One month ago, EarthRenew (ERTH.C) announced that it had signed a non-binding letter of intent (L.O.I) to acquire 38% of Replenish Nutrients – a privately held regenerative fertilizer and nutrient company located in Okotoks, Alberta.
ERTH transforms livestock waste into a high-performance organic fertilizer. That generates revenues from multiple streams.
On February 18, 2021 ERTH announced that it has negotiated an increase to its proposed equity ownership stake of Replenish nutrients from 38% to approximately 100%.
“The Replenish Nutrients team will support all aspects of the marketing, distribution and sales of the Earthrenew products into the regenerative agriculture space,” stated ERTH, “Replenish Nutrients currently has an established product line that it sells across Western Canada and the United States (North Dakota and Montana), generating strong revenues”.
Replenish Nutrients’ management has 35 years experience in the regenerative fertilizer and nutrient industry.
Key Regenerative Agriculture Principles:
Conservation tillage: By adopting low- or no-till practices, farmers minimize physical disturbance of the soil.
Diversity: Plant diversity helps create nutrient-dense soils that lead to more productive yields.
Rotation and cover crops: By rotating crops, farms can infuse soils with more diverse organic matter, avoiding disease and pests.
Mess with it less: Restrain and caution with chemical or biological additives which can disrupt the natural relationship between microorganisms and plant roots.
“The outcome of the diligence process was that it became apparent to both parties that we were more aligned with our collective vision than we originally thought,” explained EarthRenew’s CEO Keith Driver, “and the natural next step was for EarthRenew to become much more than a minority owner of Replenish Nutrients
The 100% ownership of Replenish is expected to give ERTH top line revenue and accelerate phase two of its construction plans. At the same time, ERTH will invest in the growth of Replenish Nutrient’s manufacturing capacity to address a supply gap for their product.
The combined EarthRenew/Replenish entity expects to generate significant revenue growth within the expanding regenerative and organic fertilizer markets.
Financial Highlights and Projections:
- Replenish Nutrients booked revenue of $5.1 million for the last six months of 2020 and through the end of January 2021.
- ERTH is forecasting $4.8 million in revenue for the balance of the first half of 2021.
- New Entity projections are for a total $9.9 million for the period of July 2020 through June 2021, up from $3.6 million for the same period in 2019/2020.
Following completion of the Proposed Acquisition, ERTH anticipates that Replenish Nutrients will continue to operate as a marketing and distribution company as a wholly owned subsidiary of EarthRenew.
In this December 3, 2020 video, Jody Vance talks to EarthRenew CEO and Director, Keith Driver about the business objectives of the company.
“It’s a super simple business model,” Driver told Vance, “We take manure directly from the feedlot, because we’re located on the feedlot, we run it through our thermal treatment system, a dryer, and we then blend it with other fertilizers to make really high value product.”
“We’re learning a ton from farmers,” explains Driver, “If you’re going to provide a solution to farmers, you better spend an awful lot of time listening to farmers. What we do is a mix of finance and engineering.”
EarthRenew takes a biologically compromised product that is trapped in local markets, and frees it into a pure organic product that can be transported across provincial and state lines.
The value proposition for the owner of the cows?
- Annual lease payments for ERTH’s processing plant
- Disposal of manure.
- Electricity generation.
ERTH announced that Fred Leigh will step down as a Director and Chairman of the board of directors of EarthRenew, effective immediately.
“I intend to remain involved with the company as a significant shareholder and have the utmost confidence in EarthRenew’s management team and Board of Directors to continue to deliver value for investors,” stated Leigh.
“We look forward to the potential to work with the entire Replenish Nutrients team to accelerate growth of the new combined entity, leveraging their experience in the fertilizer and soil solution space,” stated Driver.
- Lukas Kane
Full Disclosure: EarthRenew is an Equity Guru marketing client.