Lastique’s two operating divisions, resale & recycling/production, are highly synergistic and complimentary. The principal reason being vertical integration. The Resale-division directly reduces the Recycling/Production-division’s material acquisition costs and provides an enhanced sales outlet for the Recycling/Production- division’s manufactured-material i.e., Upstream & Downstream synergies in the value chain. Management states that the ~40-year-old Resale-division could continue to thrive as a standalone without the Recycling/ Production-division; however, the Recycling/Production-division growth would be severely impaired without the Resale-division.
Lastique’s direct-supplier relationships and Resale volume (Intangible Assets) drive highly discounted scrap PVC material acquisition costs and provide regular opportunities to acquire feedstock-material that other “Plastic Recyclers” cannot access in the marketplace. Further, Lastique’s “Recipe-Based” recycling is a distinct competitive advantage, re-blending lesser quality Scrap and Trash material that their competition cannot through proprietary formulations. In some cases, material acquisition for Lastique is “free” by providing suppliers an alternative to storage costs.
To elaborate on this, it is reasonable to informally view the grading scale of production/manufacturing feedstock in the following manner, from Best to Worst:
Many companies state that because they pulverize, compound, blend, and/or process “scrap” plastic, they are “Plastic Recyclers.” This is only a partial truth as the manufacturing chain/process for mechanical recycling of plastic is significantly deeper. Competitors, to our understanding, take the feedstock-types of “Scrap” and “Re-Grind” to produce Re-Processed (“Re-Pro”) material.
Given the grading scale above, there is a lesser-quality grade material feedstock than “Scrap,” colloquially referred to as, “Trash.” This is plastic-waste and runoff that is so low in quality that there are little to no outlets or market demand. Lastique’s unique capabilities allow for the processing of Trash (as well as Scrap, and Re-Grind) to generate significant value against a market competitor landscape of, near, zero competition.
Further, material acquisition costs for “Trash” and (very) low-grade “Scrap” are in many instances acquired for $0.00 or traded in the form of a purchase-credit for future transactions because the Supplier’s storage costs are a greater cost-burden than giving away the material to Lastique.
This is all driven by the Resale-division, directly benefitting the Recycling/Production-division. To further illustrate, the Resale-division is frequently able to market Lastique’s Recycling/Production-division’s Re-Pro material to a client/customer at a premium to the market’s spot price; a premium that would not have been captured or possible if the brokerage sales outlets were not part of the business strategy.