Net sales were up 8.8 percent to $82.7 million in 2015 for composite wood deck maker Advanced Environmental Recycling Technologies Inc., of Springdale, Ark.
The increase compared to 2014 can be attributed to sales growth of the MoistureShield Pro capstock products introduced two years ago, the addition of a new customer for the MoistureShield line, and by including freight costs in the selling price to Lowe's.
As AERT's biggest customer, Lowe's represented about 40 percent of sales in 2015. The big-box retailer carries AERT's ChoiceDek brand of decking of railing aimed primarily aimed at the do-it-yourself market.
Fourth quarter sales for AERT increased to $17.1 million — up 22 percent from the same period in 2014 — thanks to “a strong winter buy,” Chief Financial Officer Brian Hanna said Friday during a conference call about 2015 results. AERT trades on the OTCQB venture stage marketplace.
The company, which says it pioneered the use of recycled polyethylene plastic in the manufacturing of composite wood building products in 1988, also achieved reduced costs on every unit produced, Hanna said. However, selling and administrative costs were up about $1 million and AERT posted a net loss of $900,000 for 2015 due largely to increased freight, raw materials and interest expenses. That compares to a net loss of $1.1 million in 2014.
CEO Tim Morrison listed a couple other headwinds, such as the strong U.S. dollar hurting international sales.
“As a reminder, 2015 got off to a slow start as weather conditions throughout many parts of the U.S. delayed or eliminated projects,” he added.
AERT also spent more on advertising and invested $2 million in manufacturing plant efficiencies, $900,000 for new material handling equipment and $500,000 for a computer network upgrade, according to its 2015 annual report.
AERT products are extruded in Springdale but the plastic recycling, blending and storage facility is in Lowell, Ark. The company also has a plastics recycling, cleaning and reformulation facility in Watts, Okla.
The company “delivered a good finish to the year,” Morrison said of 2015 and he expects AERT will benefit in 2016 from distribution channels added several months ago and a program called MoistureShield University that promotes brand benefits to consumers, builders and specifiers.
MoistureShield is sold through distributors that re-sell to limber dealers and contractor yards. It competes against all-wood, all-plastics and other composite wood decking.
“I believe the majority of revenue improvements from the additional distribution will be seen in 2016.” Morrison said, adding AERT products should reach new customers “who are unserved geographically or under served due to distribution challenges.”
AERT also expects to grow its big-box channel in 2016, Morrison said.
