Kelso Technologies Inc.: Financial Results for the Year Ended
December 31, 2013
VANCOUVER, BRITISH COLUMBIA and DOWNERS GROVE,
ILLINOIS--(Marketwired - Mar 31, 2014) - Kelso Technologies Inc.
(the "Company" or "Kelso") (TSX-VENTURE:KLS)(OTCQX:KEOSF) - The
Company reports that it has released its audited financial
statements and Management Discussion and Analysis for the year
ended December 31, 2013.
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"). Effective August 31, 2011, the Company changed its
functional and reporting currency to the US dollar. Accordingly,
all amounts herein are expressed in United States dollars (the
Company's functional currency) unless otherwise indicated.
The Company changed its fiscal year end to December 31 effective
December 31, 2012. In accordance with transition rules the year
ended December 31, 2013 has been prepared with the comparative
period being the four months ended December 31, 2012 and year ended
August 31, 2012.
References to EBITDA refer to net earnings from continuing
operations before interest, taxes, amortization, deferred income
tax recovery and non cash share based payments (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.
HIGHLIGHTS OF THE YEAR ENDED DECEMBER 31, 2013
- Reported net income (IFRS) for the year ended December 31, 2013
was $2,456,636 compared to $10,988 for the four month year ended
December 31, 2012 and a net loss of $1,276,827 for the year ended
August 31, 2012.
- Revenue for the year ended December 31, 2013 reached
$13,131,387 compared to the four month year ended December 31, 2012
of $2,830,778 and $2,233,807 for the year ended August 31,
2012.
- EBITDA for the year ended December 31, 2013 rose to $2,496,632
(19% of revenues) compared to EBITDA of $194,159 (6.8% of revenues)
for the four month year ended December 31, 2012 and an EBITDA loss
of $1,178,220 for the year ended August 31, 2012.
- Reported net income of $2,456,636 included items not involving
cash for amortization of $71,731 and recognition of share based
payments (Black Scholes option pricing model) in the amount of
$743,756 which estimates the dilutive effect of incentive stock
options granted during the period and vesting from the prior year;
a write off of capital assets at our leased facility in Lisle,
Illinois of $56,680 and a deferred income tax recovery in the
amount of $832,171.
- Business growth; product and market development progress;
pre-sales strategic costs and; financial results for 2013 are in
line with management's budgets and expectations.
- Average gross profit on sales rose to 40% during the year ended
December 31, 2013.
- Cash on deposit at December 31, 2013 was $4,462,531.
- Working capital at December 31, 2013 remained healthy at
$7,447,170.
- Company remained free of interest-bearing long-term debt
commitments.
- Net tangible assets grew to $8,797,241 at December 31, 2013 up
from $4,036,440 at December 31, 2012.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2013 the Company had cash on deposit in the
amount of $4,462,531; accounts receivable of $1,259,340; prepaid
expenses of $71,696 and inventory of $2,139,750 compared to cash on
deposit in the amount of $1,421,053; accounts receivable of
$1,055,778; prepaid expenses of $88,506 and inventory of $1,188,467
at December 31, 2012.
The working capital position of the Company at December 31, 2013
improved to $7,447,170 which includes $284,847 due to related
parties compared to a working capital position of $3,470,762 which
includes $12,247 due to related parties at December 31, 2012.
OUTLOOK
Recent derailments of trains carrying hazardous materials have
accelerated government concerns over railroad safety. Regulatory
bodies are now finalizing design criteria for safety enhancements
to be incorporated in production of new tank cars and retrofitted
on to existing railroad tank cars carrying flammable liquids such
as crude oil and ethanol. The Association of American Railroads, in
response to these concerns, proposes a number of rule changes for
rail tank cars. They include the use of a high capacity pressure
relief valve to protect against a rise in internal pressure
resulting from fire and to provide for faster release of the
product; and bottom outlet valves that are configured to prevent
the operating handle from inadvertently opening the bottom outlet
in the event of an accident.
These new regulatory design and construction standards require
innovation to existing tank car service equipment. This is what
Kelso has been part of as a leading designer and producer of
patented pressure relief valves and a new bottom outlet valve both
of which are designed to meet the new regulatory specifications.
Kelso's new dual rating pressure relief valve is designed to
protect the tank against over-pressurization and provide quick
evacuation of product in an accidental environment involving fire.
