Trade Alert: EcoBlu Products, Inc. (OTCBB: ECOB) – Value Alert
Written by John Pentony on September 29, 2009
EcoBlu Products, Inc. (OTCBB: ECOB)
EcoBlu Products, Inc. is the premier manufacturer of proprietary wood products coated with an exclusive non-toxic, eco-friendly chemistry that protects against mold, rot-decay, termites and provides value added fire protection.
The Company is positioned to take advantage of the following market realities:
- A rapidly increasing demand for eco friendly homes at the top of the market
- A rapidly regulation and litigation confronting builders homes attibutable to preventable damage including moisture, rot and termites
The current downturn in residential construction provides an excellent opportunity to introduce EcoBlu Products — and that is precisely what they have done.
EcoBlu Products Overview
The family of EcoBlu products includes:
- Dimensional lumber
- Joists
- Beams
- Rim Board
- Sheathing
- Trim
Wood components and engineered wood products are manufactured and coated in the California and Texas facilities for distribution throughout the United States and for export.
EcoBlu coatings are GreenSpec listed which makes this choice an environmentally sound building decision.
EcoBlu will offer builders engineering services and framing labor as part of the value package.
These services are provided by outside firms who’ve contracted with the Company at specific rates. The engineers are located at EcoBlu facilities in CA and TX.
These outside services will bid with the Company when formulating a package price to the builder, but invoice the builder separately once the project is completed.
Wood is a shippable commodity within the industry. The California and Texas locations easily service the United States areas involved in the maximum amount of wood construction.
Lowe’s as Client
- EcoBlu has filled a void in Lowe’s business
- EcoBlu is selling dimensional lumber and OSB panels to big box retailers, Lowe’s in particular
- The Lowe’s inventory replacement rate is positive, with some stores replenishing stock at 50% of inventory monthly
- Solid and predictable revenue growth is anticipated
EcoBlu Contributes to Lowe’s New Builder Strategy
Lowe’s has historically been at a disadvantage when servicing contractors because it is unable to provide a complete wood product package.
Lowe’s loses contractors to smaller wood product companies that provide engineered wood products including tursts and joists.
Ecoblu Product is fundamental to Lowe’s new strategy to boost contractor sales in this area.
Currently, builders and contractors are reluctant to purchase dimensional lumber in large quantities from Lowe’s because the retailer cannot provide an entire framing package. Trusses, joists and other engineered wood products have to be ordered elsewhere.
This creates a situation in which the pricing advantage that Lowe’s might have over small, local lumberyards is compromised because these yards can offer the builder a complete package from a single source.
Lowe’s can now begin to compete directly with the smaller lumberyards because EcoBlu has agreed to provide coated joist, beam and rim board along with coated dimensional lumber.
Two EcoBlu Facilities Located in Southern California and Texas
EcoBlu Products currently provides coated and protected engineered wood and dimensional lumber through two impressive facilities in Southern California and Texas.
- In Colton, California, its rail-accessible facility includes an 80,000 square-foot center housing manufacturing, sales and administration offices, adjacent to a 25-acre covered lumber yard, one of the largest in California.
- In Prosper, Texas the company has an 18,000 square foot facility housing its manufacturing, sales and administration offices, adjacent to a 3.6-acre distribution center.
EcoBlu Products Texas Facility
Activity at the EcoBlu Products Texas facility has been increasing since its opening in July. The Company is projecting revenues from the Texas plant to be approximately $10 million in the next twelve month period. Due to its central location, coating services performed at the new Texas plant will reduce shipping costs and increase production efficiency for customers.
Business with national accounts including Tuff Shed, Inc., the largest manufacturer and installer of storage buildings and garages in the United States. This and other business is driving revenue in the Texas facility
- Texas facility recently completed a 6,000 square foot home for MASA Homes in Fort Worth with an additional five homes under construction
- The first order for Universal Forest Products was the coating of approximately 150,000 board feet of lumber utilizing Eco Blu Products BLUWOOD(TM) Technology
EcoBlue Products Projected Revenue
EcoBlu expect to coat more than 77 million board-feet (BFM) of dimensional lumber and roof truss in Year One of operations. They also plan to additionally convert roughly 70 million board-feet of raw lumber and panel into floor joists and lam beams, also coated with EcoBlu branded chemistry.
