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By Meg Flippin, Benzinga
From shoring up capital to building out its popular Scrap App, Greenwave Technology Solutions Inc. (NASDAQ: GWAV), has been making a lot of progress in the past few months, including the company’s recapitalization, which it announced in May. The operator of 13 metal recycling facilities in Virginia, North Carolina and Ohio recently completed that, exchanging $17.22 million in debt for shares.
All told, in the past few months, Greenwave says it has attracted $45.3 million in new capital infusions. The company is also shoring up its balance sheet, which now stands at $80.5 million, with a cash balance of over $26 million, a record for Greenwave. It is now operating a fully funded business with no need to raise any more capital.
Greenwave is also still on track to generate record revenues of more than $40 million driven by volume of steel and copper processed in 2024. The new cash position gives Greenwave firepower “to aggressively grow and increase processing volume.” To that end, Greenwave said it plans to open a second shredder this summer.
Looking For Buys
The metal recycling company is also looking for acquisition and strategic partnerships. That shouldn’t be too hard since Greenwave operates in a growing and fragmented industry; one example of which is recycled steel. Using recycled steel instead of new material can cut CO2 emissions by about 75% as it uses about 70% less energy than manufacturing new materials.
As it stands, two out of every three tons of steel produced come from recycling. In 1980, it was just one out of every ten tons produced. It's also a big market. In 2019, the metal recycling industry was valued at $52.1 billion and is projected to reach $76.1 billion by 2025, growing at a CAGR of 7.8% during the forecast period.
Greenwave says it is focused on scrap yard deals that don’t have a lot of dilution or impact cash flow. It is also committed to not overpaying, aiming to utilize seller’s notes as its preferred form of consideration.
Scrap App Expanding Nationwide
In addition to doubling down on buys, Greenwave plans to use its newfound cash flow to expand ScrapApp.com, its artificial intelligence-powered quoting system for metal from construction and demolition projects, nationwide. The app lists the nearest scrap yards with real-time pricing.
Greenwave says it is one of the first companies to utilize artificial intelligence (AI) in the $42.3 billion U.S. scrap metal industry. Since launching Scrap App, it has generated hundreds of thousands of dollars in revenue from end-of-life vehicles. That’s only from the limited markets it currently operates in, which include Hampton Roads and Richmond, Virginia, and Cleveland, Ohio. Scrap App recently set a new daily record for cars purchased through the Scrap App platform.
With its strengthened cash position, Greenwave wants to morph Scrap App into a leading AI-driven technology platform for the multi-billion dollar scrap metal industry; either as a stand-alone business serving the whole industry or as an internal subsidiary giving Greenwave a competitive edge.
In the coming months, the company plans to list nearby scrap yards with their real-time prices and introduce a points-based rewards system. Scrap App has adopted the lean startup methodology – expanding primarily utilizing the cashflows it generates from operating activities, while focusing on utilizing AI-powered systems it expects will enable it to scale in a capital-efficient manner.
“A competitor to Scrap App reportedly generated $159 million in annual revenue during 2022,” said Greenwave. “Greenwave believes the efficiencies created by its vertical integration of key stages of the car scrapping process could lead to significant competitive advantages.”
With more cash in the coffers and no need to raise additional capital, Greenwave is fully focused on bringing its growth strategies to life by making more buys and expanding its popular Scrap App. With recycled steel in demand, stay tuned for more news coming out of this smelter operator.
Featured photo by Ben Wicks on Unsplash
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