US Operations Cash Flow Positive
PHOENIX, AZ, May 27, 2020 (GLOBE NEWSWIRE) -- Taronis Fuels, Inc., (“Taronis” or “the Company”) (OTCQB: TRNF), a global producer of renewable and socially responsible fuel products, today announced the closing of an $8 million acquisition of one of the largest independent specialty industrial gas distributors in the United States today. The target will be branded TGS, operating as a wholly-owned subsidiary of Taronis Fuels going forward.
TGS’s operations cover the Georgia, Florida and Texas markets, with a dominant market share in the Atlanta, Orlando, Tampa, and Dallas metropolitan markets, and a strong market presence across much of Georgia, north and central Florida, and central and east Texas. TGS is a specialty gas supplier dedicated to the heating, ventilation and air conditioning (“HVAC”) market. The $8 million purchase was structured as $4 million in cash due at closing, and $4 million in multi-year seller debt financing. No equity was issued in conjunction with this transaction.
The TGS acquisition has an immediate, significantly positive financial impact on the Company’s overall financial outlook. TGS generated $8 million in revenues in 2019 and is experiencing rapid growth due to the increased work-from-home policies implemented during the COVID-19 pandemic. So far in 2020, TGS has achieved a record March, record April, and is on pace for record monthly sales results in May. This acquisition brings in approximately $300,000 in added monthly EBITDA, which is projected to grow throughout the remainder of 2020.
With this acquisition, Taronis is now able to generate positive EBITDA cash flows across its combined US operations. The Company is expected to periodically make discretionary investments in international business development, strategic manufacturing capabilities and research and development that may at times produce a short term period of negative EBITDA in order to accelerate growth opportunities and advance certain technology breakthroughs.
“This transaction has the potential to transform our US retail growth model,” commented Scott Mahoney, CEO of Taronis. “We have now added a very unique and compelling growth catalyst into our overall US portfolio. Through this acquisition, we can now enter entirely new markets for a very limited capital investment, and quickly become profitable in these new locations using high-margin HVAC centric gas sales to fund organic growth. This is a powerful benefit as we look to significantly expand our retail network for MagneGas Welding Supply across the United States.”
“There are also several compelling synergies regarding this transaction that offer tremendous organic growth potential across the combined companies. First, we can bring TGS’s HVAC centric sales model into our existing operations across all of California for very little capital investment. This has the potential to add several million dollars in new industrial gas sales on an annualized basis to Taronis Fuels before the end of 2020.”
“Next, we will look to utilize our combined operations to launch new MagneGas Welding Supply retail locations in Atlanta, Orlando, Jacksonville, Miami, Dallas and Houston. We see significant potential for growth as we leverage the collective management team to drive increases to revenue across the integrated business model.”
“We have also mapped out a timeline for expansion into the US southwest, particularly the Las Vegas, Phoenix, Tucson and Denver markets. Longer term, we plan to expand into Oklahoma City, New Orleans, Charlotte, Nashville and Memphis in 2021 and beyond.”
“Lastly, and most importantly, we made this acquisition because the primary industrial gas product sold within the HVAC industry is acetylene. It is the dominant metal cutting fuel in a massive and recession proof industry. In fact, more than one third of the target’s revenues are derived from acetylene sales, and our team is excited to begin transitioning those clients to MagneGas, the only renewable metal cutting fuel product on the market today,” concluded Mr. Mahoney.
About Taronis Fuels, Inc.
Taronis Fuels, Inc. is a global producer of renewable and socially responsible fuel products. Our goal is to deliver environmentally sustainable, technology driven alternatives to traditional fossil fuel and carbon-based economy products. We believe our products offer a vastly cleaner solution to legacy acetylene and propane alternatives.
Taronis is also dedicated to providing fundamentally safer solutions to meet the industrial, commercial and residential needs of tomorrow’s global economy. Our products have been rigorously tested and independently validated by global gas authorities as vastly safer than acetylene, the most dangerous industrial gas in use today.
Lastly, we strive to deliver products that offer significant function superiority at a reduced cost to the end consumer. Through these efforts, we support 9 of the 17 United Nations Sustainable Development Goals. For more information, please visit our website at www.taronisfuels.com/
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events, including our ability to raise capital, or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission. Our public filings with the SEC are available from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.
Investor Contacts:
Michael Khorassani
IR@Taronisfuels.com