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Clean Diesel Technologies Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 10, 2011 08:02AM

Clean Diesel Technologies Inc. (CDTI) filed Quarterly Report for the period ended 2011-09-30. Clean Diesel Technologies Inc. has a market cap of $25.2 million; its shares were traded at around $3.52 with and P/S ratio of 0.5.



Highlight of Business Operations:

Revenues for our Heavy Duty Diesel Systems division for the three months ended September 30, 2011 increased $4.2 million, or 59.2%, to $11.1 million from $6.9 million for the three months ended September 30, 2010. Revenues for the three months ended September 30, 2011 include $0.3 million from CDTI’s legacy business as a result of the Merger, excluding sales in the London LEZ. The remaining increase was due to sales in the London LEZ of $1.6 million, a growth in North American sales of $1.5 million, favorable currency translation impact of $0.6 million and growth in sales to European mining customers of $0.2 million. We expect sales in our Heavy Duty Diesel Systems division to increase for the remainder of 2011 as compared to the third quarter as shipments in the London LEZ are expected to increase towards its December 2011 compliance deadline.

For the three months ended September 30, 2011, selling, general and administrative expenses increased by $1.3 million, or 42.8%, to $3.9 million from $2.6 million for the three months ended September 30, 2010. The expense for the three months ended September 30, 2011 includes $0.2 million related to CDTI’s legacy business, including $0.1 million of amortization of intangibles, subsequent to the Merger. The remaining increase is due to $0.4 million in increased expenditures related to our London LEZ operation, $0.1 million in increased stock compensation expense, the unfavorable effect of fluctuations in foreign exchange rates related to operations in Canada and Sweden of $0.1 million as well as to increased legal, professional and other costs as a result of being a NASDAQ listed company as compared to the same period in 2010, when we were listed on the AIM Market of the London Stock Exchange. Selling, general and administrative expenses as a percentage of revenues increased to 26.0% in the three months ended September 30, 2011 compared to 24.9% in the three months ended September 30, 2010. We expect to continue to invest in sales and marketing related expenses both in London and other European LEZs and to support the anticipated opportunity resulting from the California mandate (see “—Factors Affecting Future Results” above).

Revenues for our Heavy Duty Diesel Systems division for the nine months ended September 30, 2011 increased $7.4 million, or 32.4%, to $30.1 million from $22.7 million for the nine months ended September 30, 2010. Revenues for the nine months ended September 30, 2011 include $1.8 million from CDTI’s legacy business, excluding the London LEZ, as a result of the Merger. The remaining increase was due to London LEZ sales of $1.8 million, the favorable effect of fluctuation in foreign currency exchange rates of $1.8 million, increased sales in North America of $1.1 million and increased sales to mining and material handling customers in Europe of $0.9 million.

For the nine months ended September 30, 2011, selling, general and administrative expenses increased by $4.6 million, or 54.5%, to $13.0 million from $8.4 million for the nine months ended September 30, 2010. The expense for the nine months ended September 30, 2011 includes $0.5 million related to CDTI’s legacy business, including $0.3 million of amortization of intangibles, subsequent to the Merger. The remaining increase is due to $1.6 million of expenses incurred in preparation for the London LEZ, $1.2 million of increased stock compensation expense, $1.0 million in increased legal and professional costs associated with being a U.S. public company compared to the same period in 2010, and unfavorable effect of fluctuations in foreign currency exchange rates related to the operation in Sweden and Canada of $0.2 million and other increases of $0.7 million. Selling, general and administrative expenses as a percentage of revenues increased to 32.3% in the nine months ended September 30, 2011 compared to 23.2% in the nine months ended September 30, 2010.

For the nine months ended September 30, 2011, research and development expenses increased by $2.2 million, or 67.5%, to $5.4 million from $3.2 million for the nine months ended September 30, 2010. The increase in research and development expenses was primarily attributable to product verifications and engineering of $0.5 million, $0.4 million of product engineering in London to support the LEZ, $0.3 million related to preparations for qualification of catalysts for use in our Heavy Duty Diesel Systems division and pre-production testing for a model year change-over expected in 2012, increased stock compensation expense of $0.2 million related to stock options and restricted share units granted in 2011, $0.2 million related to CDTI’s legacy business as a result of the Merger, $0.1 million of unfavorable foreign exchange in Canada and Sweden and $0.3 million of other increases. As a percentage of revenues, research and development expenses were 13.3% in the nine months ended September 30, 2011, compared to 8.8% in the nine months ended September 30, 2010.

Read the The complete Report



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