Kelso Technologies Inc. (“Kelso” or the “Company”), (TSX: KLS),
(NYSE American: KIQ) reports that it has released its unaudited
consolidated interim financial statements and Management Discussion
and Analysis for the nine months ended September 30, 2023.
The unaudited consolidated interim 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.
The Company’s unaudited consolidated financial
statements and MD&A for the nine months ended September 30,
2023 were approved by the Board of Directors on November 8,
2023.
SUMMARY OF FINANCIAL PERFORMANCE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
2023 |
|
|
2022 |
|
Revenues |
|
$ |
7,750,557 |
|
$ |
8,541,711 |
|
Gross profit |
|
$ |
3,300,370 |
|
$ |
3,866,354 |
|
Gross profit margin |
|
|
43 |
% |
|
45 |
% |
Adjusted EBITDA (loss) |
|
$ |
(862,150 |
) |
$ |
252,107 |
|
Non-cash expenses |
|
$ |
1,020,906 |
|
$ |
1,144,508 |
|
Taxes |
|
$ |
104,898 |
|
$ |
42,700 |
|
Net income (loss) |
|
$ |
(1,936,518 |
) |
$ |
(935,101 |
) |
Basic earnings (loss) per share |
|
$ |
(0.03 |
) |
$ |
(0.02 |
) |
Three months ended September 30, |
|
|
|
Revenues |
|
$ |
3,138,137 |
|
$ |
2,708,364 |
|
Gross profit |
|
$ |
1,421,248 |
|
$ |
1,164,399 |
|
Gross profit margin |
|
|
45 |
% |
|
43 |
% |
Adjusted EBITDA (loss) |
|
$ |
277,981 |
|
$ |
(31,379 |
) |
Net Income (loss) |
|
$ |
(102,722 |
) |
$ |
(361,522 |
) |
Liquidity and Capital Resources |
|
|
September 30,
2023 |
|
|
December 31,
2022 |
|
Working capital |
|
$ |
5,559,748 |
|
$ |
7,000,568 |
|
Cash |
|
$ |
1,865,160 |
|
$ |
2,712,446 |
|
Accounts receivable |
|
$ |
1,069,237 |
|
$ |
1,381,979 |
|
Net equity |
|
$ |
8,906,728 |
|
$ |
10,781,672 |
|
Total assets |
|
$ |
10,041,687 |
|
$ |
12,147,143 |
|
Common shares outstanding |
|
|
54,320,086 |
|
|
54,320,086 |
|
LIQUIDITY AND CAPITAL
RESOURCES
As at September 30, 2023 the Company had cash on
deposit in the amount of $1,865,160, accounts receivable of
$1,069,237 prepaid expenses of $146,879 and inventory of $3,613,431
compared to cash on deposit in the amount of $2,712,446, accounts
receivable of $1,381,979, prepaid expenses of $92,768 and inventory
of $4,144,196 as at December 31, 2022.
The Company had income tax payable of $22,524 at
September 30, 2023 compared to $30,626 at December 31, 2022.
The working capital position of the Company as
at September 30, 2023 was $5,559,748 compared to $7,000,568 as at
December 31, 2022. Capital resources and operations are to be
expected to continue the Company’s ability to conduct ongoing
business as planned for the foreseeable future.
Net equity of the Company was $8,906,728 as at
September 30, 2023 compared to $10,781,672 as at December 31, 2022.
Total assets of the Company were $10,041,687 as at September 30,
2023 compared to $12,147,143 as at December 31, 2022. The Company
had no interest-bearing long-term liabilities or debt as at
September 30, 2023 or December 31, 2022.
OUTLOOK
During the first three quarters of the current
Fiscal Year, Kelso continued efforts to strengthen the portfolio of
rail products by closely monitoring those products near completion
of the required service trial period. The corporate ambition is to
increase sales volume from newly developed rail products for a
wider variety of rail tank car applications.
