CDTi Announces Fourth Quarter and Year-end 2016 Financial Results
March 31 2017 - 4:05PM
– Began commercialization of Powder-to-Coat model
in fast-growing China automotive market –– Launched technology
provider model in North American heavy-duty market –
Clean Diesel Technologies, Inc. (Nasdaq:CDTI) (“CDTi” or “the
Company”), a leader in advanced emission control technology,
reported its financial results for the fourth quarter and year
ended December 31, 2016.
Matthew Beale, CDTi’s CEO, stated, “In 2016, we completed a
comprehensive financial and operational reorganization of CDTi,
creating the foundation for our advanced materials and high-value
catalyst business. In addition, we secured core commercial
partnerships that will drive profitable revenue growth.
“Emissions control is at the nexus of many key trends driving
the global automotive industry. We have successfully
repositioned CDTi as a provider of enabling technology to catalyst
manufacturers in our key growth markets of North America, China and
India; markets that together account for half of all global vehicle
production. In doing so, we have multiplied CDTi’s addressable
market – former competitors are now customers – while introducing a
scalable business model that gives our technology global reach. As
we enter 2017, we have strong momentum with well-positioned and
highly motivated manufacturing partners that are poised to grow
market share by deploying our low-cost catalyst technologies.”
Recent Business Highlights
- Powder-to-coat commercial launch in China
- Formed strategic alliance with Sino-Precious Metals Holding
Co., Ltd. (SPMH), one of China’s largest domestic catalyst coaters
for the China passenger car market
- Entered commercial agreements for supply of BMARS™ and SPGM™
DOC powder with three domestic catalyst manufacturers
- Initial revenue anticipated in Q4 2017
- Solutions provider for private label product lines in
North American heavy-duty market
- DENSO launched a new line of private label heavy-duty diesel
emissions control aftermarket products featuring CDTi’s Diesel
Particulate Filter (DPF) and Diesel Oxidation Catalyst (DOC)
technology
- Signed private label supply agreements with two new
manufacturing and distribution partners that will introduce DPF and
DOC product lines
Financial Highlights: Fourth Quarter 2016 compared to
Fourth Quarter 2015
- Total revenue was $8.6 million, compared to $9.7 million.
- Coated catalyst revenue was $4.9 million, compared to $4.8
million.
- Emissions control systems revenue was $3.4 million, compared to
$4.1 million.
- Technology and advanced materials revenue was $0.3 million,
compared to $0.7 million.
- Gross margin was 11%, compared to 29%. The decrease reflects
$1.1 million of inventory write-offs following the change of
manufacturing strategy to an outsource model.
- Total operating expenses in the fourth quarter of 2016 were
$9.3 million, compared to $5.5 million in the fourth quarter of
2015. Operating expenses in the fourth quarter of 2016 included the
following items totaling $6.2 million:
- Goodwill impairment of $4.7 million
- $0.7 million related to the final exit of the Canadian
location
- $0.8 million of stock compensation expense
- The company anticipates quarterly operating expenses will be
between $3.0 million and $3.5 million in 2017.
- Net loss was $7.6 million, or $0.69 per share, compared to a
net loss of $0.9 million, or $0.26 per share in the fourth quarter
of 2015.
- Cash at December 31, 2016 was $7.8 million, compared to $3.0
million at December 31, 2015. In the fourth quarter, CDTi completed
a capital raise of approximately $10.3 million in gross proceeds
through a private placement of common stock.
Financial Highlights: 2016 compared to 2015
- Total revenue for the full year 2016 was $36.8 million,
compared to $39.7 million for 2015.
- Gross margin was 22% for 2016, compared to 27% for 2015.
- Total operating expenses for 2016 were $23.7 million, which
includes $2.6 million in severance and other charges relating to
CDTi’s corporate restructuring as well as a goodwill impairment of
$4.7 million, compared to $21.2 million in 2015, which includes
$1.5 million in severance and other charges.
- Net loss for 2016 was $23.5 million, or $3.84 per share,
including non-cash charges of $12.8 million, which included the
effect of the extinguishment of debt and goodwill impairment. This
compares to net loss of $8.5 million, or $2.71 per share, in the
same prior year period.
Financial OutlookTracy Kern, CDTI’s CFO,
stated, “For the full year 2017, we expect revenue to be between
$32.0 million and $35.0 million. We expect gross margin to be
between 23% and 25%. We are targeting breakeven on an income
from continuing operations basis in the second half of 2017.”
Conference Call and Webcast InformationCDTi
will host a conference call and live webcast beginning at 1:30 p.m.
Pacific Time today, March 31st to discuss its financial results and
its business outlook. This conference call will contain
forward-looking information. To participate in the conference call,
please dial +1 (877) 303-9240 and international participants should
dial +1 (760) 666-3571. The conference code is 71254554. The
conference call will be webcast live on the CDTi website at
www.cdti.com under the "Investor Relations" section. To listen to
the live webcast, participants should visit the site at least 15
minutes prior to the conference to download any required streaming
media software. An archived recording of the conference call will
be available on the CDTi website for 30 days. You may also access a
telephone replay for two business days following the conclusion of
the call by dialing +1 (855) 859-2056 or +1 (404) 537-3406 if
dialing in internationally. The passcode is 71254554.
