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100 isn't my number.. I guess iHubbers have been running some scenarios (the spreadsheet is updatable by all)!
I had a P/E in there of 50 to start, and O/S = 57m.
S.
yet another JBII PPS calculator. Just for fun.
No Excel required, and you can play with the assumptions!
http://spreadsheets.google.com/ccc?key=0Au5LYrqHUB2OdC1nZnBEOEVUNUpWNHdUTXZaSjhUN3c&hl=en_GB
Also see the second worksheet labeled "detailed".
But beware.. if you edit the cells, it updates all other people's copies that are open.
As you can see, even a measly 5 operational JVs with modest volume (2MT/day) supports more than the current PPS. (then again, frankly.. so does PakIt future revenues!!)
Only one way to go IMO...
S.
I took it to be the same... 35% of "net revenue" from the JV would go to the partner.
Yes, it's worth signing up to Facebook and adding JB to your network.. it's a good source of news for JBII junkies!
s.
Latest Facebook post says that the 10% is "net revenue". That means in the JV you will deduct operating costs first, and share the leftover oil revenues 90/10. So the 10% must cover the other entity's admin costs.
It's far less interesting than the 65/35 previously mentioned.
Looking forward to seeing JV details soon -- numbers and locations!
S.
Yes, JBI has stated (for the US at least) that they will be locking-up the plastic supply, as well as arrange the fuel ASTM testing & pickup for selling to refineries!!
If indeed they can do that, it leaves only operational tasks for the other party in the JV.
They would corner the future of P2O on the continent if they moved quickly and locked-up supply for 10 years!! And the windfall it would bring would be ridiculous.
S.
Yes, it does indeed -- this is a change is tack from their message a few months ago.
It's encouraging in the sense that they are so bullish on the success of P2O that they want to run it all themselves. However it will take an enormous amount of man-power, organization, and funding to do that.
I liked the JV/franchise model as it would allow for a much faster rollout of P2O sites ("land grab" scenario) and a low-cost way to get there. As a shareholder I'm torn between "speed to market" and "higher returns".
I guess I'd rather slower progress with more long-term revenue than a quick setup and a smaller percentage.
Gonna be an interesting Q1.
S.
It was 65% of oil revenue actually, not 25%. But that was for the "franchise" model (i.e. not sure how it differs from a JV rev-share).
If JBI is self-funding the initial US-based JVs, then it could be more (although they'll be footing the bill for the processors too).
I guess anyway you slice it, if the first 25 JVs go on-line before the O/S share count in increased, and oil doesn't drop to $40/barrel, PPS should top $10 pretty easily.
S.
Indeed, John seemed to mention $2.2m per site, but it was unclear if that was revenue or profit. I'm not sure how they arrive at that number though.
Also, he did say that their math was based on 20-tons / day, which is a minimum as it represents a single batch per processor. JVs will strive to run 2-3 batches / processor / day (i.e 40-60 tons) assuming they have adequate feedstock, and JBI claims to be "locking supply agreements up", which makes me smile even if its ONLY in 3 urban areas.
In some cases they get paid for taking plastic. In some states they don't pay 35% tax. In most cases JV's will operate more than 2 batches per day and run more than 260 days per year.
Still, if you take my prior numbers, the 25 initial JVs with a P/E of 50 would put JBII at $18.75 (with 50m O/S).
I am also keen to learn more about the math behind their numbers, but what makes this an exciting investment is that John and his team don't seem to care much about convincing people that what it is they say is true, and seem to focus all their energy on just executing and proving it.
Kinda reminds me of Google's "do no evil" mantra in the early days...
S.
P2O per-site profit calc for JBI:
1 site = 2 processors = 20tons / day (minimum, as that's only one 2-hour batch each)
20 tons/day = 20000 liters/day = $9400/day (@$75/barrel)
9400/day = $2.4m / year (260 working days / year)
65% of that goes to JBI, or $1.59m worth.
