Environmental Solutions Worldwide, Inc. (ESWW)
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ESWs group of products provides
high performance, cost effective alternatives to traditional ceramic products
ESW has produced catalytic conversion technologies for a multitude of applications. They include the EnviroCat for gas/petrol engines, the Quiet Cat Catalyst / Muffler system, which is for the small utility engine sector. The Clean Cat® Particulate Reactor is an extremely efficient and cost effective diesel particulate control unit. The ProCat for Propane, and Compressed Natural gas engines. The Air Sentinel Catalytic Converters and Catalytic Silencers are specifically engineered for industrial stationary engines. They are available for natural gas, LPG, dual fuel and diesel engines.
Environmental Solutions also provides through ATS -Air Testing Services, consulting services as well as emissions certification testing for internal combustion engine manufacturers and users. Engine and chassis dynamometer testing services are available for gasoline, propane, natural gas, and diesel fueled IC engines. ATS also offers complete light duty vehicle emissions certification testing and related services. Since the start of the small engine regulation program several years ago, ATS has been providing a packaged certification service. A full range of services is offered including emissions testing, compilation and submission of applications, final issuance of the certifications and production line testing.
Donohoe, where was Environmental Solutions Worldwide when you became its CEO and what
changes have you orchestrated?
We now as an organization have a shared vision on what our core competency is, which is manufacturing wire mesh substrates that go into the catalytic converter. You cannot be everything to everybody and what we are trying to do is focus on the business at hand and scaling our organization to produce these substrates. We have also changed the complexion of the Board. We recently added three independent directors to the board to help lead the governance, audit, and compensation committees. Prior to that, it was all insiders; we have now put the checks and balances system in place, and I think we are doing that successfully. We hit 2003 with some momentum, with the exception of a sub-standard fourth quarter in 2002, which was largely affected by the dockworkers strike on the west coast. Some west coast customers were not able to get their engines delivered so we could not install our emission control devices. However, we entered 2003 on the right note. Things are working out well, and we are attracting some steady recurring revenue customers and executing on all of the things we said we were going to do. I think you will hear more about it in the future.
CEOCFOinterviews: Will you tell us about your products?
Mr. Donohoe: We have the wire mesh substrate that sits inside the catalytic converter and is our core competency. We also manufacture some boutique application converters. We have five CAT converters; the EnviroCat, Clean Cat®, Pro Cat, Quiet Cat, and an Air Sentinel device. All of these are catalytic converters that do different things. The EnviroCat handles gas, the Clean Cat is our diesel product and the Pro Cat is for propane or liquid compressed natural gas. The Quiet Cat can be made up from any one of previous three converters but has a muffler system attached.
The unique thing about our products is they are wire mesh as opposed to the industry standard, which is ceramic. We are very flexible and can offer multiple designs without major retooling and can do it very quickly from a delivery standpoint. We are positioned to meet the boutique field, somebody that is looking for high quality emission control without spending a whole lot of money. Our performance is extremely high compared to our competition. We believe those are just some of the components of our competitive strength in the product that we are offering.
CEOCFOinterviews: Is the wire mesh as opposed to the ceramic what makes it more flexible?
Mr. Donohoe: Yes, the wire mesh does allow us to address a variety of shapes and sizes directly and quickly. We entered into the marketplace not wanting to directly compete with the big guys like Corning, who makes the bulk of these ceramic filters. Strategically, we were going to be flexible and a potential replacement for the glass substrates in the AFTERMARKET segment of the industry. We were going to be able to handle both conventional replacement and unconventional sizes and do it in a cost-efficient manner. But, along the way, the early performance of our products also led us into the RETROFIT and OEM Original Equipment Manufacturers market segments as well.
Certainly dependent on other variables, but with our products were talking about a particulate reduction of over 60%, which is substantially higher than the industry standards, and as high as a 70-90% reduction in hydrocarbons and 70-90% reduction in carbon monoxide. Our products performance is favorable, competitive and in most cases, surpassing what is out there in the market today.
CEOCFOinterviews: Are there other people using wire mesh substrates?