About CDTiCDTi develops advanced materials
technology for the emissions control market. CDTi’s proprietary
technologies provide high-value sustainable solutions to reduce
hazardous emissions, increase energy efficiency and lower the
carbon intensity of on- and off-road combustion engine systems.
With a continuing focus on innovation-driven commercialization and
global expansion, CDTi’s breakthrough Powder-to-Coat (P2C™)
technology exploits the Company’s high-performance, advanced
low-platinum group metal (PGM) emission reduction catalysts. Key
technology platforms include Mixed Phase Catalyst (MPC®), Base
Metal Activated Rhodium Support (BMARS™), Synergized PGM (SPGM™),
Zero PGM (ZPGM™) and Spinel™. For more information, please visit
www.cdti.com.
Forward-Looking StatementsCertain information
contained in this press release constitutes forward-looking
statements, including any statements that are not statements of
historical fact. You can identify these forward-looking statements
by the use of the words “believes”, “expects”, “anticipates”,
“plans”, “may”, “will”, “would”, “intends”, “estimates”, and other
similar expressions, whether in the negative or affirmative.
Forward-looking statements are based on a series of expectations,
assumptions, estimates and projections, which involve substantial
uncertainty and risk. In this document, the Company includes
forward-looking statements regarding the acceleration of the
Company’s business transformation into an advanced materials
company, global trends in the automotive and heavy duty diesel
markets, the Company’s future financial performance, and the
performance of the Company’s technology, are all subject to risks
and uncertainties that could cause our actual results and financial
position to differ materially. In general, actual results may
differ materially from those indicated by such forward-looking
statements as a result of risks and uncertainties, including, but
not limited, to (i) that the Company may not be able to (a)
successfully implement, or implement at all, its strategic
priorities; (b) streamline its operations or align its organization
and infrastructure with the anticipated business; (c) meet
expectations or projections; (d) decrease costs; (e) increase
sales; (f) obtain adequate funding; (g) retain or secure customers;
(h) increase its customer base; (i) protect its intellectual
property; (j) successfully evolve into an advanced materials
supplier or, even if successful, increase profitability; (k)
successfully market new products; (l) obtain product
verifications or approvals; (m) attract or retain key personnel;
(n) validate, optimize and scale our powder-to-coat capability; or
(o) realize benefits from investments; (ii) funding for and
enforcement and tightening of emissions controls, standards and
regulations; (iii) prices of PGM and rare earth metals; (iv)
royalty and other restrictions on sales in certain Asian countries;
(v) supply disruptions or failures; (vi) regulatory, marketing and
competitive factors; (vii) environmental harm or damages; and
(viii) other risks and uncertainties discussed or referenced in the
Company’s filings with the Securities and Exchange Commission,
including its most recent Annual Report on Form 10-K and any
subsequent periodic reports on Form 10-Q and Form 8-K. In addition,
any forward-looking statements represent the Company’s estimates
only as of the date of such statements and should not be relied
upon as representing the Company’s estimates as of any subsequent
date. The Company specifically disclaims any obligation to update
forward-looking statements. All forward-looking statements in this
press release are qualified in their entirety by this cautionary
statement.
Contact Information: Becky Herrick or Cathy
MattisonLHA (IR Agency)+1 415 433
3777bherrick@lhai.com / cmattison@lhai.com
[Tables to follow]
CLEAN DIESEL TECHNOLOGIES, INC. |
|
Condensed Consolidated Balance
Sheet |
(in thousands, except share and per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
2016 |
|
|
2015 |
|
Assets |
|
|
$ |
|
$ |
Current
assets: |
|
|
|
|
Cash |
|
7,839 |
