5 MORE QUESTIONS AND ANSWERS with BENJAMIN COWART - CHAIRMAN AND CEO, FOURTH QUARTER 2016
- What is the state of the Company's business, and are you well-positioned to return to profitability in fourth quarter 2016 and 2017?
- At $45-$50 crude oil price, what is your EBITDA goal for 2017?
- How long will it take for the Company to transition to higher-margin products, and what percent of revenue do you expect this effort to yield?
- What percent of aggregated used oil do you expect to make up the Company's category?
- Do you expect volumes to increase enough to keep the TCEP plant?
Operationally, the plants are performing very well. We had a scheduled turn-around at our Heartland facility in November that went smoothly, and we have our next scheduled turnaround for Marrero in the first quarter 2017. With the recent warm weather across the country, we have seen an extended Asphalt and Export season for Used Motor Oil. This has put additional pressure on feedstock supplies for our plants during the fourth quarter 2016. Due to lower-than-ideal volumes, we have had to run the plants at less than optimal production capacity.
In a stable crude environment, our 2017 EBITDA target is $7 million -10 million.
We have already moved some of our products into higher margin.
The higher margin products in the base oil space will take us 9-12 months. Also we anticipate that we will be able to transition 25% of our Heartland finished products into higher margin product streams, and this accounts for 5%-7% of our overall volume.
Self-Collected gallons today are approximately 25% of our overall production. We anticipate increasing this to 30% next year, while we expand our overall production volumes.
At this time, we do not anticipate volumes or market conditions will change enough in the near term to warrant us restarting our TCEP operations.