Skip to content
November 30, 2022

Equity.Guru

Investment information for the new generation

5 Circular Economy Companies: Regenx Tech (RGX.V), The RealReal (REAL.NASDAQ), Northstar Technologies (ROOF.V), Kontrol Technologies (KNR.NEO) and Greenlane Renewables (GRN.T).

The Circular Economy is a model of production and consumption whereby materials that are already in circulation are re-purposed to create new products.

As landfills reach capacity, federal governments around the world are creating financial incentives for companies to pursue this business model.

The shift to the Circular Economy is gaining traction as an investing theme.

“Half a trillion tonnes of virgin materials, our world is only 8.6% circular,” states the 2022 Circularity Gap Report, “This means that between the ‘COP25 in Paris’, 2015 and COP26 in Glasgow, 2021, 70% more virgin materials were extracted than what the Earth can safely replenish”.

”This cannot continue,” added the report, “We only have one planet.”

Here is a round-up of 5 Circular Economy companies currently on our radar.

Regenx Tech (RGX.V) – previously “Mineworx” – is a $13 million CleanTech company, developing and commercializing processing technologies for the recovery of precious metals.

Initial focus is the extraction of platinum and palladium from diesel catalytic converters with its partner Davis Recycling.

A catalytic converter is an exhaust emission control device that converts toxic gases and pollutants in exhaust gas into less-toxic pollutants.

Two of the key rare metals found in catalytic converters are palladium and platinum

“Catalytic converter theft, a crime that has been happening for decades, is surging as thieves take advantage of a spike in the prices of rare metals contained within the automotive devices,” reports USA Today.

About 80% of palladium demand, and 50% platinum demand come from catalytic converters, but currently only 30% of the PGMs are recovered.

Feed for Regenx’s plant comes from Davis Recycling in Tennessee, where the core materials are separated from the metal containers and ground into a fine powder.

Platinum and palladium are extracted from the feed using hydrometallurgical methods. The metals are precipitated out of solution and refined prior to sale.

Catalytic Converters – Platinum & Palladium

  • 80% of the world’s supply of palladium (Pd) and 50% of the world’s supply of platinum (Pt) are used in catalytic converters annually.
  • Worldwide, catalytic converters require about 12,600,000 oz of Pd and Pt per year to meet the exhaust emission regulations for gasoline.
  • A typical auto or light truck catalytic converter contains two to 12 grams of Pd and a similar amount of Pt.
  • 27 million catalytic converters become available as scrap per year.
  • Currently less than 30% of the Pd & Pt in catalytic converters is recovered.
  • A diesel cat wave is coming – as DPF sales began in 2006 and the average recycle age of units is 10+ years.

Current Method To Recover Platinum & Palladium

  • The only current commercial method to recover Pd & Pt from catalytic converters is smelting.
  • Diesel Oxidation Catalysts (DOC) and Diesel Particulate Filters (DPF) are difficult to process.
  • Smelters worldwide currently have limited capabilities, and they are environmentally hazardous.
  • Most smelters and refiners now refuse to accept diesel cat. feedstock due to processing inefficiencies they create.
  • Diesel catalytic converter units also can create smelter safety issues, because trapped carbon can ignite, causing an explosion and damage to a furnace.
  • Recyclers currently attempt to “mix” catalyst types (gas and diesel) in order to monetize their inventory.
  • Smelters are becoming stricter on penalties or outright rejecting batches that contain diesel catalysts.

On August 23, 2022, Regenx announced that in addition to Platinum and Palladium the Company is now able to recover Rhodium successfully from used catalytic converters.

During the past year, the Regenx team has been working on research projects that have the potential to increased company value. One of these projects was a new method that now allows for the recovery of Rhodium (Rh) in addition to Platinum (Pt) and Palladium (Pd).

Rhodium is a highly valued commodity that is present in many catalytic converters. The average spot price for Rh in the previous thirty (30) days is approximately $13,680.00 USD per ounce.

“During research and trials conducted in Tennessee, it was determined the existing Mineworx pilot plant would be capable of recovering Rhodium by utilizing the newly developed techniques,” stated RGX.

“Modifications to the pilot plant required to implement the new process were completed and did not adversely impact the operating efficiency or processing costs of the existing process for Pt and Pd”.

The Company now plans for a full-scale set of tests utilizing the pilot plant to confirm the commercial viability of the initial results.

