University of Colorado Leeds School of Business
Business Plan Competition
December 12, 2002
Management
“Save the world, have fun, make money”
- Amory Lovins
 James Snyder – President & CEO
 Tina Weiler – Vice President of Sales & Marketing
 Dwight Badgley – Vice President of Finance
 Sally Keefe – Vice President of Logistics & Operations
Key Points
Specific target market
 Organic & Natural products industry
 California’s $160 Million shipping market
There is a need!
 Organic & Natural goods producers have articulated their problem
This is absolutely possible!
 Engine technology exists
 Refueling infrastructure exists
Company Overview
Clean burning natural gas trucks
Benefit – Enhanced marketing message by being clean
from stem to stern
Benefit – Helps them adhere to their company mission
Trailer Co-Branding
Benefit – Enhanced advertising & promotion strategy
Company Overview
 Trailer co-branding
 Creates over 830,000 impressions per month
 75% formulate an opinion of the company
 29% will make a buying decision
 Big Clean Trucks translates to new customers and
increased sales for our clients
Target Market Strategy
Interviews with decision-makers in our target market
confirm interest in this business concept
“The public relations and marketing benefits of green transportation
would be very real for us.”
Laura Coblentz – Director of Marketing Horizon Organic Dairy
“Absolutely -Hansen’s is always looking for ways to bolster our
environmental efforts.”
Tom Cally – Hansen’s Natural Beverages
“Big Clean Trucks has substantial opportunity to build a great package of
marketing and environmental benefits for its prospective customers.”
Mark Retzloff – Chairman & CEO Rudi’s Organic Bakery
Competition
Strengths
Established relationships
with our target customers
Established reputation
Unlimited range of routes
Weaknesses
Diesel incompatible with
green companies’ values
Low innovation in
logistics technology
Competitive Advantage
Small local competitors are unable to compete with
us because of the high switching costs associated
with changing their fleet to alternative fuel
Large national competitors will choose not to
compete with us because the California Organic &
Natural products market is too small
Lead time advantage
Refueling Infrastructure
12 within 500 miles of Los Angeles
50% growth of LNG refueling stations in U.S.
Regulatory pressure for cleaner fuels is spurring
infrastructure expansion
Risks
Refueling infrastructure availability
Expand as infrastructure develops
Receptiveness of our target market
The transportation budget in our target market is
$160 Million
We only need 1.5% of the market to breakeven
Revenue
Revenue Model
85% trucking
(# of miles)
15% co-branding
(# of trailers)
Revenue
( In Thousands )
14,000
12,000
Co-Branding
10,000
Pricing Strategy
Trucking comparable
Co-Branding at
premium
Trucking
8,000
6,000
4,000
2,000
0
2003
2004
2005
2006
2007
Profitability
 Costs
 Fuel/Maintenance
 Capital expenditures
Net Income
( In thousands )
2,000
 Co-Branding Revenue
1,500
1,000
 Breakeven
 October of year 3 (2005)
500
0
(500)
2003
Profit Margin
0%
2004
0%
2005
7%
2006
2007
14% 16%
Funding
$2.5 Million of funding required
 Startup and 9-month operating expenses
 $2 Million Preferred Equity
 Represents 49% of company
 Assuming 60% IRR
 $500,000 Debt
 Used specifically for capital expenditures
Exit Strategy
 Acquisition by major trucking company
 $14 million for preferred shareholders
Conclusion
Specific target market
 California’s Organic & Natural products industry
 $160 Million shipping market
There is a need!
 Organic & Natural goods producers have articulated their problem
This is absolutely possible!
 Engine technology exists
 Refueling infrastructure exists
Questions?
Mission Statement
 Provide high quality, reliable truckload transportation services
for clients that are committed to increasing the environmental
performance of their supply chains.
 Utilize the most innovative engine and logistics technologies
available to provide superior trucking services while decreasing
pollution.
 Treat our employees as professionals and provide a healthy,
fulfilling, and rewarding workplace.
 Revolutionize the trucking industry by inspiring shippers and
carriers to demand environmental performance in
transportation services.
Value Proposition
Big Clean Trucks is the first to provide
a clean shipping option to the organic
and natural products industry. We
provide a distinct marketing advantage
to our customers by allowing them to
show their commitment to the
environment.
Potential Customers
Company
Sales
($MM)
Horizon Organic $159
Stonyfield Farms $96
Hain Celestial
$396
White Wave
$23.5
Alberts Organic $100
Hansen’s
$98
Shipping
Budget
$4.8
$2.9
$11.9
$0.7
$3.0
$2.9
TOTAL
$26.2
$872
We only need $3
million of this $26
million opportunity
Trucking Industry
$606 billion annual spending on trucking
500,000 carriers operate 20 million trucks
68% of U.S. freight tonnage hauled by truck
81% operate 20 trucks or fewer
Expected earnings growth of 13%
CPM for Advertising
CPM for Advertising Media
CPM
$15.00
$10.00
$5.00
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$0.00
Truckside advertising is a better buy than
other advertising media
Truckside Advertising
833,000 impressions per month
75% form an opinion of company = 624,000
29% make a buying decision = 180,000
Assuming a 1% conversion rate:
1800 new customers per month!