The Company has generated $142 million since its
start-up from its proprietary constant force pressure relief valve
for HAZMAT rail tank cars. Over the years the Company has grown a
highly respected, quality brand and established new direct
relationships with HAZMAT shippers. These interested stakeholders
have directly helped design our new proprietary angle valves for
the pressure car market and our bottom outlet valves featuring
unique ceramic technology advantages.
These new rail products sell for much higher
unit values and are expected to grow our rail car revenue from an
average of $1,500 per tank car to over $10,000 per tank car once
AAR approvals are secured. Our specialized angle valves for the
pressure car market have completed their service trial and are in
the final stages of the full AAR approval process. The pressure car
market fleet for the Company to service is currently in the range
of 80,000 tank cars which provides a significant growth opportunity
in the near future. Our bottom outlet valves are going into
full-service trials and may be able to generate minimal exceedance
revenue from motivated customers.
The traditionally cyclical rail tank car market
has not recovered well from COVID related pressures as all facets
of logistics, supply chains and manufacturing were severely
impacted. Current economic conditions, that include high interest
rates and inflationary pressure on raw materials, have remained
depressed. This is a major business hurdle making corporate growth
objectives very challenging to predict and achieve.
These economic circumstances have altered the
rail tank car industry strategic planning to continue to limit new
tank car builds while shippers focus on repurposing or
re-qualifying existing tank car fleets. Although a disappointing
circumstance, this presents a bona fide opportunity for Kelso to
grow its revenues by being able to fully service the repair,
retrofit and requalification activities through a broader range of
“100% Made in the USA” technologies.
During Fiscal 2023 the Company’s KXI Wildertec™
patent pending Automated Traction Optimization Method for Vehicle
Suspension Systems (“Method”) has been filed. This Method is the
first successful specialized Advanced Driver-Assistance System
(“ADAS”) created specifically designed for specialized no-road
commercial/military wilderness operations.
In the automotive industry, ADAS refers to
specialized automated technical features that are designed to
increase the safety of operating motor vehicles on existing
roadways. Current automotive industry design ambitions are to use
human-machine interfaces that can assist a driver’s ability to
react to dangers on established roads. To date no one other than
Kelso has created and proven a functional suspension-specific ADAS
for commercial wilderness and mission specific applications until
the Company’s recent introduction of its unique Method and a fully
functional prototype. This is a major technological development
advantage for the Company to grow future revenues from specialized
automotive markets.
Very little emphasis, if any, by the automotive
world has addressed ADAS requirements in wilderness operations. Our
strategic business objectives are to lead the way on ADAS for
no-road environments for emergency responders,
commercial/industrial stakeholders and military customers. Our
business ambition is to participate in the global ADAS software
market which is estimated to reach the $80 billion mark by 2030 as
reported by industry analysts McKinsey & Company.
The Company is now concentrating its resources
on developing KXI Wildertec Application Development Agreements with
interested customers in, but not limited to, safer working
environments for drivers/operators engaged in wilderness fire
fighting, medical/evacuation operations, emergency response
capabilities, mining, energy transmission and
geographic/environmental data mapping systems.
The Company has made considerable progress in
its research and development to create meaningful new products. The
timing of required regulatory approvals on new rail and automotive
products and corresponding revenue streams remains unpredictable
and cannot be guaranteed to be successful. Management continues to
assess the Company’s research and development discoveries, new
product viability, budget restrictions and market potential of all
R&D programs. Management adjusts R&D plans based on testing
results as part of the Company’s R&D risk management program.
Despite the many financial challenges created by the COVID-19
recession, high inflation and interest rates and compromised supply
chain issues, Management remains bullish on the longer-term revenue
potentials of the Company’s new product developments.
Despite depressing business activity in the rail
industry, we remain committed to the reliability and durability of
our products and delivering our products on time. The Company
deploys capital resources sensibly to maintain reasonable financial
health and liquidity. The Company’s working capital was $5,559,748
as at September 30, 2023. Current working capital and anticipated
sales activity at above average contribution margins for the
remainder of 2023 are expected to protect the Company’s ability to
conduct ongoing business operations and R&D initiatives for the
foreseeable future.
