Questor Technology Inc. Announces First Quarter 2014 Financial Results

Date : 05/30/2014 @ 7:30AM
Source : Marketwired Canada
Stock : Questor Technology Inc. (QST)
Quote : 2.97  0.13 (4.58%) @ 3:59PM

Questor Technology Inc. Announces First Quarter 2014 Financial Results


Questor Technology Inc. ("Questor" or the "Company") (TSX VENTURE:QST) announced
today its financial and operating results for the first quarter of 2014. Revenue
this quarter was $3.2 million, 87 per cent higher than the first quarter of
2013, mainly due to higher sales activity in Canada. The Company reported a 92
per cent improvement in profit at $801,750(2) ($0.032 per basic share) for the
three months ended March 31, 2014 compared to a profit of $417,084 ($0.017 per
basic share) for the same three-month period of the prior year. 

The increase in profit was due primarily to higher revenues arising out of the
increased volume of incinerators sold. Also contributing to the increase were
higher revenues from Incinerator and combustion services while lower Incinerator
rental income, higher average cost of sales and administrative expense and
higher income tax expense partially offset the impact on earnings of the
increased sales revenues. Higher net foreign exchange gains recorded in the
first quarter of 2014 compared to the same period of 2013 also contributed to
the the Company's overall improved performance.

FINANCIAL HIGHLIGHTS SUMMARY                                                
(Stated in Canadian dollars except shares outstanding)                      
For the three months ended March 31          2014         2013   (decrease) 
Revenue                                 3,214,437    1,719,577    1,495,860 
Gross profit(1)                         1,442,541      890,441      552,100 
EBITDA(1)                               1,154,868      656,220      468,648 
Profit for the period(1)(2)               801,750      417,084      384,666 
Cost of sales as a percent of                                               
 revenue(1)                                  55.1%        48.2%         6.9%
Funds flow from operations before                                           
 movements in non-cash working                                              
 capital(1)                             1,255,065      662,405      592,660 
Earnings per share                                                          
    - Basic                                 0.032        0.017        0.015 
    - Diluted                               0.031        0.017        0.014 
                                        March 31, December 31,     Increase 
As at                                        2014         2013   (decrease) 
Total assets                           14,794,863   14,029,829      765,034 
Non-current liabilities                   152,906      175,130      (22,224)
Shares outstanding(3)                                                       
  Basic                                25,282,370   25,102,265      180,105 
  Diluted                              26,117,133   25,939,888      177,245 
(1)  Non-IFRS financial measure. Please see discussion in the Non-IFRS      
     Financial Measures section of Questor's Management's Discussion and    
     Analysis for the year ended December 31, 2013.                         
(2)  Before Other comprehensive income (loss).                              
(3)  Weighted average.                                                      

The Company has received confirmed incinerator sales orders for $3.8 million
since the start of the year. The units are expected to be delivered in the
second and third quarter of 2014 and the associated revenue recorded at that
time. Management is in discussions with several companies in Canada and the U.S.
with respect to terms and conditions on additional incinerator orders, the
revenue for which will be recorded at the time the units are fabricated and
ready for delivery in the third and fourth quarters of 2014. For certain sizes
of units, the inventory that management built up over the latter half of 2013
will ensure that the Company is able to provide clients with short delivery
times on their orders. 

At present, Questor has approximately 90 percent of the available rental
incinerator capacity committed under term contracts and is operating in the
traditional Western Canada markets as well as new markets in the United States.
Management expects to continue to issue orders for fabrication of additional
units for completion in the third and fourth quarters to add to the rental

"The heightened environmental focus on emissions from flaring, climate change
and the health concerns arising from the impacts of poor air quality has created
a significant and growing market opportunity for Questor both domestically and
internationally. It has become essential for our clients to address these issues
to obtain approval for projects and the social license to operate," said Ms.
Audrey Mascarenhas, Questor's President and CEO. "As the U.S. adopts the new EPA
rules, the demand for our products continues to develop in both the sales and
rental businesses," she continued. "We have an inventory of units available and
have fabrication partners with sufficient capacity to meet new orders."
Questor's product quality and combustion expertise are becoming more recognized
on a daily basis globally. Our incineration technology is unique in its ability
to allay public concerns regarding air quality and is capable of meeting
emissions standards across a broad range of applications. Emissions legislation
introduced in the United States and Europe is expected to continue to increase
interest in our technology as companies look for solutions to flaring and
emissions control."

On January 31, 2014, Questor acquired 100% of the outstanding shares of
ClearPower Systems Inc., ("ClearPower") a company incorporated in 2010 under the
laws of the state of Delaware. ClearPower has developed technology that will
translate waste heat from any source into power. The integration of waste heat
from Questor's incineration process with the power generation capability of the
ClearPower technology is expected to present a valued solution for many of its
customers. "We are planning to commission a demonstration of this integration in
the fourth quarter of 2014 at an oil and gas facitlity in close proximity to
Calgary," said Ms Mascarenhas. "In addition we continue to evaluate the
substantial waste heat market that the ClearPower technology can be applied
directly to. These two large waste heat areas present opportunities that Questor
continues to prepare for and we anticipate revenue generation in 2015." 

