State of the Nation
by E. W. Phares II
Our Company continues to have an excellent fiscal 2007 with sales for the first three quarters of close to $300,000 ahead of plan. Our pretax income is slightly behind plan but over $100,000 ahead of last year.
All of our operations are doing well. It is a pleasure to report that Penetone now has eight consecutive months in the black. This reverses a trend of losses of over three years. It is most gratifying to see that all of the hard work done by the Penetone team has paid off. We are still running behind where we need to be but all areas are improving with continued excellent results in military, pipeline cleaning, and pulp and paper. The best indications are that we should continue this trend for the rest of 2007.
Sales continue well at West Canada, and we are 7% ahead of plan in operating income and well ahead of last year. All areas of West Canada continue to be strong in comparison to last year with significant increases in supermarket sales and sales to the swine industry.
R&M Chemical is, unfortunately, running behind plan but approximately equal to last year. The considerable drop in gas prices has reduced the rigging in Western Canada, primarily in the tar sands field. This has had a significant impact on sales developments within R&M. There are strong indications that this trend is beginning to reverse itself as we get into the colder weather. We are anticipating that the fourth quarter should be a nice improvement.
Petron sales continue nicely ahead of both plan and last year. Sales are approximately 8% ahead of plan and operating income also is ahead of plan by some 10%.
Preliminary indications are that this trend will continue since there has been no sales drop-off in China or India. Presently, the market continues quite strong in the U.S. and our sales to the other markets in South America, Middle East, and South Africa also continue well.
Preliminary indications are that our fourth quarter will continue to be on the same track as the first three quarters. We are fully anticipating that 2007 will be another record year.
Mining Boom Bodes Well for Petron
By John McHale
Petron Corporation has just completed the 10th month of our fiscal 2007 and we are on track to set our 5th consecutive year in a row with record sales, profitability and safety.
We are 7.8% ahead of 2006 sales YTD and we are 12.3% better than the 2006 net income YTD.
There is no doubt that this is a fortuitous time to be in the mining related business. Every sector of mining that we sell to is operating at full capacity. Almost every metal and mineral industry is selling its product for record profits and previously shuttered operations (some having been shut down for over 10 years) are now being brought back on line to meet the worldwide demand. No one knows for sure how long these good times will last, but when you look at the growth that is occurring in locations such as China and India you can confidently say that for the next several years demand for mining related products will remain strong.
We have also been aided by a relatively calm base oil market. We have had a couple of base oil increases in 2007 but this is nothing compared to 2005 and 2006 when we were getting 7-8 price increases per year from our oil/additive suppliers. Although I have to admit, it is a bit mystifying why 2007has been so calm when as of yesterday crude oil was selling for $81.10 a barrel. I expect another round of price increases are just around the corner.
We are continuing to add new distributors in key strategic locations throughout the world and we are adding additional Petron personnel to help sell and service this new business.
Our new plant expansion is up and running and just in time to meet our latest up tick in business. In addition to the plant expansion, we have just added a new truck dock roof to our bulk unloading area as well as spending capital to improve product/traffic movement through our manufacturing facility.
We have just completed 2,829 days (7.7 years) without a reportable lost time accident. Congratulations to all of you for making safety your number one priority. This is a terrific accomplishment and you should all take pride in knowing that you helped contribute to this record.
I want to take this opportunity to thank everyone at Petron for their commitment to growing the company in a safe and profitable way. In addition, I want to thank all of our customers and suppliers for all of their support and loyalty.
Sales Updates
By: MikeBradford
Military/Aerospace Sales are on a Roll
As we begin to close out 2007, we are happy to report how well our Military/Aerospace sales are performing. We will finish well above plan and last year for the third straight year. A lot of hard work has been focused on developing our partnerships and keeping our raw material costs down to where we can compete for large contracts with the DLA and DOD.
Hats off to the entire Penetone team for contributing to our success. From production, to the lab, to customer service, the team has gone beyond the call to make things happen.
Obtaining re-qualification of our Type IV and Type V products, coupled with additional approvals for our Paint Stripping Technology, and 2008 sales growth will continue at a double digit pace.
