Taronis Technologies Inc (NASDAQ: TRNX) is having an incredibly strong day in the market today, with the stock currently trading up 33.01% after announcing record revenues. With the announcement in mind, many are wondering if now is the time to get involved in the stock.
After digging through the available information on the company, I’ve come to the conclusion that TRNX seems to be in the midst of a turning point, and a positive one at that. As a result, I’m expecting to see further gains ahead. Here’s why:
What Is Taronis Technologies?
Taronis Technologies is a company that is focused on renewable fuels, metal cutting fuels, and water decontamination. The company’s patented plasma arc technology is its claim to fame.
This technology enables a wide use of hydrocarbon based waste streams that can be readily converted into fossil fuel substitutes. Moreover, the company is developing a wide range of marketable uses for these fuels. For example, the company is replacing products for propane, compressed natural gas and liquid natural gas.
Moreover, TRNX is currently marketing a proprietary metal cutting fuel that is highly competitive with the market standard, acetylene. Currently, the company operates 17 locations in California, Texas, Louisiana, and Florida, where it sells its proprietary metal cutting fuel.
Taronis Technologies is also engaged in the decontamination of water. In fact, its technology has proven to starilize water, eradicating all pathogens. Moreover, the technology also eliminates contaminants like antibiotics, hormones and other soluble drugs suspended in the contaminated water.
TRNX Revenue Is Telling A Compelling Story
In a press release issued this morning, Taronis announced its financial results for the full 2018 year, and these results proved to be impressive. In fact, during the 2018 year, the company generated revenue of $9.7 million.
Considering that TRNX only generated $3.7 million in 2017, the 161% growth in this figure is impressive to say the least. In the announcement, the company said that the strong growth had to do with a series of six acquisitions that were made in 2018. With the goal of rapidly expanding geographic reach within the industrial gas and welding supply market, these acquisitions have been highly accretive.
Moreover, it’s worth mentioning that we already know that the strong revenue growth that we’re seeing out of the company is continuing. In fact, looking a couple of months back in press release tells a rather compelling story!
On March 20, 2019, TRNX issued a press release announcing revenues for the month of Februrary, 2019. During the month, the company generated $1.63 million in revenue. In February of 2019, the company only generated about $0.38 million in revenue. That represents year over year growth in the amount of 324%!
Moreover, the company completed two acquisitions in the month of February, further serving to expand revenue. In fact, on April 9, 2019, the company issued yet another press release, letting investors know how it did in March.
In the month of March, 2019, TRNX generated revenue in the amount of $2.05 million. This figure showed yet another impressive month of year-over-year growth, ganing 298% from the $0.05 million generated in March of 2018.
In a statement, Scott Mahoney, CEO at TRNX, had the following to offer:
With our third consecutive record month of sales growth, our acquisition strategy is exceeding prior financial expectations.
We are now generating in excess of $24 million in annualized sales, and our team is fully integrated and executing on all of our growth initiatives for 2019.
Revenue Expansion Likely To Continue
It’s also worth mentioning that the revenue expansion that we’re seeing from TRNX is likely to continue. In fact, the company has issued several press releases as of late with regard to its work to continue expanding its revenue.
First and foremost, on April 3, 2019, Taronis Technologies issued this press release, announcing that it has entered into a supply agreement with Catalent. Catalent is a global leader in the pharmaceutical manufacturing industry.
Under the terms of the agreement, Catalent will supply the company with medical grade waste ethanol. This will then be used as a feedstock to produce the company’s patented synthetic gas product, known as MagneGas. In a statement, Scott Mahoney, CEO at TRNX, had the following to offer with regard to this announcement:
This is a major accomplishment for our research and production team. We have worked closely with Catalent for the past 18 months to evaluate our ability to take one of their most prolific waste streams and convert it into our 4th generation MagneGas metal cutting fuel product.
With this new feedstock, we project to reduce our production costs by almost 20%. This is a key milestone in our goals to reduce our production costs by up to 50% per cubic foot of gas produced in 2019. With this key pricing competitive advantage, we anticipate being able to gain significant inroads with our roughly 30,000 existing customers across the US as we accelerate our new marketing efforts.
In what I view to be the most important press release from the company as of late, issued on April 1, 2019, Taronis Technologies announced that it has launched a staged marketing consolidation plan.
The plan surrounds all ten of the acquired brands owned by TRNX in Florida, Louisiana, Texas and California. Ultimately, the company intends on improving its national marketing effort for its proprietary MagneGas metal cutting fuel product. The company will also work to raise national awareness for its consolidated welding supply operations.
As a result of the recent accretive acquisitions, TRNX has worked its way to becoming a top-ten national player within the independent industrial gas and welding supply industry. As a result, it plans on building upon its position to lead to further gains in revenue.
Considering the strong revenue growth that we’ve seen as of late, the company’s work to expand revenue is proving effective. Now, with a full-speed-ahead marketing campaign starting to run, I believe that we will see further impressive growth in revenue, potentially taking the company from $9.7 million a year to between $24 million and $28 million this year alone.
Consider The Risks
Every time an investor makes a move in the market, they are taking on some level of risk. An investment in Taronis Technologies would be no different. When it comes to TRNX, here are the risks that I believe investors should consider:
- Operating Loss – At the moment, the company is operating at a loss. In fact, the company announced a loss of more than $15 million in the 2018 year. However, its worth mentioning that these losses were expanded as the result of six accretive acquisitions that took place in the year. Moreover, the company announced a $13.5 million fund raise in February. Between the fund raise and expanding revenue, my concerns with regard to losses are starting to die down. Nonetheless, companies that operate at a loss are dependent on support from the investing community. Should this support come to a stop, it could lead to pain.
- Revenue – In order for TRNX to be a strong, long term play, it must maintain the growth that we’re seeing in revenue. In fact, much of my bullish argument is centered around the fact that I believe that 2019 revenues will come in between $24 and $28 million. Should this not be the case, we could see declines ahead.
- Oil Prices – At the moment, Taronis Technologies’ metal cutting fuels and natural gas products are relatively inexpensive when compared to market alternatives. As oil continues to climb in price, this will likely remain the case. However, should the value of oil fall, the company may be forced to reduce prices to stay competitive, which could hurt both the top and bottom line.
While there are risks in any investment, TRNX offers up what I believe to be a compelling opportunity. With the company’s accretive acquisition strategy proving to be a successful one, we’re seeing strong growth in revenue.
Moreover, with a national marketing campaign set to take place, and two acquisitions announced in February, I’m expecting that this revenue growth will continue. Also, the company is working on various cost cutting measures, which are proving to be effective.
As revenue continues to grow and cost cutting measures continue to bulster the bottom line, the company may reach profitability in a relatively short time. All in all, I veiw TRNX as a compelling opportunity that should not be ignored by investors!