A Clear (I hope) Review of Where We're AtJust to keep the numbers straight after yesterday's announcement, RailPower has been approved for 9 Texas (TERP) grants and 2 California (Carl Moyer)grants to build 4 Green Goats and Seven Green Kids.
2 Goats for use in Texas have been ordered by CANAC, a subsidiary of CN which has its own fleet of switching locomotives. 1 Goat and 7 kids are for Railserve, 1 Kid for use in California and the
rest in Texas. Railserve leases switchers to other companies, many oil & gas, and has a fleet of 130 switchers. 1 Goat will go to an as yet unnamed company for use in California.
These grants are a huge incentive for end-users to order new switching locomotives. They pay over half the cost of a Green Goat or Green Kid - US $750,000 & US $550,000 without the grant. EPA Tier 2 regulations come into play next year. How long until the major rail companies, like UP, will want to take advantage of these grants? TERP has US $130 million available each year and still has over 100 million in the kitty available this year.
The Paradigm analyst report said RailPower has received 24 conditional orders for locomotives this year - it is only March and they are almost half way there in converting conditional sales to actual sales.
That report also said there were no other switching locomotives that can meet the tier 2 standards that RailPower significantly exceeds. In the ROB TV interview this week with Pat Bolland, CEO Jim Maier said there is no equivalent product either in North America or Europe. He said they have no competition and have an 18 month lead with all the trials already completed.
Maier also said that the environmental advantages of RailPower products are an extra "gift", the economics are what is "catching their attention." Return on Investment is 3-4 years, talk about compelling! A new standard (non-Railpower) locomotive costs US $1.2 to 1.5 million and does not have the fuel & maintenance economies, and does not meet Tier 2 regulations.
Finally, Maier said the company is very strong financially and will be cash-flow positive by the end of the year. He said they can ramp up very quickly to meet demand.
Very nice picture, isn't it?