State of the Nation

by E. W. Phares II

We have now completed the first three quarters of fiscal 2009 as of the end of August. It is gratifying to report to you that our sales are only 15% behind last year. However, our pretax income is 23% behind last year.

Although we are behind in plan, in both sales and profits when compared to our industry and the general climate, I'm gratified that we are doing as well as we are. Continued cost control, outstanding purchasing in our raw materials and extremely selective capital investments were the major contributing factors to our results.

Our major negative impact continues to be Petron due to the very weak sales in both the cement and mining industries. We have noticed, however, a slight increase in requirements during the latter part of August and the first part of September and we are optimistically forecasting that the decline in sales have now ceased and we expect that there will be a slow improvement in iron ore needs.

Penetone is doing extremely well when considering the economy and our sales in the pulp and paper, military, and pipelines are ahead of last year. The industrial segment of our business is very, very light which one would anticipate with the economic conditions we are under. We do anticipate however that Penetone will complete the year ahead of both plan and 2008.

Canadian sales have improved dramatically with the recent award of a major tar sand producer who has converted all of his waste product cleaning to R&M. This is a new product developed internally which controls numerous negative byproducts with hydrogen sulfide being the main contributor. We anticipate that this new account will generate outstanding sales and operating profits the remainder of 2009. The supermarket segment and the DeLaval sales also continue strongly, however, as we anticipated, the general purpose industrial sales, especially in Ontario, are extremely weak.

We are forecasting that Canada, due to the improvement in sales in the Western sector of the country, will be nicely ahead of plan and equal to 2008. Our swine development continues in Canada and we are some 25% ahead in sales versus last year.

In spite of the very negative economic environments in both the United States and Canada, we do anticipate the fourth quarter to be close to plan.

Here comes the next Pandemic

Are you ready for the next disease scare? First there was SARS, then bird flu, and now it's the swine flu, or more correctly H1N1, since this current pandemic did not originate from swine (more bad luck for the pork industry as they are getting unjustly blamed for this outbreak).

The hype has already begun and we'll see where it goes. Will it become a genuine worldwide scourge or will it go the way of Y2K? Either way, because scary headlines sell newspapers, we'll likely be hearing a lot more about this for the next few months.

One good thing about scary headlines though is that it can also translate into increased disinfectant sales for us if we play our cards right. This current disease scare has meant a run on demand for hand sanitizers such as Purell, for which the manufacturer cannot make enough to keep up with the demand these days. So now we are also jumping into the fray with our own line of foaming hand sanitizers, one is quat based with benzalkonium chloride as the active ingredient and another is alcohol based. We are also working to get an alcohol based gel, similar to Purell approved over the next few months. Our first major marketing push will be with the quat based version which we have named Saniquat. The reason for this is that we feel that quat based versions work better than the alcohol counterparts, assuming that alcohol based products even work at all. Here are a few facts based on studies comparing the two types:

The leading manufacturer of alcohol-based hand sanitizers claims that their product kills 99.99% of most common germs in as little as 15 seconds. Alcohol-based hand sanitizers dry in 8-10 seconds, and fall below the efficacious concentration of alcohol in seconds. It has been reported that alcohol-based hand sanitizers offer no residual protection, and that if your hands feel dry after rubbing them together for 15 seconds, an insufficient volume of alcohol gel was likely applied. Benzalkonium chloride-based hand sanitizers dry fast, but 10-15 seconds slower than alcohol-based hand sanitizers allowing more than the minimum contact time for complete efficacious coverage, including under fingernails. Additionally, benzalkonium chloride-based hand sanitizers deliver 2 to 4 hours of residual protection.

Published studies report that benzalkonium chloride-based hand sanitizers demonstrated greater sustained antibacterial activity than gelled alcohol-based hand sanitizers that actually became less effective with repeated use and made the skin dirtier, not cleaner due to removal of protective natural skin oils and entrapment of dead skin cells by the polymer thickeners used in the gelled alcohol-based products.

Benzalkonium chloride-based instant Hand Sanitizers are non-flammable, unlike alcohol of course.

We have some major hurdles to overcome. The general public is convinced that only alcohol works and even government agencies such as CDC (Centers for Disease Control) recommend alcohol, not quats, as a preventive measure. This is why we also have the alcohol based versions on hand too, should the pressure to stick with this type be too strong. We are currently marketing Saniquat in various sizes ranging from 75mL all the way to 4 litre refills. For now, our first major push is in hog and poultry barns as well as supermarkets. We will also focus on the food industry once we obtain federal acceptance for use of food plants.

After reading this though, you may want to consider keeping a quat based hand sanitizer on you rather than those fast drying alcohol gels.

