Clean Diesel Technologies, Inc. (CDTI) Announces 2Q:15 Financial Results


Clean Diesel Technologies, Inc. (NASDAQ:CDTI), a leader in advanced emission control technology, reported financial results for the second quarter ended June 30, 2015.

Chris Harris, CDTi’s President and CEO, stated: “Our second quarter results were in line with our expectations and reflect continued progress on our technology development and commercialization initiatives. Revenue was $9.9 million reflecting sequentially consistent revenues from DuraFit™ and catalysts and lower year-over-year retrofit sales due to the wind-down of the California diesel retrofit mandate. Meanwhile, gross margin was 28%, the high end of our guidance.

“We are executing our strategy to transform CDTi into an advanced materials company. In recent months, we believe we have demonstrated the fundamental value proposition of our new advanced catalytic materials. We are now beginning to share these promising new materials with customers across multiple market segments and geographies to accelerate wide adoption of our technology. The response has been most encouraging and we are engaged with multiple parties. The most advanced of these initiatives is our commercialization partnership with AP Exhaust Technologies (“AP”). AP intends to incorporate our next-generation technology across portions of their extensive aftermarket catalytic converter product line. With our powder-to-coat business model, we plan to sell AP enabling proprietary catalytic powders to precision coat onto catalytic converter substrates in AP’s state-of-the-art coating facility. We remain confident that we will validate, optimize and scale our powder-to-coat capability and secure our first orders for enabling catalytic powders in the second half of 2015.”

Recent Highlights

  • Announced initial results from engine and vehicle testing done at independent test facilities for CDTi’s SPGM™ DOC, BMARS™ and Spinel™ technologies. The tests demonstrated breakthroughs in CDTi’s advanced materials research program aimed at significantly reducing or eliminating the need for costly platinum group metals (PGMs) in emission control catalysts.
  • Partnered with AP Exhaust Technologies to bring to market CDTi’s latest catalyst technologies, including MPC®, BMARS and Spinel, across portions of AP’s extensive aftermarket catalytic converter product line. AP is a market-leading manufacturer of OEM replacement exhaust and emission products for automobiles, light trucks, and heavy duty diesel vehicles.
  • Signed an agreement with a national private label for distribution of CDTi’s DuraFit line. DuraFit diesel particulate filters (DPFs) will be distributed into the heavy and medium duty vehicle aftermarket through hundreds of local outlets acrossNorth America.
  • Signed an international distribution agreement with Diesel Emissions Service to distribute DuraFit DPFs and other CDTi products into the medium and heavy duty vehicle aftermarket in Australia.
  • Awarded certification from the Verification of Emission Reduction Technologies Association (VERT®) for CDTi’s Purifilter® EGR DPF system, enabling the Company to address opportunities in South America and other international retrofit markets.
  • Hired Eric Bippus as Executive Vice President of Sales and Marketing to drive revenue growth across the Company.
  • Raised $5.1 million in gross proceeds from an offering of common stock and warrants to help support working capital needs while executing against the Company’s advanced materials strategy.

Financial Highlights – Second Quarter 2015 compared to Second Quarter 2014

  • Total revenue was $9.9 million compared to $11.7 million in the second quarter of 2014.

— Catalyst division revenue was $6.9 million compared to $6.3 million due to increased sales to our Japanese OEM customer and a favorable product mix. Intercompany sales are eliminated in consolidation.

— Heavy Duty Diesel Systems division revenue was $3.8 million compared to $6.1 million due to a decrease in California retrofit demand partially offset by $1.0 million of DuraFit DPFs sold in the quarter.

  • Gross margin was 28% compared to 33% for the year-ago quarter, reflecting lower volumes of retrofits and continued launch costs associated with the DuraFit rollout and ramp.
  • Total operating expenses were $4.9 million compared to operating expenses of $4.4 million in the second quarter of 2014 reflecting increased R&D expense for development and vehicle testing of new advanced catalysts.
  • Net loss was $2.4 million, or $0.16 per share. This compares to a net loss of $1.2 million, or $0.10 per share, in the same period last year.
  • The weighted average common shares outstanding were 14.8 million in the current quarter compared to 12.3 million in the second quarter of 2014. The increase in the number of shares was due principally to the equity offerings completed in November 2014 and June 2015.
  • Cash at June 30, 2015 was $6.8 million, compared with $7.2 million at December 31, 2014.

David Shea, CDTi’s CFO, stated: “We continue to expect DuraFit sales to ramp later in 2015 and margins to remain strong in the second half of the year as we reduce launch costs and optimize our supply chain. Therefore, we are reaffirming our outlook for 2015. We expect revenue of between $40 million and $45 million, as compared to $41 million in 2014, and of that, DuraFit to contribute $5 million. We expect gross margin to be at the mid- to high-end of our guidance range which is between 25% and 28%, approaching the 30% achieved in 2014.”

Financial Highlights – Six months ended June 30, 2015 compared to 2014

  • Total revenue for the first six months of 2015 was $20.3 million, compared to $23.3 million for the same prior year period.

— Catalyst division revenue for the first six months of 2015 was $13.7 million compared to $12.1 million for the same prior year period. Intercompany sales are eliminated in consolidation.

— Heavy Duty Diesel Systems division revenue for the first six months of 2015 was $8.0 million compared to $12.4 million for the same prior year period.

  • Gross margin was 28%, compared to 33% in the prior year period.
  • Total operating expenses for the first six months of 2015 were $10.4 million compared to $9.7 million in the same prior year period.
  • Net loss for the first six months of 2015 was $5.4 million, or $0.38 per diluted share, compared to net loss of $5.1 million, or $0.46 per share, in the same prior year period.
  • Weighted average common shares outstanding were 14.5 million for the first six months of 2015 compared to 11.0 million in the same period a year ago. The increase in the number of shares was due principally to the equity offerings completed in November 2014 and June 2015. (Original Source)

Shares of Clean Diesel closed yesterday at $1.64. CDTI has a 1-year high of $3.97 and a 1-year low of $1.41. The stock’s 50-day moving average is $1.81 and its 200-day moving average is $1.93.

On the ratings front, Clean Diesel has been the subject of a number of recent research reports. In a report issued on June 16, Cowen analyst Jeff Osborne reiterated a Buy rating on CDTI, with a price target of $3, which implies an upside of 82.9% from current levels. Separately, on May 13, Roth Capital’s Matt Koranda maintained a Buy rating on the stock and has a price target of $2.50.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Osborne and Matt Koranda have a total average return of -3.2% and 1.6% respectively. Osborne has a success rate of 55.1% and is ranked #3185 out of 3727 analysts, while Koranda has a success rate of 37.3% and is ranked #1920.

Clean Diesel Technologies Inc is a material technology company. It is engaged in manufacturing & distributing of light duty vehicle catalysts & heavy duty diesel emissions control systems & products to automakers, distributors, integrators & retrofitters.