"We are focused and committed to providing continued excellence in combustion
products and services while we select our next steps in respect of introducing
Clearpower as a complementary technology to the enormous waste heat markets. Our
planning around fabrication has us well positioned to pursue growth
opportunities in North America and Europe over the remainder of this year and
into 2015," concluded Ms. Mascarenhas. 

Ms. Mascarenhas was invited to join the Alberta Small Medium Enterprise ("SME")
Export Council whose mission is to provide advice to the provincial Minister of
International and Intergovernmental relations on measures to expand, encourage
and facilitate access of Alberta SMEs to foreign markets. The Council met for
the first time in Edmonton on April 29, 2014.

She also spoke as a member of the Society of Professional Engineers at their
Environmental Impact Workshop in Halifax, Nova Scotia on May 14, 2014 on the
topic of Economic Implications of Compliance. 

Shareholders are invited to attend the Company's Annual General Meeting to be
held on Tuesday, June 24, 2014 at 3:00 p.m. MDT in the Company's Corporate
Offices at 1121, 940 - 6th Avenue S.W, Calgary, Alberta. In addition to the
formal business items, management will be presenting an overview of Questor's
results for the financial year ended December 31, 2013 and first quarter ended
March 31, 2014 and discussing the Company's strategic initiatives for 2014.

Questor's unaudited condensed consolidated financial statements and notes
thereto and management's discussion and analysis for the three months ended
March 31, 2014 will be available shortly on the Company's website at and through SEDAR at


Questor is an international environmental oilfield services provider founded in
late 1994 and headquartered in Calgary, Alberta, Canada with a field office
located in Grande Prairie, Alberta. The Company is focused on clean air
technologies with activities in Canada, the United States, Europe and Asia.
Questor designs and manufactures high efficiency waste gas incinerators for sale
or for use on a rental basis and also provides combustion-related oilfield
services. The Company's proprietary incinerator technology destroys noxious or
toxic hydrocarbon gases which enables regulatory compliance, environmental
protection, public confidence and reduced operating costs for customers. Questor
is recognized for its particular expertise in the combustion of sour gas (H2S).
The technology creates an opportunity to utilize the heat generated from
efficient combustion which can be been used for water vaporization, process heat
and power generation, through ClearPower Solutions (a subsidiary of Questor).
While Questor's current customer base operates primarily in the crude oil and
natural gas industry, this technology is applicable to other industries such as
landfills, water and sewage treatment, tire recycling and agriculture. 

Questor trades on the TSX Venture Exchange under the symbol "QST". 

Certain information in this news release constitutes forward-looking statements.
When used in this news release, the words "may", "would", "could", "will",
"intend", "plan", "anticipate", "believe", "seek", "propose", "estimate",
"expect", and similar expressions, as they relate to the Company, are intended
to identify forward-looking statements. In particular, this news release
contains forward-looking statements with respect to, among other things,
business objectives, expected growth, results of operations, performance,
business projects and opportunities and financial results. These statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those anticipated in such
forward-looking statements. Such statements reflect the Company's current views
with respect to future events based on certain material factors and assumptions
and are subject to certain risks and uncertainties, including without
limitation, changes in market, competition, governmental or regulatory
developments, general economic conditions and other factors set out in the
Company's public disclosure documents. Many factors could cause the Company's
actual results, performance or achievements to vary from those described in this
news release, including without limitation those listed above. These factors
should not be construed as exhaustive. Should one or more of these risks or
uncertainties materialize, or should assumptions underlying forward-looking
statements prove incorrect, actual results may vary materially from those
described in this news release and such forward-looking statements included in,
or incorporated by reference in this news release, should not be unduly relied
upon. Such statements speak only as of the date of this news release. The
Company does not intend, and does not assume any obligation, to update these
forward-looking statements. The forward-looking statements contained in this
news release are expressly qualified by this cautionary statement.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.

