In a move that adds a significant new revenue stream through vertical integration, AXION International Holdings, Inc. (New Providence, N.J.), known for recycled plastic and plastic composite technologies used to produce trademarked ECOTRAX rail ties and STRUXURE building products, announced November 22 that it has initiated operations of its new subsidiary AXION Recycled Plastics Incorporated. On November 15, 2013 AXION purchased assets previously used by Zanesville, Ohio-based Y City Recycling, which will contribute to the company's consolidated operations and revenues beginning with the fourth quarter of 2013. Key employees and members of Y City Recycling's management team have been hired by AXION Recycled Plastics.
The Zanesville facility generated approximately $2,000,000 in revenues between July 1, 2013 and September 30, 2013. Management anticipates quarterly revenues potentially ramping up to $4,000,000 to $5,000,000 in 2014 for AXION Recycled Plastics. AXION acquired the assets by the assumption of bank debt. Three of AXION's largest investors made a $3 million capital infusion for the repayment of certain liabilities, for the future purchase and maintenance of equipment needed for increasing capacity, and for working capital. An additional $2.5 million revolving credit facility, which includes the availability of Letters of Credit, has been put in place.
"This acquisition creates value for AXION in three key ways. First, it gives us added revenue. Second, it eliminates steps in our material supply chain, thereby stabilizing our raw material costs. Third, it enhances our quality control as we now process our own material for production," stated AXION president and CEO Steve Silverman. "Through this upstream vertical integration, we believe we will enhance our consolidated gross margins and capture market share in the recycling business by positioning AXION Recycled Plastics as a significant regional recycled materials processor and supplier in the Midwest and Southwest," added Silverman.
AXION Recycled Plastics recycles postconsumer and postindustrial plastics including HDPE, PP, PVC, TPO, and PS in many forms. As a complete plastics recovery operation, AXION Recycled Plastics sorts, grinds, washes, blends, and pelletizes plastic for future use, offering economic benefits to its customers, while keeping waste out of landfills. In addition, they offer toll recycling services.