Kelso Technologies Inc.: Financial Results for the Three Months
Ended March 31, 2014
VANCOUVER, BRITISH COLUMBIA and DOWNERS GROVE,
ILLINOIS--(Marketwired - May 14, 2014) - Kelso Technologies Inc.
(TSX-VENTURE:KLS)(OTCQX:KEOSF) -
The Company reports
that it has released its interim consolidated financial statements
and Management Discussion and Analysis covering the three months
ended March 31, 2014.
References to EBITDA
in this press release refer to net earnings from continuing
operations before interest, taxes, amortization and deferred income
tax expense. EBITDA is not an earnings measure recognized by
International Financial Reporting Standards (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.
All amounts are
expressed in United States dollars unless otherwise indicated.
HIGHLIGHTS OF THE
THREE MONTHS ENDED MARCH 31, 2014
- Reported net income (IFRS) for the three months ended March 31,
2014 was $1,223,575 ($0.03 per share) compared to reported net
income of $79,972 ($0.00 per share) for the three months ended
March 31, 2013.
- Revenues for the three months ended March 31, 2014 reached
$5,480,034 compared to the three months ended March 31, 2013 of
$2,014,062.
- EBITDA for the three months ended March 31, 2014 was $1,666,630
(30.4% of revenues) compared to EBITDA of $103,381 (5.1% of
revenues) for the three months ended March 31, 2013.
- Reported net income of $1,223,575 included items not involving
cash for amortization of $18,715 and a deferred income tax expense
in the amount of $424,340.
- Business growth, product and market development progress,
pre-sales strategic costs and financial results for the first
quarter of 2014 are in line with management's budgets and
expectations.
- Average gross profit on sales improved to 46.6% during the
three months ended March 31, 2014.
- Cash on deposit at March 31, 2014 was $6,647,680.
- Working capital at March 31, 2014 remained healthy at
$8,511,998.
- Company remained free of interest-bearing long-term debt
commitments.
- Net tangible assets grew to $10,323,000 at March 31, 2014 up
from $8,797,241 at December 31, 2013.
LIQUIDITY AND
CAPITAL RESOURCES
At March 31, 2014
the Company had cash on deposit in the amount of $6,647,680,
accounts receivable of $964,598, prepaid expenses of $337,301 and
inventory of $2,682,223 compared to 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 at December 31, 2013.
The working capital
position of the Company at March 31, 2014 improved to $8,511,998
which includes $460,957 due to related parties compared to a
working capital position of $7,447,170 which includes $284,847 due
to related parties at December 31, 2013.
The Company received
new equity capital in the amount of $319,000 from the exercise of
warrants and options and subscriptions received during the quarter
ended March 31, 2014. Subsequent to March 31, 2014 the Company has
received $217,684 from the exercise of 77,500 warrants and 125,283
options.
OUTLOOK
Kelso continues to
gain business momentum and is well positioned to capitalize on the
high demand for rail tank cars currently being experienced.
Regulatory bodies are finalizing design criteria for safety
enhancements to be incorporated in the 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 and other regulatory bodies propose 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 to provide for faster release
of the hazardous product. In addition they will require 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. Kelso has become a leading designer and
producer of patented pressure relief valves and are proactively
developing a new commercial bottom outlet valve both of which are
designed to meet the new regulatory specifications. Kelso's new
dual rated 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 adoption strategies are being organized with our
stakeholders.
We continue 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 earnings and the growth of dividends and
corporate value on behalf of the shareholders of Kelso.
About Kelso
Technologies
Kelso is a railroad
equipment supplier that 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.
For a more complete
business and financial profile of the Company, the financials
statements and management discussion and analysis can be viewed in
their entirety on the Company's website at www.kelsotech.com or
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. 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.comwww.kelsotech.com
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