The Company is on course for value creation as
we look forward in both rail and automotive markets. We have
determined a clear path for the commercialization of our new
products in order to provide longer-term profitable revenue growth.
With no interest-bearing long-term debt to service and improved
sales prospects from a larger product portfolio, Kelso can focus on
the growth of its equity value from financial performance generated
from a wider range of new proprietary products.
About Kelso Technologies
Kelso is a diverse engineering company that
specializes in the creation, production, sales and distribution of
proprietary products used in rail and automotive transportation.
The Company’s rail engineering business has been developed as a
designer and reliable domestic supplier of unique high-quality rail
tank car valves that provide for the safe handling and containment
of hazardous and non-hazardous commodities during rail transport.
The automotive division of the Company has created the first proven
automated suspension-based Advanced Driver Assistance System for
commercial mission-critical wilderness operations. All Kelso
products are specifically designed to address the challenging
issues of public safety, worker well-being and potential
environmental harm while providing effective and efficient
operational advantages to customers. Kelso’s innovation objectives
are to create products that diminish the potential dangerous
effects of human and technology error through the use of the
Company’s portfolio of proprietary products.
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
Adjusted EBITDA refer to net earnings from continuing operations
before interest, taxes, amortization, unrealized foreign exchange
and non cash share-based expenses (Black Scholes option pricing
model) and write-off of assets. Adjusted EBITDA is not an earnings
measure recognized by IFRS and does not have a standardized meaning
prescribed by IFRS. Management believes that Adjusted EBITDA is an
alternative measure in evaluating the Company's business
performance. Readers are cautioned that Adjusted 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 Adjusted EBITDA may
differ from methods used by other issuers and, accordingly, the
Company's Adjusted 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 our new rail products can sell for much higher unit
values and are expected to grow our rail car revenue from an
average of $1,500 per tank car to over $10,000 per tank car once
AAR approvals are secured; that our specialized angle valves for
the pressure car market have completed their service trial and are
in the final stages of the full AAR approval process; that although
the rail industry is fully depressed there is still a bona fide
opportunity for Kelso to grow its revenues by being able to fully
service the repair, retrofit and requalification activities by
hazmat shippers with a broader range of “100% Made in the USA”
technologies; that the Company is now concentrating its resources
on developing KXI Wildertec Application Development Agreements for
various industrial applications; and that current working capital
and anticipated sales activity at above average contribution
margins for the remainder of 2023 are expected to protect the
Company’s ability to conduct ongoing business operations and
R&D initiatives for the foreseeable future. Although Kelso
believes the Company’s 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 that the risk that the longer-term
effects on the rail and automotive industries including high
interest rates, inflation and short supply chain issues may last
much longer than expected delaying R&D schedules and business
orders from customers; that the development of new products may
proceed slower than expected, cost more or may not result in a
salable product; that tank car producers may produce or retrofit
fewer than cars than expected and even if they meet expectations,
they may not purchase the Company’s products for their tank cars;
capital resources may not be adequate enough to fund future
operations as intended; that regulatory compliance including
Canadian Motor Vehicle Safety Standards may be delayed or
cancelled; that the Company’s products may not provide the intended
economic or operational advantages to end users; that KXI
Application Development Agreements may not be successful and
deliver anticipated revenue streams; that the Company’s new rail
and automotive products may not receive regulatory certification;
that customer orders may not develop or be cancelled; that
competitors may enter the market with new product offerings which
could capture some of the Company’s market share; that a new
product idea under research and development may be dropped if
ongoing product testing and market research reveal engineering and
economic issues that render a new product concept infeasible; and
that 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 (TSX:KLS)
Historical Stock Chart
Von Nov 2024 bis Dez 2024
Kelso Technologies (TSX:KLS)
Historical Stock Chart
Von Dez 2023 bis Dez 2024