Clean Diesel Technologies seeks to jump-start sales, turn first profit
Some companies run from California’s strict regulatory standards on air pollution and emissions. Not Clean Diesel Technologies Inc., where the executives can’t imagine being anywhere else.
CDTi manufactures and distributes vehicle emissions control systems to automakers and other customers.
The Ventura company’s products include diesel particulate filters, exhaust accessories and catalysts. Its products reduce emissions from gasoline, diesel and natural gas combustion engines, making its California location especially valuable.
“California is one of our biggest markets,” said Nikhil Atul Mehta, who is interim chief executive, a job he shares with Pedro J. Lopez-Baldrich. “The California Air Resources Board is at the forefront and leading the charge on clean air, compared to the rest of the world.”
Clean Diesel Technologies makes its products for a broad range of uses, including family cars, big diesel rigs, school buses and off-road jobs such as mining. CDTi maintains sales offices in Britain, Canada, France, Japan and Sweden.
Clean Diesel Technologies began trading on Nasdaq in October 2007.
In 2010, as the result of a merger with Catalytic Solutions Inc., CDTi moved its headquarters from Connecticut to California.
The company recently announced that it had begun producing catalysts for Honda Motor Co.'s 2015 Acura TLX sedan. Clean Diesel Technologies also makes catalysts for Honda’s Accord and RLX models.
“We view this as a nice win,” said Roth Capital Partners analyst Matt Koranda, “as it adds to CDTI’s growing catalog of products with Honda.”
In April, the California Air Resources Board gave CDTi “an expanded verification” for its Purifilter EGR emission reduction system. That will allow the product to be used in a broader range of emissions control situations.
Last month, CDTi received $6.1 million through the sale of stock and warrants. The company said it would use the funds for general corporate purposes.
Mehta said the company’s “claim to fame is more than cleaning up dirty trucks and supplying catalysts for vehicles. We’re also a technology leader in the industry.”
For example, catalysts have traditionally relied on platinum, which is very expensive. “Our products have significantly reduced the amount of platinum usually required to do the same work,” Mehta said.
The company has yet to turn a profit and doesn’t produce enough cash from operations to meet its expenses. As of Dec. 31, CDTi had accumulated losses of $181.7 million.
On Thursday, the company reported that first-quarter sales fell more than 6% to $12.5 million compared with a year earlier. CDTi’s net loss swelled to $3.8 million from $2.1 million a year earlier; the company cited weakness in Europe and in U.S. markets outside California.
CDTi’s independent auditors in March said there was “substantial doubt” over the company’s “ability to continue as a going concern” based on its finances as of Dec. 31, the company said in a filing with the Securities and Exchange Commission. The auditors’ so-called going-concern letter was eliminated as of the end of the first quarter because of the recent financing, a company spokesman said.
In January, CDTi Chief Executive R. Craig Breese left the company and hasn’t been replaced yet.
In September, the federal Occupational Safety and Health Administration ordered the company to pay a former chief financial officer $1.9 million. OSHA said the former executive had been wrongfully terminated for “warning the board of directors about ethical and financial concerns raised by a proposed merger.” The company agreed to settle the case for $400,000.
Two analysts regularly cover the company and both have it rated as a buy.
Koranda of Roth Capital Partners said in a note to investors: “We believe CDTi is building a strong suite of catalyst technologies that can address future emissions challenges for its customers.”
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