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Wednesday, 11/20/2019 10:08:42 AM

Wednesday, November 20, 2019 10:08:42 AM

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PHOENIX, AZ, Nov. 20, 2019 (GLOBE NEWSWIRE) -- Taronis Technologies, Inc., (“Taronis” or “the Company”) (TRNX), a leading renewable fuel producer serving the global industrial gas markets, today announced third quarter 2019 results of operation. Revenues generated in the third quarter were $5.3 million, representing a 103% increase over the third quarter of 2018. The increase was primarily due to added scale through acquisitions made in the first quarter of 2019.

Organic revenue growth was most pronounced in the San Diego, CA, and Tyler, TX markets, where some of the Company’s retail locations are 70-80% higher since acquisition in 2018. This strong growth was partly offset in some markets by the national shortage of helium during the period. This shortage has begun to abate, and the Company expects to see steady sales improvements as it competes to win back longtime legacy clients that were forced to move their accounts elsewhere during the helium shortage.

Gross income generated during the quarter was $2.4 million, with a 46% gross margin. Management expects to see further improvement in gross margins in the fourth quarter, with the benefit of the Clearwater, FL fill plant in operation for a full quarter. This is expected to add approximately 1.5% to gross margins in the fourth quarter. The Company forecasts gross margins to further improve throughout 2020 as the Company’s US retail business is scheduled to complete a series of upgrades to its industrial gas facilities. Management also expects to see margins benefit through increased MagneGas sales in Texas and the West Coast.

Operating expenses were $9.7 million during the quarter. Of this amount, cash expenses excluding depreciation, amortization, and stock compensation were $6.7 million. The Company experienced an increase in expenses on several fronts. First, the cost to regain compliance with Nasdaq, including consulting, legal, and other services was significant. Second, the Company retained multiple consultants and legal counsel to facilitate international business development, primarily in Europe and the META (Middle East, Turkey and Africa) regions. The Company invested in increased staffing, primarily in the fields of engineering, technical, sales and marketing, and administrative personnel required to support the pending Turkish contract, which is expected to commence in the fourth quarter of 2019.

EBITDA for the quarter was negative $4.2 million, of which more than half was accounted for by the onetime or otherwise non-recurring items discussed above. Management expects Taronis Technologies’ burn rate to improve to neutral or become positive in early first quarter 2020. This is based on our internal outlook for the Water Pilot, which is beginning to scale and generate meaningful revenue during the fourth quarter. The Company also forecasts to see significant free cash flows from royalties due from Taronis Fuels. For example, the initial five 300KW Venturi plasma arc gas unit purchase under the Turkish contract would generate just over $1.3 million in royalties and EBITDA to Taronis Technologies with no changes in staffing, overhead or capital expenditures by Taronis Technologies. This free cash flow would be primarily devoted to further technology innovation for water decontamination, possible M&A opportunities and other corporate activities that are intended to benefit shareholders.

“This was a very productive quarter for our team,” commented Scott Mahoney, CEO of Taronis. “We had spent almost 18 months working toward a landmark contract with Turkey, which we executed in July. This $165 million contract is projected to be highly profitable, and we anticipate the entire contract could be expedited, pulling revenues and EBITDA into 2020 for our benefit. We also made significant progress in launching our first Europe location, located in Amsterdam, which we announced at the end of the quarter. We also made significant progress in multiple markets in the Middle East, and we began to unlock a compelling opportunity with partners in Latin America. Our international expansion during the period was a clear success.”