Earnings estimates of GRNO processors if and when they are in operation in coming years.
INTRODUCTION
What I will do here is run numbers for each of the three GRNO processor models. First I'll do the Model 600 for nominal operating expectations and then I'll increase them and run the numbers again.
Then I'll take the Model 600's numbers and scale them for the Model 400 and then the Model 1000.
REVENUE FROM MODEL 600
The flow rate during the official material balance tests as of this date was probably too low for meaningful results, but for the sake of discussion we could make assumptions that the fraction of waste oil made into diesel is 70% and the fraction made into #5 fuel oil is 20%. Also for the sake of discussion, I'll assume the machine runs on average about 90% of the year which is 328 days.
So the waste oil processed by a Model 600 would be
24 X 328 X 600 = 4,723,200 gallons a year.
Diesel produced would be .7 X 4,723,200 = 3,306,240 gallons.
#5 heating oil produced would be .2 X 4,723,200 = 944,640 gallons
The web page says a waste oil collector has a cost per gallon of between 5 cents and 15 cents. This is in a state that is concerned about the effects of air pollution. Where I live in Florida, the main source of air pollution away from main highways is from trees. The state is surrounded by open ocean, has no mountains to trap smog, and has plenty of carbon dioxide-consuming trees, and no law against burning waste oil that I know of. A waste oil recycler told me waste oil can be burned to heat asphalt to add an extra lane to Interstate 75, and that has driven the cost of the oil to about 25 cents. But that condition won't last forever. Sooner or late, all states will have to stop burning waste oil, and the cost of collecting waste oil will be 15 cents, tops. Let's give the waste oil collector a profit of 7 cents a gallon for this calculation and split the difference of his
cost range and say waste oil costs us 17 cents a gallon.
The web page says in 1996, diesel was between 50 cents to 75 cents a gallon. Let's split the difference and say we get 62 cents a gallon for diesel and we get 37 cents a gallon for heating oil.
17 cents times 4,723,200 gallons = $802,944 is our cost of waste oil.
62 cents times 3,306,240 gallons = $2,049,868.80 is what we get for our diesel.
37 cents times 944,640 gallons = $349,516.80 is what we get for our heating oil.
$349,516.80 + $2,049,868.80 - $802,944 = $1,596,441.6 is what we get before paying for the hired help to run the operation 24 hours a day, the rent, the taxes, the insurance, the depreciation, the office costs, the lawyers, you get the idea.
What the hey, let's make our fantasy machine clear $1,200,000 a year. Then let's divide by 7 million shares and get 17 cents a share per machine. This is before corporate income tax. Now how many machines do we want to set up and run?
INCREASED ESTIMATE FOR MODEL 600
Suppose after getting really good at running a processor, GRNO was able to average 95% uptime per unit. On a Model 600, that would be
24 hour/day X 600 Gal/hour X .95 X 365 days/year = 4,993,200 gal/year
Let's also say they got what the web page says, 74% diesel and 24% heating oil. Let diesel be 62 cents, heating oil be 37 cents, and the cost be 17 cents.
4,993,200 X .74 X .62 = $2,292,531.80 for diesel
4,993,200 X .24 X .37 = $443,715.84 for heating oil
4,993,200 X .17 = $848,844 cost of waste oil feedstock
Summing up we get $1,887,403 before overhead and taxes.
Let's subtract $387,403 for overhead and clear $1.5 million. Divide by 7 million shares and get 21 cents a share per year before corp tax for every machine GRNO sets up and operates on its own.
REVENUE ESTIMATE FOR MODEL 400
I discussed the possible potential earnings of the Model 600 above. That is the one that interests me the most, but could have left the impression that the 600 was the only one to be placed by the fantasy operations division of GRNO. If it seems that is the case, I must correct that. If I didn't, the guilt would corrode my soul.
Large areas of the USA are like my area of Florida, lightly populated with towns of suburban sprawl. GRNO makes the Model 400 for these areas to reduce the cost of feedstock transportation and to make unit placement more likely. The Model 400 processes 2/3 of the feedstock of the 600.
Previously, I calculated the gross profit from the waste oil processed by the Model 600 to be $1,596,441.60. Scaling that number by 2/3 reflects the number expected to be realized by the Model 400, which would be $1,064,076. Subtract $364,076 for miscellaneous operating and overhead costs leaves $700,000. Dividing by 7 million shares leaves 10 cents a share annual earnings for this Model 400.
INCREASED ESTIMATE FOR MODEL 400
Continuing with another daydream about oil processing, suppose we increased the product yield and operating uptime for the fantasy 400 as we did with the Model 600.
Previously, I said, "Summing up we get $1,887,403 before overhead and taxes." This was for the Model 600. Scaling this number by 2/3, we get $1,258,268.70. Subtract $348,268.70 operating and overhead costs leaves $910,000. Dividing by our supposed 7 million outstanding shares equals 13 cents a share annual earnings.
REVENUE ESTIMATE FOR MODEL 1000
I have discussed the Models 400 and 600 in previous posts, leaving the Model 1000 for last. Large urban areas such as south east Florida generate vast quantities of waste oil in a relatively small area. In addition, many of these large urban areas are located near deep water ports, with their large ocean going ships bringing feedstock and eventual markets for product. I talked to an oil recycler down in South Florida who is developing a 20 acre patch and plans to bring oil in by rail car.
The Model 1000 is designed to serve such large, densely populated areas. In making money as a waste oil processor, it is configured to kick some serious butt.
I calculated the gross profit from the waste oil processed by the
Model 600 to be $1,596,441.60. Scaling that number by 10/6 reflects
the number expected to be realized by the Model 1000, which would be $2,660,736. The fixed costs of this machine could conceivably be a little more to reflect the higher rent because of the urban area and also for the larger storage tanks. Subtracting $460,736 leaves $2.2 million and dividing by 7 million shares gives us 31 cents a share for the Model 1000.
INCREASED REVENUE ESTIMATE FOR MODEL 1000
Suppose we increased the product yield and operating uptime for the fantasy 1000 as we did with the Model 600 and Model 400.
In estimating the revenue from Model 600, I said, "Summing up we get $1,887,403 before overhead and taxes." Scaling this number by 10/6, we get $3,145,671.70. Subtract $485,671.70 operating and overhead costs leaves $2,660,000. Dividing by our supposed 7 million outstanding shares equals 38 cents a share annual earnings.
CONCLUSION
What I have done above is just some fantasy estimates of possible earnings using numbers taken from the GRNO web page. None of this has been reviewed by any GRNO insider nor have I asked them to. I did this to indicate my picture of how the operations side of GRNO could be once it is set up in coming years.
Charles |
