Today, we need to talk again about Clean Diesel Technologies, Inc. (NASDAQ:CDTI), which provides solutions to the automotive emissions control markets.Why?The company's recent share price action seems to have interested many market participants, which increased our curiosity. Forum participants on Seeking Alpha and iHub commented on the stock. The most popular was Yahoo Finance, which shows 531 reactions as of October 15, 2017.What happened?The share price jumped from approximately $1.65 to touch the level of $2.2 in only one day.But, that's not the most significant. The volume, which is a very good indicator of market interest, was also extraordinary. More than 5 million shares changed hands in only one day, while the average volume is usually about 219,000 shares.
1 month chart for CDTIFor those who don't know CDTI, we are producing some background now. The company provides catalyst products, such as "diesel oxidation catalysts, catalyzed diesel particulate filters, and selective catalytic reduction catalysts for emissions control from diesel engine applications, and three-way catalysts." Company LogoAdditionally, powder materials for emission control from gasoline engines and other catalysts for carbon monoxide, hydrocarbons, and several pollutants are also provided. A network of dealers and independent distributors are used to market these products. The company was founded in 1996 and has 97 employees.Recent DevelopmentsOn August 14, 2017, the company released its results for the quarterly period ended June 30, 2017. We appreciate that the balance sheet seems quite solid. It shows a positive net asset per share, some cash, whereas the amount of liabilities is not large. From the balance sheet, we have highlighted the $1.6 million in cash and $5.8 million in inventories. The following are the assets on June 30, 2017 and on December 31, 2016:
Cash (In Thousands)
$
1,611
$
7,839
Accounts receivable, net
4,623
5,398
Inventories
5,833
7,125
Prepaid expenses and other current assets
978
968
Total current assets
13,045
21,330
Property and equipment, net
1,031
1,158
Intangible assets, net
1,267
1,483
Deferred tax asset
561
554
Other assets
347
305
Total assets
$
16,251
$
24,830
SourceAdditionally, the following are the liabilities. Please note that there is almost no long term debt:
Line of credit (In Thousands)
$
672
$
1,458
Shareholder notes payable
—
1,803
Accounts payable
4,145
5,979
Accrued expenses and other current liabilities
5,143
6,345
Income taxes payable
693
642
Total current liabilities
10,653
16,227
SourceRegarding the income statement, the company reported $8.4 million in total revenues, and approximately $0.02 in earnings per share. We need to note that these EPS figures were better than what the market expected. But, the most relevant was what the CEO said in the conference call.We had access to the conference given by the company when these financial figures were released. You can have a look at them here. We need to highlight that the company was planning to deliver more revenues in Q3, and Q4 2017:
"As we will discuss in a moment, our focus on providing technology to manufacturing partners in China and India has translated into a strong revenue pipeline that will gain visibility during the second half of 2017" Source"I think, the first quarter, in particular, there was a lot of noise in the numbers. But as we get into the second half of the year, particularly in Q3, we'll build upon -- we expect to build upon the results in the second quarter, and that will continue into the fourth quarter." Source
On September 11, 2017, the company released the sale of DuraFit™ and private label OEM replacement diesel particulate filter and diesel oxidation catalysts product line to AP Exhaust Technologies for $3.2 million. Additionally, it was noted that CDTi and AP Exhaust have entered into a supply agreement.The company explained that this was a strategic sale to facilitate the transformation of the company into a provider of enabling technology to the emissions catalyst market by the end of the year.Matthew Beale, CDTi’s CEO, was quoted:
“For the last several quarters, CDTi has been focused on the strategic repositioning of the business to provide our technology to other manufacturers, which dramatically increases the size of our addressable market. These activities result in a leaner, more focused organization with a strengthened balance sheet, and we are now positioned to convert our progress into long-term profitable growth.” Source
Holders and ConclusionCurrently trading with a market cap of $33 million, CDTI is an interesting story among small caps. Other market participants seemed to figure out that the company was undertaking a transformative process and acquired shares. Have a look at some of them:HolderSharesDate Reported% OutValueLuther King Capital Management62,500Jun 29, 20170.40%165,000Geode Capital Management, LLC38,855Jun 29, 20170.25%102,577Millennium Management LLC35,851Jun 29, 20170.23%94,646Blackrock Inc.27,843Jun 29, 20170.18%73,505UBS Group AG12,500Jun 29, 20170.08%33,000SourceAdditionally, insiders own shares as well and did not sell any shares in the last year.NameSharesDate ReportedKANIS S.A.4,962,908Aug 24, 2016BELL LON E590,494Dec 15, 2016BEALE MATTHEW87,188Dec 15, 2016KERN TRACY A10,000Dec 15, 2016SourceWe will be updating our subscribers as soon as we know more. For the latest updates on CDTI, sign up below!Image courtesy of Tom Marshall via FlickrDisclosure: We have no position in CDTI and have not been compensated for this article.
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