Executive Director and CEO Bob Peoples reports:
Following a soft start to 2026 in Q1, Q2 showed some improvement, with gross collections of 19.1 million pounds and recycled output of 16.8 million pounds. Both numbers are up vs. Q1 but still below the average quarterly result in 2025, reflecting persistent weakness in demand for PC carpet materials and the continued decline in new carpet sales. Turbulence in the global economy and supply chains continues to weigh on markets. Inflation and the price of oil continue to drive price increases of virgin materials. Normally, that is good for PC polymer. However, demand remains weak and no meaningful price increase has yet been possible on PC carpet materials.
Carpet sales in Q2 were 12.6 million square yards, down 1.3% vs. Q2 2025 and the lowest second quarter since the California Carpet Stewardship Program began. Full-year 2026 sales are projected at 46.4 million square yards, 54% below their peak of 2013. As a reminder, new sales is the major source of post-consumer (PC) carpet for recycling.
CARE is also finalizing a set of guidelines for back stamping as required in AB 863. However, a new law, AB 904, has passed the legislature and is expected to be signed by the governor. Upon signature, the date for implementation of back stamping will likely be delayed until July 2028.
Overall, 72% of total expenses were paid out in the form of subsidies and 89% of all subsidies were paid to CA- based recyclers. Revenue of $14.0 million exceeded expenses of $9.1 million, resulting in a fund balance of $30.6 million, up $5.0 million vs. Q1, which continues to exceed the six-month reserve requirement of $18.4 million.
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