LNG is Cleaner
97% less sulfur dioxide
60% less particulate matter
50% less nitrogen oxides
90% less carbon monoxide
98% less VOC’s
No benzene emissions
Translates into 95% less emissions
Big Dirty Trucks
Heavy-Duty Diesels' Share of
Total On-Road Vehicle Emissions
69.4%
70.0%
60.6%
60.0%
50.0%
40.5%
37.6%
40.0%
30.0%
20.0%
10.0%
0.0%
NOx
PM-10
PM-2.5
SO2
Heavy-duty diesel trucks
contribute over 50% of
the total on-road vehicle
emissions
Diesel & Health Problems
Diesel fumes cause 125,000 people in the US each
year to get cancer
A child born in southern California only has to live
there for 12 days before they accumulate a lifetime’s
acceptable cancer risk
In 2020, asthma could affect up to 29 million
Americans, which is more than 2 times the current
number
132 million Americans live in areas where it’s unsafe
to breathe because of air pollution
Emissions Standards
EPA - increased emissions standards for trucks
2004 regulations went into effect October 1, 2002
 Industry transgressions
 Non-conformance penalties
2007 additional reductions required
Customers
“Having the organic product transported in an environmental truck would be a
great benefit. The idea is great and the marketing concept is superb."
Mike Paganos – Odwalla
“Alberts being a green company would look very hard at this”
Barclay Hope – President Albert’s Organic
“Our customers are very sensitive to the environment. People look to companies
like Horizon to make steps forward.”
Steve Jacobson – VP of Operations Horizon Organic Dairy
“Your team has an interesting idea that we would certainly consider”
Rob Kirby -VP Marketing Spectrum Foods, Inc
Customers
LNG Refueling Infrastructure
U.S. Trucking Traffic
Grants and Incentives
Tax incentives at state and federal levels
 Fuel
 Refueling infrastructure
 Alternative fuel vehicles
Many state and federal grant programs not renewed
 Carl Moyer program in CA
 Federal Highway Administration (FHWA)
 EPA and DOE
Cannot rely on grants for funding, but will
continue to investigate the possibility
Diesel/LNG Comparison
Diesel
LNG
Pollution
Cancer causing 95% less emissions
Political
65% in Mid East 36% in Mid East
Infrastructure Nationwide
44 total
California Trucking
$100 Billion market, $160 Million in the Organic &
Natural products industry
25,000 trucking companies
Trucks move an average of 2.2 million inbound
tons per day and 2.0 million outbound
Carry 89% of all manufactured freight transported
in California
Employs 1 of every 12 workers in the state
Tax Considerations
 Net losses in first three
years
 Tax loss carry-forward
through year 4
Taxes
( In Thousands )
6% of
Revenue
400
350
300
 $50,000 federal tax
deduction (per truck,
per year)
250
200
2% of
Revenue
150
100
 Year 5 taxes of $373K
50
0
2003
2004
2005
2006
2007
Pricing Sensitivity
 If 100% of firms use our co-branding, then 0% premium
on shipping rates.
 If 0% of firms use our co-branding, then 20% premium on
shipping rates.
Trucking Fee vs. Advertising Percentage
-Sensitivity Analysis
% increase in
trucking charge
20%
15%
10%
5%
0%
100%
90%
80%
70%
60%
50%
40%
30%
% of co-branded trailers
20%
10%
0%
Cash Burn/Build
Major uses
Daily Cash Build/Burn
( in Thousands)
Property and equip
Major source
Increase in A/R
35
Cash Build
30
Cash Burn
25
20
15
10
5
0
2003
2004
2005
2006
2007
Cash Flow
Neutral in May of year 2
(May 2004)
Major uses
Property and equip
Major source
Earnings
Operating Cash Flows
( in Thousands )
3,500
3,000
2,500
2,000
1,500
1,000
500
0
(500)
2003
2004
2005
2006
2007
Cash Flow
Operating CF’s
growing in relation
to investing
CF neutral just after
the 5th year of
operations.
Operating and Investing Cash Flow, net
(in thousands)
0
(500)
(1,000)
(1,500)
(2,000)
(2,500)
2003
2004
2005
2006
2007
Breakeven
End of 2004
(year 2)
$2.8 million in
revenues
Breakeven
(in thousands)
14,000
Breakeven point
revenues
Total Revenue
12,000
10,000
8,000
6,000
4,000
2,000
0
2003
2004
2005
2006
2007
Market Share
2003 =0.1%
2004 =1.5%
2005 =2.1%
2006 =2.9%
2007 =3.7%
Diesel/LNG
Cost Comparisons
Total cost per diesel truck ~$100,000
Total cost per LNG truck ~$145,000
Diesel truck life = 1 million miles
LNG truck life = 1.2 million miles
LNG trucks generate an extra $270,000 of revenue
over life span
Development Strategy
Q1-2003 Q2-2003 Q3-2003 Q4-2003
Clients
Equipment
Government
Infrastructure
Employees
Operations