Nanoxplore ((TSE:GRA)) has held its Q1 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, NanoXplore presented a mixed sentiment, showcasing both promising developments and current challenges. The company celebrated significant achievements, such as a major sales agreement with Chevron Phillips Chemical and a new contract with Club Car, which indicate strong growth potential. However, these positives were tempered by challenges, including reduced customer demand and decreased revenues, leading to a negative adjusted EBITDA. Despite these hurdles, NanoXplore is making strides in operational efficiencies and production capabilities, though market volatility continues to impact its financial performance.
Record Graphene Powder Sales Agreement with Chevron Phillips Chemical
NanoXplore announced its largest-ever graphene powder sales agreement with Chevron Phillips Chemical, marking a significant milestone for the company. The early volumes are already surpassing initial projections, and the company has received positive feedback from customers. Marketing efforts for this agreement are set to begin in December, highlighting the potential for increased sales and market penetration.
New Customer Contract with Club Car
The company has secured a new customer, Club Car, which is expected to generate approximately $15 million in annual revenues. Production for this contract is already underway at NanoXplore’s new facility in Statesville, North Carolina, signaling a strong start to this partnership and potential for future growth.
Successful Equity Financing
NanoXplore successfully completed a $25.7 million equity financing, which has strengthened its balance sheet. This financial boost will enable the company to scale up its dry process graphene production, positioning it for future growth and increased market share.
Improved Operational Efficiencies
Since 2021, NanoXplore has made significant improvements in operational efficiencies, resulting in an 11 percentage point increase in gross margins. The company has also expanded its customer base, demonstrating its ability to adapt and thrive in a competitive market.
Dry Process Graphene Module Installation
NanoXplore is on track to install its first fully commercial dry graphene module by March 2026. This installation is expected to add between 500 to 1,000 tons per year of new capacity, highlighting the company’s commitment to expanding its production capabilities and meeting growing market demand.
Revenue Decline and Customer Demand Reduction
The company reported a 30% decline in total revenues for Q1 compared to Q1 2025, with revenues totaling $23.4 million. This decrease is attributed to reduced demand from its two largest customers in the transportation sector, posing a challenge to the company’s financial performance.
Decreased Gross Margins
Adjusted gross margins decreased to 17.3% from 21% last year, primarily due to lower manufacturing overhead cost absorption and volume reductions. This decline reflects the challenges NanoXplore faces in maintaining profitability amid fluctuating demand.
Negative Adjusted EBITDA
NanoXplore reported a negative adjusted EBITDA of $1.4 million, a decrease of $2.5 million compared to the previous year. This loss underscores the financial challenges the company is currently navigating.
Underutilization of Expanded Capacity
The capacity expansion in Sainte-Clotilde-de-Beauce remains underutilized due to reduced demand in the medium-duty transport sector. This underutilization highlights the need for increased demand to fully leverage the company’s expanded production capabilities.
Forward-Looking Guidance
Despite the challenges faced in Q1, NanoXplore provided optimistic forward-looking guidance. The company projects a revenue range for fiscal year 2026 between $115 million and $125 million, anticipating a recovery in Q2 and accelerated growth in the latter half of the fiscal year. This growth is expected to be driven by new customer programs, such as the Club Car contract, and increased graphene powder sales. Additionally, the installation of the first fully commercial dry graphene module by March 2026 is expected to significantly boost production capacity.
In conclusion, NanoXplore’s earnings call presented a balanced view of the company’s current position and future prospects. While facing challenges like reduced revenues and negative EBITDA, the company is making strategic moves to enhance its operational efficiencies and expand its production capabilities. The forward-looking guidance suggests a potential recovery and growth in the coming quarters, driven by new contracts and increased sales efforts.