Close the Loop has a bit of a messy history just due to a number of acquisitions that muddy the financials. 

Essentially they have 2 business segments packaging and resource recovery, both segments recover pre-used goods and repurpose them into usable products. The packaging segment deals with repurposing soft plastics and paper to make products such as food packaging, receipt paper, plastic regrinds, bulk packaging, and seafood packaging while the Resource recovery segment recovers perused items such as print cartridges, batteries, cosmetics and electronics and helps sort and repurpose them to reuse or to resell. Both segments can and do partner with clients to meet their specific recycling needs and given a low percentage of products that can be recycled actually are they are seeing strong demand as businesses become more conscious of the environment along with the fact it’s cheaper for them to reuse products. The business maintains very decent margins of 20%+ and 12%+ for EBITDA and NPAT respectively. 

They have some proprietary products such as Toner Plus which uses soft plastics as an asphalt additive and Rflex which is a repurposed plastic for manufacturers. They are seeing strong demand within the resource recovery space especially from their recent acquisition: ISP tek services which helps repurpose electronics for OEMs which they are rolling out throughout Europe and may actually be an AI beneficiary as they are seeing strong demand with what they call ITAD which is recycling of data centre servers. 

The 2 founders own 12% each, and while the business has made a number of acquisitions they have stated they are not a roll-up but wait for value-adding acquisition, and for a capital-intensive business with network effects, scale benefits and cross-selling abilities there are many synergies from acquisitions. The business has $56m in cash with $78m in debt, and reduced net debt by $12m in H1 and currently looking to just pay down debt and consolidate their acquisitions. 

Despite shipping delays in H1 within the packaging division which saw a revenue decline they upgraded guidance to $200m+ in rev and EBITDA of $44 to $46m for the full year, which should equally NPATA of ~$26m for the full year.  

CLG currently trades at a market cap of $159m equal to 6.1x full-year earnings. The business won’t revolutionise the world, but 6x earnings to too cheap IMO, and as they continue to repay their debt and grow earnings organically and potentially inorganically the value should be recognised.