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A Profitable, Strong & Sustainable ESG Investment in Regenerative Agriculture

Dave Jackson Dave Jackson, Stockhouse
1 Comment| February 23, 2022

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(Click to play video.)

Click to enlargeEarthRenew Inc. (CSE.ERTH, OTC: VVIVF, Forum) is a viable and sustainable company that supports a unique farm system that puts healthy soils and grower profitability back on the table. ERTH uses a circular economics of upcycling waste nutrients into high value agronomic inputs. They are building an innovative platform of soil health products to become a key player in the regenerative agriculture space. By offering growers fertilizer alternatives that feed the soil, they strengthen the earth's ability to restore itself while growing very healthy plants.

Stockhouse Media’s Dave Jackson was joined, once gain, by company CEO Keith Driver to get our investor audience caught up on all things EarthRenew Inc.

TRANSCRIPT BELOW:

SH: For our audience that might be new to EarthRenew, can you tell us a little bit about yourself and the history of the company?

KD: Absolutely. So, Keith Driver, my background is in environmental engineering and got into EarthRenew about four years ago to help build the brand and an integrated fertilizer company that was ready to meet the demands of farmers from a regenerative agricultural perspective. So how can we take waste nutrients and upcycle them into what is conventional fertilizer shapes and forms where they get the equivalent yield but without all the downsides of using synthetic fertilizers.

SH: Can you update our investor audience and your EarthRenew shareholders on any new company developments, especially in the wake of COVID-19 and the Omicron variant?

KD: So the good news about agriculture as a sector is we tend to be resilient. People still need to eat and progress has been going well. So even though Omicron has been present and has made things a little bit more difficult for us as a team to interact, we still managed to accomplish a great deal. Internally we were able to make record revenues from last year, up over 200% year over year. We've had our field trial results come in and really do what they were supposed to do which is broaden the experience of farmers with our products and their uses. We've been able to recommission our facility in Beiseker after the upgrade. So really expanded capacity.

SH: The company has just penned a “positive letter to stakeholders.” Can you give us some details on this announcement?

KD: Yeah, it was in some ways a response to questions we were getting from shareholders and about how all the bits and pieces that we were working on all come together into this sort of common approach and the path that we're on and our website has the presentation. It sort of lays the roadmap but we wanted to pull pieces together. So we talked about the revenue achievement from last year. This is 200% plus year over year growth. So we've got cash flow and we've got to the point where we've got to the point where we’ve got net income as a business. So we now hit that sort of sustainability. We've crossed the hump as you will, and we've got a line from last year at $15 million of revenue to this year at somewhere north of $24 million revenue. So, we're going to grow again and that's fantastic.

That's things we can see. We announced the Beiseker project, and we'd been a little bit quiet as we were putting the final pieces of that together but we're now producing there, and we went from 4,000 tons of capacity there to 20,000 tons and that's really where our growth is going to come this year, organically within the business. It is just more production because we were limited last year with supply chain. That was the limit. We could have sold more but we just needed more capacity and so we brought that online.

We've also been really active in the US trying to figure out where our toehold will be into that US market. So, we're really excited about those. This also comes to the point where it's been a year since we did the Replenish Nutrients acquisition, where we really built out the management team and we brought that base of business, those products that we’d been grooming to the market. We professionalized our marketing and sales programs. We brought on additional retailers and distributors for our products and that's just made our company more resilient and enhancing our ability to reach new and growing geographies and new customers.

SH: Segueing back into Beiseker, what do you want investors to know about this company and why it’s so important?

KD: So, Beiseker was really our R&D facility to start with. So, we started, we were able to make 4,000 tons of granulated products and for granulated products, think really tiny beads, all the same size then go through conventional equipment but we're making it from a range of products. So it was really important for us to get our formulation right and now all of our expansions are just versions of Beiseker, same equipment, same layout, same everything else. So now we've made 4,000 tons. Now we're going to make 20,000 tons and then the project we're working on at Bethune is 200,000 tons but it's made up of series of units that are all the same equipment with which we made our 20,000. So we've now proven out the sort of technology risk, we've proven out the market risk because we've been able to deliver into those markets with those projects. It's now commissioned, and we can execute really quickly on this roll out of our projects.

SH: Can you also tell us about the Bethune Regenerative Fertilizer Production facility that advances a new fertilizer manufacturing facility? Sounds intriguing?

KD: Yes. We're getting very close. We announced last year that we had all the LOI’s in place for our feed stocks and our offtake and our site partner with K+S and we're sort of at that fine point of the spear where we're just about to tick over into execution mode here and so we're holding the cards, maybe a little close to our chest at this point, but things are pointing very positively. As I mentioned we've secured our feed stocks. We've got our offtakes in place and now we're just working through the sort of fine details on how do you lease and structure in Saskatchewan and those agreements are going to progress but the technology behind it now that Beiseker is in place means we've now got a working facility at scale for the engineers, who've done their work on the design build and we've been able to do our work on the permitting. So we've been able to de-risk the project even though we're slowly moving towards this grand vision of a massive scale up in our capacity.


SH: You’ve recently announced 2021 revenue info. This may be news to many investors. Can you unpack some of it for us?

