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MikeDDKing

07/19/11 5:15 PM

#153 RE: southacresdave #152

That is a complex question and the bottom line is my best guess is GM will stay relatively constant (14-20% range) but that is a swag.

They have some credits that they receive so the price/gallon includes those credits. You can't really compare pump prices to the price they receive. Also, my understanding from talking to management is that their feedstock (chicken fat) has few other uses than to create biofuel. I'm guessing that the market price for feedstock varies based upon fuel prices. So, I'm thinking that margins stay relatively constant.

GM in the most recent three quarters has been 17.8% (Apr), 12.0% (Jan), and 14,7%(Oct). My guess is that higher margins in the most recent quarter were driven to some extent by the higher volume. Even if their GM is impacted a few percent by lower diesel prices they will still be extremely profitable. They expect to expand capacity going forward which should help margins.

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