Questor Technology Inc.

TSX VENTURE : QST


Questor Technology Inc.

August 28, 2013 18:29 ET

Questor Technology Inc. Announces Strong Second Quarter 2013 Financial Results

CALGARY, ALBERTA--(Marketwired - Aug. 28, 2013) -

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 three and six month periods ended June 30, 2013. The Company reported a profit of $634,176 ($0.025 per basic share) for the three months ended June 30, 2013 compared to a profit of $99,440 ($0.004 per basic share) for the same three-month period last year. Profit for the six months ended June 30, 2013 was $1,051,261 ($0.042 per basic share), 80 percent higher than profit of $586,878 ($0.024 per basic share) for the six months ended June 30, 2012.

FINANCIAL HIGHLIGHTS SUMMARY

(Stated in Canadian dollars except per share amounts)

Three months ended June 30 Six months ended June 30
For the 2013 2012 Increase
(decrease
) 2013 2012 Increase
(decrease
)
Revenue 2,263,746 1,188,004 1,075,742 3,983,323 3,418,879 564,444
Gross profit(1) 1,177,440 448,598 728,842 2,067,881 1,502,298 565,583
EBITDA(1) 797,589 199,775 597,814 1,453,810 927,104 526,706
Profit and total comprehensive income 634,176 99,440 534,736 1,051,261 586,878 464,383
Cost of sales as a percent of revenue(1) 48.0 % 62.2 % (14.2 %) 48.1 % 56.1 % (8.0 %)
Cash generated from operations before movements in non-cash working capital(1) 879,007 178,490 700,517 1,541,412 953,475 587,937
Shares outstanding(2)
Basic 25,076,601 24,857,370 219,231 25,042,177 24,857,370 184,807
Diluted 25,729,800 25,253,889 475,911 25,621,734 25,179,460 442,274
Earnings per share - Basic 0.025 0.004 0.021 0.042 0.024 0.018
Earnings per share - Diluted 0.025 0.004 0.021 0.041 0.023 0.018
As at June 30 2013 2012 Increase
(decrease
)
Total assets 11,086,002 8,727,857 2,358,145
Non-current liabilities 278,695 194,131 84,564
(1) Non-IFRS financial measure. Please see discussion in the Non-IFRS Financial Measures section of the Company's Management's Discussion and Analysis for the three and six month periods ended June 30, 2013.
(2) Weighted average.

Questor's Profit and total comprehensive income in the second quarter of 2013 improved over 500 percent compared to the same period of the prior year. A combination of volume and mix of incinerator sales and improved margins on those sales were the main drivers for the improved performance. In addition, expansion of the Company's supply chain reduced fabrication costs. The increases were partially offset by lower Incinerator and combustion services revenue and comparatively higher Administration expense in the quarter as well as higher Income tax expense on the Company's improved before tax earnings. Incinerator and combustion services revenue depends in the most part on timing of unit sales and the associated commissioning work and factors related to the incinerator rental income stream. Higher administration expenses were due in part to the addition of personnel to the team to assist in managing Questor's growth, in part to spending on improvements in the Company's information processing infrastructure and equipment and in part to higher business development expenditures incurred to increase the Company's profile in those markets where management believes the short and long term success will be.

The 80 percent increase to profitability in the six months ended June 30, 2013 is primarily driven by Questor's success in the second quarter of the current year. In the first quarter of 2013, Profit and total comprehensive income was down 14.5% from the same quarter in the prior year. The factors affecting results for the six month period are the same as those stated in the discussion on second quarter earnings above with the exception that incinerator rental income was lower in the six month period ended June 30, 2013 compared to the same period of 2012 due to an overall lower utilization rate for the units in the fleet.