Pipeline/Petrochemical Sales Continue to Grow
Additionally, we are happy to report that our Pipeline/Petrochemical sales will also finish above plan and well ahead of last year. This is a result of the DOT mandates finally taking hold in the Pipeline Integrity Programs throughout the US, and a new relationship with a Distributor in New Jersey who is now supplying our products to Saudi Arabia and India for Gas Path Turbine cleaning in the Oil fields. We anticipate double digit growth in these Industry segments for 2008 and beyond.
Overall, we are very excited for what 2008 holds for Penetone. It s an election year, so we do not anticipate an economic downturn, and with our partnerships developing, 2008 should be a great year!
West Penetone's "Green" Line Ready for Launch
By Pierre Stewart
After over 18 months of formulating, research, and testing, our "Ecologo" line of products is finally ready for market. One of our major customers, the Sobeys supermarket chain, is becoming more environmentally conscious and wishes to use "greener" products in their cleaning program. We have responded by coming up with an impressive product line-up and having it ready for when they decide to ultimately go "green".
We have set up a new product division called "Bio-Logic" for which these Ecologo products are included. In this line we have a dish detergent called Bio-Dish, a window cleaner called Bio Sparkle, a biologically based degreaser called Bio-Eze B and a neutral degreaser called Bio-Eze 3. There is also a trash compactor deodoriser which we named Bio-Compact-R and a bacteria based grease trap digester called Enviro-Trap. We are also putting the finishing touches on an Ecologo approved disinfectant which we call Bio-San. That product is currently in the submission process for a Drug Identification Number (equivalent to an EPA registration). We are hoping to obtain full approval for Bio-San by early 2008.
We will be making a full presentation of our new line to Sobeys in early November and are starting to put out feelers elsewhere to see if there is a market for these types of products. We believe there is a great interest for Ecologo cleaners, especially in the institutional field. With the recent restrictions on NPEs and phosphates coming into force, this interest will only get larger with time.
There are stringent requirements to be eligible for the Ecologo. The product must be third party tested for cleaning performance, biodegradability and environmental toxicity. After the product passes those tests, the supporting documents and a product label are submitted to Environment Canada's licensed marketing firm, Terrachoice Environmental Marketing, which is the sole company authorized by Environment Canada to evaluate applications and issue the Ecologo. Having the Ecologo proves that you have a product that is not only "green" but can actually work too. That can give us a big advantage over competitors who try to push products while making vague claims that their stuff is "environmentally friendly" or "biodegradable". We can now tell them to prove it - Where is your Ecologo?
Business Planning Process
By Bruce Muretta
It may appear that business planning is haphazard and reactive with success resulting from vague luck. To that end it is often said "I'll take luck over skill any day." True success in business requires research, experience and planning culminating in the diligent execution of the developed plan. This planning process is the engine that drives the Penetone/Petron companies.
The process begins with long range planning where our strengths, weaknesses, opportunities and threats are identified. Using this knowledge we map out an overall plan to achieve success over a three to five year period. This procedure requires meetings of individuals from all areas of the company to accomplish this challenge. Here is where creativity, experience, and an exchange of ideas are fostered into a final result.
The next step of the planning cycle is the formulation of the above ideas into a more finite, exacting profit plan which serves as a road map for the next year. Here precise action plans are formulated to guide activities. Sales, expenses and capital requirements are reviewed and quantified into a yardstick to measure progress.
The process succeeds with diligent efforts and quick reaction to the daily changes that occur throughout the year. In the end luck becomes the residue of hard work.
New Hires
We welcome to our organization the following employees:
- William Dodd, Jr. - Production Supervisor, Petron
- David Lefaivre- Purchasing Agent, Petron
- Rosalie Stang -Customer Service, West Penetone
- Rafael Villagomez- Packager, Petron
Service Awards
Celebrating service milestones this year include:
- Roslyn Lutt - 10 Years Legal Secretary - Corporate
- Armando Munoz - 3 Years Sales/Service - Petron
- Paul Hayden - 10 Years Sales Mgr - R&M
- Jim Mckay - 3 Years Sales Rep - West Penetone
- Julie Pantano - 3 Years Customer Service - Penetone
- Elisa Pieroni - 3 Years Q&T Director - Petron
- Patrick Lalumiere - 5 Years Controller- West Penetone
- Luis Suruy - 20 Years Maintenance Mechanic - Penetone
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