Greenwave Technology Solutions, Inc. (Nasdaq:GWAV) Issues Chairman's Letter

Rhea-AI Summary

Greenwave Technology Solutions (GWAV) reports significant financial improvements in 2024, including a 635% increase in current assets and a 64% decrease in total liabilities. The company has secured multiple government contracts, including a $15-$35 million contract with Core Tree Care through March 2026. Insiders purchased over 500,000 GWAV shares in December 2024, demonstrating confidence in the company's future.

Operating 13 metal recycling facilities across Virginia, North Carolina, and Ohio, Greenwave recently acquired real estate for seven core facilities, reducing annual rent expenses by $1.7 million. The company is strategically positioned to benefit from Nucor 's upcoming Lexington facility opening in 2025, which will have a 430,000-ton annual processing capacity.

Positive

• 635% growth in current assets from $2.7M to $19.8M in first nine months of 2024
• Secured $15-$35M government contract through March 2026
• Reduced annual rent expenses by $1.7M through facility acquisitions
• Decreased total liabilities by 64% from $50.9M to $18.3M
• Increased shareholders' equity by $51.3M from negative $4.5M
• Secured exclusive contract for recycling 550,000 pounds of non-ferrous metal worth $2M in revenue
• Significant insider buying of over 500,000 shares in December 2024

Negative

• None.

Insights

Financial Analyst

The Chairman's letter reveals significant financial improvements in 2024, with current assets growing by 635% to $19.7M and total liabilities decreasing by 64% to $18.3M. The company's transformation of shareholders' equity from a $4.4M deficit to $51.2M positive is remarkable. Secured government contracts, including a $15-35M Army Corps contract and exclusive metal recycling deals, provide stable revenue streams. The strategic acquisition of seven core facilities, reducing annual rent by $1.7M, strengthens the balance sheet and improves cash flow. Insider purchases of over 500,000 shares demonstrate management's confidence in the company's future.

Industry Analyst

Greenwave's strategic positioning near key infrastructure and military installations, combined with grandfathered operational licenses, creates significant competitive advantages. The upcoming Nucor facility in Lexington, NC, with 430,000-ton annual capacity, represents a major growth catalyst. The company's shift toward 75% domestic sales in 2025 aligns with evolving trade policies and could expand margins. Recent industry consolidation trends, evidenced by Sims Metal's $220M Baltimore Scrap acquisition and Cleveland-Cliffs' $775M FPT purchase, suggest potential strategic value for Greenwave's assets and licenses.

Insiders made open market purchases of more than 500,000 GWAV shares in December 2024

Company has increased shareholders' equity by approximately $51 million in 2024

Greenwave continues to prioritize government contracts as a key driver of revenue and cash flow growth

The Company recently purchased the real estate for seven of its core facilities, reducing annual rent expenses by approximately $1.7 million

Numerous upcoming catalysts expected to benefit Greenwave -- including the opening of Nucor Corporation's state-of-the-art Lexington, NC steelmaking facility with a staggering 430,000-ton annual processing capacity₍₁₎

CHESAPEAKE, Va., Dec. 17, 2024 /PRNewswire/ -- Greenwave Technology Solutions, Inc. (Nasdaq: GWAV) ("Greenwave" or the "Company"), a leading metal recycler in Virginia, North Carolina, and Ohio, released today the following letter to shareholders from Danny Meeks, Chairman and Chief Executive Officer:

Greenwave Shareholders,

I am pleased to report Greenwave will enter 2025 in the strongest strategic and financial position in the history of the Company. Three areas of focus highlight Greenwave's excellent – and improving – fundamental business: (i) a very strong balance sheet, (ii) increasingly favorable US trade policies focused on boosting demand for domestic scrap metal, and (iii) upcoming Company milestones and catalysts that are expected to be transformative for Greenwave's fundamental business.

A Sound Balance Sheet

During the first nine months of 2024, Greenwave de-risked operations – significantly growing Company assets while reducing or eliminating certain liabilities.  From December 31, 2023 to September 30, 2024, Greenwave:

• Grew current assets by 635%, from $2,689,761 to $19,767,085.
• Decreased total liabilities by 64%, from $50,865,997 to $18,301,138.
• Increased shareholders' equity by $55,728,419, from a ($4,454,148) deficit to $51,274,271.

Government Contracts Driving Growth

Greenwave continues to prioritize government contracts as a key driver of revenue and cash flow growth. Recently, the Company secured:

• A contract expected to generate $15–$35 million in revenue with Core Tree Care, Inc., related to a prime contract with the Army Corps of Engineers as part of the Hurricane Helene recovery efforts, through March 31, 2026.
• An exclusive government contract for the recycling of 550,000 pounds of non-ferrous metal, estimated to boost Q4 2024 and Q1 2025 revenues by approximately $2 million.
• Multiple contracts for critical regional infrastructure projects such as the Hampton Roads Bridge Tunnel expansion, agreements with numerous municipalities to recycle abandoned cars, and fulfillment of several contracts awarded by the U.S. Federal Government.