Year One revenue projections are built on two primary sources – production builders of single and multifamily residential dwellings, and big-box retailers, specifically Lowes. Builders are purchasing packages composed of dimensional lumber, trusses, joists, rim board, beams, trim, etc., specifically configured to their blueprints. Retailers are buying a handful of items, mostly 2×4 studs and OSB panels for small contractor jobs or DIY homeowners.
However, retailers will buy these select items in large quantities. Builder packages presume 75% of total Year One revenue, while retailers will generate 25% of revenue, based on current sales ratios.
Year Two could see the Company expanding on two additional fronts – mills or EWP manufacturers who may cooperate with the Company to offer coated lumber and/or engineered wood products in their own geographic markets; and, additional items such as joists and beams are added to the retailers’ inventory. It’s possible that direct to builder package sales will shrink as a percentage and that cooperating distributors/manufacturers will grow more rapidly. Therefore, the percentages may be accorded thusly – 50% builder sales, 20% distributors/manufacturers, 30% retailers, as overall revenues increase.
Year Three planning calls for direct selling of chemicals and coating equipment to mills, EWP manufacturers and independent coaters in the US and elsewhere.
Here again, the mix of channels may change, with chemical and coating equipment sales contributing 10% of revenue, 40% direct to builder, 30% to mills and manufacturing partners, and finally 20% to retailers.
Year Four is an incremental extension, pending an acquisition, merger or strategic partnership. Single-family custom residence utilizing coated lumber and engineered wood products
Individual Profit Centers
EcoBlu operates as a chemical manufacturer, a coatings facility, a lumber distributor and an engineered wood products manufacturer, each activity functioning as an independent profit center.
Each reports independently so that cost controls and performance can be carefully monitored.
These profit centers are supported by a corporate administrative function, coatings technical support, construction engineering, cut-and-pack lumberyards, and laboronly framing services. Therefore, upon funding the Company will commence to operate:
- One wood coating chemical manufacturing facility, CA
- Two wood coatings facilities, CA and TX
- One engineered wood products facility, CA
- Two cut-and-pack builders’ lumberyards, CA and TX
- One lumber distribution enterprise, CA and TX
Together, these profit centers and support activities create the value package that provides production builders with a competitive per-square-foot cost to include EcoBlu coated lumber and engineered wood in their new homes.
The operating efficiencies and internal discounting of what are usually separately owned and operated businesses help to create the pricing advantage.
Profit and Cost Centers
The EcoBlu chemical manufacturing division sells its chemistry to the EcoBlu coatings services division, which in turn sells its coating labor plus the cost of the purchased chemistry.
The EcoBlu lumber distribution business pays the coatings services division to coat dimensional lumber and panels purchased directly from a lumber mill.
This coated lumber is transferred to the two Company-owned lumberyards, which then resell the dimensional lumber and panels to the builder or retailer after applying some of their own value-added services.
The EcoBlu engineered wood products division operates similarly. It buys raw lumber from the lumber distribution business, internally manufactures the joists or beams, and then pays the coatings services division to coat the products before they are transferred to the company-owned lumberyards.
The coated engineered wood products are then packaged with the coated dimensional lumber by the lumberyards and sent on to the builder. The engineered wood products division also has the option of buying engineered wood products from other sources, bringing it in-house for coating only, and then selling it to the company-owned lumberyards. The cost centers provide services to the enterprise, ranging from quality assurance to financial reporting, from sales to in-house engineering support.
EcoBlu Wood Coatings
EcoBlu Wood Coatings EcoBlu has licensed the non-toxic, environmentally friendly wood coatings chemistry developed by Brichard, Inc., of Dana Point, CA.
This exclusive license allows EcoBlu to manufacture chemicals, provide coating services and sell its own line of coated lumber and engineered wood products to the construction industry and the DIY market and includes a compatible, non-toxic flame retardant coating.
In order to stimulate rapid adoption of these coatings, EcoBlu will offer production and custom builders a comprehensive value package of coatings, lumber, engineered wood products, framing labor and engineering services within the price range of typical uncoated lumber and labor costs. Further, EcoBlu will offer an unprecedented limited lifetime warranty for its coated lumber and engineered wood products.
