Q3 08 NEW OPPORTUNITIES FOR PROFIT. New Opportunities for Profit Part of the Real Tangible Value Package from Amerimulch

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1 Q3 08 3rd Quarter 2008 Vol. 10, Issue #3 NEW OPPORTUNITIES FOR PROFIT New Opportunities for Profit Part of the Real Tangible Value Package from Amerimulch George Chase Chief Executive Officer It is no secret that the colored mulch industry is facing a severe challenge due to the lack of availability of low-cost wood feed stocks. Because of the poor state of the housing industry, land clearing has slowed to a crawl. Lumber mills are hurting and the general economy is flat. There just isn t a lot of scrap wood being generated. To complicate the problem even more, the record increase in the cost of energy has created competition for wood waste because of its BTU value. In some cases, mulch producers with grinding capability can earn the same margins as colored mulch by selling ground wood directly to pellet mills to fuel home heating stoves or to utility companies to fuel boilers to generate electricity. Contact Us: amerimulch.com At our last Amerimulch Customer Tribute held in October 2007 in Biloxi, Mississippi, Dr. Tim Sydor presented a study CONTINUED ON PAGE 3

2 finished product in addition to more yards on every load leaving my yard. Lenny Neal with Kurtz Bros. in Columbus, Ohio, adds, You can see the finished product is dryer on the stacking conveyor as well as in the finished pile. It is not only dryer but has far improved coverage. This exciting new improvement is available on new ColorTroms, retro kits for ColorTroms in the field and for modified trommels using a Spitfire injection system. Contact Rocky Hatfield at or your territory sales rep for more information. By Scott Thompson Vice President Sales & Marketing A SIMPLE SYSTEM JUST GOT A WHOLE LOT BETTER. The simplicity of operating our ColorTrom created a great deal of interest when it was introduced to the mulch industry. By simplicity we mean no paddles or shafts to jam, no liners to replace on the bellies of the systems that wear out and no mixing arms to replace. It is as simple as keeping a drum spinning. After monitoring the performance of the ColorTrom, we determined there was one significant advantage that was untapped the Extended Retention Time. This extended retention could be of more value with an atomized colorant and water delivery system. The challenge was to provide this system with the simplicity that the ColorTrom demands. Our equipment team (Rick Stoneking, Bill Flynn, Brent McKnight and Kyle Schlegelmilch) worked together to find the solution. The system includes cork screw nozzles that are far more forgiving than current atomizing nozzles. A variable speed water pump and sub tank provide the constant pressure the nozzles require at various production rates. This simple addition has provided significant results. To start the year, we modified a couple of ColorTroms to measure the short and longterm performance. The short-term results were dramatic with water reduction exceeding 20%. The results far surpassed my expectations, commented Scott Lowe from Lowe Products in West Virginia, The biggest value is the reduced drying time required for my NEW OPPORTUNITIES FOR PROFIT (CONTINUED) entitled, Raw Material (Wood) Availability and Industry Trends by Regions. Dr. Sydor summarized his comprehensive report by saying there was plenty of wood supply available; you are just going to have to pay more to get it. Why? Because it is in the form of prime raw timber, not industrial generated scrap. (To view a copy of Dr. Sydor s presentation, please visit our resource blog at amerimulch.com/resources.) One thing we can be certain of is that retail demand for products and services that help beautify gardens and landscapes will remain strong. However, the products and services our industry may offer to the consumer could change dramatically, due to material availability and economic forces. To view a copy of Dr. Sydor s presentation, please visit amerimulch.com/resources From the Amerimulch perspective, we have a vested interest in helping to sustain our customer s and our industry s viability and profitability. For the past year and a half we have been developing new products, new systems and new equipment that provide ways to supplement wood mulch as well as new products that may be used as alternatives to colored wood mulches. As these products complete their development and field tests we will bring them to your attention along with much more information. Our goal is to bring you, our customer, new and profitable opportunities to help you grow your business even through these difficult economic times

3 AMERIMULCH S WEBSITES WHAT THEY OFFER In our continued effort to provide Real Tangible Value to our customers, we have been working diligently to enhance our Amerimulch.com website and to develop our new consumer website, Colorenrichedmulch.com. Each of these sites serves a different purpose, but they work together to supply you with important and useful information. Amerimulch.com is geared to our customers who are producing mulch. Colorenrichedmulch. com appeals to the consumers purchasing that mulch. We want our websites to be the most convenient, easy-to-use and complete sources of information our customers will utilize. One of the new developments on the Amerimulch.com website is our resource blog. The blog allows us to share industry-related bulletins, company news, innovative equipment, market place information and technical data. We have added the Do the Math Spitfire Calculator to the Spitfire equipment page. This allows a customer to enter their site-specific information and, with a click of the mouse, it computes just how much money the Spitfire can save their business! These are some of the newer developments, but we continue to offer our fundamental pieces, from posting a range of used equipment and industry partner information to publishing our quarterly newsletters! We are focused on adding features to make our sites as functional as possible. Later this year and into 2009, we will be adding a reference library to Amerimulch.com. This library will contain condensed versions of our past Customer Tribute presentations that are of high interest. We will also be adding a section, accessible via password, which will publish our customers yield reports, order confirmation or status and inventory control for their sites. Colorenrichedmulch.com, our consumer website, was launched in April and is designed to answer all the questions a retail customer might have about colored mulch. The site provides safety information on toxicity testing and heavy metals. It offers consumers advice on preparing their beds, choosing a color and finding locations that sell Heartland Enriched colored mulch. In the near future, we will also be promoting this site at the garden center level, affording these centers the ability to locate wholesale distributors who produce mulch colored with Heartland Enriched Colorants. Our customers, along with their customers, can benefit by promoting this site in their literature and on their websites, helping to illustrate the safety and quality of the Heartland brand. 4 We want these sites to provide the resources and tools to make our customers businesses even more successful. They are just another example of the Real Tangible Value we strive to supply. We welcome any feedback you would like to share on how we can improve these sites or any suggestions for additional content

