Highlights
- Record quarterly total revenues of $31.7 million in Q2, up 69% compared to Q2 last year
- Strong improvement in gross margin to 17.8% in Q2 from 7.7% in Q2 last year
- Adjusted EBITDA* totaled $0.1 million in Q2, an improvement of $3.3 million over Q2 last year
- Total liquidity of $48.9 million as at December 31, 2022, including cash and cash equivalents of $38.6 million
- Total long-term debt of $8.6 million as at December 31, 2022
- Raising revenue guidance to a range of $115-120 million from $110 million previously, for fiscal year ending June 30, 2023.
Overview
Soroush Nazarpour, President and Chief Executive Officer, stated: "I am very pleased with NanoXplore's performance in Q2-2023. Achieving record revenue and strong improvement in gross margin clearly demonstrate that our business is growing and our graphene commercial activities are moving in the right direction. Whether we sell pellets, powder, or composite parts, our graphene technology is at the core of our activities and provides us with a sustainable value proposition for the years to come."
Pedro Azevedo, Chief Financial Officer, stated: "Having achieved positive adjusted EBITDA for the second time in three quarters, demonstrates our momentum towards profitability through revenue growth, operational efficiencies, and increased adoption of graphene-enhanced products. I am also very pleased for having generated positive cash flow from operating activities in the quarter for the first time in several years. We are clear on our goals, we are clear on how to achieve them and are on the right path."
Results of operations may include certain unusual and other items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Corporation results. In addition to IFRS measures, management uses non-IFRS measures in the Corporation's disclosures that it believes provide the most appropriate basis on which to evaluate the Corporation's results.
A. Results of operations variance analysis - Three-month periods
Revenues
| Q2-2023 | Q2-2022 | Variation
| Q1-2023 | | Variation |
| $ | $ | $ | | % | | $ | | $ | % | |
| | | | | | | | | | | |
| Revenues from customers | 31,417,369 | 18,425,908 | 12,991,461 | | 70.5 | % | 27,147,167 | | 4,270,202 | 16 | % |
| Other income | 307,753 | 375,579 | (67,826 | ) | (18 | %) | 85,358 | | 222,395 | 261 | % |
| Total revenues | 31,725,122 | 18,801,487 | 12,923,635 | | 69 | % | 27,232,525 | | 4,492,597 | 16 | % |
| | | | | | | | | | | |
Revenues from customers increased from $27,147,167 in Q1-2023 to $31,417,369 in Q2-2023. This increase is mainly due to a positive product mix including graphene enhanced products, higher volume, a positive FX impact and higher tooling revenues.
Revenues from customers increased from $18,425,908 in Q2-2022 to $31,417,369 in Q2-2023. This increase is mainly due to a positive product mix including graphene enhanced products, higher volume, the acquisition of Canuck in December 2021, a positive FX impact and price increases partially offset by lower tooling revenues.
Other income increased from $85,358 in Q1-2023 to $307,753 in Q2-2023. The increase is due to grants received from R&D programs.
Other income decreased from $375,579 in Q2-2022 to $307,753 in Q2-2023. The decrease is mainly explained by the end of the CEWS program set up by the Canadian Federal government to help businesses deal with the COVID-19 pandemic. The Corporation received $ nil under this program during Q2-2023 compared to $41,608 in Q2-2022 as the program ended in October 2021.
Adjusted EBITDA
The adjusted EBITDA improved from -$3,139,026 in Q2-2022 to $141,300 in Q2-2023. The variation is explained as follows:
- Gross margin on revenues from customers increased by $4,163,840 compared to Q2-2022 due to higher revenues as describe above, higher margins product mix, improved productivity, and cost control; and
- Partially offset by higher administrative expenses (SG&A and R&D) of $620,870 mainly due to additional headcounts and higher wages, including higher accrued variable compensation.