Also, EcoBlu coats lumber and panels sold to retailers with Bluwood, a similar coatings product for which it also holds a license. Bluwood coating does not contain an effective fire retardant. These are products intended for the DIY market and are price-positioned against competing brands.
Whole House Wood Protection
EcoBlu is committed to providing a whole home system of value added fire, mold, wood rot and insect protection of all wood components for homebuilders, remodelers and homeowners.
Wood may be the most environmentally friendly material available for building homes or businesses.
Non-wood products are environmentally expensive. The supplies of ores and petroleum for their production are finite; once gone, they are gone forever. Wood, on the other hand, is a renewable resource. Non-wood products require far more energy to manufacture than wood: for example – nine times as much for a steel stud as for a wood stud.
Wood is reusable, recyclable and biodegradable. Inorganic materials not only require excessive energy to produce, but also to recycle or dispose of when their use has been terminated.
Growing just one pound of wood in a vigorous younger forest removes 1.47 pounds of carbon dioxide from the atmosphere and replaces it with 1.07 pounds of life-sustaining oxygen. Carbon dioxide accounts for about half of the world’s greenhouse gases, a contributor to global-warming.
EcoBlu Products Are Green
EcoBlue products are coated with a non-toxic, eco-friendly solution that has less Volatile Organic Compounds (VOC) than a can of soda!
- EcoBlu Products protect against termites. The harmful chemicals and gases which kill termites and other insects damage the ozone layer faster than automotive exhaust.
- Wood is proteected from loss to mold and wood rot.
- EcoBlu coatings are non-toxic and will not leach into the ground water.
EcoBlu Product’s Gaining Media Attention
Fox 5 San Diego TV news report. A homeowner who lost his house in the 2007 San Diego wildfires rebuilt exclusively using EcoBlu wood products protected with BLUWOOD(TM) technology and AF-21 fire inhibitor to help prevent another loss to fire. BLUWOOD(TM) coating also protects wood from mold, rot, decay, and termites.
With wildfires raging in Los Angeles County and three other counties, Gov. Arnold Schwarzenegger declared a state of emergency. The fire, which is 22 percent contained, has destroyed 62 homes, three commercial properties, 27 other buildings and has forced thousands of people from their homes.
Extreme Makeover: EcoBlu Products protected with BLUWOOD(TM) technology were used in the construction of a home on the hit ABC television show Extreme Makeover Home Edition. The episode featured BLUWOOD(TM) coated lumber that was used to frame the entire home. EcoBlu wood components protected by BLUWOOD(TM) technology resist mold, rot and termites.
The episode featuring EcoBlu’s BLUWOOD(TM) treated lumber was centered on Connie Chapin of Seattle, Washington. “A hard working single mother and avid swimmer who turned her backyard swimming pool into a much needed community resource.(1)” Unfortunately, her home was on the brink of collapse. Despite the rainy weather, Ty and the gang were able to come to the rescue building the Chapin family a new home.
To view the Extreme Makeover Home Edition video on YouTube go to:http://www.youtube.com/ecobluproducts#play/all/uploads-all/1/n6INjD-FRWQ
Brad Pitt Make It Right Foundation: EcoBlu Products were used by Global Green House USA and Brad Pitt’s Make it Right Foundation to rebuild homes in the Lower 9th Ward in New Orleans destroyed by Hurricane Katrina. The BLUWOOD(TM) technology was chosen because of its resistance to moisture, mold, fungus, rot and termites; all serious problems in the region. The mission of the Make it Right Foundation is to be a catalyst for redevelopment of the Lower 9th Ward, by building a neighborhood comprised of safe and healthy homes with an emphasis on a high quality of design, while preserving the spirit of the community’s culture. The first eight homes out of a planned 150 have been completed.
EcoBlu Management
STEVE CONBOY, President and Chief Executive Officer
Steve has over 30 years of experience in the framing, engineered wood products, and lumber industry. Following 17 years of framing he went to work for Trus Joist, Weyerhaeuser. During his tenure with Trus Joist Steve was transferred to Las Vegas to convert the market from Open-Web joists to I-Joists.