If you consider for that price JBI takes care of training & maintenance/monitoring of the processors, and that they probably spend no more than 15% on it, then it would net:
$1.3m / JV / year
Assumptions: feedstock cost is zero; fuel pick-up is included in the barrel-price
And taking into consideration the "35% tax" John spoke about on the WallStreetReporter interview, ... $1m / JV is a safer bet.
Still, plug even half of that into the "2500" or so sites they want running in the next few years, and PPS looks projected to soar from where it is today.
S.
JBII tops Motley Fool's CAPS Market Movers list for the second day in a row (and the second day ever since it began listing on CAPS).
http://caps.fool.com/
Good weekend to all!
S.
Ha, nice! So instead of selling chocolate-chip cookies or oranges door-to-door to fund the year-end class trip, kids will be selling Pak-It bundes? Excellent way to generate consumer interest (because who turns down a kid raising money for school)?
[the box] "thinking"
s
JBII now listed on The Motley Fool's CAPS site!
Since JBII has recently qualified for listing on the Motley Fool's CAPS site (min pps $1.50, min mktcap $100m), I requested that they add the ticker symbol. Now JBII is covered there, and discussions will no doubt follow.
And what's more, I just opened the CAPS homepage (caps.fool.com) and JBII was headlining it as "Best Market Mover". See screenshot. Not bad for their first day on the Fool boards.
Spread the word!
S.
The 90 employees must be mostly the DCL/PakIt workers, as well as staff in Latin America for Javaco. My understanding is that JBI (Niagara Falls and Cambridge) is quite small staff-wise.
Anyone know? Indeed I was surprised at the 90 number too.
S.
My targets are based on the post a while back showing #JVs vs. PPS... target = 1000 JVs
Hey Zardiw, we sure didn't have to put a few $2 orders in just to help the uplisting cause, eh? Seems like AMEX will happen sooner than we'd hoped!
S.
and we ain't seen nothin' yet
b b b baby...
AK, you'd be surprised how much waste plastic is available for feedstock. In some prior posts of mine I have written about volumes. Consumers alone create huge waste, but then there's industry, retail, transportation, and agriculture too!
It will not be much of a problem IMO.
S.
Hi AK, since i'm up earlier I thought I'd take a swing at your numbers.
a P2O processor is 10 tons, but each "joint venture" will have 2 so as to be able to run in constant operation (clean & load one while the other is working). Each batch takes 2 hours, so it's conservative to suggest that you can do 4 batches total in a working day (2 batches per processor). That's 40,000 litres of oil production, and it's including the gas output.
So you'd need 1534 JVs running 2x10ton processors if they run 8 hours a day for 260 days/year. More simply put, you'd need 3068 10-ton processors.
If as you say you run them 300 days per year, and you can do 6 batches per day, it's only 888 JVs you need, or 1778 10-ton processors.
Hope this helps,
S.
We just need enough of us longs to agree to snap up a few at the close for $2 a pop. 100 shares at $2 a couple of time doesn't make me flinch.
The AMEX exposure sure would help.
S.
I agree, and they appear to be all over it. Locking up feedstock for X years into the future is the smartest thing they could possibly do. The intrinsic value of plastic waste is rising (all waste, in fact.. as technology progresses), so in order to protect their margins they appear to be moving swiftly.
Good move. Smart people. Cool company.
Stu
Of course not... you need 600 sqft per processor (i.e. 2), space for plastic storage (silo?), a large fuel tank to store the fuel, room for forklifts and drive around, etc. My point was that JBI's P2O processors compared to Envion's are like the microcomputer is to the mainframe. And while I've never been given specifics of the staff required to run it, Envion says their plant can be operated by 2 staff members.
So even if you consider all the space, salaries, extra equipment, and insurance you need, I cannot see this adding to $1m per year for operational costs. And the one-time investment of $500k up-front for the processors is a very low barrier to entry. The training & support is covered by JBI -- see a prior post of mine where I pasted an e-mail I received from them.
