Kelso Technologies Inc. (“Kelso” or the “Company”), (TSX:
KLS), (NYSE American: KIQ) reports that the Company has released
its audited financial statements and Management Discussion and
Analysis for the year ended December 31, 2018.
The audited year end 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
|
Year ended December 31, |
|
|
2018 |
|
|
2017 |
|
Revenues |
$ |
12,716,596 |
|
$ |
6,062,778 |
|
Gross
profit (loss) |
$ |
5,287,216 |
|
$ |
1,018,685 |
|
Gross
profit margin (net) |
|
41.6 |
% |
|
16.8 |
% |
Net
income (loss) |
$ |
194,453 |
|
$ |
(5,015,911 |
) |
EBITDA (loss) |
$ |
1,017,153 |
|
$ |
(4,608,683 |
) |
EPS
(basic and diluted) |
$ |
0.00 |
|
$ |
(0.11 |
) |
LIQUIDITY AND CAPITAL
RESOURCES
At December 31, 2018 the Company had cash on
deposit in the amount of $1,246,244, accounts receivable of
$1,224,235, prepaid expenses of $110,258 and inventory of
$3,668,401 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
December 31, 2018 was $4,469,882 compared to $3,628,911 at December
31, 2017. Accounts receivable are collected within 30 days
from invoicing shipments giving Kelso $1,224,235 of additional cash
flow plus $1,233,376 of available cash to discharge liabilities of
$1,312,517 on a timely basis subsequent to December 31, 2018.
Net assets of the Company improved to $8,165,734
at December 31, 2018 compared to $7,565,233 at December 31,
2017. As of December 31, 2018 the Company had no
interest-bearing long-term liabilities or debt.
OUTLOOK
Throughout 2018 the Company’s dedicated
stakeholders including new motivated customers actively pulled
together to improve Kelso’s commercial business capabilities.
These initiatives provided the necessary resources to ensure the
Company’s survival during difficult recessionary times in
2017. These efforts directly impacted the Company’s improved
financial performance in 2018 and fuel the Company’s positive
outlook for the foreseeable future.
Over the past several years the Company’s
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 an imperative strategic
goal as management believed that it was essential to achieve a
healthy sustainable financial turnaround. Under these
initiatives the Company has experienced improved sales growth and
better contribution margins providing a steady recovery of the
Company’s available capital reserves. This turn of events has
allowed the Company to continue to pursue Kelso’s ambitions to
develop new business opportunities, sales growth and new products
requiring regulatory certification from the American Association of
Railroads (“AAR”).
Management has been encouraged by the sales
growth in 2018 and the revenue prospects for 2019 and 2020. Crude
oil, ethanol and chemicals are the key commodities that are leading
the way in the resurgence of rail tank car market activity. This
stimulus has led industrial rail tank car analysts to expect
average new-build production rates to grow from approximately
12,000 tank cars in 2018 to 22,000 tank cars in both 2019 and 2020.
Based on these independent new-build predictions and the Company’s
historic retrofit/repair business where Kelso supplied its
specialized tank car Pressure Relief Valve (“PRV”) equipment to
over 8,000 tank cars in 2018, Kelso anticipates to equip over
10,000 tank cars in both 2019 and 2020.
The key hurdle for sales growth is the
achievement of AAR regulatory certifications that are required for
full commercial adoption by railroad customers. In February 2019
the Company’s Vacuum Relief Valve (“VRV”) received AAR
certification and sales have commenced. The VRV can add another
$1,000 to $1,500 per tank car to Kelso’s aggregate sales and is
expected to boost overall revenues in future periods.
A key dynamic for the Company’s financial growth
is getting a wider variety of Kelso’s tank car products adopted by
hazmat shippers through a combination of OEM, retrofit and repair
activities. Once this adoption trend can be firmly established the
Company expects customers to begin to specify combinations of
Kelso’s AAR certified One-Bolt Manway and VRV along with the
Company’s proven PRV. Kelso’s longer term goal is to improve tank
car revenues from a PRV only based revenue stream of approximately
$1,400 per tank car to in excess of $10,000 per tank car.