4 Industry Partners CONTINENTAL BIOMASS INDUSTRIES, INC. Losing Profits to Diesel? We Have an Electrifying Solution. By: Dave Whitelaw CBI offers electric-driven grinders like this Magnum Force 8400 or diesel-to-electric conversion of grinders like this one. The United States burns more than 4.1 million barrels (over 172 million gallons) of diesel every day. So it s not surprising that when diesel prices surge the price increase significantly impacts the economy. In fact, recent increases cost the US economy about $300 million in extra fuel costs per day. On a corporate level, the increase in the cost of diesel eats into profit margins and this is particularly true in the transportation and manufacturing industries. Those manufacturers performing applications like recycling or material processing rely upon equipment like grinders, chippers and shredders to yield their end product or material that comprises their end product. So, in June of 2008 when diesel topped $4 per gallon, companies employing hp grinders, chippers or shredders using 40+ gallons of diesel an hour were staring at $160 per hour of fuel for a single machine not to mention the cost of maintaining the diesel engines. That s why equipment manufacturers like Continental Biomass Industries, Inc. (CBI), Newton, NH are increasingly moving electric-driven equipment rather than diesel-driven versions of the same machines. According to CBI President, Anders Ragnarsson, The fact is, we ve offered electric-driven equipment for two decades, but the skyrocketing fuel costs have shed new light on this option. In fact, CBI has designed and installed several hundred stationary electric-powered, purpose-built machines and systems in the past 20 years. Ragnarsson elaborates, If mobility is not a necessity and sufficient power is available, our electric-powered machines consistently save our customers over 50% in fuel costs with added savings in maintenance and capital expenditures. The power to run this equipment has to be present or available at the job site. In the past, pulling in the required amount of power to locations off the beaten path was no small feat. However, with the current cost of diesel, the economics begin to look not only doable, but even appealing to manufacturers. Particularly for yard operators, including multiple yard operators who process wood, wood waste and C&D, the operational savings are tremendous. Converting a 1000 hp system from diesel to electric from scratch is a significant undertaking and the manufacturer has to have a clear understanding of what s involved. The conversion itself, including all of the electric motors and controls required to operate the grinding system will cost approximately $250,000. In addition to these costs, adequate power lines and transformers need to be run and installed. This could be another $50,000 - $100,000. A call to your electric power company can get the ball rolling on estimating these costs. So, where does the savings come in after you just spent $300,000? First, examine the electric part. In a recent installation, two 500 hp motors running at full capacity required just shy of 1000 amps. Therefore, a calculation of a 1000 amps, the associated volts, currents and power factor to run a 1000 hp grinder or shredder should be accurate. Depending on the area of the country you are in, electrical power costs approximately 7-12 cents per kilowatt hour (kwh). At the low end of 7 cents per kwh, the cost of running this 1000 hp grinder is under $53 per hour or a whopping $107 per hour savings over a diesel-driven version of the same machine (which consumes $160 of fuel per hour). Even at the high end of 12 cents per kwh, the cost of running the electric-driven grinder is under $90 per hour saving a considerable $70 per hour over the diesel-driven version. While all of these numbers are estimates and machines and motors vary, the potential operational savings of $100 per hour has many manufacturers closely examining this option. It is important to note that conversion is not as easy as simply removing a diesel engine and then adding an electric motor. The hydraulics have to be operated independently with an additional electric motor which may change the way the machine is operated. CONTINUED ON PAGE

