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WOODS CROSS, Utah - Sky Quarry Inc. (NASDAQ:SKYQ), a small-cap company ($20.5 million market capitalization) specializing in waste asphalt shingle recycling, has announced its strategy to deploy modular Asphalt Shingle Recycling (ASR) units across the United States. According to InvestingPro analysis, the company currently faces significant financial challenges, with a weak overall financial health score and concerning liquidity metrics. The move aims to broaden the company's market reach by producing sellable byproducts for local and regional markets while enhancing operational efficiency and scalability.
The company, currently with downstream operations at its Nevada refinery and midstream operations at its Utah extraction facility, is set to be fully operational within the year. The planned ASR units are designed to process waste asphalt shingles, reducing environmental impact and transportation costs due to their strategic placement near densely populated areas, high-tipping-fee regions, and accessible rail lines.
Sky Quarry's modular units come in two designs: Resource Processing Units and Resource Extraction Units. The former will process shingle material, reduce volume by 40%, and prepare it for shipment to Utah for final extraction. The latter, still in the design phase, will extract oil for local use, targeting areas such as the East Coast, Florida, Texas, and the Midwest.
The estimated cost for setting up a Resource Processing Unit ranges from $500,000 to $1.5 million, while Resource Extraction facilities are projected at around $12 million each. The company expects these facilities to recover their initial capital costs within 24 to 36 months through tipping fees and material sales. However, InvestingPro data reveals the company's current ratio of 0.31 and negative free cash flow of -$9.61 million, raising questions about its ability to fund this expansion. Get access to 10+ additional crucial ProTips about SKYQ's financial position with an InvestingPro subscription.
Sky Quarry's initiative comes in response to stricter landfill disposal mandates and state requirements for construction and demolition waste diversion. The company believes its technology offers a viable solution to these challenges, potentially allowing for higher waste management fees. Additionally, Sky Quarry is offering exclusive modular partnership opportunities to qualified candidates.
David Sealock, CEO and Chairman of Sky Quarry, expressed confidence in the economic, environmental, and community benefits of the modular ASR facilities. He emphasized the potential for partnerships with local businesses and manufacturers to create a sustainable closed-loop system, reduce reliance on virgin materials, and foster regional economic growth and job creation.
Sky Quarry Inc. and its subsidiaries are collectively focused on oil production, refining, and environmental remediation, aiming to repurpose asphalt shingle waste and contribute to improved waste management and reduced environmental impact.
This expansion plan is based on a press release statement and may include forward-looking statements subject to risks, uncertainties, and other factors. The company's stock has experienced significant volatility, declining over 73% in the past year, with revenue dropping nearly 35% in the last twelve months. InvestingPro's Fair Value analysis suggests the stock is currently overvalued, making it crucial for investors to conduct thorough due diligence before making investment decisions.
In other recent news, Sky Quarry Inc., an energy solutions company, has made significant changes to its leadership team. The company announced the appointment of Leo Womack to its Board of Directors, where he will contribute his expertise in corporate financial strategy and capital markets. Womack's appointment comes amid financial challenges for the firm, as indicated by its weak financial health score and concerning metrics such as negative profit margins and liquidity constraints.
Additionally, Sky Quarry has strengthened its finance team with the appointment of Darryl Delwo as Chief Financial Officer and the promotion of Cyla Apache to Vice President of Finance. Both have extensive experience in finance and accounting, and their appointments are part of Sky Quarry's efforts to bolster its finance leadership team.
These recent developments come as the company focuses on growth and the deployment of its first modular Asphalt Shingle Recycling (ASR) facility. Furthermore, Sky Quarry is dealing with operational challenges, including a current ratio of 0.31 and negative EBITDA of $6.09 million in the last twelve months. Despite these challenges, the company remains committed to its mission of improving waste management and reducing environmental impact.
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