Its time for the 2Q report predictions! First let's quickly review how the Skunk did Last Quarter so you can get a feel for how much credence you should lend to this exercise. He underestimated revenues by less than 20% & We see that the seed crushing plant smashed him with revenues!
"As noted above, we delivered and commissioned a 10 million gallon per year biodiesel facility for an Indiana-based client during the first quarter 2008. The majority of the revenue and contribution margin for this system were realized during 2007. We expect to complete construction and commence the commissioning of another 10 million gallon per year facility for this same client during the second quarter 2008. The majority of the revenue and margin for this additional system will be realized during the second quarter of this year. Moreover, we are party to agreements to design, build and commission biodiesel and related production infrastructure for a number of additional third party clients. We expect that equipment and technology sales will increase in the second quarter and thereafter will remain episodic and dependent on the issuance by our clients of notices to proceed under existing contracts."
WE WILL BE UP HERE! The February Shareholder letter has us bringing in $15M in additional sales for third party bio-diesel sales in 2008. We brought in $2,654,428 in the first quarter leaving $12,345,572 for the rest of the year. This would be $4,115,191 per quarter over the next three quarters on average. The quarterly guidance states that a majority of a single 10mmgy, 5 million dollar unit revenues will be in the 2Q. Other projects may have started with minimal revenues as well. Rising commodity (steel/copper/stainless ect.) prices may have increased the costs of the installation. Hopefully the contracts were written to protect our margins. We might also see the revs go a little higher in that case. The Skunk thinks we will come in at 4.2M - a 158% increase over first quarter numbers.
Culinary Oil Production & Sales.
The Skunk Thinks
Down HERE! We had great revenue numbers here last quarter. Since we sold seed directly into the market, we had great revenues - but not great margins. I looked at historical data for Sustainable Systems. We saw $5,087,451 in revenues in this sector in 2007. Since none of the expansion is reported completed - except for increasing oil prices - this number should not change much from these historical prices below. The average for one fourth of actual production is $1,271,863. One fourth of ProForma production (as if we had acquired Sustainable for the entire first quarter) would be $1,643,208.
January 1, 2007 - March 31, 2007 = $418,138 (Pro Forma) $1,903,517
April 1 - June 30th = $1,882,946
July 1 - September 30 = $1,925,248
October 1 - December 31st = $861,119
Total 5,087,451/4 = $1,271,863/quarter (actual)
Total 6,572,830/4 = $1,643,208/quarter (Pro Forma)
So the skunk is looking at these numbers and I am not sure what happened in the forth quarter. I will assume that was a seasonal fluctuation. So I will throw that quarter out. Also I see that the other quarters are very close. I will simply pick the second quarter 2008 to mimic the 2 quarter 2007. The prices of the oils should have gone up – and I will assume that covers the disruption of a sell off of feedstock last quarter and the stop and go of a partially completed? Expansion. So the Skunk predicts 1.88 Million in revenues here.
Biofuel Production & Sales
"We commenced commissioning of our Medina, New York corn oil extraction facility and a scheduled upgrade of our Oshkosh, Wisconsin corn oil extraction facility during the first quarter. We are scheduled to commission several more corn oil extraction facilities over the balance of this year. Ordinarily, these new facilities would be expected to significantly increase revenue during the balance of 2008. However, in May 2008, we completed the acquisition of Biofuels Industries Group, LLC (“BIG”), which company owns a biodiesel facility that is based on our biodiesel technologies. The BIG facility has been designed to efficiently refine our extracted corn oil into biodiesel. Given our current and expected production of corn oil, this acquisition will result in additional increases in sales associated with our corn oil extraction efforts. Prior to the BIG acquisition, we sold corn oil for biodiesel production at prices that were discounted to diesel spot prices. By internalizing biodiesel production capacity, we can now refine and sell corn oil derived biodiesel (instead of extracted corn oil alone) at more than $4.50 per gallon at current market prices – more than two times the sales price of extracted corn oil realized during the first quarter. Furthermore, BIG’s current annualized biodiesel production capacity is greater than our current corn oil extraction capacity. This allows us to opportunistically purchase and refine waste fats, oils and greases into ASTM standard biodiesel. We intend to expand BIG’s annualized production capability to at least 20 million gallons per year by the fourth quarter 2008. This expansion will allow us refine increased volumes of these waste fats, oils and greases. These activities are all expected to result in significantly increased revenue during the second quarter and the balance of 2008 from this segment. At current market prices, a 10 million gallon per year production facility can be expected to generate about $45 million in annualized biodiesel sales."