Our new bottom outlet valve is designed for the containment of
hazardous materials at the bottom outlet in the event of a train
derailment.
With these new developments Kelso is expected to continue its
steady business growth. Our products are well received and continue
to prove their economic value to our railroad customers. The
backlog for new tank cars has reached over 60,000 units and the
retrofit demand is expected to reach 90,000 units. These are very
large sales opportunities for Kelso to capitalize on.
Kelso is adapting its product designs to respond to the industry
demand which may not wait until final regulations are set in place.
In addition we have the unique ability to scale our production
capacity to service all OEM, retrofit and repair customers' needs.
We believe that the trend to new more stringent regulations and the
existing backlog of orders will continue to intensify the momentum
of our revenue growth from these products.
We are also working with industry specialists in crude oil
loading terminal technologies on adoption strategies for our
one-bolt manway technology. Terminal operators can expect to ship
30% more oil from existing facilities through our higher speed
loading and uniform sealing technology improving their netback
profits on shipments of crude oil. The case for utilization of our
manway is economically compelling and we expect to begin generating
revenue in mid 2014.
Our financial health and welfare remains very strong. Our assets
remain unencumbered and we carry no interest-bearing debt. We are
internally financed from operations and our working capital has
risen to exceed $7,000,000. From these financial resources we
continue to invest in new product development; independent lab
testing and engineering services; new patent applications; enhanced
Tier 1 regulatory disclosure and listing strategies in Canada and
the United States; and more streamlined production capability with
the construction of a modern 44,000 square foot facility that is
scheduled to be completed in the second quarter of 2014.
In 2013 we were able to demonstrate our value as a creative
innovator and reliable supplier of the products required by the
railroad industry. Although we have challenges ahead we are
extremely optimistic about our position in the industry and the
prospects of our future business development. We will continue to
build the quality of our brand and move forward on the improvement
of revenue performance, profit margins and corporate value on
behalf of the shareholders of Kelso.
About Kelso Technologies
Kelso is a railroad equipment supplier that designs, produces
and sells proprietary tank car service equipment used in the safe
loading, unloading and containment of hazardous materials during
transport. Products are specifically designed to provide economic
and operational advantages while reducing the potential effects of
human error and environmental harm during the transport of
hazardous materials. The Company is experiencing rapid
multi-million dollar revenue growth based on its expanding
commercial product catalogue and increased concerns about railroad
safety in North America.
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 on www.sedar.com.
On behalf of the Board of Directors,
James R. Bond, CEO and President
Legal Notice Regarding Forward-Looking Statements: This news
release contains "forward-looking statements" within the meaning of
applicable Canadian securities legislation. Forward-looking
statements are indicated expectations or intentions.
Forward-looking statements in this news release include that the
Company is expected to continue its steady business growth due to
new innovations required by railroad regulatory bodies; that our
products are well received and continue to prove their economic
value to our railroad customers; that Kelso is adapting its product
designs to respond to the industry demand; that we have the unique
ability to scale our production capacity to service all OEM,
retrofit and repair customers' needs; that the trend to new more
stringent railroad regulations and the existing backlog of orders
will continue to intensify the momentum of our revenue growth from
these products; that the case for utilization of our one-bolt
manway is economically compelling and we expect to begin generating
revenue from this product in mid 2014; and that Kelso is currently
experiencing rapid multi-million dollar revenue growth based on its
expanding commercial product catalogue. 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 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 products involve detailed
proprietary and engineering knowledge and specific customer
adoption criteria, hence factors that could cause actual results to
be materially different include that we may be unsuccessful in
raising any additional capital needs that may arise; we may not
have sufficient capital to develop, produce and deliver new orders;
product development may face unexpected delays; orders that are
placed may be cancelled; delivery of orders may be rescheduled;
product may not perform as well as expected; markets may not
develop as quickly as anticipated or at all; and operations may run
into permit, labor or other problems. Further, we are reliant on
certain key employees who may leave the Company and we may be
unable to protect or defend our intellectual property. Investors
are cautioned against placing undue reliance on forward-looking
statements. 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.
Neither the 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.
Kelso Technologies Inc.James R. BondCEO and
President250-764-3618bond@kelsotech.comKelso Technologies
Inc.Richard LeeChief Financial
Officer604-590-1525lee@kelsotech.comCorporate Address:Kelso
Technologies Inc.7773 - 118A StreetNorth Delta, BC, V4C
6V1www.kelsotech.com
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