Strategically located near Naval Station Norfolk, the world's largest naval base, and the Port of Virginia, Greenwave taps into an abundant supply of prime scrap metal from defense contractors, shipyards, and logistics operations.

Upcoming Growth Catalysts

We believe Greenwave is set to benefit from the 2025 opening of Nucor Corporation's state-of-the-art steelmaking facility in Lexington, North Carolina_(1). The facility's staggering 430,000-ton annual processing capacity, consisting of nearly 100% recycled materials, will significantly increase regional demand for recycled steel_(1).

A Leading North Carolina Scrap Metal Supplier

Greenwave stands as one of North Carolina's largest suppliers of recycled steel, operating five metal recycling facilities and an industry-leading American Pulverizer 60x85. The Company has a proven track record of supporting Nucor's operations, supplying its Hertford mill with steel for critical applications, including bridges, heavy equipment, and warships vital to American national security interests, including the $13 billion USS Gerald Ford aircraft carrier_(2).

Key Growth Drivers and Market Opportunities

• Surging Regional Infrastructure Demand: Supported by recent federal investment, the South Atlantic Region is experiencing an unprecedented surge in construction projects, driving demand for recycled metals_(3).
• Domestic Market Shift: Greenwave projects 75% of revenue will stem from domestic sales in 2025, up from 41% over the previous four years, as President-elect Trump's anticipated tariffs and trade policies reshape global steel market dynamics. This transition is expected to result in very significant revenue growth and margin expansion.
• Sustainability Leadership: Operating 13 strategically located recycling facilities, Greenwave aligns with the growing emphasis on sustainable, domestically sourced ferrous and non-ferrous metals. The leading U.S. steel producers aim for more than 97% of their raw material to be composed of recycled metals _(1)(4).

Positioning for a Strategic Transaction

Greenwave recently acquired the real estate for seven of its core facilities – thus reducing the Company's annual rent expenses by approximately $1.7 million, enhancing cashflow and positioning the Company for potential high-value strategic transactions.

Unmatched Competitive Edge in the Metal Recycling Industry

Greenwave holds a portfolio of highly coveted operational licenses for the Company's metal recycling facilities. These licenses, often protected by grandfathered municipal codes, provide significant barriers to entry to competitors in Greenwave's tightly regulated markets.

Key highlights include:

• Norfolk, VA Facility: Positioned near the largest U.S. Naval Base, Greenwave's Norfolk facility benefits from a steady influx of prime scrap metal and holds one of the only Virginia Department of Motor Vehicles automotive recycler/demolisher licenses in the city.
• Virginia Beach, VA Facility: Greenwave operates the sole metal recycling facility in the state's largest city, Virginia Beach, strategically located near NAS Oceana and the region's thriving industrial core.
• Portsmouth, VA Facility: A cost-effective hub for domestic and international shipments due to its proximity to the Port of Virginia, the Company's Portsmouth facility holds a license protected by grandfathered regulations.

Twenty-year Relationship with Sims Metal

Greenwave generated $20.7 and $18.0 million in revenue from Sims Metal, the world's largest scrap metal company, in 2023 and 2022, respectively, underscoring market confidence.

Peer Benchmarking Supports Valuation Upside

Steelmakers are leading a wave of consolidation, securing the supply of raw materials to feed a projected increase of 16 million tons of annual capacity in the coming years_(5).

• Sims Metal acquired Baltimore Scrap Corp. for $220 million in August 2023. Baltimore Scrap operates 17 yards, four shredders, and processes 600,000 metric tons of scrap each year_(6).
• Nucor acquired the assets of Garden Street Iron & Metal, including one feeder and one shredder yard, in 2023. The terms of the acquisition were not disclosed_(7).
• Cleveland-Cliffs acquired Ferrous Processing and Trading Co. for $775 million in 2021. FPT is a leading U.S. processor, buyer, seller, and recycler of scrap metals_(8).
• Steel Dynamics completed the acquisition of Roca Acero for $90 million in October 2022. Roca Acero's operations include five scrap processing facilities in Northern and central Mexico, with an annual processing capacity of approximately 850,000 gross tons_(9).

Recent Insider Buying

Over the past two weeks, during an open trading window, several of our officers and directors purchased significant numbers of Greenwave shares on the open market:

• Greenwave's Chairman and CEO, Danny Meeks, purchased 377,002 shares of common stock at $0.66/share.
• Independent Director Jason Adelman, an experienced investment banker, small cap investor and a graduate of the University of Pennsylvania and Cornell Law School, purchased 100,000 shares of common stock at $0.66/share.
• Audit Committee Chair Henry Sicignano III, a former CEO of Nasdaq-listed company and double-Harvard graduate (both undergraduate and MBA), purchased 100,000 shares of common stock at $0.659/share.

