Financial Performance - Revenues for the year ended December 31, 2022, were $10,931,188, a 47% increase from $7,425,707 in 2021[11] - Gross profit for 2022 was $4,908,996, with a gross profit margin of 45%, up from 43% in 2021[11] - The net loss for 2022 was $1,355,417, an improvement from a net loss of $2,758,567 in 2021[11] - Adjusted EBITDA for 2022 was a loss of $83,575, compared to a loss of $1,436,435 in 2021[11] - Sales performance for the year ended December 31, 2022 improved by 47% compared to the previous year, indicating a recovery in business prospects[58] - The Company reported a net loss of $1,355,417 ($0.02 per share) on revenues of $10,931,188, an improvement from a net loss of $2,758,567 ($0.05 per share) on revenues of $7,425,707 in 2021[61] - Adjusted EBITDA loss for 2022 was $83,575, significantly improved from a loss of $1,436,435 in 2021[65] - Basic and diluted loss per share improved to $0.02 in 2022 from $0.05 in 2021[156] Assets and Liabilities - The total assets as of December 31, 2022, were $12,147,143, down from $13,728,510 in 2021[11] - The Company had cash on deposit of $2,712,446 and working capital of $7,000,568 as of December 31, 2022, compared to $3,377,464 and $8,670,165 respectively in 2021[76][77] - The company’s total liabilities decreased to $1,365,471 in 2022 from $1,673,397 in 2021, a reduction of 18.4%[154] - Cash reserves decreased to $2,712,446 in 2022 from $3,377,464 in 2021, while working capital also declined to $7,000,568 from $8,670,165[81] Operational Highlights - The company has active service field trials for new rail tank car products, including a ceramic ball bottom outlet valve, which are pending AAR approval[21] - The KXI™ Wildertec™ Suspension System is under development to enhance commercial wilderness transportation capabilities[24] - The KXI HD prototype vehicle was completed in late 2022 and is undergoing extensive testing to ensure compliance with Canadian Motor Vehicle Safety Standards (CMVSS) and Federal Motor Vehicle Safety Standards (FMVSS)[29][50] - The anticipated new tank car demand is projected to reach 10,650 units in 2023, alongside significant retrofits for 135,000 tank cars delivered between 2012 and 2017[37] - The company plans to initiate pilot production and sales of the KXI HD in late 2023, following successful compliance testing[30][53] - The company operates two production and R&D facilities totaling 50,000 square feet in Bonham, Texas, and a new facility in West Kelowna, British Columbia, for KXI HD development[52][53] Market and Customer Dependency - The company aims to diversify its market presence beyond rail to mitigate risks associated with reliance on a small number of customers[23] - The Company is dependent on three major customers for a significant portion of its revenue, with no formal long-term agreements in place, posing a risk to revenue stability[117] - The company generated over $137 million in revenues since 2012 from the distribution of more than 89,000 valves, with 9,812 rail tank cars produced in 2022[33] - The Company’s market share in new tank car production is approximately 47%, bolstered by its reputation for reliability during supply chain disruptions[132] Research and Development - The company is engaged in R&D activities focused on new products for rail/road tank cars and automotive suspension technology, with uncertain returns on investment[107] - The company has obtained patents for key products, including external constant force spring pressure relief valves, which are crucial for future product development[105] - The Company’s R&D investments are aimed at developing new products for the rail and automotive industries, with ongoing projects expected to enhance future financial success[134] Challenges and Risks - Management anticipates potential challenges in 2023 due to slow economic rail activity, hyperinflation, and supply chain concerns, despite a cautiously optimistic outlook from OEMs and tank car owners[78] - The Company’s ability to meet production schedules may be impacted by potential shortages of parts and raw materials, which could adversely affect business development plans[119] - The company has been impacted by COVID-19, which has caused material disruption to business globally, affecting financial results[159] Financial Management - Kelso's financial performance reflects its ability to manage capital resources effectively and navigate improved market conditions post-COVID-19[59] - The Company maintains a debt-free financial position, allowing it to execute strategic business plans for 2023[95] - The company recognizes variable lease payments not dependent on an index or rate as an expense in the period incurred[199]
Kelso(KIQ) - 2023 Q1 - Quarterly Report