The successful conversion process required extensive training of the carpentry and mechanical trades in the proper installation and penetration of engineered I-Joists. In 2001 Steve started Framers Choice Inc. in Las Vegas, Nevada. FCI teamed with Nascor products to capture the I- Joist market in the Western United States. Steve’s successes lead to an opportunity in 2003 to merge his company with that of a large lumber and engineered wood products manufacturing company. Steve’s framing background and engineered wood experience were applied to create the Wide and Deep floor system.
Steve’s creation provided his customers with better performing floors, lower building cost and reduced cost of ownership for the homeowner. Steve’s desire to expand the company’s vision beyond floor joists and beams led to his buy out in September of 2005. Free to fulfill his vision of building a company to supply the whole framing package, Steve revived Framers Choice, Inc. (FCI) in December of 2005 and opened his technical office in Ontario, CA in March of 2006. Steve defined and branded his whole framing package as the Frame Right System in the spring of 2006.
Steve’s blog can be read here.
MARK VUOZZO, Chief Operations Officer
Mark started his career working in the semiconductor industry supporting Automated Test Equipment (ATE). After a few years experience Mark joined LTX Corporation, an ATE company, as Field Service Engineer. Mark worked for LTX Corporation for several years including the position as an international Field Engineer based out of Woking, England. Mark left LTX to start MV Technical Sales, LLC which grew into a large international company producing revenues in excess of $25 million annually. MVTS has several offices worldwide with a total employee count over 150 people. In 1999 MVTS was able to acquire the rights to the LTX product lines and became the only Authorized Reseller in the ATE industry. In 2006 Mark sold his interest in MVTS to Babcock and Brown, a publicly held company.
Mark was introduced to Steve Conboy in November, 2006. Steve was seeking funding and expertise to assist him with the growth of his company Southern California Bluwood. After several months of working with Steve, the two joined forces to create Framers Choice, Inc. As COO Mark will be managing the day-to-day activities of the Company and be responsible for the development, design, operation, and improvement EcoBlu systems and strategies.
Based near San Diego with corporate offices in Carlsbad, California, EcoBlu Products, Inc. is a public company traded on the Over the Counter Bulletin Board Exchange (OTCBB) with the ticker symbol ECOB.
Advisory Team
Fabrizio Balestri As the Chief Operating Officer of Lorica International Corporation,
Fabrizio Balestri is seeking to make his fourth start up company as successful as the other three by introducing a new fire-resistant technology into the textile marketplace.
Dan McKenna, JD, RPLU
Mr. McKenna has been a member of the California State Bar since 1981. He gained his Registered Professional Liability Underwriter (RPLU) designation in 2002.
Ken McClelland
Mr. McClelland graduated from the University of British Columbia with a Bachelor of Applied Science in Mechanical Engineering and has spent twenty-plus years in the lumber industry, mostly in manufacturing, sales, marketing and building products distribution.
EcoBluProducts, Inc. Videos:
EcoBlu Products, Inc.
1869 W. Littleton Blvd.
Littleton, CO 80120
Phone: 303-738-8994
Colton, CA Facility
EcoBlu Products, Inc.
1280 Jefferson Lane
Colton, California 92324
Phone: 909.825.5005
Fax: 909.825.5055
Texas Facility
EcoBlu Products, Inc.
300 McKinley Street
Prosper, TX 75078
ABOUT ECOBLU PRODUCTS, INC.
EcoBlu Products, Inc. is a manufacturer of proprietary wood products coated with an eco-friendly chemistry that protects against mold, rot, decay, termites and value added fire. EcoBlu products protected by BLUWOOD(TM) technology is the ultimate in wood protection, preservation, and fire safety to building components constructed of wood; from joists, beams and paneling, to floors and ceilings. The Company is committed to the development, marketing and sales of environmentally-responsible building materials. EcoBlu products are ready to deliver the winning edge to builders and the environment with its sustainable green product line.
Disclosure ECOB: Pentony Enterprises LLC is STOCKGURU.COM, SHAREHOLDERVISION.COM and STREETRESEARCH.COM. 9555 Lebanon Road; Suite 103; Frisco, Texas 75035. (469) 252-3030. Disclosure: Pentony Enterprises LLC has been compensated 35000 free trading shares froma non-controlling third party for coverage. Pentony Enterprises is not a registered investment adviser or a broker/dealer. Pentony Enterprises LLC makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person, or that an investment in such securities will be profitable. In general, given the nature of the companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree of risk.
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