A Unique and Compelling Opportunity

In my twenty years working in the scrap metal industry, I have never been more bullish about the future prospects of our business. Greenwave is entering FY 2025 in an incredibly strong financial position, with optimal trade conditions, and numerous upcoming catalysts that are expected to be truly transformative for the Company.

The scrap metal industry is rapidly consolidating. We believe Greenwave's extensive footprint, grandfathered licenses, and relationships with key suppliers offer a unique and compelling opportunity for our company and shareholders. Greenwave currently provides subsidiaries of Nucor Corporation, Cleveland-Cliffs, Inc., Sims Limited, Georgia-Pacific, and several other steel producers, with a reliable supply of mill-ready shred, sourced from thousands of corporations, municipalities, and individuals in Virginia, North Carolina, and Ohio.

Indeed, Greenwave is executing on all fronts and I am grateful for your continued support. We look forward to updating you on our progress and on important industry developments in the coming days and weeks.  In the meantime, the people of Greenwave wish you and your families a happy holiday season… and a healthy, prosperous New Year.

Sincerely,
Danny Meeks
Chairman and Chief Executive Officer
Greenwave Technology Solutions, Inc.

(1)	https://assets.ctfassets.net/aax1cfbwhqog/1B2AplzfIpH2aiSws0qoNf/db895286e45c8b18e21b1f7e2496ea8d/NSLexington_Event_Fact_Sheet_4.6.22.pdf
(2)	https://ncchamber.com/2024/02/07/nucor-steel-hertford-galvanizes-community-north-carolina-manufacturing/
(3)	https://www.industryweek.com/leadership/growth-strategies/article/21238679/nucor-to-build-new-350-million-micro-mill-in-north-carolina
(4)	https://www.clevelandcliffs.com/sustainability/environment
(5)	https://ionanalytics.com/insights/mergermarket/trash-to-treasure/
(6)	Sims Limited / 2024 Annual Report / Note 24 - Business Acquisitions and Disposals / (a) Baltimore Scrap Corporation / Page 124 (Link)
(7)	https://www.recyclingtoday.com/news/river-metals-recycling-acquires-garden-street-iron-metal-ohio-yards/
(8)	https://www.clevelandcliffs.com/news/news-releases/detail/533/cleveland-cliffs-enters-the-scrap-business-and-announces
(9)	https://www.bglco.com/insights/scrap-metal-ma-market-update/

About Greenwave – One of the Mid Atlantic's Leading Metal Recyclers

As an operator of 13 metal recycling facilities, Greenwave Technology Solutions, Inc. (Nasdaq: GWAV) supplies leading steel mills and industrial conglomerates with ferrous and non-ferrous metal. With steel being one of the most recycled materials worldwide, Greenwave supplies the raw metal utilized in critical infrastructure projects and U.S. warships vital to American national security interests. Headquartered in Chesapeake, VA, the Company has 167 employees with metal recycling operations across Virginia, North Carolina, and Ohio.

For detailed financials and updates, visit www.GWAV.com.

Forward-looking Statements
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements about its revenue growth, opening of additional locations, margin expansion and cashflow projections. These statements are identified by the use of the words "could," "believe," "anticipate," "intend," "estimate," "expect," "may," "continue," "predict," "potential," "project" and similar expressions that are intended to identify forward-looking statements. All forward-looking statements speak only as of the date of this press release. You should not place undue reliance on these forward-looking statements. Although the Company believes that its plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements are reasonable, the Company can give no assurance that these plans, objectives, expectations or intentions will be achieved. Forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company's control), assumptions and other factors that could cause actual results to differ materially from historical experience and present expectations or projections. Actual results may differ materially from those in the forward-looking statements and the trading price for the Company's common stock may fluctuate significantly. Forward-looking statements also are affected by the risk factors described in the Company's filings with the SEC. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

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SOURCE Greenwave Technology Solutions

FAQ

What major financial improvements did GWAV report in 2024?

GWAV reported a 635% increase in current assets to $19.8M, reduced total liabilities by 64% to $18.3M, and increased shareholders' equity by $51.3M to positive $51.3M from negative $4.5M in 2024.

What is the value of GWAV's new government contract with Core Tree Care?

GWAV secured a contract with Core Tree Care expected to generate $15-$35 million in revenue through March 31, 2026, related to Hurricane Helene recovery efforts.

How much will GWAV save annually from its recent real estate acquisitions?

GWAV will save approximately $1.7 million annually in rent expenses after acquiring the real estate for seven of its core facilities.

How many GWAV shares did insiders purchase in December 2024?

Insiders purchased over 500,000 GWAV shares in December 2024, including 377,002 shares by CEO Danny Meeks at $0.66/share.

How will Nucor's new Lexington facility impact GWAV in 2025?

Nucor's new Lexington facility, opening in 2025 with 430,000-ton annual processing capacity, is expected to significantly increase regional demand for recycled steel, benefiting GWAV as one of North Carolina's largest suppliers.