Up Big Here! Over all in the first quarter we produced $331,371 of corn oil revenues. Based on $2.25 revenues/gal of corn oil that was 147,276 gallons. Remembering that the NY plant came up half way through the first quarter (so we minus a quarter of our processing time for the 2 COES) (Two COES operating at nameplate would produce 750,000 gallons/quarter - minus 25% would be 562,500.) So in the 1Q we operated at an average of 26% of nameplate capacity. In the Kreisler Interview we learned that the two operational COES were preforming at an 77% and 33% level - which would give us an 55% combined production vs capacity. So if we assume a gradual increase over the quarter from 26% to 55% we would expect an average of 40.5% of capacity. So we will say we produced in the 2nd quarter at 40.5% of capacity. 40.5% of 750,000 is 303,750 gallons. Since we aquired NEXTDiesel midway through the 2nd quarter, we can figure that half was sold as corn oil ($2.25) and the second half was sold as bio-diesel ($4.50). So we have 151,875 gallons sold for $341,718.75 and 151,875 sold for $683,437.50. Added together we get $1,025,156 of biofuel production and sales for corn oil extraction and conversion into biodiesel - a 309% increase over the first quarters $331,371. Tapping into an entirely new revenue stream, the Skunk believes we will see about a 30% utilization of excess capacity of the 10mmgy plant – converting tallows and greases into biodiesel. This will be in the second half of the quarter only – from the purchase of NextDiesel on 15 May until the end of the quarter. The 2.5M of quarterly capacity minus the 151,875 produced using our corn oil leaves 2,348,125 gallons of unused capacity. Utilizing just 30% of this capacity to produce bio-diesel (for half the quarter) gives us 352,219 gallons – at $4.50/gallon - that is $1,584,986 in additional revenues. So the Skunk has us at $2,610,142 total Biofuel production and sales. This new source is difficult to determine how much capacity we will be able to utilize. We have nothing to determine how much downtime is required to move between feedstocks. This area has a significant potential for error.
$4.2M in equipment and technology sales;
EOY 60 cents with 45 -75 trading range**
$4.91 Share Price in FEB 2010**
1Q Actual & Skunk's Predictions
$2,564,428 in equipment and technology sales; (Skunk Predicted 3.43M)
$3,659,954 in culinary oil production and sales; (Skunk Predicted 1.27M)
$331,371 in biofuel production and sales (Skunk Predicted $838,125)
________
________
$6,555,753 Total Revenues
(Skunk predicted $5,538,125 - under by 18.37%)
Predicting how GERS reports in the 2Q should be a synch, right? Scared of being wrong has never slowed the Skunk down a bit. (that's not always a good thing-lol) Lets see what we get -I have challenged myself to be within 15%. First lets see what guidance Greenshift gave us from the 1Q report. Second I will add in what I found out since then - Then we will come up with some numbers.
Greenshift Guidance (with 2Q in Bold & Blue)
Equipment & Technology Sales.
1Q Guidance.
"As noted above, we delivered and commissioned a 10 million gallon per year biodiesel facility for an Indiana-based client during the first quarter 2008. The majority of the revenue and contribution margin for this system were realized during 2007. We expect to complete construction and commence the commissioning of another 10 million gallon per year facility for this same client during the second quarter 2008. The majority of the revenue and margin for this additional system will be realized during the second quarter of this year. Moreover, we are party to agreements to design, build and commission biodiesel and related production infrastructure for a number of additional third party clients. We expect that equipment and technology sales will increase in the second quarter and thereafter will remain episodic and dependent on the issuance by our clients of notices to proceed under existing contracts."The Skunk's Thinks:
WE WILL BE UP HERE! The February Shareholder letter has us bringing in $15M in additional sales for third party bio-diesel sales in 2008. We brought in $2,654,428 in the first quarter leaving $12,345,572 for the rest of the year. This would be $4,115,191 per quarter over the next three quarters on average. The quarterly guidance states that a majority of a single 10mmgy, 5 million dollar unit revenues will be in the 2Q. Other projects may have started with minimal revenues as well. Rising commodity (steel/copper/stainless ect.) prices may have increased the costs of the installation. Hopefully the contracts were written to protect our margins. We might also see the revs go a little higher in that case. The Skunk thinks we will come in at 4.2M - a 158% increase over first quarter numbers.
