JBI, Inc
(OTC BB: JBII)
John Bordynuik, CEO
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TRANSCRIPT
WSR: Start off by bringing us up to speed on the recent company developments including your product line of eco-friendly products.
John Bordynuik: We’ve only been trading for about six months. We are a fully reporting company on the — we are just what I call it, we are just visiting the OTCBB exchange. Everyone has to start somewhere; for us, it was the OTC. We are a green company that essentially commercializes disruptive technologies that we mine or develop internally into niche markets with low barriers of entry and then exponential growth. Since the – we’ve only brought this company probably about six months ago, and in that time massed four operating entities. We have about 10 million in revenue now, 22 million in assets. In that time, put together a proven management team, we have 90 employees, we were managing this growth and all without diluting the existing shareholders and while maintaining control. We have validation from a number of sources. We are sole sourced by NASA for our tape reading business. Our P2O fuels are ASTM certified by a national lab for our Plastic2Oil division. Our Pak-It products are used by many big box retailers to clean their own stores like HomeDepot. And in the past six months, we have returned 22 million shares to the treasury and returned many more, and in the end we are setting up a value-based manager in here, the way it should be in every company, which is basically we don’t get paid unless the shareholders gain value. And so far in the last six months, we’ve executed ten out of ten times perfectly.
WSR: What are some of the synergies between some of the products and services?
John Bordynuik: From our operating division — I mean personally, the word “synergies” is an ugly word. Anytime I hear companies use that word at the stock, because our acquisitions aren’t based solely on synergies. So, we make acquisitions based on the barriers to entry or the cost would be — if they are too high if we were to build the entire business ourselves. But, I’ll talk about our various divisions and how we came to acquire them.
We acquired Pak-It in September, which has patents and know-hows that it’s basically where a very high barrier to entry is. So, it’s a water-soluble clean solution that’s distributed in a water-soluble pack, and so essentially we can ship a large amount of chemicals or cleaning chemicals for a very low cost through very high formulations to purify higher concentrations into that packet. We acquired JAVACO as well, which has excellent communications know-how and strong ties to Latin America and South America with offices in Mexico. And JAVACO is our fastest way to get our processors — our Plastic2Oil processors into Mexico. For the Pak-It division, which is essentially the water-soluble cleaning, it also has a bulk chemical mixing facility, and we are using that to actually mix and distribute the catalyst for the plastic to oil. So, I think – – the wholly-owned companies have direct synergies to a business plan, but we really acquired them because of their value and the high barriers of entry if we have to build those businesses from the ground up. I can get into the operating businesses, the cash operating businesses if you’d like that — I can go down that line if you like to explain each one.
WSR: Yes, certainly. That was a good answer regarding the business model.
John Bordynuik: The three cash operating businesses are the data migration business. In that business alone — that’s what started this company off in April essentially I designed and developed tape drives to read legacy media. Original equipment is useless to read the old media. In the end, the client gets a lot of errors, missing data and damaged tapes back. NASA sole sourced us to read their tapes, and we are reading seismic data for big oil and gas now. We’ve also read thousands of the MIT tapes. I’ve expanded that particular division in to fusion microfilm and we’re doing that for both NASA and oil and gas. It really validates what we do. It’s highly profitable and we built our research archive from it. We have the largest engineering research archive on the planet, as I was out buying all sorts of recycled tape and old tape archives back just prior to the Y2K tech bubble. So, that’s basically how we got our engineering archive.
To go on to the next division, which is Pak-It, it’s just — it’s simply amazing. Again, it’s the water-soluble cleaning solutions. We ship HomeDepot stores all the chemicals they need to clean the entire store in a small box versus chemicals shipped for proportionate systems or bulk cleaners. We are 30% to 50% cheaper, we clean better, it’s green and many of the big box retailers and BSEs are using our products. We have 41% revenue growth over the last year in that business alone. We’ve opened the Canadian market now, we’ve started manufacturing in Canada and we are going to retail within commercial ads and retail store space. Pak-It has the bulk-processing facilities again that do mix the catalyst. And our team up here in Canada is actually injecting the automation into the Pak-It facility in Philadelphia and as well here. The Pak-It and P2O niche markets actually offer quite a bold minded business plan to us. They both have shared fixed costs. We can realize economies of scale and scope. We have predictable revenue and exponential growth.
For P2O, which is one division I haven’t talked it, which is probably the biggest homerun of our company, is really in addition to the fixed cost and the clustering capabilities, we have in-house a catalyst, which is key. So, the catalyst that’s now been optimized and developed here basically allows us to convert waste unwashed plastics to fuel. It’s a low initial cost per machine, which approximates around 80K. It can process about 20 metric tons of mixed plastics everyday. We are still at about 125 barrels a day and at the west, WTI the — I think it’s about $71 a barrel right now today. We clear $68 with delivery charges in and the clear is about $2.2 million per site. We are doing that business plan on a mass of land rush with our management team, which is good at high-growth models. So, our plan is to launch 2,500 sites over the next few years. This doesn’t include the best scenario, which is really installing a cluster of processors into an oil tanker. Our greatest, so our greatest barrier at this time is how to deal with a 35% tax that we will be having to deal with on the Plastic2Oil sites. We are working on that now.
