Nanalysis Announces Second Quarter 2024 Results
Record Revenue and Positive EBITDA
CALGARY, AB, Aug. 28, 2024 /PRNewswire/ - Nanalysis Scientific Corp. ("the Company", TSXV: NSCI, OTCQX: NSCIF, FRA: 1N1), a leader in portable NMR machines and MRI technology for industrial and research applications announces second quarter results for the period ending on June 30, 2024, achieving 65% year-over-year revenue growth to $11.5 million in Q2. Chief Executive Officer Sean Krakiwsky and Chief Financial Officer Randall McRae will host a conference call at 5 P.M. Eastern Time today to discuss the results. A second call will be held for European investors at 8:30am Eastern Time tomorrow, August 29. All interested parties are invited to join these calls.
"We continue to see strength in both of our core business segments, benchtop NMR and security services," said Sean Krakiwsky, Founder and CEO of Nanalysis. "In addition, this quarter we had the added contribution of sizeable medical imaging hardware sales resulting in another record revenue quarter. We are very encouraged by these results which were consistent with our internal expectations, and we have a very positive outlook as we move into the back half of the year, which has historically been stronger than our first half. While we continue to drive our topline, we remain steadfast on improving margins by leveraging efficiencies and reducing costs, with the ultimate goal of delivering bottom line profitability to shareholders."
Financial highlights for the three months ended June 30, 2024:
Three months ended June
30
($000's) 2024 2023 ($) Change
Change
Product sales 5,402 3,917 1,485 38 %
Service revenue 5,265 2,162 3,103 144 %
Flow-through inventory 807 877 (70) -8 %
Total sales and revenue 11,474 6,956 4,518 65 %
Gross margin percentage - product sales 50 % 39 % 12 %
Gross margin percentage - service revenue 10 % -36 % 45 %
Adjusted EBITDA 414 (2,399) 2,813
Net loss (1,995) (4,054) 2,059 51 %
-- For the three months ended June 30, 2024, the Company reported
consolidated revenue of $11,474K, an increase of $4,518K or 65% from the
comparative period in 2023.
-- Gross margin percentage on product sales was 50% for the three months
ended June 30, 2024. Improvement in gross margin percentage for
Benchtop NMR is materializing as sales have improved in the second half
of last year and manufacturing cost reductions started in 2023 have
begun to positively affect margins.
-- Security service gross margin percentage in the quarter was 10% versus
(36)% in prior year comparative period as the Company completed the full
transition of 100% of airports serviced to its control from the
incumbent provider in the first quarter of 2024, and now expects to
increase revenue and drive efficiency within this business through 2024,
while keeping costs stable.
-- Adjusted EBITDA for the three months ended June 30, 2024, was $414K
versus an Adjusted EBITDA loss of ($2,399K) in the same period last
year. This improvement was driven by increased product sales, full
transition of airports to the Company's control resulting in increased
security services revenue, and the effect of cost reduction initiatives.
-- Net loss for the three months ended was $1,995K as compared to the
three-month loss for June 30, 2023, of $4,054K.
Quarterly Trend:
2024 2023
($000's) Q2 Q1 Q4 Q3
Product sales 5,402 4,216 5,450 3,941
Security service revenue 5,265 4,723 3,362 2,629
Flow-through parts revenue 807 2,223 988 466
Total revenue 11,474 11,162 9,800 7,036
Adjusted EBITDA 414 (362) (774) (1,354)
Net loss for the period (1,995) (2,522) (2,123) (6,287)
-- The Company has demonstrated continuous growth in Security service
revenue quarter over quarter, driven by the expansion of the Company's
airport security maintenance business as the Company took over more
airports from the incumbent service provider, ultimately taking over all
airports in Q1 2024.
-- Second quarter product sales remained strong as the Company realized a
large medical imaging sale which added significant revenue to the
quarter. As the Company moves into the second half of 2024, it believes
product sales will remain strong as seasonality in the second half has
historically produced positive results.
-- The Company's Adjusted EBITDA has continued to improve quarter over
quarter, resulting in positive Adjusted EBITDA for the second quarter of
2024. The Company expects this to continue as it works to grow both
product sales and security service revenue, while closely managing
costs.
-- Net loss was ($1,995K) in Q2 2024. Net losses continue to improve as
the Company has successfully grown revenue and implements cost reduction
initiatives.
Recent strategic and operational highlights during and after the second quarter of 2024 include:
-- New Quarterly Revenue Record: Q2 2024 revenue of $11.5 million was
driven by continued expansion of security services related to the
airport security maintenance business, as well as continued strength in
Benchtop NMR sales. Also included in this quarter was a large medical
imaging hardware sale.
-- Consistent Revenue in Airport Security Maintenance Business: The Company
saw a higher weighting of unscheduled maintenance and service during the
quarter which contributed to strong revenue results. As unscheduled
maintenance work ebbs, resources will shift to focus on the continued
rollout of projects which will provide a consistent balance of billing.
The Company continues to work to gain efficiencies and expects to see
increased margin growth through 2024 and into 2025.
-- Continued year over year Benchtop NMR Strength: In Q2, the Company
generated $2.8 million in Benchtop NMR sales. This represents a $1.2
million increase over Q2 2023 Benchtop NMR sales. The Company expects
continued strength in this product line through the rest of 2024.
