CALGARY, ALBERTA--(Marketwired - Nov. 28, 2014) -
THIS DOCUMENT IS NOT INTENDED FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES.
Questor Technology Inc. ("Questor" or the "Company") (TSX VENTURE:QST) announced today its financial and operating results for the third quarter of 2014. Earnings per share for the nine month period ending September 30th, 2014 increased by 60% to $0.121 from $0.075 for the same period of the prior year. Questor's third quarter results benefited from a substantial increase in rental and combustion services revenues in both Canada and the U.S. This trend is expected to continue as "first mover" states adopt more stringent policies regarding emissions. Revenue this quarter was $3.1 million, 5 per cent higher than the third quarter of 2013. The gains in rental and combustion services revenues were partially offset by lower revenues from the sale of units. The Company reported a 6 per cent improvement in profit at $867,856(2) ($0.034 per basic share) for the three months ended September 30, 2014 compared to a profit of $817,840 ($0.033 per basic share) for the same three month period of the prior year. Cost of sales as a percent of revenue was lower in the current quarter, due to the growth in rental revenue, contributing to the increase in profitability while higher administrative costs and higher income tax expense acted to moderate the impact of the gross margin gains on profit for the period. Overall, revenue generated in the first nine months of 2014 was 13% higher than revenue generated in full year 2013.
FINANCIAL HIGHLIGHTS SUMMARY
(Stated in Canadian dollars except shares outstanding)
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||
| For the | 2014 | 2013 | Increase (decrease) |
2014 | 2013 | Increase (decrease) |
|||||||
| Revenue | 3,127,213 | 2,989,767 | 137,446 | 10,845,301 | 6,973,090 | 3,872,211 | |||||||
| Gross profit(1) | 1,618,863 | 1,336,609 | 282,254 | 5,606,556 | 3,404,490 | 2,202,066 | |||||||
| EBITDA(1) | 1,358,819 | 1,036,215 | 322,604 | 4,483,249 | 2,490,024 | 1,993,225 | |||||||
| Profit for the period(2) | 867,856 | 817,840 | 50,016 | 3,063,929 | 1,869,101 | 1,194,828 | |||||||
| Cost of sales as a percent of revenue(1) | 48.2 | % | 55.3 | % | (7.1 | %) | 48.3 | % | 51.2 | % | (2.9 | %) | |
| Cash generated from operations before movements in non-cash working capital(1) | 1,332,126 | 1,032,556 | 299,570 | 4,674,394 | 2,573,968 | 2,100,426 | |||||||
| Shares outstanding(2) | |||||||||||||
| Basic | 25,714,761 | 25,119,327 | 595,434 | 25,492,507 | 25,068,175 | 424,332 | |||||||
| Diluted | 26,498,220 | 25,917,239 | 580,981 | 26,284,681 | 25,772,662 | 512,019 | |||||||
| Earnings per share | |||||||||||||
| Basic | 0.034 | 0.033 | 0.001 |
0.121 | 0.075 | 0.046 | |||||||
| Diluted | 0.033 | 0.032 | 0.001 | 0.117 | 0.073 | 0.044 | |||||||
| As at | September 30, 2014 | December 31, 2013 | Increase (decrease) |
||||||||||
| Total assets | 17,338,114 | 14,029,829 | 3,308,284 | ||||||||||
| Non-current liabilities | 173,404 | 175,130 | (1,726 | ) | |||||||||
(1) Non-IFRS financial measure. Please see discussion in the Non-IFRS Financial Measures section of Questor's Management's Discussion and Analysis for the three and six months ended September 30, 2014.
(2) Before Other comprehensive income
(3) Weighted average.
"The heightened environmental focus on emissions from flaring, climate change and the health concerns arising from the impacts of poor air quality have created a significant market opportunity for Questor domestically and internationally. It has become essential for our clients to address these issues to obtain approval for projects and the social license to operate." said Ms. Audrey Mascarenhas, Questor's President and CEO. "We are working with key individuals in business and government in the first mover states in the U.S. as they apply air quality rules, as stringently or more so than what has been laid down by the EPA. Demand for our products is expected to grow quickly in both the sales and rental businesses", she continued. "We have an inventory of units available and have fabrication partners with sufficient capacity to meet new orders."
