Sustainable Green Team, Ltd.

What they do

The company collects tree debris (feedstock) through National Storm Recovery, which operates as Central Florida Arborcare and provides arbor care, tree trimming, and storm debris cleanup primarily in the southeastern U.S. Its Mulch Manufacturing subsidiary produces mulch, lumber and soil products in the Midwest and Southeast, and also makes proprietary mulch dyes, colorants, and coloring equipment sold under the Nature's Reflections and Cheetah brands. The company owns sawmills in Homerville, Georgia; Jasper, Florida; and Beaver, Washington, and sells to retailers, wholesalers, landscapers, and garden centers nationwide.

Revenue drivers

• Arbor care and storm debris services (NSR) — National Storm Recovery provides tree trimming, storm cleanup and disposal services, primarily in the southeastern U.S.; the segment supplies internal feedstock but its external revenue contribution is not separately disclosed.
• Mulch and lumber products (MMI) — Mulch Manufacturing produces colored mulch, lumber and soil products sold through national distribution to retailers and landscapers; this is the primary manufactured product line, though exact segment revenue is not broken out.
• Colorants and coloring equipment — MMI manufactures proprietary mulch dyes, colorants and Cheetah brand coloring equipment sold to other landscaping material producers; no separate revenue figure is provided.

Recent performance

For the quarter ended June 30, 2023, revenue was $7.3 million, down from $12.2 million in the quarter ended July 2, 2022. Full-year 2022 net income was $8.9 million, or $0.10 per diluted share. As of June 30, 2023, total assets were $134.7 million, total liabilities $53.8 million, and shareholder equity $80.9 million.

Strategy

The company is transitioning from a legacy manufacturer to a GreenTech provider, citing an October 2022 licensing agreement with VRM Biologik. It plans to begin manufacturing and selling soil products in 2023 and intends to start lumber and mulch production at the Jasper, Florida sawmill and lumber and soil production at the Beaver, Washington sawmill once funding is secured. Management states these planned expenditures require additional funding and are included in anticipated capital expenditures. The company also partners with a large waste management company to divert feedstock from landfills.

Risks

• Funding dependent growth — The company states it will require additional funding for its growth plans, and such funding may result in dilution to investors.
• Idle mill capacity — The Jasper and Beaver sawmills have not commenced lumber and mulch production and require secured funding for raw materials, equipment, permitting and working capital.
• Revenue decline — Quarterly revenue fell to $7.3 million in the June 2023 quarter from $12.2 million in the prior-year period.
• Forward-looking statement uncertainty — The company cautions that actual results could differ materially from forward-looking statements due to factors detailed in its SEC filings.

Outlook

Management expects to begin manufacturing and selling soil products in 2023 and to commence production at the Jasper and Beaver sawmills once funding is secured. The company characterizes these plans as requiring additional capital. No specific revenue or earnings guidance is provided in the excerpt.