EarthRenew (ERTH.C) announced that their wholly-owned subsidiary, Replenish Nutrients, signed a distribution agreement with Parrish & Heimbecker (P&H), one of Canada’s largest grain and fertilizer businesses.
The deal will allow P&H to distribute Replenish’s regenerative agriculture products across their 30 facilities throughout Alberta, Saskatchewan, and Manitoba for six years.
EarthRenew anticipates that this agreement with P&H will expand the distribution of Replenish’s crop inputs by 6,000 tonnes in the first year alone, which is valued at $1.95 million with a gross margin of ~30%.
“We are very excited to announce the signing of this agreement with P&H on the back of just having acquired 100% of Replenish. It speaks both to the certain demand for Replenish’s regenerative product line and to the momentum we’ve built while we work to grow our businesses,” stated Keith Driver, CEO of EarthRenew. “Our distribution relationship with P&H increases our ability to provide leading products, to more customers and to farm communities throughout Alberta, Saskatchewan and Manitoba. Now we can serve more farmers in more areas who have the important job of growing food to feed the nation.”
Replenish will be providing P&H with their regenerative soil health line including Sustain, Super KS, and Replenish. These products enhance soil conditions to maximize plant nutrient uptake by using soil microbe delivery technology that focuses on feeding soil microbes.
Today’s announcement comes just a week after EarthRenew closed their acquisition of Replenish Nutrients, purchasing the sustainable fertilizer company for ~$9 million. Replenish Nutrients had just over $5 million in sales in the second half of 2020 through to the end of January 2021, so an additional $1.95 million sales is a significant increase.
Because the deal is with P&H, one of Canada’s largest fertilizer businesses, this presents ERTH and Replenish with the opportunity to develop a very valuable relationship. P&H is growth-oriented, diversified, and vertically integrated, and are well-positioned to supply fertilizer in densely populated organic farming regions in western Canada.
Oh, and of course, with a gross margin around 30% and an expected $1.95 million in sales, the agreement could bring in ~$585,000 in profit. That’s always nice, too.
“We are pleased to have the opportunity to distribute Replenish’s unique brand of regenerative fertilizers to our conventional and organic customer base. We have seen an impressive increase in demand for products that not only address plant yield but also contribute to soil health and Replenish-line products handily address that need,” stated Colin Hudson, Western Canadian Sales Manager at P&H.
Following the news, EarthRenew shares are up a cent and a half, and are currently trading at $0.34.
Full disclosure: EarthRenew is an Equity Guru marketing client.