Tampa, Florida -- MagneGas Corporation ('MagneGas' or the 'Company')(NASDAQ: MNGA), a technology company that counts among its inventions a patented process that converts liquid waste into MagneGas2 fuel, today announced financial results and provided a business update for the third quarter ending September 30, 2015.
Third Quarter 2015 Financial Highlights
- Revenue for the third quarter of 2015 increased 326% to $623,893 compared to $146,400 for the same period last year;
- Revenue for third quarter of 2015 increased 7% sequentially compared to the second quarter of 2015;
- Gross margin for the third quarter of 2015 improved 220 basis points to 34.9% compared to 32.7% for the third quarter of 2014.
Ermanno Santilli, Chief Executive Officer of MagneGas stated, 'We continue to execute on our strategy to expand MagneGas2 sales and increase our recurring revenue base. Revenue for the third quarter more than tripled to $623,893 versus the same period last year primarily due to our ESSI acquisition. We have added multiple distributors and marquee customers nationwide due in part to our aggressive sales campaign for MagneGas2 fuel, and the proven faster cutting speed, smaller heat affected zone, demonstrated safety attributes, and eco-friendly aspects of MagneGas2.
'We recently announced the addition of two new industrial gas distributors on the West coast. In August, we announced Harris Industrial Gases, which has multiple locations throughout Northern California and Northern Nevada. Most recently, we announced Piners Welding Supply, a major supplier to the metal cutting and steel demolition markets in Napa, California. We expect that the increasing demand will require construction of our first local waste conversion/fuel supply facility in California.
'On the East coast, we also have added two major industrial gas distributors. In September, we announced AWISCO Corp. of New York, a leading industrial gas company. AWISCO will be the exclusive supplier of MagneGas2 fuel in certain areas of New York, New Jersey and Connecticut. We also recently announced that Haun Welding Supply, with 18 locations in New York, Pennsylvania and Vermont, will be distributing MagneGas2 fuel. These distributors have customers that include the Fire Department of New York and several major electric utility companies. We now have MagneGas2 distribution covered in all the major hubs in and around the Northeast corridor of the United States.
'We were pleased to announce in October that we have received an order to supply MagneGas2 fuel and MagneTote first responder backpack kits to a U.S. Army contractor. We estimate that the U.S. Army spends several million dollars per year on acetylene and related products, and this initial order could signal an opportunity for MagneGas to generate additional revenue from this market segment.
'We also recently announced that our wholly owned gas distribution subsidiary Equipment Sales and Services, Inc. ('E.S.S.I') has received confirmation that a major industrial company is moving all of their welding gas and related product orders to E.S.S.I. The customer has stated that they are switching to E.S.S.I. due to the superior customer service and exclusive access to MagneGas2 fuel and this is estimated to be the largest sale in E.S.S.I. history. In addition, we have expanded E.S.S.I. into North Florida and Georgia through a Joint Venture expansion agreement called 'E.S.S.I. North.
'Due to growing demand for MagneGas2 fuel, which has created a substantial backlog, we installed a second production facility that is now operating. We expect that the second production unit will help to fulfill the increased demand and we plan to have a third unit in operation in early 2016 to support our further growth.
'We continue to add to our growing customer base. In the past month we have announced that our cutting fuel has again been selected by industry experts as the fuel of choice for five major demolition projects in Florida. The five demolition and reconstruction projects range in scope from hotels, resorts and other structures to roadways and bridges, encompassing both the private, public and military sectors. MagneGas2® is now being used in six of the top ten demolition projects in the Central Florida area, based on our estimates.
'Looking toward the coming months, we have identified some confidential, exciting acquisitions that are in our industry. Based on the size of the markets we address, which we estimate to be in the several billion dollar range, we continue to evaluate opportunities to grow both organically and by acquisition. The goal of any acquisition would be to find synergies with our fuels or technology that would provide the target company with an accelerated growth trajectory, while bringing the overall MagneGas financial profile to profitability.'
Third Quarter 2015 Financial Results
Revenues for the three months ended September 30, 2015 were $623,893 as compared to $146,400 for the same period last year. Revenue from the industrial gas segment was $623,893 for the third quarter of 2015 as compared to $123,067 for the same period last year. This was primarily due to an increase in MagneGas fuel sales and revenue received from the acquisition of ESSI, Inc. Revenues for three month period ended September 30, 2015 increased 7% over June 30, 2015 to $623,893 versus $584,445. This was primarily due to the addition of new industrial gas customers.
Gross margins increased to 35% from 33% for the three month period ending September 30, 2015 versus September 30, 2014. This was primarily due to reduced product costs associated with the vendor agreements through ESSI, Inc.
Overall operating expenses increased 3% for the three month period ended September 30, 2015 versus June 30, 2015 to $2,400,740 from $2,325,774. Operating expenses, increased to $2,430,740 for the period ending September 30, 2015 versus $1,954,518 for the same period 2014. The additional expenses were primarily due to the operating expenses associated with the ESSI, Inc. acquisition as well as additional regulatory and other expenses related to the incident on April 16th.
MagneGas' executive management team will host a conference call Wednesday November 11th at 10:00 a.m. Eastern Time to discuss the company's financial results for the third quarter ending September 30, 2015, as well as the Company's corporate progress and other meaningful developments.
Interested parties can access the conference call by dialing (877) 407-8033 for U.S. callers or (201) 689-8033 for international callers.
A teleconference replay of the conference call will be available approximately one hour following the call, through midnight Friday, December 11, 2015, and can be accessed by dialing (877) 660-6853 for U.S. callers or (201) 612-7415 for international callers and entering conference ID: 13624046.
About MagneGas Corporation
MagneGas Corporation (MNGA). The Company owns a patented process that converts various liquids and liquid wastes into hydrogen based fuels. These fuels can be used as a replacement to natural gas or for metal cutting. The Company's testing has shown the fuels are faster, cleaner and more productive than other alternatives on the market. They are also cost effective and safe to use with little changeover costs. The Company currently sells MagneGas into the metal working market as a replacement to acetylene.
The MagneGas fuel production systems can be set-up locally using various types of feedstock. The Company believes this flexibility can give them an advantage in the Government/Military marketplace as fuels can be manufactured on site from raw materials found locally worldwide and eliminates the time and expense of shipping to the specific military theater. The Company is planning to establish joint ventures with third parties to construct these supply facilities worldwide.
The Company also sells equipment for the sterilization of bio-contaminated liquid waste for various industrial and agricultural markets. In addition, the Company is developing a variety of ancillary uses for MagneGas fuels utilizing its high flame temperature for co-combustion of hydrocarbon fuels and other advanced applications.