State of the Nation

By E. W. Phares II

The company has now completed the first quarter of fiscal 2012 and I’m most pleased to report we finished the quarter close to plan. Sales were approximately 3% below plan but pre-tax income was 5% ahead of plan.

Penetone sales, although ahead of last year, were unfortunately well below plan for the first quarter. The core business has been negatively affected by the economics in the pharmaceutical and printing markets. Pulp and paper sales also have been well below plan due to formulation changes which have now been completed which will greatly enhance our sales going forward. Transportation has come back very strong and is looking very good for the first quarter. Military sales are below plan due to the lost business that we are incurring in the Army at the Anniston Base because of the curtailment of the Middle East activities.

Although the first quarter at Penetone was extremely weak, we are quite bullish about going forward with the increase in the oil and gas fields as well as new approvals of our pulp and paper products plus a considerable drop in the raw material costs.

Sales in Canada were nicely ahead of plan as well as operating income. In spite of the soft economy in Canada we are doing extremely well, especially in the West Coast where we have added excellent new accounts in the tar sand field. These sales coupled with strong sales in the supermarket area, even though we lost the main contract, have caused these beneficial results. All other markets are equal or ahead of plan and we anticipate a strong second quarter.

Petron had an excellent first quarter with sales ahead of plan, and our operating profit 6% ahead of plan. All areas of Petron are doing well with continued growth in China and India. Sales in the U.S continue to grow at a nice pace; adding new accounts not only in the steel mines but also in coal operations.

The second quarter looks quite promising for the total company and we fully expect to be equal to or ahead of plan by the end of the first half of 2012.

May I take this opportunity to once again congratulate the West team on the excellent job that is being done.

Emerging Technologies is Foundation for Growth

By Paul Hayden

We all have heard about ultrasonic cleaning which is most commonly found in jewelry stores, for dentistry applications and some surgical instrument cleaning processes. The industrial side of ultrasonic cleaning has been rather small in comparison, mostly because upscaling the ultrasonic equipment has been a difficult process. A company out of Fort McMurray, Alberta, named Tech Sonic Services, has managed after much research to achieve commercialization of ultrasonic cleaning technology. Tech Sonic Services required a “chemistry” partner willing to do some research as well as to produce an acceptable ultrasonic cleaning fluid; this is where West Penetone fits into the picture. We have the facilities to create and supply ultrasonic cleaning fluids and we have done just that.

Starting with what Tech Sonic Services was using from another company, West Penetone researched a replacement product we called Sonic Wave, effectively achieving step one. Step two was to improve certain criteria about Sonic Wave and this led to the creation of Sonic Wave Plus. Sonic Wave Plus is the latest version in the Sonic Wave family of products and includes several additives for enhanced cleaning of all types of metals including non-ferrous metals. The outlook for Sonic Waver Plus is very promising in terms of performance and overall value.

The market globally for ultrasonic cleaning is immense with some estimates in the hundreds of millions of dollars. While this figure is high in terms of potential growth, just a fraction of that figure would mean significant growth for West Penetone. To date, West Penetone has participated in three overseas projects in the European Market with mixed success. The ultrasonic market in the target area of petrochemical cleaning is still in the development stages, however the potential is great.

At home here in North America and abroad, ultrasonic technology is just beginning to take off as an emerging technology and new applications are being found every day. With our client on the cutting edge of a new cleaning technology and West Penetone the exclusive supplier, we are in a very good position to realize exponential growth of the new ultrasonic technology for cleaning. If any of you, our West Penetone employees, have clients with problem items to clean, give us a call here in Edmonton. We may just be able to help you and your client solve a difficult cleaning problem.

New Venture in Australia

By Dave Brealey

Petron Corporation has been active in Australia for many years through re-branded third party sales. Recently a distributor was signed on to distribute Petron products throughout Australia opening the door for our products and high potential for the coming months and years.

Lubes Direct, a New South Wales located company operated by Don Mcrae and his two sons Robie and Stewart, shows ideal commitment and attitude to get the job done. Their strategic locations around the country and personnel add the required technical expertise and mentality required in this niche business.

Australia for Petron is a golden opportunity due to its vast mining operations in both hard rock (gold) and soft rock (coal) industries. Dragline and shovel applications are some of the highest concentrations you will see anywhere in the world and offer tremendous opportunity not only for our core products, but also for our second tier products which have shown great success in South America under similar conditions.

A recent visit to this mostly wild yet friendly country brought home the enormity of the task at hand entering a market with an unknown brand and products. Relationships however built over the past 18 months to two years in the USA with a major OEM in the shovel and dragline market will make life a bit easier for the guys at Lubes Direct.

During the visit we travelled around Australia introducing ourselves to the different OEM offices, distributors and dealers collecting contact details for end users to try and kick start our venture in Australia.We look forward to a long and successful business relationship with Lubes Direct.

A side opportunity is to assist the third party in Australia to sell more of their product with our technical service capabilities. This will open doors that were previously not available to the third party and offer another opportunity for substantial growth, all in all this could be one of our larger markets in years to come.

New Animation Unveiled at Conference

By Mike Bradford

In February, Penetone attended the annual Pipeline Integrity Conference in Houston Texas. Attending were Jimmy Hassell, Mike Bradford and Bruce Muretta.

This conference is the biggest and most important show of the year for Penetone regarding the Pipeline Industry.

The picture below shows our new Booth with back lighting and a glimpse of the 50 inch HDTV presentingthe new Pipeline Cleaning Animated Video.

Our Booth and Animation were a big hit at this conference. It illustrated our up to date technology with a dynamic flair.

We received many compliments for our display but more importantly, our existing and potential new customers were very impressed. We were able to solidify several new leads and actually close on 2 Pipeline projects which resulted in over 100k in new business.

Thanks to Josee Mecure (West Penetone- Montreal) for her creative design for the Booth and to Petro Pages in Houston for their excellent work on the Animation.

Petron Conference Room Remodel

By Barb LaFond

A remodeling is underway at Petron. The main conference room has not been updated since Petron bought the building in 1997. Since the purchase, the room has aged, and it was time for a face lift. The remodel was needed not only from a corporate image stand point but from a technology stand point as well.

The remodeling will include a new ceiling, lighting, paint, carpeting and window treatment. The room currently had dark wainscoting that made the room look smaller and confined. With a fresh coat of paint and new ceiling the room will be brighter and look larger. New lighting will eliminate glare issues and dimmer switches will enable certain lights to remain on while projecting items from a laptop onto the new monitor.

There will no longer be a need to set up a projector on the table to transmit presentations from a laptop to a white board. Power, video, audio and phone service will all be within arm’s reach from a receptacle located in the middle of the table. A new LED TV Monitor will be installed and with one hook up, will effortlessly show presentations from a laptop computer.

A large Petron logo will be put on one wall to further enhance and project our corporate image. A small service counter, shelving and refrigerator will put beverages within arm’s reach when conducting meetings with customers without having to interrupt the meeting to go to the lunch room to get them. The new room will keep Petron on the cutting edge well into the future.

As of this writing the expected completion date of the project is April 30th.