WSR: Who are some of your key competitors and what makes your company unique from some of the other players in your sector?
John Bordynuik: Several things — in the data migration field you have ma-and-pa operators with the off-the-shelf drives. We are slowly driving the mode and again being sole sourced by NASA opens a lot of doors for us. So, there isn’t a lot of competition in the tape industry. For Pak-It, because we own the patent, there isn’t anyone that can distribute chemicals in a water-soluble pack with a liquid. That’s something that’s us — our competitors there are obviously Procter & Gamble and JohnsonDiversey. We are displacing their systems in the big box retailers. So, that’s something about our product and we will continue to grow that business. In the plastic to oil there have been – plastic to oil attempts over a number of years, but without a catalyst their business model is doomed to bankruptcy. The catalyst really is what allows us to essentially convert the plastics to fuel. We get a 15% propane by-product, which goes back into fuel the process, and we don’t have huge pollution problems that the other sites would have. Therefore we don’t really have competitors in the Plastic2Oil business. We are specifically looking at a land rush, so it’s more along the lines of how quickly can we get the individual sites financed with state and tax credits to rollout as many as we can.
WSR: Perhaps you can walk us through your background and experience, as well as that of some of the key management team at JBI.
John Bordynuik: Our key management — we acquired most of our key management through the Pak-It acquisition, that was a key to it. Robert Shoemaker has been a banker for many years. He grew a merchant bank in Florida from one branch to ten branches before it was sold. Jeff Weber, is our deal guru. He has audit experience at Deloitte. So, he is an auditor. Dick Haber is a Counsel to the company. So, he’s helping us quite a bit.
As far as myself, my background is I — it’s quite a lengthy background, I was at the legislature for ten years in research and development. I then went out after that in the year 2000 as I said to go and buy tape archives. I was restoring a lot of the old computers for the founders of big software and hardware companies. I was then asked to recover the holy grail of software, which was saved on tapes from Harvard from 1975. When I recovered that, they gave us validation and we went on to read MIT tapes, and then now it’s been NASA and oil and gas. I’ve been primarily involved myself with hardware engineering and growing the tape business.
We’ve been organically growing to a certain point, but now we are in exponential growth. So, it’s a whole new business model and that’s why I needed the new business management team.
WSR: What are some of the goals that the team wants to accomplish over the course of next 12 months?
John Bordynuik: The next 12 months, really our P2Os and third-party validations. Validation is probably a bad word to use here, what it means is, they are putting together all of the analytical data so that our processors can be rolled out as quickly as possible worldwide with the most possible information available for permitting. So, really our plan is — simultaneously we are locking up now JVs, plastic sources and rollout a series of Plastic2Oil processors in large municipalities with proven business operators to grow that business; that by far is our homerun.
The rest of the business, they’re doing quite well on their own. For Pak-It, rolling it out in a retail forum, Canada big box. We want to see that happen in 2010. The tape business, it’s taking the life of its own. It’s gone into film, we’ve come into a whole as you would say an information migration company with not only reading the media but now we have a software that actually preserves and makes it available in a modern format. So, we are growing with oil and gas, and some other big companies. So, all the units are growing fairly nicely, but Plastic2Oil really is what we’re going to be focusing on in 2010.
WSR: The company recently announced some of your conference call with shareholder details and you also reduced your outstanding common shares by 12 million. So in terms of investors, do you believe that the company’s investment story and upside potential are completely understood and appreciated by the financial community?
John Bordynuik: I think it will take sometime to get around and understand why we acquired which entity, what we did. I think I’ve explained what the — to use the word synergies — why we did and what we did. I think the shareholders certainly see that I’m committed to shareholder value. That’s what the key is at the end of the day. They drive us and make us go. I’m only compensated if the company does well and I have returned 22 million shares to date and over the term, over the next few months it’s fair to say I will be returning the rest. In the end, we’re putting in together a value-based management model where we will be based on couple of percent of EBITDA and that’s what management will end up taking home. So, our gains are really based on the shareholder gains.
WSR: What do you believe is missing from your investment story or what do you think that investors better understood would result in higher valuation of the stock?
John Bordynuik: What’s missing in our story is no one knows about us. We haven’t paid promoters. We haven’t gone out in an advertising blitz. We’ve been basically trading on word-of-mouth. I think, when they consider our progress and track records, more and more investors are coming up-to-date. But, the Plastic2Oil and the joint venture rollouts that will certainly drive the stock. It’s certainly getting funds’ attention now, and that I think will drive the stock a lot more.
WSR: Before we conclude, just a rehash, what do you believe are some of the key reasons that an investor should consider JBI as a good long-term investment opportunity?
John Bordynuik: Our track record to-date, our progress, our growth, high innovation technologies that we have in hand. We gain customer and market acceptance quickly even with disruptive technologies, which is generally difficult. We have grown from zero to 0.2 million in less than six months. We are working on uplift now. We’ve a proven track record of increasing shareholder value while decreasing the number of shares issued. Value-based management model; they know I don’t get paid unless they get paid, highly talented management team, profitable P2O and really Plastic2Oil is our homeland. That’s why.