Also, please consider Envion's $6 million dollar price tag for their P2O. That's 12 times a JBI franchise. Also, when you consider than with the catalyst the 10 tons can be processed in 2 hours, you can theoretically run 5 or more batches per day (depending on loading/cleaning time between batches). x2 machines, means it will yield far more than Envion's plants.
I think the model is hugely compelling, and when people run the numbers they will find the same. If you have an existing industrial or agricultural site with space and workers (i.e. the overhead is in-place), then your 500k investment can be made back within a couple of months.
Very compelling stuff IMO.
S.
Yes, JBI is targeting 3 urban sites to start, and they are locking-up both the plastic supply and the oil purchase (and pick-up).
This implies that each of the 3 sites has more than enough feedstock for 5 or more P2O sites (that's 100+ tons / day), and likely has an oil refinery close by it!
That's equivalent to about 750,000 consumers' daily plastic waste. If you can additionally source retail, industrial, or agricultural waste, there's no shortage of supply!
S.
Capital intensive? Do you realise what others are doing in this space? Envion, Plast2Fuel, .. these are huge and way more complex plants that cost > $6-7 million to build (see article here http://tinyurl.com/p2o-done-wrong-1 ).
JBI offers you the entire kit for under $500k, and you can have it running in 90 days, and they take care of training & maintenance! And the real-estate footprint is tiny too (600 sqft). That is not "a substantial sum" as you call it.. it's peanuts!
The 65% is more than justified IMO.
S.
Not necessarily. All of the validation, certification, documenting of the processor assembly, etc. that they're doing now (lot of work up-front) is to be able to crank out P2O sites that much faster when the light goes green. They are really building for speed like it's gonna be a land-grab (i.e. people fighting to get a JV for their region).
I would expect a good chunk of the 25 JVs to be running by May/June, and others to be lined-up before then. Recall that he said "60-90 days" is the expected lead-time to get a P2O site up & running (certification, equipment, etc.)
So you could have your franchise by late summer IMO, depending on where you are.
S.
The 25 JV's comes from an e-mail I received from Katie a few weeks back:
"The current franchise situation is this, we are in the process of setting up 25 joint ventures. These will be operating in Niagara Falls, NY, Pennsylvania, and Florida. These are going to be our first set of franchises and a test run for the P2O joint ventures. Each state/country/region have different regulations and requirements regarding our P2O process and we have decided to start with the above 3 states for now. After the set up and the first 25 joint ventures we will be looking to rapidly expand into other areas."
And then in the CC, when asked about the status of these 25 JVs, the reply was "we cannot comment on the PIPE at this time", hence
why it appears they're funding these themselves.
Just speculation on my part though.
S.
The beauty of the franchise/JV model is that JBI doesn't need to finance anything in order to rollout a large number of P2O sites. It's the JV partner that has to poney-up the $400k.
However, a few comments from JB imply that the PIPE is being used to finance the first few JVs in the 25 already identified sites. This is perhaps because they want more control than a JV would offer, or maybe because they want 100% of the revenue
S.
Charlie Rose & Larry King
You should all go on YouTube, rate this 5-stars and add comments... There are already 32 views of the P2O clip that was uploaded only yesterday.
These are the first videos I've ever put on YouTube, and I didn't realize the stats (like google analytics) that you get from them (breakdown of daily views, geographies, etc.). It should be a good way to judge how much attention JBI is getting in the coming months.
Now go eat turkey and spread the gospel!
Stu
Full November shareholder webcast now available on YouTube in two parts:
P2O video (taken from CC prez) now on YouTube.
Investor presentation video in Windows Media Format here.
For those of you having trouble viewing the MP4 video on the jbiglobal.com website, I have encoded a Windows Media version. I wanted to upload it to YouTube, but it was too much hassle to chop it into 2x10min clips.
