MagneGas Applied Technology Solutions, Inc., a leading clean technology company in the renewable resources and environmental solutions industries, has released financial results and provided a business update for the third quarter ended 30th September, 2018.
Scott Mahoney, CEO of MagneGas, stated, “2018 has been transformative for many reasons and our rapidly expanding geographic footprint in the United States has been one of the strongest signals. We proudly announce our monthly sales figures because we’re regularly seeing more than 200% year-over-year growth each month. This not only speaks to our acquisition strategy and due diligence being effective, but I would also like to thank all the teams for the speed and efficiency with which we have effectively integrated our acquisitions and enabling them to be immediately accretive.”
He continued, “With each strategic acquisition and subsequent expansion, more customers and potential partners are recognising the way our MagneGas2® is transforming their industries in a positive and environmentally focused way. Revenue for the third quarter, ended 30th September, 2018 increased 195% to $2.6m, largely driven by these new acquisitions.”
“We have three major goals: first, we want to scale our US industrial revenues so that we are financially self-sufficient. Second, we want to unlock the growth potential of the European markets. Lastly, we want to explore new and complimentary technology opportunities, leveraging both our existing technologies as well as through partnerships or other technology additions to our patent portfolio. I believe we are hitting on all cylinders and that MagneGas is currently best positioned to maximise our growth potential,” Mahoney concluded.
Third quarter 2018 financial results
Revenue for the third quarter ended 30th September, 2018 was $2.6m, which equates to a 195% increase compared to the same period last year. The 195% increase in revenue was due primarily to MagneGas’s acquisition of Trico Welding Supplies in Northern California which generated $1.26m.
For the three months ended 30th September, 2018 the cost of revenues was $1.60m. During this period, the company generated a gross profit of $998,000. Gross margins for the three months ended 30th September, 2018 and 2017 were 38% and 37%, respectively. The company recorded $201,809 in additional cost of goods sold during the period due to acquisition accounting. If this amount were excluded, gross margins would have otherwise been 46%.
MagneGas recorded $534,000 in additional cost of goods sold during the period due to acquisition accounting. If this amount were excluded, gross margins would have been 43%. The company anticipates that margins will improve as all acquired inventory is sold and the cost basis for replacement inventory is reflected in MagneGas’s future cost of goods sold. Partially offsetting this increase in cost of goods sold, the company has achieved better pricing and terms on select products as it achieves economies of scale and greater buying power.
Operating costs for the three months ended 30th September, 2018 and 2017 were $4.5m and $2.6m, respectively. MagneGas’s operating expenses as a percentage of sales were 175.1% and 298% for the three months ended 30th September, 2018 and 2017, respectively.