"We continue to see the impact of our focus on growth pay off in strong, profitable results and with $0.28 per share available in cash on hand at the date of this news release, we are well positioned to take the next steps in our growth strategy," said Audrey Mascarenhas, President and Chief Executive Officer. "Our revenue in the first six months of 2013 is $564 thousand higher than the same period last year, an increase of 16.5 percent. On a comparative basis, gross profit improved by 38 percent and earnings per basic share is 75 percent higher than it was in the corresponding period of last year. We currently have confirmed incinerator sales orders of $5.5 million of which $3.2 million has been recognized in the first six months of the year.

Tough new emission standards in the United States and Europe are creating demand for Questor's clean air solutions and we are pursuing expansion of the Company's presence in those markets. We have seen growth in our Canadian sales as we support our customers in their quest for the social license to operate. The economic and operational benefits of our technology are leading to greater market penetration for our products and services," concluded Ms. Mascarenhas.

In relation to the Company's market awareness and brand recognition initiatives, Ms. Mascarenhas made a presentation called "Clearing the Air" in February 2013 as part of an Alberta Oil and Gas Mission to Poland and again in mid-May at the ACI Tight and Shale Gas Summit in Istanbul, Turkey. She also presented to senior executives at several major U.S. oil and gas companies in Houston in late April of 2013 with respect to the capabilities of the Company's incinerators/thermal oxidizers. On May 10th, 2013 she made a presentation at the Western Energy Summit entitled "Climbing to New Heights with Clean Air Solutions". A further mission took Ms. Mascarenhas in late May of 2013 to Bahrain, Abu Dhabi, Dubai and Oman, where she attended meetings with corporate and government individuals who had expressed interest in Questor's technology. Audrey was invited to be a discussion leader on waste management where she presented Questor's clean air solutions at Society of Petroleum Engineers (SPE) workshops focused on Future Systems for Extreme Environments.

A copy of each presentation is or will be made available on the Company's website.