KD: Absolutely. So last year's equivalent revenue from before the acquisition of Replenish would been in the neighborhood of $7 million, this year it was $15 million. What that shows us is we went from direct to farm sales and we converted that business. At the same time we grew it by 200%. We converted much of that business to selling through distributors. So we were able to maintain our margins. We were able to maintain and grow by 200% our volumes. 50% of our revenue last year came in last quarter of the year and so the year over year growth, we actually see it two seasons a year, spring and fall as our big seasons. We're seeing that growth season over season. So that gave us the position to a) move into cashflow positive, b) understand the people we need to hire now to go from $15 million to $25 to $30 million and it's a handful of people, supply chain and organizationally in sales to be able to process a little bit in the backend but our ability to scale now we've got that nucleus. So it was a really good year for us to show that we could go through an acquisition, do a redevelopment, still make money, and grow a revenue by 200% is a pretty good year for the team. I'm really proud of them.

SH: EarthRenew looks set for strong growth in 2022. How are you placed to expand operations to meet demand?

KD: So there's a couple of ways we're doing it. One, the largest component of this is going to be more granulated product. That's the future for us. We do sell blended product, which is more or less are mixed into piles and we're going to grow that a little bit with some geographies that we're going to be able to open up and that I would say organic and modest growth and what that's really focused on is getting trial. If customers have used our product in one form, they're going to love it when it's in a better form in the granular and then Beiseker, we spent some time in the last month allocating that volume to our customers because we know with commodity prices where they are, where fertilizer prices where they are, I mean, two and a half times all time highs. Like we're at all time highs two and a half times what they're normally at in terms of these prices and so for us, we know demand is strong. There's weakness on the supply side because of global supply chains issues and potash coming in from Eastern Europe and all that sort of geopolitical backdrop but what that said to us is; now is the time, customers are looking for new products, they're looking to move towards regenerative practices and they're looking for alternatives that they can count on because this is the year with prices for commodities, where they are, that they're going to make a lot of money. If they can just run their farm without any of the interruptions and so we plan to take advantage of that and be there to service that new and growing customer base.


SH: For company shareholders and potential investors, what kind of future development and progress can we expect at your Beiseker Facility?

KD: If everything goes according to plan folks won't hear a lot about Beiseker anymore. It's going to pull off 20,000 tons a year. We're going to do a little bit of support on our R&D program there and we're going to focus all of our attention on the expansion at Bethune for 200,000 tons and that's what we're going to be working on. We're moving forward, we've got this model and it's that sort of anchor piece, and it's not terribly exciting because all it's going to do is churn out really high-quality granules. They're going to support all of our marketing and sales programs for the next year or two and then we'll be able to use it more and more for R&D as we move into higher value products over time.

SH: What separates EarthRenew from the competition and makes your business model so unique?

KD: So, if the field trials we released showed that our product was equivalent on yield to the conventional synthetic product and I'm the only fertilizer guy in the world who got super excited about that because of two reasons. One, our products are healthy for the soil. Two, our products cost less. So, the farmer got the same yield they would've got by paying for a product they don't really want. They got that from using our products and it cost them less. They didn't have to pay a premium for being better to their soil and so we provided that product in the form they wanted at a lower cost and got the same yield and that's something the farmers can easily get at. It's the promises of twice as much growth or this, that, and the other thing that are really hard for them to believe but a lower cost and an equivalent yield makes them just more profitable. So that's what separates us is we're really focused on this regenerative agriculture trend and this move towards healthy soils but we're going to do it at a price that's 95 to a hundred percent of conventional not the premium because we have that ability given our supply chain and our up cycling approach, we've got that opportunity.

SH: What’s the long-term strategy for the company moving forward and what should retail and institutional investors be looking out for?

KD: Ours is a growth story. So we've now got our anchor. We've now built the foundation. We're going to be consistently delivering on capacity growth. And so for us, our revenues will flow with commodity prices. The way our business is built. We don't really take a lot of commodity risks. So, our price floats, we take a standard margin, a steady margin so we need capacity. We make the same amount from every time we should just make more tons. And so we're going to make more tons. We're going to open new geographies and that's what's going to trigger this consistent growth story. It's a cash play. The more we produce, the more we make, the more opportunities that's going to provide for us to upcycle and upgrade our products into new markets. So that's what we should be looking for.

SH: Can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to the farm system space?

KD: Absolutely. So of the management team, we went with a slightly different approach. So more than half of our management team comes from farming and that allows us to understand the products and understand the market. We then have folks from outside of farming, because one of the things we found is that the approaches in agriculture have not necessarily kept up with the ways of digital marketing and these other approaches. So we're bringing in expertise from outside the agriculture sector in part because there's a lot of people who are really interested in being in agriculture but have never been able to find their way in and so we're able to bring that together.

Now with Replenish, we brought their management team and our management team together. We kept everything whole and it's been a great year. We've been through two strategic planning cycles together. We've executed on 200% growth and there's nothing quite like executing on 200% growth to make the management team feel like we've got something and this is working. So that's been really effective to draw on. We got the skills, we got the experience, get a little bit of sort of outsider approach that's been working well for us in terms of building and professionalizing some of our approaches on marketing, communications, and finance and now we're ready to go.

SH: And finally, Keith, if there’s anything I’ve overlooked please feel free to elaborate.

KD: Well, thank you and I mean our message to stakeholders and shareholders is we appreciate their attention to this. We recognize that the agriculture sector is really underrepresented in the public markets and we feel like we're a really a good, pure play in that space and that the growth that we're going to look at is equivalent to other types of industries, more conventional industries, but we've got this added benefit of the tailwinds of environmental ESG and regenerative farming to push us along. So we feel we're well positioned and we look forward to delivering on our promises going forward.


For regular updates, visit earthrenew.ca.


FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.


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