of the words "could," "believe," "anticipate," "intend," "estimate," "expect," "may," "continue," "predict," "potential," "project" and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although the Company believes that its plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements are reasonable, the Company can give no assurance that these plans, objectives, expectations or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company's control), assumptions and other factors that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results may differ materially from those in the forward-looking statements and the trading price for the Company's common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company's filings with the SEC. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

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SOURCE Greenwave Technology Solutions

What is Greenwave Technology Solutions, Inc.'s ticker symbol?

Greenwave Technology Solutions, Inc.'s ticker symbol is GWAV.

What revenue milestone is Greenwave Technology Solutions, Inc. expected to achieve in FY 2024?

Greenwave Technology Solutions, Inc. is on track to generate record revenues in FY 2024.

What is the expected impact of the second shredder on Greenwave Technology Solutions, Inc.'s ferrous metal processing capacity?

The second shredder is expected to double Greenwave Technology Solutions, Inc.'s ferrous metal processing capacity.

How much revenue did Greenwave Technology Solutions, Inc. generate from cars purchased through Scrap App, Inc. in the first 130 days since its launch?

Greenwave Technology Solutions, Inc. generated more than $200,000 in revenue from cars purchased through Scrap App, Inc. in the first 130 days since its launch.

What was the acquisition cost of Baltimore Scrap Corp. by Greenwave Technology Solutions, Inc.?

Baltimore Scrap Corp. was acquired for $177 million plus working capital and other adjustments by Greenwave Technology Solutions, Inc.