|
|
2,958 |
|
|
Accounts
receivable, net |
5,398 |
|
|
4,255 |
|
|
Inventories |
7,125 |
|
|
7,918 |
|
|
Prepaid
expenses and other current assets |
968 |
|
|
1,568 |
|
|
|
Total
current assets |
21,330 |
|
|
16,699 |
|
Property
and equipment, net |
1,158 |
|
|
1,538 |
|
Intangible
assets, net |
1,483 |
|
|
1,901 |
|
Goodwill |
|
- |
|
|
4,659 |
|
Deferred
tax asset |
554 |
|
|
- |
|
Other
assets |
|
305 |
|
|
305 |
|
|
|
Total
assets |
24,830 |
|
|
25,102 |
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
|
Line of
Credit |
1,458 |
|
|
3,513 |
|
|
Shareholder
note payable |
1,803 |
|
|
- |
|
|
Accounts
payable |
5,979 |
|
|
5,012 |
|
|
Accrued
expenses and other current liabilities |
6,345 |
|
|
7,854 |
|
|
Income
taxes payable |
642 |
|
|
534 |
|
|
|
Total
current liabilities |
16,227 |
|
|
16,913 |
|
|
Shareholder
note payable, non-current |
- |
|
|
7,559 |
|
|
Deferred
tax liability |
- |
|
|
193 |
|
|
|
Total
liabilities |
16,227 |
|
|
24,665 |
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
Common
stock |
157 |
|
|
36 |
|
|
Additional
paid in capital |
237,838 |
|
|
205,377 |
|
|
Accumulated
other comprehensive loss |
(6,329 |
) |
|
(5,387 |
) |
|
Accumulated
deficit |
(223,063 |
) |
|
(199,589 |
) |
|
|
Total
stockholders' equity |
8,603 |
|
|
437 |
|
|
|
Total
liabilities and stockholders' equity |
24,830 |
|
|
25,102 |
|
|
|
|
|
|
|
|
CLEAN DIESEL TECHNOLOGIES, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations |
(in thousands, except share and per share
amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Coated catalyst |
$ |
4,894 |
|
57 |
% |
|
$ |
4,833 |
|
50 |
% |
|
$ |
22,537 |
|
61 |
% |
|
$ |
23,075 |
|
58 |
% |
|
Emission control systems |
|
3,405 |
|
40 |
% |
|
|
4,147 |
|
43 |
% |
|
|
12,970 |
|
35 |
% |
|
|
15,415 |
|
39 |
% |
|
Technology and advanced materials |
|
256 |
|
3 |
% |
|
|
721 |
|
7 |
% |
|
|
1,332 |
|
4 |
% |
|
|
1,248 |
|
3 |
% |
Total
revenues |
$ |
8,555 |
|
100 |
% |
|
$ |
9,701 |
|
100 |
% |
|
$ |
36,839 |
|
100 |
% |
|
$ |
39,738 |
|
100 |
% |
Gross
profit |
|
935 |
|
|
|
|
2,850 |
|
|
|
|
8,066 |
|
|
|
|
10,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
$ |
3,213 |
|
|
|
$ |
2,444 |
|
|
|
$ |
11,837 |
|
|
|
$ |
11,903 |
|
|
|
Research and development |
|
702 |
|
|
|
|
1,550 |
|
|
|
|
4,657 |
|
|
|
|
7,826 |
|
|
|
Severance and other charges |
|
686 |
|
|
|
|
1,478 |
|
|
|
|
2,555 |
|
|
|
|
1,482 |
|
|
|
Goodwill impairment |
|
4,675 |
|
|
|
|
- |
|
|
|
|
4,675 |
|
|
|
|
- |
|
|
|
Total operating expenses |
|
9,276 |
|
|
|
|
5,472 |
|
|
|
|
23,724 |
|
|
|
|
21,211 |
|
|
Loss from
continuing operations |
|
( 8,341 |
) |
|
|
|
( 2,622 |
) |
|
|
|
( 15,658 |
) |
|
|
|
( 10,319 |
) |
|
Other
income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
101 |
|
|
|
|
( 280 |
) |
|
|
|
( 1,535 |
) |
|
|
|
( 1,166 |
) |
|
|
Gain on change in fair value of bifurcated derivative
liability |
|
- |
|
|
|
|
- |
|
|
|
|
2,754 |
|
|
|
|
- |
|
|
|
Loss on extinguishment of convertible debt |
|
162 |
|
|
|
|
- |
|
|
|
|
( 12,410 |
) |
|
|
|
- |
|
|
|
Gain on change in fair value of liability-classified
warrants |
|
671 |
|
|
|
|
- |
|
|
|
|
1,554 |
|
|
|
|
2,617 |
|
|
|
Other income, net |
|
41 |
|
|
|
|
1,755 |
|
|
|
|
863 |
|
|
|
|
47 |
|
|
Loss from
continuing operations before income taxes |
|
( 7,366 |
) |
|
|
|
( 1,147 |
) |
|
|
|
( 24,432 |
) |
|
|
|
( 8,821 |
) |
|
Income tax
expense (benefit) from continuing operations |
|
274 |
|
|
|
|
( 311 |
) |
|
|
|
( 958 |
) |
|
|
|
( 399 |
) |
|
Net loss
from continuing operations |
|
( 7,640 |
) |
|
|
|
( 836 |
) |
|
|
|
( 23,474 |
) |
|
|
|
( 8,422 |
) |
|
Discontinued operations |
|
- |
|
|
|
|
( 45 |
) |
|
|
|
- |
|
|
|
|
( 112 |
) |
|
Net
loss |
|
$ |
(7,640 |
) |
|
|
$ |
(881 |
) |
|
|
$ |
(23,474 |
) |
|
|
$ |
(8,534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted EPS |
$ |
(0.69 |
) |
|
|
$ |
(0.26 |
) |
|
|
$ |
(3.84 |
) |
|
|
$ |
(2.71 |
) |
|
Weighted
shares outstanding |
|
11,011 |
|
|
|
|
3,435 |
|
|
|
|
6,107 |
|
|
|
|
3,151 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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