Management continues to develop strategic relationships with organizations in various regions. The US continues to be a focal point for Questor and, in particular, in Colorado where technology such as Questor's, including minor modifications made to its large well test incinerators, will allow industry to conduct its operations in compliance with new regulations requiring enclosed combustion resulting in "closed loop flow backs".
In addition to this Questor has responded to a large industry demand for water management. This technology will reduce water waste at the well site by over 95% and this will be commercialized in 2015. Both the waste heat to power and water vapourization technologies will serve the same markets that Questor is currently pursuing and are complementary to both completion flow backs as well as continued production operations.
Questor acquired ClearPower Systems Inc. ("ClearPower") early in the year, which company has developed technology that will tranform waste heat from any source into power. The integration of waste heat from Questor's incineration process with the power generation capability of the ClearPower technology is expected to present a valued solution for current and future customers. Ms Mascarenhas continued, "We are evaluating the waste heat market to which the ClearPower technology can be directly applied. We believe the market to be substantial and we anticipate revenue generation from this business segment in mid 2015. We have opened up a facility in Florida to assemble our units."
Ms Mascarenhas was invited to interview on July 9, 2014 on the subject of Questor's solutions on Business News Network (BNN). Here is a link to view the interview: http://www.bnn.ca/Video/player.aspx?vid=395152.
Ms Mascarenhas presented to the Oilmen's Forum in Banff, Alberta on August 20, 2014 as part of a panel addressing the topic of Innovation, Economy and Environment which resulted in some key contacts in new markets for the Company's incinerators and waste heat to power generators.
She presented at joint workshops to address gas flaring, stranded gas and emissions reduction by utilizing novel technologies to monetize gas at the wellhead in Houston, Denver and West Virginia, managed by the Petroleum Technology Transfer Council (PTTC) and the Environmentally Friendly Drilling (EFD) program, managed by the Houston Advanced Research Center (HARC).
Ms. Mascarenhas recently presented at an SPE webinar/luncheon in Houston for the Gulf coast HSSE group on the EPA Subpart Quad O - Opportunities, Technologies and Solutions for Vent Gas Management in Upstream Oil and Gas Operations on October 23rd, 2014.
She also participated at in French Community Business Program - Sunday, November 2, 2014 in Banff during the French President's visit to Alberta.
Questor's unaudited condensed consolidated financial statements and notes thereto and management's discussion and analysis for the three and six months ended September 30, 2014 will be available shortly on the Company's website at www.questortech.com and through SEDAR at www.sedar.com.
ABOUT QUESTOR TECHNOLOGY INC.
Questor is an international environmental oilfield services provider founded in late 1994 and headquartered in Calgary, Alberta, Canada with a field office located in Grande Prairie, Alberta. The Company is focused on clean air technologies with activities in Canada, the United States, Europe and Asia. Questor designs and manufactures high combustion efficiency waste gas incinerators for sale or for use on a rental basis and also provides combustion-related oilfield services. The Company's proprietary incinerator technology destroys noxious or toxic hydrocarbon gases which enables regulatory compliance, environmental protection, public confidence and reduced operating costs for customers. Questor is recognized for its particular expertise in the combustion of sour gas (H2S). The technology creates an opportunity to utilize the heat generated from efficient combustion which can be been used for water vaporization, process heat and power generation, through ClearPower Solutions (a subsidiary of Questor). While Questor's current customer base operates primarily in the crude oil and natural gas industry, the Company's combustion technology is applicable to other industries such as landfills, water and sewage treatment, tire recycling and agriculture.
Questor trades on the TSX Venture Exchange under the symbol "QST".
Certain information in this news release constitutes forward-looking statements. When used in this news release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties, including without limitation, changes in market, competition, governmental or regulatory developments, general economic conditions and other factors set out in the Company's public disclosure documents. Many factors could cause the Company's actual results, performance or achievements to vary from those described in this news release, including without limitation those listed above. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. Such statements speak only as of the date of this news release. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Neither 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.