A key barrier to the pace of the Company’s
technology growth is that there is no mandatory requirement for any
company to participate in service trials of new technology.
This means Kelso must source volunteer companies to participate in
service trial programs. This is a difficult circumstance but Kelso
continues to find technology partners and service trials for the
Company’s ceramic ball Bottom Outlet Valve (“BOV”) and Kelso’s high
flow pressure car PRV are in process. Customers’ willingness to
participate in this process is an encouraging indication that these
products will be in demand once AAR certifications are
completed.
The Company continues to prioritize promising
product development initiatives to build future value propositions
for Kelso’s stakeholders even though R&D projects are often
complex and expensive. Timing of new revenue streams remains
unpredictable and certainly not guaranteed. Kelso’s 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 a specialized vehicle suspension system
for use in rugged outback terrain applications. It is important
that Kelso continues to develop new products that can eventually
add a diverse array of new sales opportunities.
Although many operational and human resource
expenses have been reduced and the Company’s capital management
remains challenging, recent improvements in cash flows from sales
growth in 2018 and early 2019 have been more than adequate to fund
Kelso’s ongoing business activities. The Company currently operates
without the need for immediate access to new equity capital or debt
and the Company remains free of interest-bearing long-term
debt.
In addition, the Company has implemented new
business processes, new personnel, changes to Kelso’s corporate
culture and introduced a more effective approach to customer
service, marketing and sales. In 2018 the results were
encouraging with growth in sales, profitability and overall working
capital position. In 2019 business momentum appears to be
growing and the Company maintains a strong growth outlook for 2019
and 2020. The key objectives of Kelso’s strategic plans are
to achieve a more balanced growth of profitability from diverse
revenue streams, stronger financial performance and improved
valuation of the Company’s business activities.
About Kelso Technologies
Inc.
Kelso is an engineering product development
company that specializes in the design, production and distribution
of proprietary service equipment used in transportation
applications. The Company’s reputation has been earned as a
designer and reliable supplier of unique high performance rail tank
car equipment that provides for the safe handling and containment
of hazardous and non-hazardous commodities during transport.
All Kelso products are specifically designed to provide economic
and operational advantages to customers while reducing the
potential effects of human error and environmental harm.
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) and
write off of assets. 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 industrial rail tank car analysts to expect average
new-build production rates to grow from approximately 12,000 tank
cars in 2018 to 22,000 tank cars in both 2019 and 2020; that based
on these new-build predictions and the Company’s historic
retrofit/repair business Kelso anticipates equipping over 10,000
tank cars in 2019 and 2020; that once an adoption trend from
customers can be established for the Company’s AAR certified
One-Bolt Manway and VRV along with the Company’s proven PRV the
Company’s long-term goal is to improve tank car revenues from a PRV
based revenue stream of approximately $1,400 per tank car to in
excess of $10,000 per tank car; that customers’ willingness to
participate in AAR product service trials is an encouraging
indication that the resulting products will be in demand once AAR
certifications are completed; that the Company can currently
operate without immediate access to new equity capital or debt;
that business momentum appears to be growing and we maintain a
strong growth outlook for 2019 and 2020; and that the Company’s key
objectives in the Company’s strategic plans are to achieve a more
balanced growth of profitability from diverse revenue streams,
stronger financial performance and improved valuation of the
Company’s business capabilities. 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; the Company’s new products may not receive AAR
certification; orders may be cancelled and competitors may enter
the market with new product offerings which could capture some of
the Company’s market share; and the Company’s 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 Avenue |
|
|
|
South
Surrey, BC V4A 8J1 |
|
|
|
www.kelsotech.com |
|
Kelso Technologies (AMEX:KIQ)
Historical Stock Chart
From Aug 2024 to Sep 2024
Kelso Technologies (AMEX:KIQ)
Historical Stock Chart
From Sep 2023 to Sep 2024