                           QUESTOR TECHNOLOGY INC.                          
                         Stated in Canadian dollars                         
                                                    March 31     December 31
As at                                                   2014            2013
Current assets                                                              
  Cash and cash equivalents                    $   6,023,026   $   7,323,303
  Trade and other receivables                      3,879,578       2,863,257
  Inventories                                      2,347,975       2,359,276
  Prepaid expenses and deposits                       93,048         124,163
  Current tax assets                                       -          77,849
  Total current assets                         $  12,343,627      12,747,848
Non-current assets                                                          
  Property and equipment                           1,533,329       1,256,066
  Intangible assets                                  230,509          25,915
  Goodwill                                           687,398               -
  Total non-current assets                         2,451,236       1,281,981
Total assets                                   $  14,794,863   $  14,029,829
LIABILITIES AND EQUITY                                                      
Current liabilities                                                         
  Trade payables, accrued liabilities,                                      
   provisions                                  $   1,768,737   $   1,746,259
  Deferred revenue and deposits                      450,238         252,356
  Current portion of lease inducement                 52,002          52,002
  Current tax liabilities                            371,864         638,527
  Total current liabilities                        2,642,841   $   2,689,143
Non-current liabilities                                                     
  Deferred tax liabilities                            44,570          53,793
  Lease inducement                                   108,336         121,337
  Total non-current liabilities                      152,906         175,130
  Total liabilities                                2,795,747   $   2,864,274
Capital and reserves                                                        
  Issued capital                                   5,680,655       5,636,119
  Reserves                                           692,081         703,156
  Retained earnings                                5,628,030       4,826,280
  Cumulative translation adjustment                   (1,650)              -
  Total equity                                    11,999,116      11,165,555
Total liabilities and equity                   $  14,794,863   $  14,029,829
                          QUESTOR TECHNOLOGY INC.                           
              Stated in Canadian dollars except per share data              
For the three months ended March 31                    2014            2013 
Revenue                                       $   3,215,437   $   1,719,577 
Cost of sales                                    (1,772,896)       (829,136)
Gross profit                                      1,442,541         890,441 
Administration expenses                            (487,156)       (353,550)
Net foreign exchange gains (losses)                 143,153          44,997 
Depreciation of property and equipment              (11,965)        (10,740)
Amortization of intangible assets                      (305)           (305)
Other income                                          2,700           4,675 
Profit before tax                                 1,088,968         575,518 
Income tax expense                                 (287,218)       (158,434)
Profit for the period                         $     801,750   $     417,084 
Other comprehensive (loss) income, net of                                   
 income tax                                                                 
Exchange differences on translating foreign                                 
 operations                                          (1,650)              - 
Total comprehensive income for the period     $     800,100   $     417,084 
Earnings per share, Profit for the period                                   
  Basic                                       $       0.032   $       0.017 
  Diluted                                     $       0.031   $       0.017 
                          QUESTOR TECHNOLOGY INC.                           
                         Stated in Canadian dollars                         
                      Issued              Retained Translation              
                     Capital  Reserves    Earnings  Adjustment Total Equity 
Balance at                                                                  
 January 1, 2014  $5,636,119 $ 703,156  $4,826,280 $         -  $11,165,555 
Profit for the                                                              
 period                    -         -    801, 750           -      801,750 
Recognition of                                                              
 payments                  -    16,711           -           -       16,711 
Issue of ordinary                                                           
 shares under                                                               
 employee share                                                             
 option plan          44,536   (27,786)          -           -       16,750 
Translation of                                                              
 operations                -         -           -      (1,650)      (1,650)
Balance at March                                                            
 31, 2014         $5,680,655 $ 692,081  $5,628,030 $    (1,650) $11,999,116 
                      Issued              Retained Translation        Total 
                     Capital  Reserves    Earnings  Adjustment       Equity 
Balance at                                                                  
 January 1, 2013  $5,521,001 $ 676,834  $2,282,231 $         -  $ 8,480,066 
Profit and total                                                            
 income                    -               417,084           -      417,084 
Recognition of                                                              
 payments                  -    18,796           -           -       18,796 
Issue of ordinary                                                           
 shares under                                                               
 employee share                                                             
 option plan               -         -           -                        - 
Balance at March                                                            
 31, 2013         $5,521,001 $ 695,630  $2,699,315 $         -  $ 8,915,946 
The accompanying notes are an integral part of these unaudited condensed    
consolidated financial statements.                                          
                          QUESTOR TECHNOLOGY INC.                           
                         Stated in Canadian dollars                         
For the three months ended March 31                    2014            2013 
Cash flows from operating activities                                        
  Profit and total comprehensive income       $     800,100   $     417,084 
  Adjustments for:                                                          
    Income tax expense                              287,218         158,434 
    Depreciation of property and equipment           65,596          80,397 
    Amortization of intangible assets                   305             305 
    Net unrealized foreign exchange (gains)                                 
     losses                                          85,136         (12,611)
    Expense recognized in respect of equity-                                
     settled share-based payments                    16,711          18,796 
                                                  1,255,065         662,405 
  Movements in non-cash working capital            (891,550)       (156,651)
  Cash generated from operations                    363,515         505,754 
  Income taxes paid                                (583,871)              - 
Net cash (used in) generated from operating                                 
 activities                                        (220,356)        505,754 
Cash flows used in investing activities                                     
  Payments for property and equipment               (46,776)        (90,355)
  Payments for intangible assets                    (50,858)              - 
  Acquisition of a business                      (1,000,710)              - 
Net cash used in investing activities            (1,098,344)        (90,355)
Cash flows from financing activities                                        
  Proceeds from issue of ordinary shares                                    
   under employee share option plan                  16,750               - 
Net cash generated from financing activities         16,750               - 
Net (decrease) increase in cash                  (1,301,950)        415,399 
Cash and cash equivalents at beginning of                                   
 the period                                       7,323,303       4,405,624 
Effects of translation of foreign currency                                  
 items                                                1,673           6,246 
Cash and cash equivalents at end of the                                     
 period                                       $   6,023,026   $   4,827,269 

Questor Technology Inc.
Audrey Mascarenhas
President and Chief Executive Officer
(403) 571-1530
(403) 571-1539 (FAX)

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