5 The Brookfield Viscometer is used to calculate dispersion viscosity to ensure product flows easily. Not too thick or thin so your pumps can be accurately set. used to measure formulation enhancement and color performance guarantees. As many customers have experienced this year, our market is rapidly changing. Our new state of the art lab is positioned to bring innovative products to the market sooner, keeping our customers present and future needs at the forefront. We invite all our customers to schedule a visit to our facility with their area rep to see first-hand what we have to offer. AMERIMULCH S NEW LABORATORY Amerimulch s highly anticipated lab expansion is now complete and includes improved capabilities to measure current product quality and consistency, in addition to new technology to expand the services we offer our customers. This dual role ensures the consistency our customers demand from our Heartland Enriched Colorants as well as continually looking forward to bringing them the products of tomorrow. Prior to shipment, each lot of Heartland Enriched Colorants goes through a series of tests to ensure Quality Assurance. These tests include final viscosity, weight per gallon, percent solids, ph and color verification. In addition to testing all finished dispersions, the lab works with our purchasing agent to ensure all raw material suppliers meet safety and performance standards set by OSHA and EPA regulations, as well as, a Certificate of Analysis from every vendor. These are some of the many steps we take to make sure our products are non-toxic and environmentally friendly. Our expanded capabilities include accelerated weather testing equipment, raw material evaluation, light booth, color matching capability and new product or formulation development. We are eager to receive feedback from our customers on how these services can be extended to add value to the products they offer. The accelerated weather testing unit already is being ABOVE: Q-Sun Xenon Arc Accelerated Weather Testing The test chamber is a laboratory simulator of the damaging effects of weathering, used to test the relative durability of materials. In a few days or weeks, the Q-Sun can produce damage that might occur over months or years of outdoor exposure through extended UV light and moisture water spray cycles. RIGHT: Color samples are reviewed in the light booth under different light sources. This enables us to see the sample as though it were outdoors in direct sunlight at different times of the day. BELOW: X-Rite Spectrophotometer As part of Quality Control Testing, batch to batch verification is done to ensure color is vibrantly consistent from order to order

6 CONTINENTAL BIOMASS INDUSTRIES, INC. (CONTINUED) The fact remains, the $100 per hour savings multiplied by 3,000 running hours quickly pays off the $300,000 conversion investment... and the rest is butter you can take to the bank. And it s worth mentioning that if you re running dieseldriven equipment, you re already paying that amount to your fuel man anyway. Plus you ll eliminate diesel maintenance, oil changes, air filter replacement, radiator problems, cleaning the engine at the end of each shift... and the list goes on. Most importantly, you ll be reminded of your keen business sense each time the fuel truck passes by your site on the way to your competitor s location. Guidelines for Diesel-to-Electric Conversion or Electric Machine Purchase: 1. Do you have access to the power required? Or can you get it? 2. When can it be installed? 3. Get a quote for the conversion specifics. 4. Plan to start the conversion in off season and plan, plan, plan. Continental Biomass Industries, Inc. has been making purpose-built, electricdriven stationary grinders and systems since Call Dave Whitelaw at for more details. CBI Metal Detection System. Trademarked and Patent Pending Adaptable to Virtually ANY Grinder! Customer Spotlight Beach Timber Company, Inc. Alma, GA Beach Timber Company is a family owned business that started in 1986 as a white pole operation. As the business grew, they relocated to a larger site to increase manufacturing capacity and additional services. In 2004, Beach Timber entered into the bulk mulch coloring business with the purchase of an Amerimulch Midi-Mite. Each year their color-enriched mulch production has risen in response to the markets demand for consistent, durable product. Colored mulch has become an important part of their operation. Today, Beach Timber offers their customers several colored mulch products with red being the top seller. I find the Heartland Vivid Red colorant to be among the highest quality with the most consistent performance available in the industry, said Steve Strickland, owner. With the help of their account manager, Bryan Young, they learned a great deal about how to improve their business. Through site visits, machine calibrations and training, Bryan assisted in processing green wood fiber into high quality mulch. Measuring production rates, training Beach Timber s employees on water use adjustments and proper start up and shut down procedures helped make their operation very efficient. I look at Amerimulch as more than just a vendor but as a partner in Beach Timber s success, stated Strickland. Protects rotor, anvil and screens Tramp metal detected by electronic sensor Feed roll lifts, feed system reverses Engine goes to idle, machine shuts down Grate frame opens & tramp metal is ejected All of this in less than 1/2 second! Continental Biomass Industries, Inc. Call Dave Whitelaw at CBI In addition to their ever growing bulk mulch sales in 2008, they expanded into the bag market and now offer color-enriched mulch in two and three cubic foot bags. The response to their bagged products from the marketplace has been very positive. We are excited about what the future holds within the mulch segment of the wood products industry, said Strickland, Our outlook is very positive!

7 EQUIPMENT FOR SALE Second Harvester Tires & axle are removable, extra paddles and bolts, radial stacker, in very good operating condition, 1,582 hours. For more information call Amerimulch at Diesel Second Harvester Diesel-powered with 50-foot stacking conveyor, 6,000 hours. For additional details please contact Amerimulch at King Stone Star Deck Separator For more details contact Ray Detweiler at Amerimulch Mega Mite 2,000 hours total over past 4 years, production rate of 200 yards per hour. Interested parties please contact Randy at For a complete line of used equipment, please visit Amerimulch.com If you know of anyone else who would like to receive the newsletter, please contact Jennifer McCann at jenniferm@amerimulch.com and provide their complete address Enterprise Parkway Twinsburg, OH , all rights reserved amerimulch.com Amerimulch News Vol. 10, Issue #3 Third Quarter 2008 Published by ChromaScape, Inc.