MagneGas (NASDAQ:MNGA), which has a patented process to convert liquid waste into a hydrogen-based fuel and has been ramping up sales recently, more than tripled its revenue in the second quarter of 2015.
The Florida based company posted revenues of US$584,445 in the quarter ending June 30, 2015, or 228% higher year over year from US$178,330. Revenues also increased 7% over the previous quarter ending on March 31, 2015.
The company said that gross margins increased 623 basis points to 36% from 30% for the second quarter compared to a year ago while operating expenses (excluding non-cash items) decreased 6% in the same period compared to the first quarter of 2015 to $1,720,441 from $1,822,961. MagneGas could count on a cash balance of $4,038,190 on June 30, 2015.
"We continue to make progress and remain on target to increase revenues, reduce expenses and improve margins for the second half of the year. Revenue for the three months ending in June 30, 2015 more than tripled to $584,445 in the second quarter versus the same period last year primarily due to our ESSI acquisition and MagneGas 2(NYSE:R) product line.
"We have launched an aggressive sales campaign for our new MagneGas 2 fuel and have added marquee customers to our existing and growing customer base," said MagneGas's chief executive Ermanno Santilli.
MagneGas has enjoyed success with its MagneGas 2 fuel, generating multiple repeat customers sales and demand from users including the US Navy, NYFD and major utilities. Indeed, the US Navy ordered MagneGas 2 fuel last May after months of rigorous testing:
"In various customer and independent tests, MagneGas 2 has repeatedly been commended for its ability to cut faster than acetylene as well as for its overall safety advantages due to its lighter than air characteristics, reduced slag and reduced oxygen consumption.
"At the end of July, we announced a major waste-to-energy company has placed multiple fuel orders of MagneGas 2 for metal cutting where it will be used as a replacement to acetylene for repairs and demolition. MagneGas 2 is an excellent example of successful customer-driven research and development coupled with consistent execution on our strategy to attract marquee customers that can have a significant impact on revenue as our product rolls out to multiple locations," Santilli said.
MagneGas has not shown any signs of slowing down over the summer and the company has added customers in July, noting that many have switched from acetylene to MagneGas 2 such as AB&I Foundry, LB Construction and others given that MagneGas2 has the added advantage of being produced from renewable liquid wastes, making it a unique and environmentally responsible alternative fuel:
"During a successful demonstration at a large utility customer Green Gas Supply LLC witnessed first hand that MagneGas 2 would provide the driver for growth to help execute their own aggressive expansion strategy. As a result, we signed a Memorandum of Understanding with Green Gas Supply, LLC to expand into Louisiana and Texas with a $550,000 Plasma-Arc Gasification system sale that includes future royalty payments, profit sharing rights and an initial 300 cylinder gas order to seed the territory. Under the MOU, we formed a new joint venture that will be established in Louisiana to own and operateMagneGas gasification systems to produce and sell MagneGas 2 into the metal cutting market," Santilli said.
During the second quarter, MagneGas also formed Kickin Gas Partners, a joint venture company, to expand its distribution and service capability into North Florida, with Suwannee Ironworks, an existing client.
"We will now be able to directly distribute MagneGas in areas not currently serviced and will expand revenue opportunities from gas and welding supplies. This new joint venture will launch MagneGas into North Florida, from Tallahassee to Jacksonville, as well as from southern Georgia to Gainesville. Both of these joint ventures allow us to reach new customers and expand our fuel sales rapidly across the United States while keeping joint control of MagneGas 2 production and quality," noted Santilli.
MagneGas has ambitious plans to market MagneGas for the co-combustion of hydro-carbon fuels as pilot testing of its co-combustion technology to reduce coal emissions continues with joint venture partners in the United States and Australia.
"We anticipate the conclusion of our testing by year's end. Initial internal testing demonstrated a significant reduction in greenhouse gas emissions and a greater efficiency in burning coal. Testing and validation is now in the final stages with oversight from a leading coal technology research center that is associated with one of the nation's largest utility companies. We fully expect the results to continue to be significant in terms of coal burning efficiency, reduction of greenhouse gases and overall business potential for MagneGas. We believe our system cost-effectively reduces emissions, which also improves the overall energy output of the plant by re-burning the smoke from coal fired power plants," said Santilli.