Wood-plastic composite decking manufacturer Advanced Environmental Recycling Technologies Inc. will debut its much-awaited — and the industry's first — decking board that incorporates nanotechnology at the International Builders Show in Las Vegas in mid-January.
AERT's new coextruded deck board will be part of its MoistureShield product line. It is designed to compete with cap-stock composites, which have had a slight market edge in tough weather climates in the Northeast, along the Eastern seaboard, the upper portions of Minnesota and in Colorado.
The new nano coextruded deck will hit the market as the firm's financial picture is improving.
Net income at AERT for the first nine months of 2012 was $1.4 million compared to a loss of $500,000 in the first nine months of 2011. Sales for those nine months were up 25 percent to $63.1 million and higher than full-year sales in 2011 of $59.3 million.
In addition, the company's gross margin in the first nine months of 2012 was 20.6 percent compared to 16.3 percent in the first nine months of 2011. All of that is in stark contrast to the previous five years of losses as the company hasn't turned a profit since 2006 and has lost nearly $31 million the last three years.
From a brand perspective, the timing of the introduction of the new nano-board couldn't be better, either, as MoistureShield sales are booming.
MoistureShield product line sales in 2012 are expected to end up around 40 percent higher than a year ago — which is twice the projected 18-20 percent increase in sales for alternative decking in 2012, said Brent Gwatney, vice president of sales and marketing for Springdale-based AERT.
“Like all of our products, the new coextruded decking is still going to be a price-point product, but it is going to be a little higher in price than our other MoistureShield decking products — and more fade and scratch-resistant,” Gwatney said in a Nov. 27 telephone interview.
The MoistureShield brand product line — aimed at builders and contractors — currently includes the high-end Vantage Collection Pro Series and the lower-priced Essential product collection. AERT's product line for consumers, ChoiceDek, is sold exclusively at Lowe's Home Improvement stores.
Gwatney declined to identify the exact name of the nano-composite decking or where it will be made. But the AERT website proclaims that Nanopoly — or reformulated polyethylene plastics — is coming soon to its plant in Springdale. And one year ago, AERT chairman, CEO and founder Joe Brooks said the product would be called NanoShield.
“This is not just an additive,” said Gwatney. “The use of nanotechnology creates a different surface for the product and helps with the longevity of the color and in preventing moisture absorption. It is a more natural looking [woodlike] product.”
The initial products will have high fade and mold and mildew resistance, more closely resemble wood, and provide superior slip resistance.
“Over the long-term, it has the potential to add as much as 20 percent more sales to the MoistureShield brand,” he said.
“The nanotechnology coats the fibers so the decking doesn't fade, scratch, or mar,” said Gwatney. “There is a lot we can do with nanotechnology with colors, reflective products and there is even the opportunity to harness energy and light your deck.”
AERT's approach of using nanotechnology to create an improved wood-plastic composite product goes against the industry trend toward the use and development of capped wood-plastic composites — which have a price premium of four to five times the price of wood decking.
The nanotechnology-enhanced materials for the AERT decking were developed in partnership with NanoMech Inc. of Fayetteville, Ark.
A year ago, AERT said it planned to dedicate two of its seven extrusion lines specifically for the coextruded decking that incorporates nanotechnology.
“It requires a whole new process before it gets to extrusion,” Gwatney said. Last year Brooks said the firm had invested more than $54 million over a five-year period on infrastructure and technology.
In its third-quarter conference call earlier this month, Brooks and President Tim Morrison both expressed strong optimism.
“Our recycling operation continues to focus on recycling a broader range of material —specifically aimed at reducing our raw material costs,” said Morrison. “Recent improvements in our process also have resulted in significant improvements in the quality of the recycled resin and many more feedstock options. Because of the relationships we have established with large distributors, the seeds have been planted for sales growth for 2013 and beyond for MoistureShield.
“AERT is positioned well for the future,” he said.