Kelso Technologies Inc. (“Kelso” or the “Company”), (TSX: KLS),
(NYSE American: KIQ) reports that it has released its unaudited
interim consolidated financial statements and Management Discussion
and Analysis for the three and nine months ended September 30,
2018.
The unaudited interim consolidated financial
statements were prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”). All amounts herein are
expressed in United States dollars (the Company’s functional
currency) unless otherwise indicated.
SUMMARY OF FINANCIAL PERFORMANCE
|
Three months ended Sept 30, |
Nine months ended Sept 30, |
|
|
2018 |
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenues |
$ |
3,491,602 |
$ |
1,153,341 |
|
$ |
8,538,716 |
|
$ |
4,150,321 |
|
Cost
of goods sold |
$ |
1,947,607 |
$ |
887,986 |
|
$ |
5,067,037 |
|
$ |
3,302,990 |
|
Write
off of inventory |
$ |
- |
$ |
443,769 |
|
$ |
- |
|
$ |
443,769 |
|
Gross
profit (loss) |
$ |
1,543,995 |
$ |
(178,414) |
|
$ |
3,471,679 |
|
$ |
847,331 |
|
Income tax expense (recovery) |
$ |
161 |
$ |
17,856 |
|
$ |
(3,052) |
|
$ |
17,856 |
|
Net
income (Loss) |
$ |
261,717 |
$ |
(1,380,495) |
|
$ |
(180,336) |
|
$ |
(2,803,514) |
|
EBITDA (Loss) |
$ |
383,563 |
$ |
(936,011) |
|
$ |
62,195 |
|
$ |
(2,256,111) |
|
EPS
(basic and diluted) |
$ |
0.01 |
$ |
(0.03) |
|
$ |
(0.00) |
|
$ |
(0.06) |
|
LIQUIDITY AND CAPITAL
RESOURCES
At September 30, 2018 the Company had cash on
deposit in the amount of $421,500, accounts receivable of
$1,754,749, prepaid expenses of $145,908 and inventory of
$3,732,559 compared to cash on deposit in the amount of $411,223,
accounts receivable of $653,445, prepaid expenses of $183,966 and
inventory of $3,980,243 at December 31, 2017.
The working capital position of the Company at
September 30, 2018 was $3,711,142 compared to $3,628,911 at
December 31, 2017. Accounts receivable are collected within
30 days from invoicing shipments giving Kelso $1,754,749 of
incoming cash flow plus $421,500 of available cash to discharge
liabilities of $1,634,287 on a timely basis subsequent to September
30, 2018.
Net assets of the Company were $7,483,152 at
September 30, 2018 compared to $7,565,233 at December 31,
2017. At September 30, 2018 the Company had no
interest-bearing long-term liabilities or debt.
OUTLOOK
Our team of dedicated stakeholders have actively
pulled together to turnaround our business capabilities and improve
our financial performance during very difficult recessionary
challenges over the past three years. Our strategic plan has
been focused on re-branding Kelso as a reliable American made
supplier of high-quality performance equipment for the rail tank
car industry. This was imperative and we believed that this
process would eventually lead to a healthy financial
turnaround. Under these established initiatives we have
experienced improved sales results providing a steady return to our
available capital reserves. This turn of events has allowed
us to survive and keep our ambitions of business growth, product
development and pursuit of regulatory approvals on course.
Management has been encouraged by sales-to-date
growth for 2018 and the revenue prospects for 2019. Crude oil,
ethanol and chemicals are the key commodities that are leading the
way in the resurgence of tank car market activity. This stimulus
has led rail tank car analysts to expect average new-build
production rates to grow from approximately 12,000 tank cars in
2018 to 19,000 tank cars in 2019. Based on these new-build
predictions and our historic retrofit/repair business Kelso expects
to supply its specialized tank car equipment to over 8,000 tank
cars in 2018 and over 10,000 tank cars in 2019.
A key dynamic for our growth of financial
performance will be getting a wider variety of our tank car
products adopted by hazmat shippers. Once this adoption trend is
established, we expect customers to begin to specify combinations
of our One-Bolt Manway, VRV and BOV along with our proven PRV. Our
long-term goal is to improve tank car revenues from approximately
$1,400 per tank car to in excess of $10,000 per tank car.
The key hurdle for sales growth is the
achievement of full AAR regulatory approvals that are required for
full commercial adoption. Currently our VRV is in the final stages
of full AAR approval. Once final approvals are received sales of
VRV are expected to commence.
There is no mandatory requirement for any
company to participate in service trials of new technology which
means we have to source volunteer companies to participate in
service trial programs. This is a difficult circumstance but Kelso
has successfully found these technology partners and service trials
for our ceramic ball BOV, high pressure PRV and angle valve are in
process. Customer s’ willingness to participate in this process is
an encouraging indication that these products will be in demand
once approvals are completed.
Our R&D model has delivered an array of
promising new products that include specialized truck tanker
equipment, rail wheel cleaning systems, fuel loading systems,
military applications, first responder emergency response kits and
an ASCS suspension system for motor vehicles being used in rugged
outback terrain applications.
We continue to prioritize promising product
development initiatives to build future value propositions for
Kelso’s stakeholders even though R&D projects are often
complex, expensive and the timing of revenue streams are
unpredictable and not guaranteed. Although many operational and
human resource expenses have been reduced our capital management
remains challenging but recent improvements in cash flows from
sales growth in 2018 have been adequate to fund current business
activities. The Company can currently operate without immediate
access to new equity capital or debt and the Company remains free
of interest-bearing long-term debt.
