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SPECIAL ALERT
KBF POLLUTION MANAGEMENT, INC. (OTCBB:KBFP)
Near Term Target Price: $0.23
Shares Outstanding
170.89 million
Approx. Float
102.7 million
Near Term Price Proj.
$0.23
A Few Reasons to Own KBFP:
1.KBFP, a New York Corporation, was organized in 1984 under the name Kreisler Bags &
Filtration, Inc., which name was changed to KBF Pollution Management, Inc. in 1986,
and have been trading publicly since 1987.
2.KBFP will have $20 Million Dollars in revenues with $2.0 Million Dollars in EBITA in first
year upon completion of pending merger with Veridium.
3.KBFP revenues of the companies acquired on a historical consolidated basis were in
excess of about $13.8 Million, $15.2 Million and $17.0 Million for the three years ending
December 31, 2000, 2001 and 2002, respectively.
4.KBFP consolidated company's growth rate is expected to be in excess of 20% per year
in the absence of additional acquisitions.
5.KBFP will execute roll-up strategy, acquiring key companies in the industry in a
hub-and-spoke manner across the country.
6.KBFP’s target is to ramp up to $200 Million Dollars in sales through acquisitions over
the next 4-5 years.
7.KBFP broad customer base, includes many Fortune 500 companies, including: Air
Products, Analog Devices, Black and Decker, Honeywell, Howmet, a division of Alcoa,
USR Optonix, a division of Mitsubishi Chemical, Mack Truck, Moen, Osram Sylvania,
Sartomer, Sanmina, Stanley Bostich, Strum Ruger, Titeflex and Tyco.
8.KBFP operates in a $6 Billion Domestic Market (on the tipping fees); Metal Markets are
much larger.
9.KBFP application for listing on American Stock Exchange is pending; KBFP expects to
be trading on AMEX in Q3-Q4.
About
KBFP, a New York Corporation, was organized in 1984 under the name Kreisler Bags &
Filtration, Inc., which name was changed to KBF Pollution Management, Inc. in 1986. KBFP
has traditionally specialized as a wastewater recycling service provider, recycling liquid
hazardous and non-hazardous metal bearing wastes. Much of the KBFP's efforts in the
years subsequent to its founding were focused on the research, development and
implementation of innovative technologies for the recycling of hazardous wastes.
During this time KBFP developed a strong local following for its services, the revenues from
which were eventually leveraged into the KBFP's present growth initiatives - initiatives
premised on safe, compliant and profitable infrastructure development and service
distribution. KBFP long-term plans are to become the nation's premier recycling service
provider by building and operating centralized recycling and commodity manufacturing
facilities in key demographic regions, supported by a web of full service transfer and
distribution centers.
Investment Opportunity
KBFP is a new class of participant in a market that few are aware of, but that spans nearly
every sector of the economy: the hazardous waste management industry. Service providers
in this industry are paid to manage the toxic by-products generated by the vast array of
manufacturing processes that are critical to the foundation of the modern economy - from
specialty chemicals to ceramics, aerospace to pharmaceuticals, telecommunications to
electronics, automotive to food products, munitions to metal finishing, petroleum refining to
plastics - the list goes on, and it reaches into all but every sector of the modern industrial
economy.
KBFP was founded on the premise that environmentally superior results can be cost
effective, KBFP is setting a new standard for environmental service with its focus on the use
of state-of-the-art green technologies to recycle, reuse and mine commodities from industrial
hazardous wastes.
KBFP recently completed four strategic acquisitions and is currently seeking financing for
this and other strategic acquisitions, as well as for other critical aspects of KBFP strategic
plan to bring its unique technologies to market on a national scale.
KBFP controls a distinct and incomparably powerful competitive advantage. Hazardous
industrial wastes are vast resources they contain valuable metals like chrome, copper,
nickel, silver and titanium in concentrations many times greater than virgin ore extracted
from the earth, and partially consumed chemical compounds that retain reuse potential.
More than 99% of the hazardous wastes generated last year were either landfilled or
incinerated for the want of a cost-effective recycling outlet burying or burning waste has
always been cheaper and easier. KBFP’s technologies enable the large-scale recycling of
hazardous wastes at the same cost to the generator as landfill or incineration.
The value proposition of KBFP’s technologies is compelling: KBFP provides the service of
recycling hazardous wastes (for which KBFP charges a tipping fee equal to the price of
disposal) from which KBFP mines metallic commodities (which KBFP then sells to metal
manufacturers for about half of their inherent value). Leveraged with volume, KBFP’s
technologies are capable of remarkable degrees of profitability, the scalability of which is
critical to and the core driver of KBFP’s business model.
