Organic Growing Systems, a subsidiary of Advanced Growing Systems, has completed negotiations with Agreaux Organics to acquire its production facility in Monticello, Miss. With an initial capacity to produce more than 10,000 tons of organic fertilizer annually (plans are in place to double that amount), Advanced Growing Systems anticipates more than $4,000,000 of added gross revenue in 2007 with gross margin opportunity well over 50 percent.
This facility will replace the contract manufacturing agreement that the Company presently has in place, which has limited capacity, and where the Company has only been able to recognize margins of approximately 25 percent. This facility represents the first of three domestic manufacturing plants that the Company will either purchase or build as part of the Company's overall plan to effectively supply over 200MM tons nationally to the Company's customers which include, golf courses, growers and various end users.
OGS has positioned itself to compete with traditional synthetic fertilizer companies.
The newly acquired factory, situated in a rural, yet industrial, location is perfect in its ability to meet the growing need for production. Available acreage and a modern laboratory inside the industrial unit are being assessed for their ability to increase plant capability and assure consistent quality control. Situated close to a new four lane divided highway with easy access to numerous metropolitan areas in the South, the location has many exciting possibilities. Plans are currently being drawn up to enhance the design of the facility to improve internal product flow, and ensure access for trucks delivering raw material as well as shipping finished product.
Investing approximately $2 million in plant acquisition and improvements, OGS will continue to work with the current owners in an advisory and support capacity. Key plant and office personnel have agreed to stay with OGS for a minimum of two years. Access to existing Mississippi and other Southern customers brings value and the exciting potential for substantial sales growth.
OGS will work with local officials and the Lawrence County Chamber of Commerce in order to bring additional economic growth to the immediate area where the plant is located. Local Monticello companies will provide the new and needed construction work. It is anticipated that many new jobs will be created just at the time when a large nearby paper mill has laid off several hundred employees.
Initially, regular shipments of organic fertilizer will be sent to the Company's Houston, Texas and Atlanta, Georgia distribution facilities, as well as direct to major consumers. The factory has the capacity to manufacture and distribute product in bulk, one-ton agricultural totes and 40-pound retail bags in pellet and granular sizes.
OGS, Inc., is a sister company of Advanced Nurseries, Inc. (Alpharetta, Ga.). Both are wholly owned subsidiaries of Advanced Growing Systems, a publicly traded company.