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August 08, 2001

Turning Waste Streams into Products
    by Trevor Snorek-Yates

The largest manufacturer of recycled plastic lumber in the U.S. is looking to position itself for a more profitable 2001. -- U.S. Plastic Lumber Corp. (ticker: USPL) is rapidly becoming a leader in the recycled building materials industry. Now in its fifth year of production, USPL is transforming milk jugs, garbage bags and industrial plastic waste into a wide variety of products.

Aiming to develop technologies in an environmentally responsible manner, USPL comprises two distinct product lines: an alternative materials lumber division, USPL, Ltd., and an environmental recycling division, Clean Earth, Inc.

Commenting on its rapid growth, John Poling, Chief Financial Officer said, "USPL was started in 1996 through a reverse merger into a public company shell. Clean Earth Inc. was merged into the new company and USPL completed over 23 acquisitions from 1997 to 1999, resulting in the company structure, business and products that you see today."

With a market capitalization of $34 million, USPL is still relatively small. Its stock has been volatile over the last year, fluctuating between $5.00 and 59 cents per share. It is currently trading at approximately $1 per share.

The plastic lumber division, USPL Ltd., manufactures high-density polyethylene (HDPE) building products for use in outdoor decking, boardwalks and site amenities such as benches, picnic tables and waste cans. A second tier of USPL Ltd. provides OEMs (original equipment manufacturers) with alternative products in the packaging and transportation industries.

Clean Earth, Inc. focuses on three principal businesses: accepting and cleaning contaminated soil; performing landfill-related services; and accepting and providing beneficial reuse of dredge materials. Currently, Clean Earth is in the process of restoring abandoned strip mines in Pennsylvania with stabilized dredge materials from the New York harbor region.

USPL endured a difficult year in 2000. Mark Alsentzer, USPL's President and CEO, attributes some of these financial setbacks to cost increases in raw materials. "Since we were unable to reflect these cost increases in the pricing of our finished goods, they directly affected our bottom line," he explained.

USPL's investment in production expansion also brought about a slow fiscal year. "We invested $30 million to increase plant capacity, giving us the largest production capacity in the plastic lumber industry," said Alsentzer. "[USPL' s sales] were outpaced by the increase in our fixed costs, and this affected our profitability in 2000."

While sales grew 38% for USPL Ltd., its margin deteriorated substantially in 2000. Clean Earth Inc., however, showed only an 18% increase in sales while still managing good year-end profitability.

USPL's environmentally responsible building materials are competing strongly with the pressure treated lumber industry, and its environmental division is continuing to perform well. Given last year's capital investments, the company seems to have positioned itself for better financial results in 2001.

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