Release Date: September 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record sales of $38 million in Q4, marking a strong quarter.
- Gross margin expanded to nearly 24%, a record for the company.
- First full-year positive adjusted EBITDA of $5.2 million.
- Strong demand for graphene-enhanced composite products with nearly full capacity utilization.
- Significant investments in new equipment and expansion plans, particularly in the United States.
Negative Points
- VoltaXplore gigafactory project postponed due to unfavorable market conditions.
- Higher expenditures in the battery cell segment, leading to a $820,000 loss.
- Seasonal fluctuations expected to impact Q1 margins and revenues.
- Ongoing validation and testing processes for graphene products, which can take 2-3 years.
- Dependency on government support and administrative processes for new projects, causing delays.
Q & A Highlights
Highlights of NanoXplore Inc (NNXPF, Financial) Q4 2024 Earnings Call
Q: On your sales growth, what portion of the increase is related to tooling versus part sales? How sustainable is this growth as we move into fiscal '25?
A: Approximately two-thirds of the Q4 revenue increase relates to tooling, and one-third to part sales. As tooling revenue decreases, part sales will increase, ensuring continued growth into fiscal 2025. (Pedro Azevedo, CFO)
Q: With your composites business being fully utilized, how much more upside is there in margins until your expansions come online?
A: Margins will continue to grow due to manufacturing efficiencies and volume increases, though Q1 margins may not reach Q4 levels due to seasonality. (Pedro Azevedo, CFO)
Q: Could you provide an update on the validation process with customers for both CSPG and silicon anode materials?
A: Validation processes with customers are ongoing and typically take two to three years. We are in different stages with various clients and have received initial support letters from both provincial and federal governments. (Soroush Nazarpour, CEO)
Q: With the delay on the VoltaXplore gigafactory, do you expect this level of OpEx to continue?
A: Costs will come down significantly, and the impact on financials will be reduced due to grants like the IRAP. (Pedro Azevedo, CFO)
Q: Are you concerned about China's investment in graphene capacity and its potential impact on pricing?
A: While China is investing heavily, our production technology makes us the lowest-cost producer of graphene. Our dry process production will further reduce costs, maintaining our competitive edge. (Soroush Nazarpour, CEO)
Q: Can you provide an update on the new dry graphene production process and its commercial scale implementation?
A: We have a small module already operational and plan to set up an industrial module soon. Full industrial production is expected in about two years. (Soroush Nazarpour, CEO)
Q: Can you provide specific targets for top line and margins for the current fiscal year?
A: Margins are expected to expand by 100 to 200 basis points on average for the year. Top line guidance will be provided at the end of Q1. (Pedro Azevedo, CFO)
Q: What is the expected pace of investment related to the five-year plan, and what was maintenance CapEx last year?
A: We expect to spend $3 million to $5 million in each of the next three quarters, totaling $12 million to $15 million for the full year, compared to $10 million last year. (Pedro Azevedo, CFO)
Q: Have the labor issues you mentioned earlier this year been resolved?
A: Yes, the strike at customer facilities that impacted Q2 is over, and there are no ongoing labor issues at our plants. (Soroush Nazarpour, CEO)
Q: How will the new US capacity impact margins?
A: Initial margins may be slightly lower as we ramp up, but they will grow with increased volumes and manufacturing improvements. Overall, the impact on margins should be neutral. (Pedro Azevedo, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
