OREANDA-NEWS. Clean Diesel Technologies, Inc., a leader in advanced emission control technology, reported its financial results for the second quarter ended June 30, 2016.

Matthew Beale, CDTi’s CEO, stated, “In the second quarter, we achieved important milestones in establishing improved capital and cost structures for the Company. In June, we reached an agreement to convert $8.5 million in debt into the Company’s common stock, demonstrating our debtholders’ confidence in CDTi’s future. The debt conversion is subject to stockholder approval. In a related transaction, we received a $1.25 million investment from Haldor Topsoe A/S as well as began an important commercial relationship where CDTi’s technology will complement Haldor Topsoe’s product capabilities and global reach within the heavy duty diesel market.

“Our advanced materials strategy aligns with highly favorable global trends in the automotive and heavy duty diesel markets and with the needs of market participants. This has accelerated our commercial momentum as a technology partner as recent agreements with leading global players including Panasonic and Haldor Topsoe provide the foundation for a diversified and growing revenue base. The market opportunities in China and India are particularly significant as our international partners and domestic suppliers require technology to cost-effectively address increasingly stringent emissions standards. With our leading PGM reduction technology and pedigree as a tier one catalyst manufacturer, CDTi is uniquely qualified to supply enabling technology to this growing global market. 

“While the impact of our new strategic customers and partners will begin taking hold in the second half of 2016 and into 2017, we believe the actions taken to date to build our revenue pipeline and optimize our cost structure have placed the company on a path to profitability that will become increasingly visible in the second half of 2016,” Beale concluded.

Financial Highlights: Second Quarter 2016 compared to Second Quarter 2015

  • Total revenue was $8.4 million, compared to $9.9 million.
    • Coated catalyst revenue was $4.8 million, compared to $6.1 million.
    • Emissions control systems revenue was $2.9 million, compared to $3.6 million.
    • Technology and advanced materials revenue was $0.7 million, compared to $0.2 million.
  • Gross margin was 20%, compared to 28%. The variance reflects approximately $0.5 million in costs related to the shutdown of the Markham facility and the startup of new vendor relationships as CDTi transitioned to outsourcing. The company expects gross margins to return to more normalized levels in the second half of the year.
  • Total operating expenses in the second quarter of 2016 were $4.8 million, compared to $4.9 million in the second quarter of 2015. The decrease in operating expenses reflects the restructuring actions taken in late 2015 and early 2016, which began to take effect in the second quarter of 2016. This was offset by approximately $0.6 million in severance and costs related to the company’s shutdown of the Markham facility and transition to outsourcing.
  • Net income was $1.3 million, or $0.35 per share, and included an accounting gain of $2.8 million related to the conversion feature of the Kanis S.A. debt. This compares to a net loss of $2.4 million, or $0.81 per share in the second quarter of 2015.
  • Cash at June 30, 2016 was $0.9 million, compared with $3.0 million at December 31, 2015.

Financial Highlights: Six months ended June 30, 2016 compared to 2015

  • Total revenue for the first six months of 2016 was $18.2 million, compared to $20.3 million for the same prior year period.
  • Gross margin was 24%, compared to 28% in the prior year period.
  • Total operating expenses for the first six months of 2016 were $10.8 million compared to $10.4 million in the same prior year period.
  • Net loss for the first six months of 2016 was $1.4 million, or $0.38 per share, compared to net loss of $5.4 million, or $1.88 per share, in the same prior year period.

Revised Financial Outlook
Tracy Kern, CDTi’s CFO, stated, “We now expect full year 2016 revenue to be at the lower end of our guided range of between $39 million and $43 million. We believe DuraFit™ will continue to partially offset the decline in legacy retrofit revenue; however, we now expect its full year revenue contribution will approximate $7 million due in part to supply chain issues related to the closure of our Markham facility in December 2015. We expect this to be positively offset by a greater than anticipated revenue ramp from Panasonic related to shipments of our synergized-platinum group metal (SPGM™) diesel oxidation catalysts (DOCs). In addition, based on the transition costs related to the closure of our Markham facility, we expect gross margin to be between 25% and 27%. Based on these assumptions and cost reductions undertaken in 2015 and 2016, we now expect to be breakeven on an income from continuing operations basis by the first quarter of 2017.”

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™.