OREANDA-NEWS. Clean Diesel Technologies, Inc. (Nasdaq:CDTI) (“CDTi” or “the Company”), 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,” stated 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.”

Recent Highlights

  • 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.
  • 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 US. This brings the total DuraFit™ distribution locations to more than 1,000, as traction in this key growth market continues to grow.
  • Advanced Spinel™ SPGM technology toward commercialization by completing initial vehicle testing.
  • Closed a new $2 million loan with Kanis S.A. and amended existing agreements providing CDTi the ability to convert the $7.5 million aggregate principal balance of the debt into equity in the event of a public stock offering or strategic investment in CDTi.
  • 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 September 30, 2017.


Financial Highlights: First Quarter 2016 compared to First Quarter 2015

  • 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%, compared to 27%.
  • Total operating expenses in the first quarter 2016 were $5.9 million, compared to $5.5 million in the first quarter of 2015. The increase in operating expenses reflects $0.8 million in severance expense related to the closing of the Markham facility, increased stock compensation resulting from awards made in 2015, and increased administrative fees for audit and statutory work. The company expects the savings from restructuring actions taken in late 2015 and early 2016 will begin to take effect in the second quarter of 2016.
  • Net loss was $2.8 million, or $0.15 per share, compared to $3.0 million, or $0.21 per share.
  • Cash at March 31, 2016 was $1.6 million, compared with $3.0 million at December 31, 2015.

Financial Outlook
David Shea, CDTi’s CFO, stated, “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% and 29%. 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.”

About CDTi
CDTi develops advanced materials technology for the emissions control market. CDTi’s proprietary technologies provide high-value sustainable solutions to reduce hazardous emissions, increase energy efficiency and lower the carbon intensity of on- and off-road combustion engine systems. With a continuing focus on innovation-driven commercialization and global expansion, CDTi’s breakthrough Powder-to-Coat (P2C™) technology exploits the Company’s high-performance, advanced low-platinum group metal (PGM) emission reduction catalysts. Key technology platforms include Mixed Phase Catalyst (MPC®), Base Metal Activated Rhodium Support (BMARS™), Synergized PGM (SPGM™), Zero PGM (ZPGM™) and Spinel™.

Clean Diesel Technologies, Inc.
Summary Statements of Operations (unaudited)
($ millions)
                 
    3 Months Ended  
March 31,  
      2016       2015    
Revenues $     9.7    $      10.3    
Gross profit       2.7         2.8    
Gross margin     28 %     27 %  
           
Operating expenses:          
Selling, general and administrative $     3.4    $      3.4    
Research and development       1.7         2.1    
Severance and other charges       0.8         -     
Total operating expenses       5.9         5.5    
Loss from operations       (3.2 )       (2.7 )  
Other income (expense)       -          (0.1 )  
Loss before income tax       (3.2 )       (2.8 )  
Income tax expense (benefit)       (0.4 )       0.2    
Net loss $     (2.8 )  $      (3.0 )  
           
Basic and diluted EPS $     (0.15 ) $     (0.21 )  
Weighted shares outstanding (in millions)       18.2         14.2    
                 
 
Clean Diesel Technologies, Inc.
Segment Information (unaudited)
($ millions)
                 
    3 Months Ended  
March 31,  
      2016       2015    
Revenue          
Catalyst $     6.5   $     6.8    
Heavy Duty Diesel Systems       4.1         4.1    
Eliminations       (0.9 )       (0.6 )  
Total $     9.7   $     10.3    
           
Income (loss) from operations          
Catalyst $     (0.3 ) $     (0.5 )  
Heavy Duty Diesel Systems       (0.8 )       (0.4 )  
Corporate        (2.1 )       (1.7 )  
Eliminations       -          (0.1 )  
Total $     (3.2 ) $     (2.7 )  
                 
Clean Diesel Technologies, Inc.
Summary Balance Sheets (unaudited)
($ millions)
   
    As of  
    March 31,
2016		   December 31,
2015		  
Total current assets $     16.2   $   16.7  
Total assets $     24.8   $   25.1  
Total current liabilities $     17.9   $   16.9  
Total long-term liabilities $     7.8   $   7.8  
Stockholders’ equity $     (0.9 ) $   0.4  
           
Short-term debt $     4.1   $   3.5  
Long-term debt $     7.6   $   7.6