I think you are mistaken. I think the "lightweights" are trying to get the heavyweight to stop tinkerfarkin' and let them make some money for us. He's tying up the machines.
It should all sort itself out by Q3.
My responses from IR:
My questions:
Q: The issue of the wet plastic and "residual downtime experienced in Q1 2013" for testing HTF being the reasons for Q1 revenues now being forecast to be less than the meager revenues seen in Q4 has left all investors scratching their heads. How could a quarter previously forecast to be CFP have gone so wrong? Two functioning processors and so little revenue? Is it all due to "operational and engineering issues, not issues related with the technology"? Does this mean procuring the right feedstock and having the right engineering processes in place to process that feedstock? It sounded like there was plenty of feedstock
A: We understand the frustration with the way the plastic was handled and we have addressed it internally already. We only had one machine running, #2, for the fourth quarter. We are still attempting to make processor #1 into a revenue center. Feedstock is not currently a bottleneck for us. From our call yesterday:
Subsequently, weather-related issues that caused high amounts of water to enter our plastic storage system made processing of this excess inventory difficult during the Q1 2013. Therefore, our feed rates and fuel production levels suffered in that period, resulting in revenues for the first quarter that will be lower than revenues for Q4 2012. We have fixed these issues and do not foresee a repeat of this situation in the future.
A reminder, though, is that we are making our own path through this emerging industry as we go. We do run into errors occasionally, but what's really important for us is that we don't make the same mistakes twice. We have addressed this issue, learned from it, and put systems in place to prevent it in the future.
Q: Will P1 be used for generating revenue or will it continue to be an R&D unit? There seems to be some disagreement here.
A: It has been modified to work with HTF & plastic mixture. We will try and run it with just plastic until we are permitted for HTF. The goal is to get whatever revenue we can out of machine 1.
Q: John said that P2 stays extremely clean, but also said that it "accumulates residue until the feed has to be stopped and the reactor emptied, resulting in downtime." How long can P2 run without being brought down?
A: This all depends on the feedstock. A usual run is about 140,000 lbs of plastic, resulting in about 15,000 gallons of fuel. Depending on our feed rate, it could go from a couple days to a week. It all depends on the weight of the plastic.
Q: How long is P3 expected to be able to run without being brought down given the addition of the "half-sized kiln to condition and continuously extract the residue from the processor in real time"? Are there any plans to retrofit P2 with the half-sized kiln?
A: We can't make speculations here until we test the machine and get some data.
Q: Will P4 & P5 go into the new building with P3? Is there any outlook for when they will be ready for production? How will their assembly impact the production of P3?
A: We can't disclose this yet, but ultimately, we will go down the path that will lead us to profitability the quickest.
Q: How long is it expected to take to "amend our simple air permit and solid waste 360 permit before we can use heat transfer fluid in production"? We were waiting a long time the last time we needed to amend the "simple air permit".
A: This is up to the DEC, not us. Historically, they have been very expedient in permitting for us.
Q: Based on what has been said it seems the company is at the point of securing reliable sources of processor-ready feedstock and running at full production once P3 is in place? Is there any reason not to expect Q3 to be CFP? Could the installation of P4 & P5 prevent that?
A: Feedstock is not currently a bottleneck for us.
Q: Is there any outlook for when processors will begin to be constructed for the RockTenn Jacksonville site? How will the issues seen in Q1 with wet plastic be addressed when processing RockTenn plastic, especially RockTenn's monofilled raggertail?
A: Right now, profitability is our main priority.
All the best,
Christopher Irons
Corporate Communications & Investor Relations Manager
JBI, Inc.
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