Kelso Technologies Inc. (“Kelso” or the “Company”), (TSX: KLS),
(NYSE American: KIQ) reports that the Company has released its
unaudited interim consolidated financial statements and Management
Discussion and Analysis for the three and nine months ended
September 30, 2019.
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 September 30, |
Nine months ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Revenues |
$ |
5,596,031 |
$ |
3,491,602 |
$ |
15,247,490 |
$ |
8,538,716 |
|
Gross profit |
$ |
2,576,579 |
$ |
1,543,995 |
$ |
7,029,643 |
$ |
3,471,679 |
|
Income tax expense (recovery) |
$ |
243,832 |
$ |
161 |
$ |
619,465 |
$ |
(3,052 |
) |
Net income (Loss) |
$ |
759,713 |
$ |
261,717 |
$ |
2,091,505 |
$ |
(180,336 |
) |
EBITDA (Loss) |
$ |
1,257,077 |
$ |
383,563 |
$ |
3,162,063 |
$ |
62,195 |
|
EPS - basic and diluted |
$ |
0.02 |
$ |
0.01 |
$ |
0.04 |
$ |
0.00 |
|
LIQUIDITY AND CAPITAL
RESOURCES
At September 30, 2019 the Company had cash on
deposit in the amount of $1,690,662, accounts receivable of
$2,725,217, prepaid expenses of $115,339 and inventory of
$4,501,079 compared to 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 at December 31, 2018.
The Company has accrued income tax payable of
$591,605 for the nine months ended September 30, 2019 compared to
an income tax payable of $466,739 at December 31, 2018.
The working capital position of the Company at
September 30, 2019 was $6,950,856 compared to $4,469,882 at
December 31, 2018. The majority of accounts receivable are
collected within 30 days from invoicing shipments giving Kelso
$2,725,217 of additional cash flow plus $1,690,662 of available
cash to discharge accounts payable and accrued liabilities of
$1,489,836 on a timely basis subsequent to September 30,
2019. Income taxes payable are not due until 2020.
Net assets of the Company improved to
$10,362,022 at September 30, 2019 compared to $8,165,734 at
December 31, 2018. The Company had no interest-bearing
long-term liabilities or debt at September 30, 2019. If sales
volume continues to grow at the current pace then the Company can,
for the time being, generate the necessary capital resources
required to finance all operations.
OUTLOOK
Kelso continues to take measures to maintain the
growth of its financial health from operational activities.
The impact of improved business momentum has been very apparent
throughout 2019 despite a perceived downtick in revenue in second
quarter rail activity when in fact orders, deliveries and backlog
for rail tank cars remained at very healthy levels.
Management believes that revenue growth should continue for the
balance of this year.
Overall rail traffic in North America in 2019 is
down 3% year-over-year mainly due to decreases in shipments of
coal, forest products, grains and non-metallic minerals. Rail
loadings for chemicals and petroleum products remain at healthy
levels. The rail tank car market has been stronger than
expected with rail tank car production backlogs at a current level
of approximately 30,000 units. Based on these new-build
predictions and our historic retrofit/repair business relationships
with over 60 customers Kelso anticipates equipping over 10,000 tank
cars in both 2019 and 2020 with an increasing number of new tank
cars being fitted with multiple pieces of our proprietary rail
equipment.
Strong contribution margins from sales have
provided a steady growth of positive cash flow replenishing our
available capital reserves. Working capital has improved to
$6,950,856 at September 30, 2019. We currently operate
without the need for access to new equity capital or credit
facilities. Our capital management goal is to continue to
finance operations from sales of our products thus avoiding the
need for dilutive new equity funding or interest-bearing long-term
debt.
We will continue to invest in promising product
development initiatives to build the next generation of revenue
opportunities 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 to
develop. Our R&D model has delivered an array of
promising new products that include new rail tank car valves,
specialized truck tanker equipment, fuel loading systems, military
applications, first responder emergency response kits and our
wilderness transportation technologies which includes our KXI™
suspension system for use in rugged wilderness applications
scheduled for launch in 2020. It remains a key strategic goal
to develop new products that can add a diverse array of new sales
opportunities that in time can provide a more predictable financial
growth year-over-year.
Despite the many hurdles in our business
development we have been able to improve our financial health in
2019 with new business opportunities and capabilities.
Business momentum appears to be consistent for now and we maintain
a steady growth outlook for the remainder of 2019 and 2020.
About Kelso Technologies
Kelso is an engineering product 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 issues. The Company offers
specialized truck tanker equipment, fuel loading systems, military
applications, first responder emergency response kits and
suspension systems for motor vehicles being used in rugged
wilderness 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 continues to take measures to maintain the
growth of its financial health from operational activities; that
management believes that revenue growth should continue for the
balance of this year; that ; that the rail tank car market has been
stronger than expected with rail tank car production backlogs at a
current level of approximately 30,000 units; that based on these
new-build predictions and our historic retrofit/repair business
relationships with over 60 customers Kelso anticipates equipping
over 10,000 tank cars in both 2019 and 2020 with an increasing
number of new tank cars being fitted with multiple pieces of our
proprietary rail equipment; that we can currently operate without
the need for access to new equity capital or credit facilities;
that we can develop new products that can add a diverse array of
new sales opportunities that in time can provide a more predictable
financial growth year-over-year; and that business momentum appears
to be consistent for now and we maintain a steady growth outlook
for the remainder of 2019 and 2020. 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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