-- Welcomed Ms. Jennifer Stubbs to Nanalysis' Board of Directors: Following
shareholder approval at the Annual General Meeting, Ms. Stubbs joins
Nanalysis as a Director. The Company also announced that Guido Cloetens
has stepped down as a director of the Company as he did not stand for
re-election at the Meeting. The Board of Directors sincerely thanks Mr.
Cloetens for his many valuable contributions to the Company during his
time as a director and wishes him well in the future.
-- Granted Funding Supporting AI Software Development for Detection of
Illicit Substances: The Company is receiving advisory services and up to
$1.45 million in non-repayable, non-dilutive funding from the National
Research Council of Canada Industrial Research Assistance Program (NRC
IRAP), to develop Artificial Intelligence based software tools to detect
illicit substances on top of the Company's portable Nuclear Magnetic
Resonance (NMR) spectrometers.
Outlook
"We feel that we have had a great first half of the year, and we plan on continuing this trajectory through the second half of the year," said Sean Krakiwsky, Founder and CEO of Nanalysis. " While we continue to implement our orderly cost reduction program, we are excited about the growth trajectory for BT NMR, MRI, and our Services business. We continue to make excellent operational improvements, which will continue to show gross margin expansion and ultimately bottom-line profitability. We will always be a company of technological innovation, with exciting product announcements expected this year."
Conference Call:
Investors interested in participating in the live full year call can dial 1-800-836-8184 or 289-819-1350 from abroad. Investors can also access the call online through a listen-only webcast here: https://app.webinar.net/nwZajZWGPNR or on the investor relations section of the Company's website HERE.
The webcast will be archived on the Company's investor relations webpage for at least 90 days and a telephonic playback will be available for seven days after the conference call by calling 1-888-660-6345 or 289-819-1450, conference ID # 89736.
Additionally, the Company will be hosting a Q&A session for its European investors at 8:30am ET tomorrow, Thursday, August 29th, which can be accessed by the following link: Join the meeting now.
Non-IFRS and Supplementary Financial Measures
The Company prepares and reports its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, as adopted by the Canadian Accounting Standards Board ("IFRS"). However, this press release may make reference to certain non-IFRS measures including key performance indicators used by management. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.
The Company uses Flow-through parts revenue, Security service revenue, and Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA") as non-IFRS measures, which may be calculated differently by other companies. These non-IFRS measure are used to provide investors with a supplemental measure of the Company's operating performance and liquidity and thus highlight trends in the Company's business that may not otherwise be apparent when relying solely on IFRS measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of companies in similar industries.
Three months ended June 30
($000's) 2024 2023 ($) Change
Security services revenue 5,265 2,162 3,103
Flow-through inventory revenue 807 877 (70)
Total Service Revenue 6,072 3,039 3,033
Security services costs 4,759 2,931 1,828
Flow-through inventory costs 807 877 (70)
Total Cost of Services 5,566 3,808 1,758
Three months ended June 30
($000's) 2024 2023 ($) Change
Net loss (1,995) (4,054) 2,059
Business acquisition costs and contingent consideration loss (gain) 22 (26) 48
Depreciation and amortization expense 1,085 1,141 (56)
Finance expense 357 136 221
Stock-based compensation 388 287 101
Foreign exchange (gain) loss (51) 74 (125)
Loss from associate 235 235
Impairment of associate receivable 200 200
Restructuring costs 179 355 (176)
Current income tax expense (recovery) 2 (67) 69
Deferred income tax recovery (8) (245) 237
Adjusted EBITDA 414 (2,399) 2,813
Supplementary Financial Measures
The Company may also use supplementary financial measures which are intended to be disclosed on a periodic basis to depict the historical or expected future financial performance, cash position, or cash flow of the Company, are not a non-IFRS measure, and are not presented in the financial statements. The measures as discussed in this press release include:
-- Gross margin percentage, which is defined as either (Product sales less
Cost of product sold) divided by Product sales or (Security service
revenue less Cost of security services) divided by Security service
revenue
About Nanalysis Scientific Corp. (TSXV: NSCI, OTCQX: NSCIF, FRA:1N1)
Nanalysis Scientific Corp. in operates two primary business segments: Scientific Equipment and Security Services. Within its Scientific Equipment business is what the Company terms "MRI and NMR for industry". The Company develops and manufactures portable Nuclear Magnetic Resonance (NMR) spectrometers or analyzers for laboratory and industrial markets. The NMReady-60(TM) was the first full-feature portable NMR spectrometer in a single compact enclosure requiring no liquid helium or any other cryogens. The Company has followed-up that initial offering with new products and continues to have a strong innovation pipeline. In 2020, the Company announced the launch of its 100MHz device, the most powerful and most advanced compact NMR device ever brought to market.
The Company's devices are used in many industries (oil and gas, chemical, mining, pharma, biotech, flavor and fragrances, agrochemicals, law enforcement, and more) as well as numerous government and university research labs around the world. The Company continues to exploit new global market opportunities independently and with partners. With its partners, the Company provides scientific equipment sales and maintenance services globally.
In 2022 the Company was awarded a five-year, $160 million contract to provide maintenance services for passenger screening equipment in Canadian airports. This has resulted in expansion of the Company's Security Services business. The Company is providing airport security equipment maintenance services in each province and territory of Canada. In addition, the Company provides commercial security equipment installation and maintenance services to a variety of customers in North America.
Notice regarding Forward Looking Statements and Legal Disclaimer
This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.
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SOURCE Nanalysis Scientific Corp.