QUESTOR TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Stated in Canadian dollars
Unaudited
| As at | September 30 2014 |
December 31 2013 |
||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 5,515,185 | $ | 7,323,303 | ||
| Trade and other receivables | 4,889,644 | 2,863,257 | ||||
| Inventories | 2,131,253 | 2,359,276 | ||||
| Prepaid expenses and deposits | 253,599 | 124,163 | ||||
| Current tax assets | - | 77,849 | ||||
| Total current assets | 12,789,681 | 12,747,848 | ||||
| Non-current assets | ||||||
| Property and equipment | 3,184,960 | 1,256,066 | ||||
| Intangible assets | 676,075 | 25,915 | ||||
| Goodwill | 687,398 | - | ||||
| Total non-current assets | 4,548,433 | 1,281,981 | ||||
| Total assets | $ | 17,338,114 | $ | 14,029,829 | ||
| LIABILITIES AND EQUITY | ||||||
| Current liabilities | ||||||
| Trade payables, accrued liabilities, provisions | $ | 1,498,509 | $ | 1,746,259 | ||
| Deferred revenue and deposits | - | 252,356 | ||||
| Current portion of lease inducement | 52,002 | 52,002 | ||||
| Current tax liabilities | 1,025,298 | 638,527 | ||||
| Total current liabilities | 2,575,809 | 2,689,144 | ||||
| Non-current liabilities | ||||||
| Deferred tax liabilities | 91,068 | 53,793 | ||||
| Lease inducement | 82,336 | 121,337 | ||||
| Total non-current liabilities | 173,404 | 175,130 | ||||
| Total liabilities | 2,749,213 | 2,864,274 | ||||
| Capital and reserves | ||||||
| Issued capital | 5,925,105 | 5,636,119 | ||||
| Reserves | 781,415 | 703,156 | ||||
| Retained earnings | 7,890,209 | 4,826,280 | ||||
| Cumulative translation adjustment | (7,828 | ) | - | |||
| Total equity | 14,588,901 | 11,165,555 | ||||
| Total liabilities and equity | $ | 17,338,114 | $ | 14,029,829 | ||
QUESTOR TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Stated in Canadian dollars
Unaudited
| For the three months ended September 30 |
For the nine months ended September 30 |
||||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||||
| Revenue | $ | 3,127,213 | $ | 2,989,767 | $ | 10,845,301 | $ | 6,973,090 | |||||
| Cost of sales | ( 1,508,350 | ) | (1,653,158 | ) | (5,238,745 | ) | (3,568,600 | ) | |||||
| Gross profit | 1,618,863 | 1,336,609 | 5,606,556 | 3,404,490 | |||||||||
| Administration expenses | (629,418 | ) | (349,741 | ) | (1,722,298 | ) | (1,200,948 | ) | |||||
| Net foreign exchange (losses)/gains | 259,127 | (16,167 | ) | 368,234 | 76,267 | ||||||||
| Depreciation of property and equipment | (14,052 | ) | (10,459 | ) | (39,989 | ) | (30,998 | ) | |||||
| Amortization of intangible assets | (905 | ) | (305 | ) | (2,542 | ) | (914 | ) | |||||
| Loss on disposal of property and equipment | - | - | - | (347 | ) | ||||||||
| Other income | 23,054 | 898 | 36,932 | 7,870 | |||||||||
| Profit before tax | 1,256,669 | 960,835 | 4,246,893 | 2,255,420 | |||||||||
| Income tax expense | |||||||||||||
| Current | (347,312 | ) | (164,458 | ) | (1,145,688 | ) | (418,691 | ) | |||||
| Deferred | (41,501 | ) | 21,463 | (37,276 | ) | 32,372 | |||||||
| Profit for the period | $ | 867,856 | $ | 817,840 | $ | 3,063,929 | $ | 1,869,101 | |||||
| Other comprehensive income, net of income taxExchange differences on translating foreign operations | (14,413 | ) | - | (7,828 | ) | - | |||||||
| Total comprehensive income | $ | 853,443 | $ | 817,840 | $ | 3,056,101 | $ | 1,869,101 | |||||
| Earnings per share - Profit for the period | ||||||||
| Basic | $ | 0.034 | $ | 0.033 | $ | 0.121 | $ | 0.075 |