2009 Pipeline cleaning sales are flowing

by Mike Bradford

Pipeline cleaning sales for Penetone in 2009 are really flowing. Thanks to several big jobs in Texas and Alaska, total sales this year will finish well above plan and four times last year's sales. One project alone used 17,000 gallons of Citrikleen HD to clean 10 miles of 32inch piping. Needless to say, orders like that do not come across every day, but, by being persistent in maintaining relationships with the Contractors and Pipeline owners, we are ready to bring our cleaning products to the Pipeline, at a days notice. And sometimes, that's all you have to get product to the job site.

Our winning formula is due to many factors. One key factor is that Jimmy Hassell has done a tremendous job in maintaining key contacts, and the rest of the Penetone team has supported the effort, with inventory management and timely deliveries to meet the demands of our customers.

Overall, 2009 Pipeline sales will finish very strong and close to a record, and 2010 should equal or even surpass ‘09 as the DOT mandates get closer for Pipeline Integrity assessment. We are looking forward to some very nice business over the next several years and in keeping our Pipeline sales flowing.

Staying the course

by Antoine Alonzo

A recession puts a magnifying glass on a business, so small problems that were once manageable suddenly become big problems. It doesn't change the rules of the game; it simply makes the fundamentals more important. The economic downturn serves as a wake-up call for businesses that may have become complacent.

Rather than focusing on the economic doom and gloom, we should be looking at the following:

Cash-flow, customer service and marketing are the three fundamental areas that will benefit from close attention.

First, cash-flow. Now more than ever cash is king. Collecting accounts in full and on time is a key element to get us through tough times. While tracking the slow payers and improving cash flow, we should scrutinize all accounts. We need to think strategically about our customers. Who exactly are the best customers? What are their demographics? What are their buying patterns?

Such analysis support another key area of focus: Marketing. Many businesses typically react to weaker sales by cutting their spending on marketing, which can be a mistake. In recession times, the most important thing is to generate new business. Customers are spending less, so more customers are needed. We also need to keep the ones we have, which brings customer service to the fore.

Customer service and sales are like the two sides of a coin. You can't have one without the other. To ramp up sales, we should start with our existing customers. These relationships are the most vulnerable in a down economy, however they can be cemented by providing over-the top service.

Once customer service has been polished to a high sheen, we should market constantly- in a strategic fashion and to a targeted market. Customers in general are on edge and will leave a business for another if you give them a good reason. So customer service can be an effective method of not just keeping great customers, but of attracting new ones as well.

By focusing on fundamentals when the economy turns back upward, business will rise with it.

Customer web based order entry

by Roger Wichner

Petron recently added a new dimension to its customer service. Petron customers now have the ability to enter their purchase orders directly into the SysPro system via the internet. Customers can access the web order entry screen at http://www.petronorder.com. Access to place orders via this site is log-on and password protected and controlled by Petron. Customer access to information is limited to their account information only.

The order entry process is easy to follow and provides the customer the ability to select the products they regularly order, verify their contract pricing and make comments such as rush order requests. Customers are able to view the order prior to submission to Petron. Once their order is entered, Petron provides an order acknowledgement. Customers have the ability to check the status of their open orders at anytime and look up past order history.

Another added feature for the customer is that they can query accounts receivable information for their account. The query will show any open invoices on their account and their due dates along with any recent payments that were received.

Benefits cost

by Kimberly Lyons

The deductions taken out of our paychecks to pay for various taxes, insurance premiums and retirement contributions can add up to quite a large amount for employees. However, in addition to what the employees pay, the company is also paying for these programs, along with others the employees don't see.

1. Taxes – the employer is required to match the employee's contribution to Social Security/Medicare – 7.65%. In most states, it has to contribute to the unemployment insurance fund as well.
2. The company is paying a considerable amount for medical and dental coverage. The company pays on average about 25% of total base salaries of employees covered.
3. The company is required by law to maintain worker's compensation insurance. The annual premium is about $750 per employee.
4. The company matches employees' contributions to the 401k plan – this can be as much as 4.5% of compensation.

These are just some of the benefits the company maintains and some of the costs it bears.

Service Anniversaries

Congratulations to the following employees on their service achievements.

3 Years:
John Wilkes, Francois Richard, Michele D'Alessandro, Pierre Castagne, Edwin Ulin Hernandez, Quinton Lawson, Bevan Bonnett, Greg Cebuliak Emerita Cacheiro

5 Years:
Elisa Pieroni, Tim Rouselatos, Kathy Frato

10 Years:
Pete Boutsikaris

25 Years:
Ralph Santoro, Chad Tennant

35 Years:
Doug Garnsey, Ossene Jean-Baptiste