The RealReal (REAL.NASDAQ) is a $132 million company that operates the world’s biggest online marketplace for authenticated, resale luxury goods, boasting an astonishing 20 million members.

In the last 2 years the company shed 95% its market cap. The company generates a lot of revenue but loses money doing it.

On November 8, 2022, REAL released Q3, 2022 financial results.

Third Quarter Financial Highlights

  • GMV was $441 million, an increase of 20% compared to the same period in 2021
  • Total Revenue was $143 million, an increase of 20% compared to the same period in 2021
  • Net Loss was $(47.3) million or (33.1)% of total revenue compared to $(57.2) million or (48.1)% in the same period in 2021
  • Adjusted EBITDA was $(28.2) million or (19.7)% of total revenue compared to $(31.5) million or (26.5)% of total revenue in the third quarter of 2021
  • GAAP basic and diluted net loss per share was $(0.49) compared to $(0.62) in the prior year period
  • Non-GAAP basic and diluted net loss per share was $(0.38) compared to $(0.47) in the prior year period
  • Top-line-related Metrics
    • Trailing 12 months (TTM) active buyers reached 950,000, an increase of 23% compared to the same period in 2021
    • Orders reached 952,000 in the third quarter, an increase of 26% compared to the same period in 2021
    • Average order value (AOV) was $463, a decrease of 5% compared to the same period in 2021
    • Lower AOV was driven by a year-over-year decrease in average selling prices (ASPs) driven by a shift in demand from high value items to more ready-to-wear items, partially offset by higher units per transaction (UPT).
    • GMV from repeat buyers was 84% which was stable year-over-year

Cash & Cash Equivalents at Quarter-End was $300 million

“Fashion is one of the top polluting industries, contributing 10% of the world’s total carbon footprint,” stated REAL, “Clothing production has approximately doubled in the last 15 years to 80 billion garments per year. A garbage truck’s worth of textiles is landfilled or burned every second, even though 95% of trashed clothes could be re-worn, recycled or reused.

If the industry continues on its current trajectory, its share of the world’s carbon footprint could jump to 26% by 2050 and it will miss the 1.5-degree pathway laid out by the Paris Climate Accord.

The RealReal’s share price dropped after EBay (EBAY.NASDAQ) announced it would be expanding its Authenticity Guarantee service to include handbags.

There is a lot of chatter that Ebay may try to buy The RealReal at this radically discounted share price.

“So now ebay is shifting to luxury products and consumers since they obviously hold up better in a recession. Their main business is dying and now they realize it, so they are shifting,” declared one investor on an investment bullboard.

“But in reality TheRealReal has all the customers they want and supply they need. You can’t build a new strategy and expect it to work overnight. REALREAL has been doing this for 11 years now,” continued the investor, “They will need to acquire them or risk going down a bad path of trying to compete when their technology is not setup and the sellers and buyers they want are not on eBay marketplace.”

“Do you really think the majority of luxury consumers shop on ebay?,” the investor asked rhetorically, “Absolutely not. Ebay is a cheaper amazon. I have tried to sell a luxury item on ebay in the past and got no offers or interest until 8 months after. I took the item off eBay and sent to therealreal. It sold in 2 days… Realreal is exactly what they need and they don’t realize it yet. Or maybe they do…”

The Real Real’s concept is good. The revenue growth is good. The biggest problem is the weak authentication of its luxury items. If it owns up to this failure, creates more rigorous authentication protocols, it could rebound hard.

An ebay buyout would create an exit at a premium to the current share price.

 

Northstar Clean Technologies (TSXV: ROOF) is a $20 million clean technology company focused on the recovery and repurposing of single-use asphalt shingles to produce liquid asphalt, fibre and sands while diverting shingle waste from landfills.

Nine months ago, Northstar announced that it has initiated steady state production at its reprocessing facility (Empower Pilot Facility) in Delta.

“A steady state implies that the System State is independent of its initial start-up conditions,” reports the International Journal of Development Research, “providing top management with a clear picture of how to make their production line more effective.”

“This announcement proves to the market that our technology works and validates our business model,” states Northstar CEO Aidan Mills, “as we set out to scale up this technology to a facility size that we can expand with across the North American market.”

ROOF’s business model anticipates four revenue streams: 1. tipping fees (paid by waste haulers and roofing contractors), 2. Sale of Asphalt, 3. Sale of Fiber and 4. Sale of Aggregate. The sale of carbon credits would add a 5th revenue stream.

