Company Generates $8.9 Million in Revenues, $2.4 Million in EBITDA
PHOENIX, AZ, Aug. 17, 2020 (GLOBE NEWSWIRE) -- Taronis Fuels, Inc., (“Taronis” or “the Company”) (OTCQB: TRNF), a global producer of renewable and socially responsible fuel products, today announced its results of operations for the second quarter of 2020. The Company reported $8.9 million in revenues during the quarter, which represented a $3.0 million increase, or 51.8% increase in sales when compared to $5.8 million in sales generated during the second quarter of 2019. When compared to the $4.9 million in sales for the first quarter of 2020, this represents a $3.9 million, or 80% increase in quarterly revenues.
The significant increase in sales was in part due to the sale of a 300KW Venturi plasma arc gasification unit during the quarter for $3.0 million. The second significant factor for the increase in sales was approximately $1.4 million in wholesale industrial gas products sold into the heating, ventilation, and air conditioning (“HVAC”) market through the Company’s wholly owned subsidiary, TGS. The Company acquired TGS in late May of 2020, and it immediately contributed to the 80% increase in monthly sales in June. TGS has now generated record sales for four straight months, as its Georgia, Florida and Texas operations continued to benefit from the increased work-from-home conditions due to the COVID-19 pandemic.
The Company also continued to experience a steady increase in sales across its 26 retail locations operated under the MagneGas Welding Supply brand. The Company continued to win new clients in virtually all markets, which more than offset general softness in manufacturing and industry as a result of the COVID-19 economic impact.
Gross income for the second quarter was $7.2 million, which represented a 157% increase when compared to the $2.8 million in gross income reported for the same period in 2019. The primary cause for the increase was a significant improvement in gross margins, which were 81% for the quarter, as compared to 47% for the same period in the prior year. The primary factor for this accomplishment was the very high gross profits generated from the unit sale.
The second contributing factor for the improved profitability was the shift in revenue mix towards very high gross margins industrial gas products. The added sales from the wholesale gases sold into the HVAC supply market is expected to play a lasting role in gross margins going forward. Overall, the added HVAC supply centric revenue component is expected to permanently improve combined gross margins closer to 60% on a go-forward basis.
Total cash operating expenses during the second quarter were $5.5 million, and $4.8 million excluding depreciation, amortization, and non-cash stock expenses. For the same period in the second quarter of 2019, operating expenses were $4.0 million, and $3.1 million excluding all non-cash expenses. The increase was primarily attributed to increased payroll, as the Company has expanded its operations substantially over the past twelve months. Payroll for the second quarter was $3.1 million, compared to $2.1 million for the same period in 2019. Headcount increased over 40% in the last 12 months, largely in line with the 43.9% increase in payroll and related benefits expenses.
All other cash operating expenses were $1.7 million for the second quarter, as compared to $1.5 million for the first quarter of 2020. The 14.5% quarter over quarter increase in non-payroll expenses was largely related to the new corporate headquarters and manufacturing facilities launched in Arizona during the second quarter of 2020.
As a result of the record revenues, improved gross margins, and overall cost control efforts, the Company reported a record $2.4 million in EBITDA during the second quarter of 2020, as compared to negative $1.0 million in EBITDA for the same period in 2019. This represents a major financial accomplishment for the Company, as it is the first EBITDA positive quarter in the Company’s history.
Excluding the impact of the gasification unit sale, Taronis’ combined US retail and wholesale operations were cash flow break even for the first time in Company history. The Company recorded a $1.2 million net income for the second quarter, which was also the first profitable quarter in the Company’s corporate history.
“Our second quarter results of operations speak for themselves,” commented Scott Mahoney, CEO of Taronis Fuels. “In the second quarter, several positive developments all came together to produce these strong financial results. We are very proud of our entire team, which made this accomplishment possible.”
“Heading into the second half of 2020, we see this strengthening trend in financial performance continuing. We are seeing solid results across all markets for our retail operations. Our wholesale gas distribution division is operating at maximum capacity and is clearly benefitting from the work-from-home conditions across the Sunbelt markets we serve. We believe our $2.8 million in industrial gas and welding supply sales reported for June is a strong indication of what we can sustain and build on consistently going forward, and we expect to fully leverage this success as we incorporate our newest location in Miami into our operations.”
“We added six new markets to date in 2020, most of which occurred in the second quarter. These expansion efforts are only just beginning to translate into tangible results. We have a number of new markets slated for expansion in California, Arizona, Texas and Florida for the second half of 2020. This expansion is expected to accelerate our domestic growth outlook for the remainder of the year.”
“We also expect to provide meaningful progress reports on several of our international expansion opportunities in the coming weeks as we are able to reaccelerate some of these efforts with the moderation of the COVID-19 pandemic in key markets where we have been working towards the launch of revenue generating activities. We look forward to providing periodic updates on these efforts throughout the remainder of the year,” concluded Mr. Mahoney.
About Taronis Fuels, Inc.
Taronis Fuels, Inc. is a global producer of renewable and socially responsible fuel products. Our goal is to deliver environmentally sustainable, technology driven alternatives to traditional fossil fuel and carbon-based economy products. We believe our products offer a vastly cleaner solution to legacy acetylene and propane alternatives.
Taronis is also dedicated to providing fundamentally safer solutions to meet the industrial, commercial and residential needs of tomorrow’s global economy. Our products have been rigorously tested and independently validated by global gas authorities as vastly safer than acetylene, the most dangerous industrial gas in use today.
Lastly, we strive to deliver products that offer significant function superiority at a reduced cost to the end consumer. Through these efforts, we support 9 of the 17 United Nations Sustainable Development Goals. For more information, please visit our website at www.taronisfuels.com/
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events, including our ability to raise capital, or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission. Our public filings with the SEC are available from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.
Investor Contacts:
Michael Khorassani
IR@Taronisfuels.com