Mr. Donohoe: Yes but the uniqueness of our product is not just the flexibility and durability that the wire mesh affords, but also the way we are combining it with our proprietary wash coat that we use. I think that combination of the two, and the way we are molding and combining the precious metals yields a higher catalytic result than the competition.
CEOCFOinterviews: Is this something you patent, and what is to prevent someone else from coming along and hitting on the same thing?
Mr. Donohoe: It is unique in that it is a proprietary compound of precious metals and wash coat. We do have US & Canadian patents on our technology, which we have had for some time, as well as several U.S. based patents pending. I believe its simply a matter of time before we have it all patented. I guess it is possible that somebody could duplicate it, but one of the things that Environmental Solutions has going for it is that we were a research and development company for years. We took the collaborative trial and errors and learned from those mistakes. Then we purchased an additional testing and certification production company that was focused on similar technology and had other products. ESW then melded all that Intellectual property, experience and technology into one amalgamated product offering. That resulted in a company with technology that is not so easy to be duplicated. In some cases it is patented and in some cases it is patent pending. It has been a long road for us and I do not see someone coming around the corner and doing what has taken us years to acquire in a short period of time.
CEOCFOinterviews: Who is using your products now?
Mr. Donohoe: We sell to three markets. We sell to the after-market, where we are replacing the ceramic product for somebody else. One of the nice things about having the flexibility is that we can actually duplicate the dimensions and density and even surpass the performance of what is out there now. We can plug our substrate into an existing muffler or converter. The second marketplace is the retrofit, where many third world countries are under mandates to have engine emission toxins eliminated or reduced. We are a perfect retrofit to these engines; our products are presently being used in Mexico and being strongly considered for areas in India and China. The third marketplace, potentially, the biggest home run for us, would be the OEM market, where they are selling our product directly on their new engines. As I said earlier, we have a lot of exciting opportunities out there. We are really starting to get onto peoples radar screens as far as those that are looking for a high performance cost efficient alternative to what has been out there in the past.
CEOCFOinterviews: How do you go from the radar screen to getting contracts, and what part has the state of the economy played in reaching your goals?
Mr. Donohoe: This has been a difficult process to get our hands around the entire sales cycle, from providing someone a sample of our products for testing and performance results, meeting the dimensions of the diagrams and designs of a prospective customer and then getting a qualified order and getting paid for it. Some of these activities and initiatives that we have been involved with have been eight months to a year long, which is much longer than I am used to dealing with in selling a service or a product. I believe in 2003, we will attract some large recurring revenue customers and we will get over that hurdle. That is really the only issue that we have now. Our products have gotten enough attention. However, customers continue to want to try it themselves and not take the word of someone else. For performance, I think the hurdle of proof-of-concept has really been addressed. In this coming year, particularly the last three quarters of it, we are going to see some big customers signing contracts with us.
CEOCFOinterviews: Is proof-of-concept been a function of the industry itself or is the economy part of that factor?
Mr. Donohoe: This industry is very proof-of-concept oriented. Typically, you are not going to get by just talking about your product and showing designs and specifications. They are going to want to touch and feel it. Until that happens, they are not going to be comfortable. They may want to put your product through a rapid aging testing or a durability cycle. They will only be comfortable when they have achieved the results that either we are promoting or they are looking for before they buy. I think that is a by-product of the industry. Like everyone else in business today, they are challenged by all the activities of a poor economy. With us as I mentioned, we had an unforeseen dockworkers strike, which affected our Q4-2002 sales. Our country is at war right now and there are all kinds of other variables that affect business everywhere. There have been challenges and road blocks, but I think we are positioned now from a production and capacity standpoint to address them, and I anticipate ESW being very successful this year.
CEOCFOinterviews: Will you tell us about your new facility?
