Second quarter results - Still not good enough!!!
Questor Announces Second Quarter Results
2022-08-29 07:00 ET - News Release
CALGARY, Alberta, Aug. 29, 2022 (GLOBE NEWSWIRE) -- Questor Technology Inc. ("Questor" or the "Company") (TSX-V: QST) announced today its financial and operating results for the second quarter 2022.
Questor's Unaudited Condensed Consolidated Financial Statements and Management's Discussion and Analysis for the quarter ended June 30, 2022 are available on the Company's website at www.questortech.com/investors and through SEDAR at www.sedar.com.
Unless otherwise noted, all financial figures are presented in Canadian dollars, prepared in accordance with International Financial Reporting Standards and are unaudited for the three and six months ended June 30, 2022 and 2021.
SECOND QUARTER 2022 FINANCIAL RESULTS
| | Three months ended June 30, | | Six months ended June 30, | |
| For the | | 2022 | | | 2021 | | | 2022 | | | 2021 | |
| (Stated in CDN $) | | | | |
| Revenue | | 2,454,229 | | | 1,184,040 | | | 5,041,936 | | | 2,732,431 | |
| Gross profit (loss) | | 431,796 | | | (127,077) | | | 1,062,705 | | | (91,252) | |
| Loss for the period | | (457,911) | | | (873,214) | | | (823,530) | | | (1,759,101) | |
| Loss per share - basic and diluted | $(0.02) | | $(0.03) | | $(0.03) | | $(0.06) | |
| As at | | June 30, 2022 | | | December 31, 2021 | |
| (Stated in CDN $) | | | | |
| Working capital1 | | | 16,202,007 | | | | 16,274,715 | |
| Total assets | | | 33,334,485 | | | | 35,047,855 | |
| Total equity | | | 29,906,084 | | | | 30,482,081 | |
1 Working capital is defined as total current assets less total current liabilities.
The Company's financial performance in the three and six months ended June 30, 2022 has improved significantly compared to 2021. Revenue is $2.5 million for the three months ended June 30, 2022 and $5.0 million for the six months ended June 30, 2022, an increase of 107 percent and 85 percent compared to the three and six months ended June 30, 2021 due to an increase in equipment sales and rentals. During the second quarter of 2022, requests for proposals from customers remained strong and the Company closed a further $0.6 million of equipment sales.
Gross profit increased $0.6 million for the three months ended June 30, 2022 and increased $1.2 million for the six months ended June 30, 2022, compared to the same periods in 2021. This increase in gross profit is due to improved sales and margins. This improvement was partially offset by $0.5 million additional costs being incurred for the waste heat to power project in Mexico during the quarter.
The overall loss for the three and six months ended June 30, 2022 was $0.5 and $0.8 million, an improvement of 48 and 53 percent compared to the same period of 2021. The overall loss has reduced significantly period over period even though an additional $0.5 million was incurred during the quarter on the waste heat to power project in Mexico, as result of strong margins on equipment sales and rentals, and a continued focus on controlling operating and administration expenses.
The Company continues to have a strong financial position at June 30, 2022 including cash and cash equivalents of $14.6 million and working capital of $16.2 million. As a result of this strong financial position, the Company cancelled its undrawn $1.0 million revolving demand loan facility and its $5.0 million capital loan facilities.
SECOND QUARTER 2022 HIGHLIGHTS
During the second quarter, the Company has made significant progress towards completing the commissioning of three waste heat to power facilities in Mexico which included running two of the sites at the maximum output the available gas supply would allow. There were some equipment issues encountered by Questor's partners at the third site. Questor is working with its partners to get the replacement parts ordered and has a detailed plan to redeploy and complete the start up at the three sites, as soon as the additional equipment has been received on site. In order to complete the project, the Company has taken on additional scope to move the project forward and prove the technology. As a result Questor has expensed a further $0.5 million of costs during the three months ended June 30, 2022 and continues to work with its customer to discuss potential future compensation to recover some of these additional costs.
During the first half of 2022, the Company has continued to progress its strategic research and development activities as follows:
- The Company has completed the procurement of long lead time materials required to build the 1500kw prototype for its waste heat to power project and received the first pre-milestone payment of $0.8 million from Sustainable Development Technology Canada ("SDTC").
- The Company completed the first phase of its integrated emissions data measurement and reporting platform project being worked on in partnership with the Southern Alberta Institute of Technology ("SAIT") which was largely funded by Alberta Innovates and Western Economic Development. The Company and SAIT are scoping and planning for the next phase of the project which will be partially funded by Western Economic Development. Subsequent to the period end, the Company received $100,000 of funding from this partnership which will offset certain research and development costs already incurred.
- The Company continues its collaboration with North-East Gas Association ("NYSEARCH") and Stanford University to develop alternative approaches to cleanly combust waste gas.
- The Company has decided not to proceed with the project with the University of Michigan and Southwestern Research Institute at this time.
PRESIDENT'S MESSAGE
Jurisdictions around the world are enacting regulations and incentives to target methane emissions and as a result Questor has seen increased interest in our ISO 14034 certified clean combustion technology solutions that guarantee 99.99% elimination of methane. Requests for proposals have increased significantly from both international and domestic companies, who are exploring opportunities to use Questor's integrated solutions to reduce greenhouse gas emissions, eliminate flaring and venting and to meet the new regulations focused on methane.
Cutting the amount of methane released into the atmosphere is one of the easiest and most effective ways to fight climate change, according to a U.N. report released last year. Canada recently introduced methane regulations for the upstream oil and gas sector and is contemplating an emissions cap for the industry. The Inflation Reduction Act (IRA; H.R. 5376) recently passed is the most significant investment the U.S. government has made in fighting climate change, putting more than $369 billion toward projects that will reduce planet-warming emissions. IRA would include supplemental appropriations of $850 million to the Environmental Protection Agency to provide grants to facilities subject to the methane charge for a range of objectives, including "improving and deploying industrial equipment and processes" that reduce methane emissions. The act also includes supplemental appropriations of $700 million for "marginal conventional wells" for the same purposes. These funds could support technology adoption at smaller oil and natural gas facilities or sites where the volumes are insufficient to justify infrastructure capital but significant enough to require technology like Questor's to ensure that methane and other hazardous pollutants are destroyed at a guaranteed high efficiency. To address domestic methane emissions, the IRA will impose a fee of "$900 per metric ton of methane starting in 2024, increasing to $1,500 per metric ton after two years".
The Environmental Protection Agency (EPA) is set to release new regulations early next year that will define the threshold at which an oil or gas facility is subject to the emissions fee on methane. The facilities that would be subject to the charge include the following industry operations: offshore petroleum and natural gas production; onshore petroleum and natural gas production; onshore natural gas processing; onshore natural gas transmission compression; underground natural gas storage; liquefied natural gas storage; liquefied natural gas import and export equipment; onshore petroleum and natural gas gathering and boosting; and onshore natural gas transmission pipelines. These are all facilities that we have a 25-year track record supporting with our technology.
The pressure from the public, government and investors is expected to result in companies focusing their efforts to reduce emissions and achieve their emissions reduction commitments resulting in increased demand for the Company's cost-effective high efficiency clean combustion systems, waste heat to power and data solutions. Questor's rental fleet can decrease non-routine vented gas emissions at a cost of less than ten cents per tonne. Similarly, the Company's clean combustion combined with its waste heat to power solutions, can reduce emissions at a cost of less than $10 per tonne. The Company is well positioned to assist its clients to meet their emissions reductions targets today using its proven cost-effective technology solutions.