In 2017 we began re-branding our organization by
implementing new business processes, new personnel, changing our
corporate culture and revamping our approach to customer service,
marketing and sales processes. In 2018 the results have been
encouraging with growth in sales, improved financial performance
and business momentum seems to be building for future
periods. The key objectives of our strategic plans are the
eventual satisfaction of all Kelso stakeholders with reliable
growth of profitability, improved financial health and market
valuation.
About Kelso Technologies
Kelso is an engineering development company that
specializes in the development, production and distribution of
proprietary service equipment used in transportation
applications. Our reputation has been earned as a developer
and reliable supplier of unique high-performance rail tank car
equipment for the handling and containment of hazardous and
non-hazardous commodities during transport. All Kelso
products are developed with emphasis on economic and operational
advantages to customers while mitigating the impact of human error
and environmental release. The Company develops and offers
specialized rail tank car equipment, truck tanker equipment, rail
wheel cleaning systems, fuel loading systems, military
applications, first responder emergency response kits and
suspension systems for motor vehicles being used in rugged outback
terrains.
For a more complete business and financial
profile of the Company, please view the Company's website at
www.kelsotech.com and public documents posted under the Company’s
profile on www.sedar.com in Canada and on EDGAR at www.sec.gov in
the United States.
On behalf of the Board of
Directors,
James R. Bond, CEO and President
Notice to Reader: References to
EBITDA refer to net earnings from continuing operations before
interest, taxes, amortization, unrealized foreign exchange and
non-cash share-based expenses (Black Sholes option pricing
model). EBITDA is not an earnings measure recognized by IFRS
and does not have a standardized meaning prescribed by IFRS.
Management believes that EBITDA is an alternative measure in
evaluating the Company's business performance. Readers are
cautioned that EBITDA should not be construed as an alternative to
net income as determined under IFRS; nor as an indicator of
financial performance as determined by IFRS; nor a calculation of
cash flow from operating activities as determined under IFRS; nor
as a measure of liquidity and cash flow under IFRS. The
Company's method of calculating EBITDA may differ from methods used
by other issuers and, accordingly, the Company's EBITDA may not be
comparable to similar measures used by any other issuer.
Legal Notice Regarding Forward-Looking
Statements: This news release contains “forward-looking
statements” within the meaning of applicable securities
legislation. Forward-looking statements are indicated expectations
or intentions. Forward-looking statements in this news release
include that Kelso that our strategic plan has been focused on
re-branding Kelso as a reliable American made supplier of
high-quality performance equipment for the rail tank car industry
and this was imperative to eventually lead to a healthy financial
turnaround; that under these established initiatives we have
experienced improved sales results providing a steady return to our
available capital reserves; that this turn of events has allowed us
to survive and keep our ambitions of business growth, product
development and pursuit of regulatory approvals on course; that
management has been encouraged by sales-to-date growth for 2018 and
the revenue prospects for 2019; that rail tank car analysts to
expect average new-build production rates to grow from
approximately 12,000 tank cars in 2018 to 19,000 tank cars in 2019;
that based on these new-build predictions and our historic
retrofit/repair business Kelso expects to supply its specialized
tank car equipment to over 8,000 tank cars in 2018 and over 10,000
tank cars in 2019; that a key dynamic for our growth of financial
performance will be getting a wider variety of our tank car
products adopted by hazmat shippers; that once this adoption trend
is established we expect customers to begin to specify combinations
of our One-Bolt Manway, VRV and BOV along with our proven PRV; that
our long-term goal is to improve tank car revenues from
approximately $1,400 per tank car to in excess of $10,000 per tank
car; that our VRV is in the final stages of full AAR approval and
once final approvals are received sales of VRV are expected to
commence; that cash flows from sales growth in 2018 have been
adequate to fund current business activities and the Company can
currently operate without immediate access to new equity capital or
debt and the Company remains free of interest-bearing long-term
debt; that the results in 2018 have been encouraging with growth in
sales and improved financial performance; that business momentum
seems to be building for future periods; and that the key
objectives of our strategic plans are the eventual satisfaction of
all Kelso stakeholders with reliable growth of profitability,
improved financial health and market valuation. Although
Kelso believes its anticipated future results, performance or
achievements expressed or implied by the forward-looking statements
and information are based upon reasonable assumptions and
expectations, they can give no assurance that such expectations
will prove to be correct. The reader should not place undue
reliance on forward-looking statements and information as such
statements and information involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Kelso to differ materially from
anticipated future results, performance or achievement expressed or
implied by such forward-looking statements and information,
including without limitation the risk that regulatory deadlines for
compliance may be delayed or cancelled; the Company’s products may
not provide the intended economic or operational advantages; or
reduce the potential effects of human error and environmental harm
during the transport of hazardous materials; or grow and sustain
anticipated revenue streams; AAR approvals may not be finalized,
orders may be cancelled and competitors may enter the market with
new product offerings which could capture some of our market share;
and our new equipment offerings may not capture market share as
well as expected. Except as required by law, the Company does
not intend to update the forward-looking information and
forward-looking statements contained in this news release.
For further information, please contact:
James R. Bond, CEO and
President |
Richard Lee, Chief
Financial Officer |
Corporate Address: |
Email:
bond@kelsotech.com |
Email:
lee@kelsotech.com |
13966
- 18B AvenueSouth Surrey, BC V4A 8J1www.kelsotech.com |
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