Clean Diesel: CARB Diesel retrofit continues at below compliance levels.

Ian Gilson, CFA

On August 30, 2012 Clean Diesel (CDTI) issued a comment on a recent release by the Manufacturers of Emission Controls Association, MECA, that the diesel particulate filter (DPF) retrofit rate in California continued to be below that required to meet the proscribed requirements. This continues the trend of the first half of the year. In the first six months of 2012 the verified sales number was 3,030 out of an expected rate of 12,000 for 2012 and 66,000 filters for the period 2011 to 2015.

Without strong enforcement action, that is fines not citations, we doubt that many truck operators will comply with the regulations and the January 1, 2013 deadlines. Fleet operators, which make up a large proportion of Clean Diesel’s customer base, are moving towards compliance but small independent operators are under financial pressure in a weakening economy.

There is no certainty that the trucker will rush to buy DPF units in the fourth quarter so we are reducing our estimates for 2012 and 2013. Positive factors are the off-road and stationary diesel markets and the new contract with Honda for catalyst systems.

Our revenue estimates are $74 million, down from $75.2 million for 2012 and $90 million in 2013, down from $97 million. Our new EPS estimates are -$0.76 in 2012 and $0.10 in 2013.

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