Culinary Oil Production & Sales.1Q Guidance.
"Culinary oil sales were higher than expected during the first quarter 2008 due to opportunistic sales of whole seed into higher end culinary markets. Quarterly revenues from this segment for the second and third quarters of this year can be expected to decrease to historical levels due to the fact that we have scaled back production until we complete our plant expansion project. We will not operate at efficient economies of scale until we complete of this project. We will not be able to recover all of the available oil in the seed we process until then. Revenues in this segment can be expected to rise significantly after we complete this plant expansion (which is targeted for the fourth quarter of this year)"
"Culinary oil sales were higher than expected during the first quarter 2008 due to opportunistic sales of whole seed into higher end culinary markets. Quarterly revenues from this segment for the second and third quarters of this year can be expected to decrease to historical levels due to the fact that we have scaled back production until we complete our plant expansion project. We will not operate at efficient economies of scale until we complete of this project. We will not be able to recover all of the available oil in the seed we process until then. Revenues in this segment can be expected to rise significantly after we complete this plant expansion (which is targeted for the fourth quarter of this year)"
The Skunk ThinksDown HERE! We had great revenue numbers here last quarter. Since we sold seed directly into the market, we had great revenues - but not great margins. I looked at historical data for Sustainable Systems. We saw $5,087,451 in revenues in this sector in 2007. Since none of the expansion is reported completed - except for increasing oil prices - this number should not change much from these historical prices below. The average for one fourth of actual production is $1,271,863. One fourth of ProForma production (as if we had acquired Sustainable for the entire first quarter) would be $1,643,208.
January 1, 2007 - March 31, 2007 = $418,138 (Pro Forma) $1,903,517
April 1 - June 30th = $1,882,946
July 1 - September 30 = $1,925,248
October 1 - December 31st = $861,119
Total 5,087,451/4 = $1,271,863/quarter (actual)
Total 6,572,830/4 = $1,643,208/quarter (Pro Forma)
So the skunk is looking at these numbers and I am not sure what happened in the forth quarter. I will assume that was a seasonal fluctuation. So I will throw that quarter out. Also I see that the other quarters are very close. I will simply pick the second quarter 2008 to mimic the 2 quarter 2007. The prices of the oils should have gone up – and I will assume that covers the disruption of a sell off of feedstock last quarter and the stop and go of a partially completed? Expansion. So the Skunk predicts 1.88 Million in revenues here.
Biofuel Production & Sales
1Q Guidance
"We commenced commissioning of our Medina, New York corn oil extraction facility and a scheduled upgrade of our Oshkosh, Wisconsin corn oil extraction facility during the first quarter. We are scheduled to commission several more corn oil extraction facilities over the balance of this year. Ordinarily, these new facilities would be expected to significantly increase revenue during the balance of 2008. However, in May 2008, we completed the acquisition of Biofuels Industries Group, LLC (“BIG”), which company owns a biodiesel facility that is based on our biodiesel technologies. The BIG facility has been designed to efficiently refine our extracted corn oil into biodiesel. Given our current and expected production of corn oil, this acquisition will result in additional increases in sales associated with our corn oil extraction efforts. Prior to the BIG acquisition, we sold corn oil for biodiesel production at prices that were discounted to diesel spot prices. By internalizing biodiesel production capacity, we can now refine and sell corn oil derived biodiesel (instead of extracted corn oil alone) at more than $4.50 per gallon at current market prices – more than two times the sales price of extracted corn oil realized during the first quarter. Furthermore, BIG’s current annualized biodiesel production capacity is greater than our current corn oil extraction capacity. This allows us to opportunistically purchase and refine waste fats, oils and greases into ASTM standard biodiesel. We intend to expand BIG’s annualized production capability to at least 20 million gallons per year by the fourth quarter 2008. This expansion will allow us refine increased volumes of these waste fats, oils and greases. These activities are all expected to result in significantly increased revenue during the second quarter and the balance of 2008 from this segment. At current market prices, a 10 million gallon per year production facility can be expected to generate about $45 million in annualized biodiesel sales."The Skunk Thinks:
Up Big Here! Over all in the first quarter we produced $331,371 of corn oil revenues. Based on $2.25 revenues/gal of corn oil that was 147,276 gallons. Remembering that the NY plant came up half way through the first quarter (so we minus a quarter of our processing time for the 2 COES) (Two COES operating at nameplate would produce 750,000 gallons/quarter - minus 25% would be 562,500.) So in the 1Q we operated at an average of 26% of nameplate capacity. In the Kreisler Interview we learned that the two operational COES were preforming at an 77% and 33% level - which would give us an 55% combined production vs capacity. So if we assume a gradual increase over the quarter from 26% to 55% we would expect an average of 40.5% of capacity. So we will say we produced in the 2nd quarter at 40.5% of capacity. 40.5% of 750,000 is 303,750 gallons. Since we aquired NEXTDiesel midway through the 2nd quarter, we can figure that half was sold as corn oil ($2.25) and the second half was sold as bio-diesel ($4.50). So we have 151,875 gallons sold for $341,718.75 and 151,875 sold for $683,437.50. Added together we get $1,025,156 of biofuel production and sales for corn oil extraction and conversion into biodiesel - a 309% increase over the first quarters $331,371. Tapping into an entirely new revenue stream, the Skunk believes we will see about a 30% utilization of excess capacity of the 10mmgy plant – converting tallows and greases into biodiesel. This will be in the second half of the quarter only – from the purchase of NextDiesel on 15 May until the end of the quarter. The 2.5M of quarterly capacity minus the 151,875 produced using our corn oil leaves 2,348,125 gallons of unused capacity. Utilizing just 30% of this capacity to produce bio-diesel (for half the quarter) gives us 352,219 gallons – at $4.50/gallon - that is $1,584,986 in additional revenues. So the Skunk has us at $2,610,142 total Biofuel production and sales. This new source is difficult to determine how much capacity we will be able to utilize. We have nothing to determine how much downtime is required to move between feedstocks. This area has a significant potential for error. 2Q Skunk's predictions
$4.2M in equipment and technology sales;$1.88 in culinary oil production and sales;
$2,610,142 in biofuel production and sales
$2,610,142 in biofuel production and sales
________
________
Total Revenues $8,690,142** (up 33% over the 1st Quarter)
{$9,993,663 - 7,386,621 is within the Skunks goal of 15%}
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Looks like Sustainable Systems/Montola has updated parts of their web site:
The Facility
The Montola plant was originally built in 1956. Projects to improve and enhance through the years have resulted in a very versatile, efficient, and up to date facility.
Capacity Summary:
Production: 300 short tons/day – CURRENTLY EXPANDING TO 600 SHORT TONS/DAY Utilizing both Expeller and Solvent Extraction.
Refining Capability: Refined, Bleached. Deodorized, and Winterized.
Refining Capacity: 6000 lbs/hour
Seed Storage: 1.2 Million Bushels
Oil Storage: 2.2 Million Gallons
Meal Storage: 4,300 Short tons
Transportation: Located on Burlington/Santa Fe Mainline and convenient truck access
The Montola plant was originally built in 1956. Projects to improve and enhance through the years have resulted in a very versatile, efficient, and up to date facility.
Capacity Summary:
Production: 300 short tons/day – CURRENTLY EXPANDING TO 600 SHORT TONS/DAY Utilizing both Expeller and Solvent Extraction.
Refining Capability: Refined, Bleached. Deodorized, and Winterized.
Refining Capacity: 6000 lbs/hour
Seed Storage: 1.2 Million Bushels
Oil Storage: 2.2 Million Gallons
Meal Storage: 4,300 Short tons
Transportation: Located on Burlington/Santa Fe Mainline and convenient truck access
More to come,
Skunk
FORECASTS
". . . in the next six months I expect this stock to have convincingly turned the corner." (Skunk 13 July 2008)**
EOY 60 cents with 45 -75 trading range**
$4.91 Share Price in FEB 2010**
See past posts for details
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**Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions – (and your own life in general) good or bad. I have been rightfully accused of being a rather cheery, positive individual who laughs at every opportunity. These tendencies may cause me to overlook deficiencies in this stock that are obvious to others. Celebrate today - and some good garage logic luck to ya.
Skunk
**Note: I am a shareholder - I do not work for, nor do I receive any direct or indirect payment from GERS or anyone associated with them. (But it would be Kapitalist Kool if I did) I will not intentionally mislead - but I can be wrong (ask Mrs. Skunk for specific frequencies) - so do your own due diligence - and take responsibility for your own financial decisions – (and your own life in general) good or bad. I have been rightfully accused of being a rather cheery, positive individual who laughs at every opportunity. These tendencies may cause me to overlook deficiencies in this stock that are obvious to others. Celebrate today - and some good garage logic luck to ya.
Skunk
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