“We had to borrow money through TruFund to get the company off the ground, but now we are profitable.”
Brent Baker, CEO - Tri-State Biodiesel
The Business
Tri-State Biodiesel collects material from 3,500 restaurants in New Jersey, Connecticut, and New York. The oil is then delivered to its Hunts Point rendering facility where it is filtered and purified into a product ready for chemical processing, which is then sold to processing facilities that further process the oil and produce biodiesel. The company’s largest customer is Northern Biodiesel, a processing facility in Ontario, NY representing 50% of sales. In addition to Northern Biodiesel, Tri-State Biodiesel works with 40 other facilities to purchase rendered oil.
Tri-State Biodiesel’s competitive advantage is its size and rendering facility. One of the largest collection and rendering operation in New York City, the firm has higher economies of scale than smaller businesses, incurring fewer fixed expenses as a percent of sales and therefore, is able to operate more efficiently in volatile markets. Rendering the materials allows Tri-State Biodiesel to deliver a more refined product and achieve higher profitability than smaller collection companies.
The Opportunity
With its acquisition of VORCO, a small waste cooking oil collection company, Tri-State Biodiesel has increased its scale, providing the business with additional flexibility in a fluctuating oil market by increasing its sales as a percent of its fixed expenses. Demand has increased for biodiesel among commercial diesel users as a result of receiving attention as an effective means to reduce foreign oil dependency and as an environmentally safer alternative to diesel oil.. Tri-State Biodiesel is positioned to fill this need as the largest collector and processor in the New York metropolitan area.
Tri-State Biodiesel received its opportunity through a loan from TruFund to refinance truck leases and support future expansion plans. By refinancing its truck leases, Tri-State Biodiesel was able to improve its monthly cash flow and to focus more resources on expansion opportunities.
