By: Tomas Ronolski - AllPennyStocks.com News

Tuesday, November 10, 2015

In a report last year, ratings agency Moody’s said that the outlook for the North American railroad industry has been changed to positive. Moody’s said that its outlook reflects improving macroeconomic conditions in the U.S. Moody’s believes that the improving economy will support broad-based growth across major freight categories over the next 12 to 18 months. Since the Moody’s report last year, the U.S. economy has continued to show signs of improvement. Weaker oil prices have had a negative impact on the Canadian economy; however, oil prices are now stabilizing.

Moody’s noted in its report last year that freight volumes will increase by 2% to 3% and pricing will increase by 1% to 2% in 2015. According to Senior Analyst, Rene Lipsch, this would translate into revenue growth of 3%-5%.

The positive outlook for the North American railroad industry augurs well for Kelso Technologies Inc. (TSX-Venture:KLS), a railway equipment supplier engaged in the design, production and sale of proprietary tank car service equipment used in safe handling and containment of hazardous materials during transport.

KLS’s products are specifically designed to provide economic and operational advantages while reducing the potential effects of human error and environmental harm during the transport of hazardous materials.

This morning, KLS reported its financial results for the third quarter of 2015. For the quarter, KLS reported revenue of $4.37 million, compared to $5.94 million reported for the same period in the previous year. The company’s revenue for the first nine months of 2015 was $15.84 million, compared to $17.06 million reported for the same period in the previous year.

KLS reported an EBITDA loss of $304,574 for the quarter ended September 30, 2015. For the same period in the previous year, the company had reported positive EBITDA of $1.56 million.

KLS noted that its financial performance has been negatively impacted by the delay in the new PHMSA regulations, deteriorating economic conditions in the oil industry and various competitive factors.

At the end of the September quarter, KLS had cash of $3.92 million on its balance sheet.

KLS also said that in response to the emerging negative environment, it has realigned its business model early in 2015 to weather the sharp downturn in tank car activity. The company noted that its research and product development initiatives and service trials remain on schedule. KLS added that it is looking at measures to bring down its operating costs without having a negative impact on its effectiveness, performance and long-term profitability.

KLS shares have been dropping in sync with oil prices as shares have continued a slide from late 2014 including a further 14.5% decline today alone on the release of the above mentioned financials.

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