B. Results of operations variance analysis - Six-month periods
Revenues
| YTD 2023 | YTD 2022 | Variation |
| $ | $ | $ | % |
| | | | |
| Revenues from customers | 58,564,536 | 36,255,925 | 22,308,611 | | 62 | % |
| Other income | 393,111 | 1,364,008 | (970,897 | ) | (71 | %) |
| Total revenues | 58,957,647 | 37,619,933 | 21,337,714 | | 57 | % |
| | | | |
Revenues from customers increased from $36,255,925 in the last year period to $58,564,536 in the current period. This increase is mainly due to a positive product mix including graphene enhanced products, the acquisition of Canuck in December 2021, higher volume, a positive FX impact and price increases partially offset by lower tooling revenues.
Other income decreased from $1,364,008 in the last year period to $393,111 in the current period. The decrease is mainly explained by the end of the CEWS program set up by the Canadian Federal government to help businesses deal with the COVID-19 pandemic. The Corporation received $ nil under this program in the current period compared to $840,249 in the last year period as the program ended in October 2021.
Adjusted EBITDA
The adjusted EBITDA improved from -$6,899,432 in the last year period to -$1,835,732 in the current period. The variation is explained as follows:
- Gross margin on revenues from customers increased by $6,787,873 compared to the last year period due to higher sales as describe above, higher margin product mix, improved productivity and cost control; and
- Partially offset by higher administrative expenses (SG&A and R&D) of $1,357,099 mainly due to additional headcounts and higher wages, including higher accrued variable compensation.
C. Other
Additional information about the Corporation, including the Corporation's Management Discussion and Analysis for the three and six-month periods ended December 31, 2022 and 2021 ("MD&A") and the Corporation's consolidated financial statements for the for the three and six-month periods ended December 31, 2022 and 2021 (the "financial statements") can be found at www.nanoxplore.ca .
* Non-IFRS Measures
The financial statements and MD&A were prepared using results and financial information determined under IFRS. However, the Corporation considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Corporation. These measures, which the Corporation believes are widely used by investors, securities analysts and other interested parties in evaluating the Corporation's performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted EBITDA".
Webcast
NanoXplore will hold a webcast tomorrow, February 15, 2023, at 8:30 am EST to review its second quarter results ended December 31, 2022. Soroush Nazarpour, CEO and President of NanoXplore, and Pedro Azevedo, Chief Financial Officer, will host the event. To access the webcast please click on the link https://edge.media-server.com/mmc/p/nke9vt6o or you can access through our website in the Investors section under Events and Presentations. A replay of this event can be accessed via the above link or on our website.
About NanoXplore
NanoXplore is a graphene company, a manufacturer and supplier of high-volume graphene powder for use in industrial markets. The Corporation provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. NanoXplore is headquartered in Montreal, Quebec with manufacturing facilities in Canada, the United States and Europe.
Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information (together, "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements, and subject to risks and uncertainties. All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors deemed appropriate in the circumstances. No assurance can be given that these assumptions and expectations will prove to be correct. Forward-looking statements are not facts, but only predications and can generally be identified by the use of statements that include phrases such as "anticipate", "believe", "continue", "could", "estimate", "foresee", "grow", "expect", "plan", "intend", "forecast", "future", "guidance", "may", "predict", "project", "should", "strategy", "target", "will" or similar expressions suggesting future outcomes.
Forward-looking information is not a guarantee of future performance and involves a number of risks and uncertainties. Such forward-looking information necessarily involves known and unknown risks and uncertainties, including the relevant assumptions and risks factors set out in NanoXplore's most recent annual management discussion and analysis filed on SEDAR at www.sedar.com, which may cause NanoXplore's actual results to differ materially from any projections of future results expressed or implied by such forward-looking information. These risks, uncertainties and other factors include, among others, the uncertain and unpredictable condition of global economy, notably as a consequence of the Covid-19 pandemic. Any forward-looking information is made as of the date hereof and, except as required by law, NanoXplore does not undertake any obligation to update or revise any forward–looking statement as a result of new information, subsequent events or otherwise.
Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated by such statements.
No securities regulatory authority has either approved or disapproved the contents of this press release.
For further information:
Investors and media
Martin Gagné
Director of Investor Relations
martin.gagne@nanoxplore.ca
Tel: 1 438 476 1927
