Clean Diesel Technologies Inc. (CDTi), a leader in advanced emission control technology, reported its financial results for the first quarter ended March 31, 2016.
“In the first quarter, we took steps to accelerate the execution of our advanced materials and high-value catalyst business strategy, while also strengthening our capital structure to support our growth,” said Matthew Beale, CDTi’s CEO. “Our agreement with Panasonic exemplifies our strategy to cost-effectively deliver our technology through high-volume coaters through our powder-to-coat capability. In addition, this relationship provides important validation of our advanced materials technology among industry leaders. The progress in our commercialization efforts and success growing the DuraFit distribution network support our expectation to be breakeven on an income from continuing operations basis by 2016 year-end.
“Key to our long-term success is strengthening our financial foundation. Subsequent to the end of the first quarter, we amended our loan agreements with our long-time lender, Kanis S.A., providing us with a mechanism to convert debt into common stock of the company in the event of a stock offering or strategic investment. We believe these agreements provide us with an important opportunity to significantly reduce the debt on our balance sheet and thereby reduce our cost of capital, accelerating our path to profitability.”
The company began supplying Panasonic Ecology Systems Co. Ltd., with CDTi’s proprietary synergized-platinum group metal (SPGM) diesel oxidation catalyst (DOC) with an initial focus on China’s heavy-duty retrofit market. CDTi continues to expect a meaningful ramp in activity during the second half of 2016.
The company also added more than 300 dealerships in North America through a partnership with Hino Motors Ltd., a Toyota Group company and the fourth largest truck dealership network in the U.S. This brings the total DuraFit distribution locations to more than 1,000, as traction in this key growth market continues to grow.
In addition, it executed a Convertible Promissory Note for $500,000 on April 11, 2016, with Lon E. Bell, Ph.D., one of the company’s directors, with a maturity date of Sept. 30, 2017.
Financial highlights of the first-quarter 2016 compared to first-quarter 2015 include:
- Total revenue was $9.7 million, compared to $10.3 million.
- Catalyst division revenue was $6.5 million, compared to $6.8 million.
- Heavy Duty Diesel Systems division revenue was $4.1 million for both quarters.
- Gross margin was 28 percent, compared to 27 percent.
The company noted a net loss was $2.8 million, or 15 cents per share, compared to $3 million, or 21 cents per share. Cash on March 31, 2016 was $1.6 million, compared with $3 million at Dec. 31, 2015.
Financial Outlook
David Shea, CDTi’s CFO, said, “We are reaffirming our full year 2016 outlook for revenue to be between $39 million and $43 million. We believe DuraFit will double its revenue contribution to $10 million and partially offset the decline in legacy retrofit revenue. In addition, we continue to expect gross margin to be between 27 percent and 29 percent. Based on these assumptions and cost reductions undertaken in 2015 and 2016, we plan to be breakeven on an income from continuing operations basis by the fourth quarter of 2016.”
