Takeback provider of ink and toner cartridges Close the Loop (ASX: CLG) is set to expand its footprint in the US, Europe and the Middle East. Over the next 12 months, the Company anticipates establishing new facilities in these locations to support its growing operations.
This expansion aligns with its strategic goals and aims to capitalise on the IT renewal and circularity programs that are being rolled out by global original equipment manufacturers (“OEMs”).
Close the Loop CEO Joe Foster said, “We are excited about the potential opportunities that lie ahead and are dedicated to ensuring a smooth and successful implementation of this expansion plan.
“We acknowledge the importance of effectively managing our resources to support our growth objectives without impacting on the FY24 guidance or expected financial results as previously advised to the market. As we move forward, we will diligently leverage our existing working capital and debt facilities to achieve our strategic milestones.”
Close the Loop is a sustainability solutions company that focuses on recovering a wide range of electronic products, print consumables, cosmetics, plastics, paper and cartons, and reusing toner and post-consumer soft plastics for an asphalt additive. In H1 FY24, the Company reported a revenue of $106.2m, on track to exceed FY24 guidance of $200m. Its EBITDA was $22.7m, with guidance upgraded to a range of $44m to $46m.
Close the Loop will open a new facility in Mexicali, Mexico, to expand its processing capacity in North America. The facility is expected to come online by October 2024. The new facility will, among other product lines, refurbish consumer and enterprise printers in the US, supporting OEMs in efficiently returning them to the market.
The Company also has a Circular Planet program, which is a multi-vendor print consumable take-back program in Europe that expanded into Spain and Portugal in June 2024. The decision to expand the program into new European geographies follows the success of Circular Planet in Germany, the UK, Belgium, the Netherlands and Luxembourg.
Since Circular Planet’s inception in November 2023, 40% of the 1.3 million cartridges collected have been returned to their OEMs for reuse in their European factories. Other cartridges not suitable for resale are stripped, and components are recovered or recycled so that no material goes to landfills.
Closer to home, Close the Loop has been awarded up to $2.2m in government funding. This funding will be used to commission a second TonerPlas facility outside of Victoria, which will be constructed over the next 12 months.
In FY24, the Company’s relationship with HP Inc. was materially broadened and deepened, specifically regarding HP Renew Solutions. This new HP business is less than a year old and focuses on refurbishing and selling computers and printers.
HP has a publicly stated goal of achieving 75% circularity for its products and packaging by 2030. Considering that HP ships about 40 million personal computers every year and that there are about 300 million HP PCs in the market currently, before considering the number of printers, HyperX, Poly and other products HP makes, demonstrates the opportunity for Close the Loop to support HP in achieving its takeback goal.
Close the Loop found a strategic loop of profitability and circularity, and it met a growing demand from HP’s global customer base for certified refurbished products. It reaffirms the decision to expand globally and pursue its global product takeback programme.
Alinda is a Business Reporter for The Sentiment
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