IDEAS: Sales and earnings are rising again as Questor Technology (TSXV: QST)
capitalizes on its hybrid clean-tech solutions and tougher US state-level waste emission
regulations for oil and gas producers.
Investorfile's share price accumulation target of $0.65 for Questor Technology
Inc. was reached on June 3, 2013. For the record, we do not revise share price
targets for our Top Ideas - Small Cap Value Stocks. We have positioned our blog
to be one of the first providers for a pragmatic perspective of a small cap
company stock's potential worth, where there may be uncovered value that has
been largely overlooked by the investment community.
Technology (TSXV: QST - $1.14) holds the record as the Investorfile blog’s
number one performer with the stock price soaring 1,215% to a high of about
$5.00 since we first introduced the Company as one of our Top Ideas (See:
Questor Technology Inc: A small cap clean-tech company that makes money).
But that occurred back in 2014. Since then world oil prices collapsed and
what followed was the massive spending cuts by the oil and gas industry
(Questor’s main customers) and the Company’s stock price fell to trade at a
fraction of its highs.
the setback, our enthusiasm for Questor Technology’s potential had never waned
insomuch as we proclaimed in December of 2016 that the Company is one of our
Top Ideas to watch out for in 2017 (See: Investorfile
predictions for 2016 perform well. Looking forward to 2017). Since
that blog post, Questor Technology’s stock price is already up 73%.
Technology is a leading provider of waste gas combustion incineration solutions to improve air quality. The Company's proprietary incinerator
technology, which is safe, reliable and very efficient, is deemed a
best-of-breed clean-air solution for oil and gas producers needing to comply
with stricter emission regulations. To date the Company's incinerators have
been deployed all over the United States
as well as in many other countries worldwide.
year the Company saw the introduction and implementation of its hybrid
incineration technology. The technology allows its oil and gas customers to
purchase a base level of capacity and rent additional capacity to meet the
shorter-term demands of high initial production. The benefits are lower capital
and operating costs, reduced lease footprint, and clean enclosed combustion to
meet stringent emission regulations that are starting to be strictly enforced
in the USA
on a state-by-state basis.
demand for Questor’s clean-air incineration solutions has heightened again in
2017. This is mainly driven by an increase in drilling activity, coupled with
tougher state-driven waste emission regulations, most notability in the state
of Colorado .
oil and gas companies have started to embrace Questor’s hybrid
incineration technology over historical methods due to its increased financial
efficiency. Now oil and gas customers only purchase the incinerator capacity
that they require with an option to rent additional capacity when needed, such
as during the temporary well-testing operation. For Questor, this approach has
balanced its revenues generated between sales and higher margin rentals.
sales success of Questor’s hybrid incineration solutions is evident in the
Company’s Q1 report for 2017. Questor Technology reported that revenue in the
first quarter of 2017 was $3 million, an increase of 36 per cent from the same
period in 2016. Rental revenue doubled during this period to $1.5 million due
to the higher activity in the United
States. Adjusted EBITDA jumped significantly
in the quarter to $800,000, primarily due to the rental revenues and
significantly higher utilization and expansion of equipment that was relocated
to the United States.
The Company earned a profit of $419,000 in the quarter, which equated to $0.02
in earnings per share.
forward, the Company says it expects to continue to expand its presence in the United States.
While stricter waste emission regulations in Colorado were a catalyst for
growth in that state, Texas, Ohio, Pennsylvania and other states are
considering similar regulations to Colorado. This will create additional growth
opportunities for the Company’s hybrid incineration technology.
on the strong demand from the United States, Questor has set its 2017 capital
budget to $3.5-million (funded from its existing cash resources) in order to
increase its rental fleet of incineration units by 36%. We note that the
Company reported that it also received $4 million of orders from a key client
for the purchase of its hybrid incineration units for delivery in 2017.
what we see, Questor Technology is ideally positioned to deliver a strong
rebound in its financial results for 2017 and beyond. Could the stock price
also rebound to reach its all-time highs of $5.00 in the future? We would
not rule that out!
Company has maintained a strong balance sheet with cash in the bank and no
Questor Technology has approximately 26.4 million shares
The Company’s website www.questortech.com
Author Ownership Disclosure: TSXV: QST- YES
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Investorfile.com is not engaged in an investor relations agreement with Questor
Technology Inc. nor has it received any compensation from Questor Technology
Inc. for the preparation or distribution of this article.
The author of this article has acquired and may trade shares of Questor
Technology Inc. through open market transactions and for investment purposes