| Diluted | $ | 0.033 | $ | 0.032 | $ | 0.117 | $ | 0.073 |
QUESTOR TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Stated in Canadian dollars
Unaudited
| Issued Capital | Reserves | Retained Earnings | Cumulative Translation Adjustment | Total Equity |
|||||||||
| Balance at January 1, 2014 | $ | 5,636,119 |
$ | 703,156 |
$ | 4,826,280 |
$ | - |
$ | 11,165,555 |
|||
| Profit for the period | - |
- |
3,063,929 |
- |
3,063,929 |
||||||||
| Recognition of share-based payments | - |
191,145 |
- |
- |
191,145 |
||||||||
| Issue of ordinary shares under employee share option plan | 288,986 |
(112,886 |
) | - |
- |
176,100 |
|||||||
| Translation of foreign operations | - |
- |
- |
(7,828 |
) | (7,828 |
) | ||||||
| Balance at September 30, 2014 | $ | 5,925,105 |
$ | 781,415 |
$ | 7,890,209 |
$ | (7,828 |
) | $ | 14,588,901 |
||
Issued Capital |
Reserves |
Retained Earnings |
Cumulative Translation Adjustment | Total Equity | |||||||
| Balance at January 1, 2013 | $ | 5,521,001 |
$ | 676,834 |
$ | 2,282,231 |
$ | - |
$ | 8,480,066 |
|
| Profit for the period | - |
- |
1,869,101 |
- |
1,869,101 |
||||||
| Recognition of share-based payments | - |
54,993 |
- |
- |
54,993 |
||||||
| Issue of ordinary shares under employee share option plan | 75,841 |
(31,091 |
) | - |
- |
44,750 |
|||||
| Balance at September 30, 2013 | $ | 5,596,842 |
$ | 700,736 |
$ | 4,151,332 |
$ | - |
$ | 10,448,910 |
|
QUESTOR TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Stated in Canadian dollars
Unaudited
| For the nine months ended September 30 | 2014 | 2013 | ||||||
| Cash flows from operating activities | ||||||||
| Profit for the period | $ | 3,063,929 | $ | 1,869,101 | ||||
| Adjustments for: | ||||||||
| Income tax expense | 1,182,964 | 386,319 | ||||||
| Loss on disposal of property and equipment | - | 347 | ||||||
| Depreciation of property and equipment | 233,814 | 233,690 | ||||||
| Amortization of intangible assets | 2,542 | 914 | ||||||
| Net unrealized foreign exchange losses | 328,054 | 28,604 | ||||||
| Expense recognized in respect of equity-settled share-based payments | 191,145 | 54,993 | ||||||
| 5,002,448 | 2,573,968 | |||||||
| Movements in non-cash working capital | (4,480,698 | ) | 329,058 | |||||
| Cash generated from operations | 521,750 | 2,903,026 | ||||||
| Income taxes paid | (816,994 | ) | (26,639 | ) | ||||
| Net cash (used in) generated from operating activities | (295,244 | ) | 2,876,387 | |||||
| Cash flows used in investing activities | ||||||||
| Payments for property and equipment | (181,778 | ) | (120,067 | ) | ||||
| Proceeds from disposal of property and equipment | - | 5,000 | ||||||
| Payments for intangible assets | (498,658 | ) | - | |||||
| Acquisition of a business | (1,000,710 | ) | - | |||||
| Net cash used in investing activities | (1,681,146 | ) | (115,067 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issue of ordinary shares under employee share option plan | 176,100 | 44,750 | ||||||
| Net cash generated from financing activities | 176,100 | 44,750 | ||||||
| Net (decrease) increase in cash | (1,800,290 | ) | 2,806,070 | |||||
| Cash and cash equivalents at beginning of the period | 7,323,303 | 4,405,624 | ||||||
| Effects of translation of foreign operations | (7,828 | ) | (34,609 | ) | ||||
| Cash and cash equivalents at end of the period | $ | 5,515,185 5,515 | $ | 7,177,085 | ||||
Contact Information:
Audrey Mascarenhas
President and Chief Executive Officer
(403) 571-1530
(403) 571-1539 (FAX)
amascarenhas@questortech.com