“One of the critical metrics for any energy transition, ESG-based, clean technology company is demonstrating that its transformational technology actually works,” stated Mills, “For Northstar to do that, we need to produce the end products from our facility at the specification we expected, in a repeatable manner.”

On October 6, 2022, Northstar announced that it – along with its wholly-owned subsidiary Empower Environmental Solutions Calgary – has signed a binding term sheet for a five-year off-take agreement with McAsphalt Industries – a subsidiary of Colas Canada.

Northstar will sell McAsphalt, on an exclusive basis, 100% of liquid asphalt production at the Company’s planned scale-up asphalt shingle reprocessing facility in Calgary, Alberta. The Term Sheet is a legally binding obligation between the Parties.

Term: Northstar and McAsphalt have agreed to a five-year term for the off-take agreement with automatic three-year renewal options, unless either of the Parties provides 180 days’ written notice of its intention not to renew.

Pricing: The agreed terms of the sale price of the liquid asphalt is confidential due to commercial sensitivity reasons, but the pricing is market based and includes the market index, a quality and locational differential, and a sustainability premium.

Risk Management: Risk management pricing is incorporated into the pricing mechanism.

Third Party Sales: Northstar and McAsphalt will have the ability to enter into third party sales agreements for the liquid asphalt product produced from the Empower Calgary Facility. The detailed terms of any third party sales are confidential.

Planning, Regulatory and Government Agency Support: McAsphalt will support Northstar in planning, regulatory and government agency engagement with respect to the Empower Calgary Facility.

Life-Cycle Assessment: The Parties will work together to develop an additional life-cycle assessment for Northstar’s proprietary clean technology.

Carbon Credits: The Parties will work together on the development of a protocol to create carbon credits. Should carbon credits be created, the sustainability premium will be calculated based on the joint contribution to the protocol development.

“McAsphalt has contributed to the continued optimization of the production and quality control processes at Northstar’s Empower Pilot Facility in Delta, B.C.,” reported Aidan Mills, President & CEO and Director of Northstar, “and to the design of the Empower Calgary Facility.

“With McAsphalt’s commitment to continue its support, through detailed design, construction, commissioning, and operation of the Empower Calgary Facility, we have a sophisticated partner who will contribute significantly to the success of our commercialization of an industry changing technology,” continued Mills.

For the Empower Calgary Facility, this agreement provides Northstar the ability to divert an estimated 40,000 tonnes of shingles per year from Calgary landfills (60,000 barrels of asphalt per year into landfill) and deliver an estimated 10,000 tonnes of asphalt per year.

“McAsphalt is a serious long term strategic partner, and we are delighted to have them as a critical partner in our first commercial facility,” concluded Mills.

“Northstar will be an important partner helping us meet our corporate CSR commitments,” stated Ron Vertz, Canadian President of McAsphalt, “specifically, carbon reduction, reducing our impact, circular economy and helping us shape an exemplary culture of ethics and compliance.”

Kontrol Technologies (KNR.NEO) is an $55 million company that has developed propriety solutions to make buildings safer and more energy efficient.

The “smart city/smart building” market is experiencing parabolic growth.

“The global smart cities market size was valued at USD 98.15 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 29.3% from 2021 to 2028,” reports Grandview Research.

On October 26, 2022 KNR announced that it has delivered energy savings in the range of 20% to 30% per annum for 3 recent REIT customers, which manage national building portfolios in Canada the USA. The REIT customers operate multi-family or multi-residential buildings in Canada and the USA.

Currently the Kontrol SmartSuite energy management technology is deployed in 7 initial buildings across these 3 REIT customer portfolios. Kontrol typically deploys to a number of buildings initially to build a relationship based on proven performance with its new customers. The Company then seeks to turn these initial deployments into a scalable solution.

“We are excited to deliver such robust energy savings performance for our new customers,” says Paul Ghezzi, CEO of Kontrol Technologies. “Our SmartSuite technology is designed to provide building automation and in-suite control over heating, cooling, and ventilation through a unified Cloud solution. Each of these REIT customers represents a scalable customer and we look forward to continuing the expansion our energy management technology.”

On August 15, 2022 Kontrol provided financial results for the three months and six months ended June 30th, 2022.