Mr. Donohoe: When we acquired Applied Diesel Technology and Air Testing Services it came with a facility in Telford, Pennsylvania, which is about 25 miles northwest of Philadelphia. It is about twenty-five thousand square feet, of which twelve thousand is production. There is an associated lab and administrative facilities. Right now, it is adequate for where we have been, and wanted to go. If we were to get one of those large customers who I feel are right around the corner, we would quickly outgrow it and move to a bigger facility. Thats is a good kind of problem. We are anticipating that happening and have actually been out looking for some alternative space. Right now real estate is a consumers market, so if that comes down the road, we should be able to do that quickly without a big financial impact on the company. We also have developed an outsourcing capability and most of our manufacturing can be done by us bringing in additional staff without paying them full-time. We have done that to build fault-tolerance into our labor and production. When we do get the big customer that is going to challenge our production capacity, we have already built that production support infrastructure. With that strategy, I think we have seeded a production capability that is much larger than what our 25,000 square foot facility.
CEOCFOinterviews: Do you think that the environmentally conscious environment will be of help to you?
Mr. Donohoe: Globally, environmental-consciousness may be our biggest sales force. When you have federal mandates and global legislation requiring our customers to put controlling devices for the toxicity reduction on their products were in the right place at the right time. Whether youre talking about buses, trucks, cars, utility generators or other types of gas, diesel and alternative fuel engines, these requirements are laying the groundwork for ESWW success today and growth tomorrow. It is a tremendous help to us not to have to explain why someone would use our product. Instead, we just explain what our products do and what performance results they should expect to achieve when they install it. The application has already been created for us - its then up to us to demonstrate that our products address their needs and make the sale.
CEOCFOinterviews: You mentioned global a few times. How big a market do you anticipate it to be?
Mr. Donohoe: It is a huge market depending upon whose figures you use. If you look at the EPA and other U.S. based agencies figures, and tie them into the European emission control market statistics; this could be anywhere from a five to fifteen billion dollar marketplace. Im sure youve read the statistics out there about all the diesel engines everywhere that have to be retrofitted or altered to meet emission targets by a certain year. On a worldwide basis, almost twenty million retrofit diesels that are out there between automobiles and trucks, and over five million generator sets. In the United States, there are over six million gas retrofit applications. There is marine equipment and utility engines. The EPA put out a year ago that there were thirty million existing diesel engines in the United States and each year two million more are produced. So, you can see that the application here is huge and how ESW is in the right place at the right time and now with the performance results of our products things are starting to work really well for us. And its easy to see that we do not need a big chunk of the market share; we just want a little piece, which could translate into millions of dollars for Environmental Solutions. Thats really been our strategy from the beginning, we dont have to dominate just let us in the game to play and well earn our share. So, we are in the business now and the second half of 2002 marked that conversion from test to production. We believe 2003 is going to offer us a very bright addition to what we have done so far.
CEOCFOinterviews: Do you see acquisitions and joint ventures in the future?
Mr. Donohoe: I would say that there is not the need for acquisitions at the present time. I could see some joint ventures taking place with the right partners or some collaboration with one of the bigger companies could possibly be down the road. But, I do not see us going out and acquiring another company that does similar things to us, as weve done the necessary accumulation of the process components. We have positioned ourselves to grow. We have our own laboratory that does EPA, and CARB (California Air Resource Board) pre-certification. We are able to provide testing and preparation for those certifications. We have laid the groundwork to have all the aspects of our business covered. The one thing we have not spent a lot of money on is the sales and marketing end, because we believe we can sell our product attached to someone elses product or through someone elses channel. If one of those big companies took a strong liking to the technology, who knows where it could go.
CEOCFOinterviews: Will you tell us about the financial condition of the company?
Mr. Donohoe: We just completed a private placement where we raised almost a million-and-a-half dollars. Of that, about half was new money infused into the company. That went for replenishment of inventory and raw materials; the other half was to pay off debt. The company is relatively debt-free now. We do expect within the next couple of periods to move to break-even and then to profitability. Once we have achieved that profit and sustainable business model, we are just going to grow from there.
CEOCFOinterviews: Do you do much continuing R&D?
Mr. Donohoe: I do not think research & development will ever completely disappear from our activities. Many of the smaller companies that we have serviced have come back to us looking for that better mousetrap. Because we have a staff of scientists, that will continually go back to them with a new design that does things more efficiently with better results or more cost effectively, I think R&D will always be a component of ESW.