So here it is:
http://www.genuan.com/JBI-InvestorUpdate-Nov2009.wmv
Stu
Agreed. I have personally bought TRTN/JBII at 5 different times in the past 6 months, and never sold a single share.
JBII is still so far off the radar it's ridiculous. But management seems (rightly so) not to care about that in favour of focusing on generating value. It's the best way to increase share-price, especially given it's already at a P/E of > 400.
Lots of longs, lack of sellers, and zero publicity is why shares aren't up. Be patient.... 6 more months to see some real activity IMO.
S.
Video recording of presentation now on-line:
http://www.jbiglobal.com/JBI-InvestorUpdate-Nov2009.mp4
Skip to time 16:40 for the bit about the 100m barrels per year by 2020 P2O objective
S.
I agree.. separating the plastic from the rest of the crap should not be an issue since its a chemical transformation, and the in the hopper at 700C (or whatever temperature it gets to) the hydrocarbons just get leeched out. Peanut butter or shoe-laces... either gets incinerated or just scooped-out.
I missed that answer about the laser printer... same goes for an old Ford Pinto I suppose
S.
Just for fun - garbage math:
Texas is 678,354,145,920 m2
2xTexas is 1,356,708,291,840 m2
Sailing back-and-forth sucking up all garbage within a 100m swath will mean you need to zig-zag for 13,567,083 km
A cargo ship burns 280 L/km (src: get http://wiki.answers.com/Q/How_much_fuel_does_a_container_ship_burn)
So 13.6 million km burns 3,798,783,217 litres of fuel
Which can be generated from 3,798,783,217 kg of plastic
Thats 3.8 millions tons of plastic.
According to http://www.greatgarbagepatch.org/ there are "approximately 3.5 millions of tons of trash" there, so...
If its all plastic, then indeed, this endeavor (minus staff salaries, operating costs, etc.) can BREAK EVEN.
Cool.
I'd guess that if they do head to the ocean garbage patch, they would redesign the mouth and conveyor-belt a fair bit. John seems hell-bent on automating these processors, and making things work like a black-box (he's a hardware/software guy after all).
Remember they have a mobile unit and small-site version in the works too it seems, so an ocean-version doesn't seem like such a challenge.
But I agree... there is like 90% non-plastic in the trash mass they would pull from the ocean, so lots of sludge/waste. I picture a blue whale scooping-up and living-off plankton which is 0.001% of the mass that goes into its mouth.
Seems like such a trip wouldn't be profitable, but would make excellent PR. I would be willing to bet that many federal governments would help foot the bill for this.
S.
Did anyone catch JB's answer to "are you going to the great pacific garbage patch"? It was something like "well, we don't hire stock promoters, so we are looking for ways to generate interest in the public eye".
Sounds like a "yes" with a capital "Y". Exciting....
S.
So they need to get the share price to $5 to be able to get onto NASDAQ, and they believe this is reasonable given that outstanding share count will DROP to 50m, and a handful of $2m/year profit-yielding P2O processors and a conservative P/E ratio will get us there!
Works for me!
S.
Agreed. My point was only that the word "rollout" meant the business plan of signing-up and actively establishing the franchises/JVs. Indeed for this they should want to have permits & legal/environmental issues taped.
Rollout doesn't imply producing oil. But it's certainly not far behind!
S.
Yes, "full rollout" meant (as my question intended) rollout of the franchise program. i.e. start to sign-up franchises, create JVs, not have operational P2O processors.
My question to JB was in the context of being interested in establishing a P2O franchise, not as a shareholder wondering when P2O will start generating revenue.
So don't take this out of context. His answer was in direct reply to my question "what is the estimated timeline for franchise applications & grants".
S.
True, delays come from external influences such as government bodies. I suppose though that they're much better equipped to deal with it today than before the Pak-It/DCL acquisition.
S.