Second Quarter and Year-to-Date 2022 Highlights

  • Record Q2 revenues of $29.1 million, up 599% year-over-year
  • Revenues for the six months ended, were $55.8 million
  • Adjusted EBITDA* of $2.0 million and $4.5 million for the three and six months ended respectively
  • Net income for the six months ended, was $2.7 million, compared to net loss of $(645,597) for the same period in the prior year
  • Gross profit for the six months ended, was $13.6 million
  • Working capital of $9.1 million, an increase of $5.4 million over the year end balance at December 31, 2021
  • Launched development of Kontrol BioWater, an extension of the Kontrol BioCloud™ Technology for early viral detection in water systems
  • Completed first SmartSuite installation in Florida for a leading National USA REIT
  • Continued success in contract and letter of intent awards for HVAC and automation projects

“The Company’s first half performance reflects continued operational execution as we work diligently to scale the Kontrol platform while maintaining discipline in our operations and capital structure,” said Paul Ghezzi, CEO of Kontrol Technologies. “Q2 was our highest-ever revenue quarter in our history, as we continue to drive growth within our customer relationships in the multi-residential and commercial building portfolios.”
Q2 2022 Financial Summary


“In a paper published in the journal Science, 39 experts in various fields called for a “paradigm shift” in the design of buildings and their ventilation systems, a safety upgrade on par with the 19th century introduction of clean water supplies and centralized sewage systems,” reported the L.A Times on May 13, 2021.

“The scientists envision futuristic buildings with systems that could detect a crowd gathering in a room and immediately adjust the ventilation to increase air turnover. Monitors would display air quality measurements in real time”, said The L.A. Times.

The paper cited estimates suggesting that the systems would increase the construction cost of a typical building by less than 1%.

Greenlane Renewables (GRN.T) is an $86 million company providing biogas upgrading systems that are helping decarbonize natural gas.

GRN’s systems produce clean, low-carbon and carbon-negative renewable natural gas from organic waste sources including landfills, wastewater treatment plants, dairy farms, and food waste, suitable for either injection into the natural gas grid or for direct use as vehicle fuel.

On November 8, 2022, Greenlane Renewables Announced Third Quarter 2022 Financial Results

Third Quarter Highlights

  • Record revenue of $19.9 million, a 48% increase over the $13.4 million reported in the third quarter of 2021;
  • Gross profit of $4.3 million, Gross Margin1 (gross profit excluding amortization) of $4.9 million (25% of revenue);
  • Adjusted EBITDA2 of $0.4 million;
  • Net income of $0.6 million;
  • Sales Order Backlog3 of $36.7 million, as at September 30, 2022;
  • Sales Pipeline4 valued at approximately $900 million, as at September 30, 2022;
  • Cash and cash equivalents of $21.3 million and no debt, other than payables, performance bonding and letters of credit resulting from normal course operations, as at September 30, 2022;
  • The Company announced new contract wins totalling $13.5 million in the quarter for the supply of its biogas upgrading technology for two landfill gas-to-renewable natural gas (“RNG”) projects in South America;
  • The Company announced its second deployment of development capital to a company focused on developing landfill gas-to-RNG projects in the United States; and
  • The Company increased its credit facility with The Toronto Dominion Bank from $12.5 million to $20.0 million.

“We’ve delivered record quarterly revenue and a solid bottom line, and we maintain our excitement about the growth of the RNG industry and our role in its success,” said Brad Douville, CEO of Greenlane. “We remain driven to grow our business and balance this growth’s impact on our bottom line.”

“With increasing global focus on impactful solutions to decarbonize our planet, the RNG industry has experienced significant consolidation this year together with new supportive regulations and funding, pointing to the scale up of the number of RNG projects,” added Douville.

“The concept of circular economy is a foundational blueprint and if we could get more and more of the money owners to agree that this is a good way to invest, not just for social reasons, not just for environmental reasons, but for investment reasons, performance reasons,” it would be a good thing, stated Larry Fink, CEO & Chairman of BlackRock, an asset management company with $6.5 trillion under management.

Regenx Tech (RGX.V), The RealReal (REAL.NASDAQ), Northstar Technologies (ROOF.V) and Kontrol Technologies (KNR.NEO) and Greenlane Renewables (GRN.T) are all fighting for a piece of this pie.

Related Posts:

More on , ,

Leave a Reply

Your email address will not be published.