Kelso Technologies Inc. Financial Results for the Three Months Ended June 30, 2025

Executive Summary

• Kelso Technologies Inc. reported unaudited interim consolidated financial statements for the three months ended June 30, 2025, marking its second consecutive profitable quarter.
• The company reported Q2 2025 net income of $72,175 ($0.00 per share), with gross revenue of $2.64 million, an 8.6% decrease year-over-year due to macroeconomic challenges and new tariffs.
• The company settled a lawsuit with Kitchener Holdings Corp. on July 8, 2025, and repaid the full $250,000 drawn on its $500,000 line of credit, restoring full credit availability.

Key Details

• Q2 2025 Financial Performance:
  • Net Income: $72,175 ($0.00 per share).
  • Net Income (excluding discontinued operations): $70,705.
  • Gross Revenue: $2.64 million (down 8.6% YoY from $2.89 million in Q2 2024).
  • Gross Profit: $1,075,446 (Margin: 41%, down from 47% in Q2 2024).
  • Adjusted EBITDA: ($19,451) (improved from ($396,227) in Q2 2024).
• H1 2025 Financial Performance:
  • Total Revenues: $5,801,283 (up from $5,544,195 in H1 2024).
  • Gross Profit: $2,485,201 (Margin: 43%).
  • Net Income: $484,462 (compared to a loss of ($1,243,686) in H1 2024).
  • Cost Management: Total expenses cut by 30% ($580,303) year-over-year in the first half of 2025.
• Liquidity and Capital Resources (as of June 30, 2025):
  • Cash: $488,273 (up from $153,147 at Dec 31, 2024).
  • Working Capital: $2,682,405 (up from $2,125,386 at Dec 31, 2024).
  • Total Assets: $6,591,231.
  • Net Equity: $4,713,491.
  • Common Shares Outstanding: 55,160,086.
  • Line of Credit: Repaid full $250,000 drawn in Q1; full $500,000 facility now available. Interest rate is WSJ Prime Rate + 1.00% (7.50% prime rate at June 30, 2025).
• Legal Settlement:
  • On July 8, 2025, Kelso and Kitchener Holdings Corp. reached a settlement agreement to resolve a lawsuit filed in October 2024.
  • Terms include a Full and Final Release by Kitchener and dismissal of the lawsuit.
  • Settlement terms and facts are confidential.
• Outlook and Strategy:
  • FY2025 Sales Growth Forecast: Flat to slightly positive (0% to 5% vs. FY2024).
  • Tank Car Builds: Anticipated to be lower in 2026 before rebounding in 2027.
  • Product Approvals: Seeking full Association of American Railroads (AAR) approval for Bottom Outlet Valve (BOV) and Angle Valve (AV); currently in service trial periods.
  • Industry Forecast: FTR predicts 10,325 tank car deliveries in 2025 (15.8% increase over 2021-2023 average), dropping below 10,000 in 2026, and rising to 13,000 in 2027.

Notable Quotes

• "Kelso Technologies Inc. announces its second consecutive profitable quarter."
• "The revenue decline was mainly due to macroeconomic challenges, as Kelso’s main customers adopted a cautious stance in response to new tariffs in April and May. Since the beginning of June, the Company has observed signs of improvement as the industry adjusts to current conditions."
• "Kelso is currently seeking full approval from the Association of American Railroads (AAR) for its Bottom Outlet Valve (BOV) and Angle Valve (AV)... These pending approvals are anticipated to create new revenue opportunities."