The prime component of KBFP’s business model is to leverage its economies of scale by
maximizing the distribution of qualified hazardous wastes into centralized recycling, reuse
and mining facilities located in key domestic markets. The focus of KBFP’s immediate-term
plans for growth will be on organic development, increasing penetration in the Northeastern,
New England and Mid-Atlantic markets, and the continued and aggressive acquisitive
development of realistic and sustainably profitable means to scale into the national markets,
leveraging the economies of scale and high degrees of profitability associated with the
centralized application of KBFP’s technologies.
Valuation
Garbage In----Garbage Out!
Remember Wayne Huizenga who started with a small, little company and built it into the
behemoth waste disposal company through acquisitions called Waste Management, a Multi
Billion Dollar Waste Company.
Yes, this is the same Wayne who left Waste Management and went onto other endeavors
such as founding Blockbuster Video, which he sold and made a Billion or Two. Then along
the way went on to own the Miami Dolphins, Florida Marlins (by the way he won the World
Series) and Panthers, as well as being current Chairman of AutoNation & Boca Resorts.
Now guess what? After all this, he is back and still in the garbage business, as Chairman of
Republic Services Inc., one of the largest providers of solid waste collection and disposal
services in the U.S.A.
We guess the point is the Waste Disposal Business could be quite lucrative if managed
properly.
KBFP, although you may never have heard of them before, has been public since 1987.
About 3 years ago KBFP embarked upon an aggressive roll-up strategy (just like Wayne) to
capitalize on their Patented Technology.
In January, KPFP applied for a listing on the American Stock Exchange (Don’t Laugh). From
the little due diligence that we did (don’t trust what we say) regarding listing requirements for
AMEX, KBFP for the most part, actually meets all the requirements except stock price. In
looking at KBFP’s most recent 10k, you will notice that over $ 16 Million dollars has been
invested in KBFP over time, and that shareholder equity is in excess of $ 8 Million Dollars.
NOT YOUR TYPICAL NICKEL STOCK!
So maybe, if KBFP can continue on their roll-up strategy and by judging the most recent PR,
not only have they announced proposed mergers but have actually CLOSED them. Maybe
one day NEAR TERM KBFP can be just like WAYNE.
We believe the NEAR TERM VALUE in KBFP’s Stock Price Has to do with Veridium.
As Quoted in KBFP’s most recent PR dated 5/07/03:
Veridium Environmental Completes Acquisition of Environmental Services Division of R.M.
Jones & Co., Inc., Consolidated Company Expects to Complete Merger With KBF Pollution
Management in Q3 2003
"Jones, Enviro-Safe, MRTC, Vulcan Waste Systems, Inc. (another recently completed
acquisition), and KBF Pollution Management, Inc., Veridium's current parent company, will
all be consolidated into Veridium Corporation upon the completion of the Company's
previously announced merger with KBF. The Veridium-KBF merger is expected to be
completed in the third quarter 2003. These events are among the final steps of KBF's
corporate restructuring plan, the principal goal of which is to optimally position the
Company for the accelerated execution of its business model.”
OK enough said, what could KBFP’s Stock Price be worth NEAR TERM? In our opinion,
KBFP would love nothing more than to be just like Wayne and his peers (The Big Boy’s).
According to Multex, KBFP would be classified in the THE WASTE MANAGEMENT
SERVICES SECTOR, one of the KEY VALUATION RATIOS IS PRICE TO SALES, on a trailing
twelve month basis the peer group trades at 2.6 times sales.
IF OVER THE NEAR TERM, BASED ON PREVIOUS PR AND AN AGGRESSIVE BUSINESS
PLAN KBFP COULD TRADE IN THE MARKETPLACE AT A 75% MULTIPLE OF ITS PEERS
(75% x 2.6 = 1.95), THEN BASED ON PROJECTED REVENUES OF $20 MILLION DOLLARS
NEXT YEAR,
WHEN APPLYING THE COMPARATIVE GROUPING’S AVERAGE PRICE TO REVENUE
MULTIPLES TO KBFP WE CAN ARRIVE AT A RELATIVE VALUATION OF $0.23 PER SHARE
OVER THE NEAR TERM.
So Keep a REALLY, REALLY Watchful Eye on this Old Timer, And as always Watch This
Stock Trade!
Conclusion
An excerpt from the CEO’s quote from PR dated 5/1/03 regarding earnings, "The positioning
of KBF to effectively leverage its unique technologies and recycling capabilities has been a
complex and lengthy process and one that will prove to be well worth the cost. Our efforts
are rapidly coming to a conclusion as we close on our previously announced acquisitions in
the immediate term and prepare the Company for its upcoming merger with Veridium.
Combined, these transactions are designed to maximize our shareholder wealth…”
