Taronis Fuels Releases First Quarter Results of Operations

Tuesday, 07. July 2020 15:00

Company Generates $4.9 Million in Revenues

PHOENIX, AZ, July 07, 2020 (GLOBE NEWSWIRE) -- Taronis Fuels, Inc., (“Taronis” or “the Company”) (OTCQB: TRNF), a global producer of renewable and socially responsible fuel products, today released its results of operations for the first quarter of 2020. The Company reported revenues of $4.9 million for the first three months of the year, unchanged from the same period in the prior year. Sales were in part negatively impacted by the COVID-19 pandemic across much of the retail industrial gas locations. The Company’s California retail network was negatively impacted by the statewide lockdown for most of March, and the Company’s Texas and Louisiana operations were further negatively impacted by the severe oil price collapse in March.

The Company offset most of this impact through new client acquisitions during the quarter. The Company’s retail network, MagneGas Welding Supply, remained fully operational during the period with no incidents of COVID-19 infection due to a rapid and comprehensive corporate response to the pandemic. As a result, the Company was able to largely offset the adverse economic backdrop through an aggressive marketing and hiring strategy.

The Company announced a price reduction in MagneGas, its proprietary and patented metal cutting fuel product, in early March. This strategy placed the product at roughly a 50% price advantage relative to acetylene. This resulted in significant success in generating product interest with new clients in California in particular, which was highly beneficial in the Company’s overall new client acquisition activity in March and has continued to significantly benefit the Company since.

In addition to the above pricing strategy, the Company began an aggressive hiring initiative during the first quarter. The Company added significant staffing resources across all of its retail markets during the first quarter. The Company also significantly increased its staffing for MagneGas production, gasification unit manufacturing, international MagneGas production and its expansion into new domestic retail markets.

Gross income for the first three months of 2020 was $2.4 million, as compared to $2.2 million in the same period in the prior year. The improvement was largely due to improved margins on the overall product mix sold during the period. Gross margins were 49.7% for the first quarter of 2020, as compared to 45.4% for the first quarter of 2019. The Company anticipates that the gross profit margin improvements will continue into subsequent quarters in 2020 as it continues to benefit from improved pricing as a national buyer of products across its expanding retail network.

The Company also anticipates that the additional revenues from its heating, ventilation, and air conditioning wholesale gas distribution operations, operated under the TGS brand, will have a meaningful impact on gross margins and overall profitability in the second quarter and for the foreseeable future. The Company acquired TGS in late May 2020.

The Company’s operating expenses for the quarter were $5.9 million, as compared to $3.6 million in the first quarter of 2019. The $1.3 million increase was in part due to one-time, non-cash stock compensation expenses of $0.7 million. The remaining $0.6 million in increased expenses were due to increases in payroll for added headcount, with a total headcount growth of approximately twenty percent during the period.

“We are very proud of our Company’s ability to overcome significant economic adversity across our entire business during the first quarter of 2020,” commented Scott Mahoney, CEO of Taronis Fuels. “The combined impact of COVID-19 and the oil price disruptions in the first quarter did play a significant role in the Company’s ability to execute on our ambitious growth objectives that we set forth for the year. With that said, the first quarter also delivered a number of very positive developments that will continue to benefit the Company throughout the remainder of the year.”

“We were able to capitalize on the overall industry’s reaction to COVID-19 by adding a number of highly experienced industry experts to our sales team in all regions. These are incredibly talented, experienced, respected sales leaders in our industry. This was a very rare opportunity to add high quality experts that are helping to drive our growth today.”

“Our sales team is expanding our addressable market within the regions we serve. We continue to serve many valued small and medium size businesses every day. However, we are also now gaining access to a number of industry leaders across a wide range of industry verticals. We are competing to earn the business of clients that dwarf our legacy client base in terms of annual spending on the products we offer.”

“We made a very calculated and strategic investment in our domestic staffing model, and it is paying off. In addition, we added significant depth and expertise across our entire technical team. We now have a national director of MagneGas production to oversee all of our domestic and international gas production. We added a national director of manufacturing to oversee the new Arizona gasification unit manufacturing facilities. We added supply chain logistics experts to oversee the materials procurement for our manufacturing process. We now have the capabilities to drive our international expansion in the coming quarters.”

“It is also important to note that many of these staffing decisions were made with a longer term understanding of our financial condition. We have gained access to various federal, state and local government funding programs already, and we have verified that we will be able to utilize a number of government funded programs to support our growth, particularly in Arizona, which is now home to our new corporate headquarters and our global manufacturing facilities. Arizona is exceptionally pro-business, and we have benefitted greatly from our decision to base our scaling operations there.”

“We are excited to continue to execute our strategy and we look forward to providing a comprehensive update on our second quarter results of operations in the near term,” 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

Primary Logo

Related Links: 
Author:
Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.