Questor's unaudited condensed financial statements and notes thereto and management's discussion and analysis for the three and six month periods ended June 30, 2013 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 service company founded in late 1994 and headquartered in Calgary, Alberta, Canada with a field office located in Grande Prairie, Alberta, Canada. The Company is focused on clean air technologies with activities in Canada, the United States, Europe and Asia. Questor designs and manufactures high 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 at 99.99% efficiency which ensures regulatory compliance, environmental protection, public confidence and reduced operating costs for customers. The technology creates an opportunity to utilize the heat generated from efficient combustion. Questor is recognized for its particular expertise in the combustion of sour gas (H2S). While the Company's current customer base is primarily in the oil and gas industry, this 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 STATEMENTS OF FINANCIAL POSITION
Stated in Canadian dollars
Unaudited
As at June 30
2013
December 31
2012
ASSETS
Current assets
Cash and cash equivalents $ 5,725,432 $ 4,405,624
Trade and other receivables 2,286,896 2,304,478
Inventories 1,351,393 670,959
Prepaid expenses and deposits 45,526 88,378
Current tax assets 12,024 25,158
Total current assets 9,421,271 7,494,597
Non-current assets
Property and equipment 1,657,017 2,295,529
Intangible assets 7,714 89,323
Total non-current assets 1,664,731 2,303,852,
Total assets $ 11,086,002 $ 9,798,449
LIABILITIES AND EQUITY
Current liabilities
Trade payables, accrued liabilities and provisions $ 747,661 $ 894,206
Deferred revenue and deposits 85,854 2,205
Current tax liabilities 372,245 171,907
Total current liabilities 1,205,760 1,068,318
Non-current liabilities
Deferred tax liabilities 79,355 97,319
Lease inducement 199,340 152,746
Total non-current liabilities 278,695 250,065
Total liabilities 1,484,455 1,318,383
Capital and reserves
Issued capital 5,575,881 5,521,001
Reserves 692,174 676,834
Retained earnings 3,333,492 2,282,231
Total equity 9,601,547 8,480,066
Total liabilities and equity $ 11,086,002 $ 9,798,449
QUESTOR TECHNOLOGY INC.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
Stated in Canadian dollars except per share data
Unaudited
For the three
months ended
June 30
For the six
months ended
June 30
2013 2012 2013 2012
Revenue $ 2,263,746 $ 1,188,004 $ 3,983,323 $ 3,418,879
Cost of sales (1,086,306 ) (739,406 ) (1,915,442 ) (1,916,581 )
Gross profit 1,177,440 448,598 2,067,881 1,502,298
Administration expenses (497,657 ) (364,217 ) (851,207 ) (717,661 )
Net foreign exchange gains 47,437 51,749 92,434 17,336
Depreciation of property and equipment (9,799 ) (10,463 ) (20,539 ) (20,785 )
Amortization of intangible assets (304 ) (304 ) (609 ) (609 )
Loss on disposal of property and equipment (347 ) (6,226 ) (347 ) (8,994 )
Other income 2,296 7,208 6,972 11,913
Profit before tax 719,066 126,345 1,294,585 783,498
Income tax (expense) income
Current (102,855 ) (30,389 ) (254,233 ) (204,346 )
Deferred 17,965 3,484 10,909 7,726
Profit and comprehensive income $ 634,176 $ 99,440 $ 1,051,261 $ 586,878
Earnings per share
Basic $ 0.025 $ 0.004 $ 0.042 $ 0.024
Diluted $ 0.025 $ 0.004 $ 0.041 $ 0.023
QUESTOR TECHNOLOGY INC.
CONDENSED STATEMENTS OF CHANGES IN EQUITY
Stated in Canadian dollars
Unaudited
Issued capital Reserves Retained earnings Total equity
Balance at January 1, 2013 5,521,001 676,834 2,282,231 8,480,066
Profit and total comprehensive income - - 1,051,261 1,051,261
Recognition of share-based payments - 37,970 - 37,970
Issue of ordinary shares under employee share option plan 54,880 (22,630 ) - 32,250
Balance at June 30, 2013 $ 5,575,881 $ 692,174 $ 3,333,492 $ 9,601,547
Balance at January 1, 2012 $ 5,458,215 $ 622,226 $ 1,241,875 $ 7,322,316
Profit and total comprehensive income - - 586,878 586,878
Recognition of share-based payments - 30,507 - 30,507
Issue of ordinary shares under employee share option plan - - - -
Balance at June 30, 2012 $ 5,458,215 $ 652,733 $ 1,828,753 $ 7,939,701
QUESTOR TECHNOLOGY INC.
CONDENSED STATEMENTS OF CASH FLOWS
Stated in Canadian dollars
Unaudited
For the six months ended June 30 2013 2012
Cash flows provided by (used in) operating activities
Profit and total comprehensive income $ 1,051,261 $ 586,878
Adjustments for:
Income tax expense 243,324 196,620
Loss on disposal of property and equipment 347 8,994
Depreciation of property and equipment 158,616 142,997
Amortization of intangible assets 609 609
Net unrealized foreign exchange gains 49,285 (13,685 )
Expense recognized in respect of equity-settled share-based payments 37,970 30,507
Write-downs of inventories to net realizable value - 555
1,541,412 953,475
Movements in non-cash working capital (150,108 ) 2,688,931
Cash generated provided by operations 1,391,304 3,642,406
Income taxes paid - (371,549 )
Net cash provided by operating activities 1,391,304 3,270,857
Cash flows (used in) provided by investing activities
Payments for property and equipment (90,270 ) (408,549 )
Proceeds from disposal of property and equipment 5,000 -
Net cash used in investing activities (85,270 ) (408,549 )
Cash flows provided by financing activities
Proceeds from issue of ordinary shares under employee share option plan 32,250 -
Net cash from financing activities 32,250 -
Net increase (decrease) in cash 1,338,284 2,862,308
Cash and cash equivalents at beginning of the period 4,405,624 2,166,301
Effects of exchange rate changes on the balance of cash held in foreign currencies (18,476 ) 10,829
Cash and cash equivalents at end of the period $ 5,725,432 $ 5,039,438

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