CEOCFOinterviews: It sounds like you have all the pieces together.
Mr. Donohoe: We have tactically strategized with many different phenomena taking place. We do believe that we have it covered and that is part of why we were so slow in the transition from research and development into production, because we spent time on that game planning.
CEOCFOinterviews: What should shareholders and investors know that might not be apparent on the surface?
Mr. Donohoe: We have almost fifty million shares of stock out there for a small company that does not make any money. Those shareholders as do the employees of ESW believe in our technology. We have consistently cut our cash burn over the last three periods to a point to where you will continue to see marked improvement in the first or second quarter of this year. I see the light at the end of the tunnel as far as us being a company that will go from losing money to one that becomes profitable. I think the leadership of the company is long-term now. I believe we have instilled that shared vision and an interwoven strategy in all ESW employees and they now embrace it. We have some operational experience now, which we did not have in the past. And we have people that are passionate about sustaining the business and being a successful company. I am not sure that was always commonplace in the previous infrastructure, but I do believe that we have done the necessary planning to take the company to a more successful place. If you were going to invest in a company now, I think that we have a tremendous upside. I think our stock is at a severe discount because we have not earned our stripes yet. Talk is cheap, as they say. But when people start to look at what we have done over the past six months, and recognize that what we are saying - we are doing. I am very confident with the people that we have on-board right now at ESW, with the global push for emission controls and the comparative performance of our products that Environmental Solutions Worldwide is on the right track and will continue to grow in both results and success.
CEOCFOinterviews: Any final thoughts in closing?
Mr. Donohoe: I would like to conclude by saying: God Bless Our Troops and the Coalition forces fighting in Iraq. That activity certainly outweighs some of the discussions that you and I are having today. I think Environmental Solutions Worldwide is in a great position right now to be successful. If all goes according to the way we anticipate it, people are going to see some very good work from the ESW this year, and going forward. Thank you for your time today.
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Environmental Solutions Worldwide, Inc.
Amersey appointed as interim Chairman of the Board and
Telford, Pa.-May 3, 2004-Environmental Solutions Worldwide, Inc.(OTCBB:ESWW), announced today that its Board of Directors has appointed Mr. Nitin Amersey as its interim non-executive Chairman of the Board and has appointed Mr. David Johnson its interim President and Chief Executive Officer. The appointments were effective May 1, 2004.
Posted: 5/4/04 - CEOCFOinterviews.com
Files for California ARB Certificate for Three Way CatalystTELFORD, P.A.--(BUSINESS WIRE)-January 20th, 2004. Environmental Solutions Worldwide, Inc. (ESW) (OTCBB: ESWW), is pleased to announce the successful completion of a comprehensive testing program to validate and verify performance of its Enviro-Cat gasoline catalytic converter product and subsequent filing to the California Air Resources Board (CARB) for review and certification.
Posted: 1/20/04 - CEOCFOinterviews.com
NASHVILLE, Tenn.-Cummins Inc. (CUM) (October 20, 2003)Fleetguard Emission Solutions (FES), a wholly owned subsidiary of Cummins Inc., and Environmental Solutions Worldwide Inc., (ESW) are pleased to announce the signing of exclusive long term marketing and distribution agreements and preferred supplier agreements for ESW's Particulate Reactor; a proprietary, high performance, metallic, diesel oxidation catalyst (DOC).These agreements cover OEM and retrofit applications in North American, South American and Western European markets as well as markets in
Posted: 10/23/03 - CEOCFOinterviews.com
TELFORD, P.A.--(BUSINESS WIRE)--May 6th, 2003--Environmental Solutions Worldwide, Inc. (ESW) (OTCBB: ESWW), is proud to announce that it has become the first Company to receive a technology verification certification from Environmental Technology Verification (ETV) Canada Inc for a Diesel Oxidation Catalyst (DOC) converter. ESWs proprietary High Performance DOC achieved a reduction of Particulate (PM-10) of 66.7% by weighted average.
Posted: 5/15/03 - CEOCFOinterviews.com
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