Although not technically a "wood" product, USPL's products are a replacement for wood and many of the factors that affect this stock are related to wood, hence, the Forestry and Wood Products Forum.
Their website can be viewed at: usplasticlumber.com
From their website:
U.S. Plastic Lumber (USPL) creates high-quality, competitive building materials, furnishings, industrial supplies and packaging solutions using CycleX™ technology. CycleX is the advanced method of processing plastic waste streams (milk cartons, grocery bags and industrial plastic waste) into durable, purified, consistent products. Through smart technologies like CycleX, USPL offers highly effective, environmentally responsible, aesthetically pleasing and maintenance friendly alternatives and solutions for the residential, commercial and industrial markets.
USPL seems to have several things going in the right direction. They are one of North America's leading manufacturers of recycled plastic lumber in a business where the annual market for pressure treated lumber in the U.S. is $10 billion. The sale of pressure treated lumber for residential decks is $4 billion a year alone and USPL offers a lumber deck alternative. USPL is entering fiscal 2003 with a strong sales backlog. For certain product lines, USPL has already pre-sold most of its 2003 production capacity. With over 10 - 15 million wood railroad ties replaced annually in the United States at a cost of $1 billion, USPL believes that there is a significant opportunity for them to capture a large percentage of this market.
Their product is appealing because unlike wood, plastic lumber will not rot, crack, warp, or splinter. In fact, plastic lumber is denser than wood, long lasting (50 years plus, depending on the application), stain resistant, waterproof, UV resistant, impervious to insects, and is not affected by exposure to most substances. Lumber is often times injected with chemicals to ward off impending insect attacks and protect against the environment. Plastic lumber on the other hand contains no hazardous chemicals and cannot leak or contaminate the soil.
On May 15, 2003 USPL announced that it had completed the sale of its plastic cornerboard business to Illinois Tool Works Inc. for $8.2 million. Proceeds from the sale will be used for further debt reduction and working capital. Over the last couple months USPL has increased their production rates, and raised $8.2 million that will be used for working capital. As a result, USPL expects to see continuous improvement throughout the remainder of the year.
The kicker for me getting involved in this stock is due to a coming fact of regular pressure treated lumber. The U.S. Consumer Product Safety Commission (CPSC) released a statement in early February stating that chromated copper arsenate (CCA), used as a wood preservative in pressure-treated lumber may cause cancer in some children. As of January 1, 2004, the Environmental Protection Agency will not allow CCA products to be used to treat wood intended for use in decks, picnic tables, landscaping timbers, gazebos, residential fencing, patios, walkways/boardwalks, and play-structures. This decision will facilitate the voluntary transition to new alternatives that do not contain arsenic in both the manufacturing and retail sectors. This decision could open a floodgate of potential business for USPL.
The stock has seen a lot of recent activity followed by some profit taking but in my opinion it is a sound stock from a sound company that can expect some real short and long term growth. |
