Page 60 - Strategic_Plan_finanal_jlw_PDF_NeatFlip

- Facility rent
o Revenue increasing by 7.2% due to additional rent charged to Ippolito and
annual CPI increases.
- Material/Labor Revenue
o Service income installing and repairing equipment is expected to increase by
about 10%, adding approx. $90k of revenue. Also in this category is the
weigh scale income projected to remain at the same revenue amount.

Cost of Goods Sold
1
2017 budgeted cost of goods are 48.6% of revenue, 0.2% higher than 2016 estimated cost
of goods (33.6% growth, $3.3M additional dollars). Drivers of the increase:
- Labor

o We are expecting 42.9% increase in total direct labor cost (including
benefits). The increase in labor and benefits is due to:
 New crew hires at CCC to process the increased volume of sales;
 Three new Supervisor Apprentice hires at GIC;
 An estimated increase for CCC crew and GIC wages of 3% and 2%
respectively, starting in January;
 An assumed bonus plan to be put in place for the CCC crew, based on
achieving a certain percentage of EBITDA ($75k total impact);
- Power
o Power will increase by 4.3% as a result of the increase in units being cooled,
and an assumed 5% increase in cost per kw hour.
o Cost of Goods calculation per revenue stream:
 DOCK ICE = Revenue / $82 = tons; Tons * 56 kwh/ton = kwh; $0.15 *
kwh = cost
 Cold Box = .14 kwh / gallons of ammonia pumped
 Precooling = Ttl power minus ICE calc minus Cold Box calc
- Rent

o Rent expense increase due to Mainas increase (~$60k) + addition of Jackson
Tube rent (~$65k)
OPEX

Operating Expenses are expected to increase by 32.1% over 2016 estimated expense. This
increase comes from:
- Labor: Admin labor and benefits will increase by 67.6% and 48.7%, respectively,
over 2016. This represents an increase of 1.8% and 0.5% as a percentage of sales
compared with 2016. The increase is due to:

1 Cost of Goods Sold has been defined as all activity that is not G&A or Admin related. Therefore all Shop, Maintenance, Refrigeration and Ice
costs have been defined as revenue generating activities for the purpose of allocating to Cost of Goods Sold. All non-revenue related expenses
such as IT, security and safety have been allocated to operating expenses.

Prepared for Growers Ice Company, Inc.
60
Jim White, PhD --- JL White International