Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NanoXplore Inc (NNXPF, Financial) reported a 16% year-over-year increase in sales, reaching $33.7 million for the first quarter.
- Gross margin expanded to 20.9%, indicating improved profitability.
- The company is seeing strong demand for its graphene-enhanced composite products, with current capacity almost fully utilized.
- NanoXplore Inc (NNXPF) is making progress with its dry graphene and CSPG expansion plans, supported by government financing.
- The company has a robust liquidity position with $21.3 million in cash and cash equivalents, and additional financing options available.
Negative Points
- The company is experiencing a slowdown in growth from its two largest customers, which may impact future revenue.
- There is uncertainty regarding the timing of new sales from graphene powder applications, such as drilling fluids.
- The US expansion will only begin producing incremental revenues towards the end of fiscal year 2025, limiting its immediate impact.
- NanoXplore Inc (NNXPF) faces challenges in securing additional power supply for its new facility in Quebec.
- Operating cash flows were negative $2.3 million for the quarter, although this was an improvement from the previous year.
Q & A Highlights
Q: Can you provide high-level comments on how the US elections might impact your business?
A: Pedro Azevedo, Chief Financial Officer: It's early to say, but we see potential positives in increased interest in localizing supply chains for batteries and car manufacturing in the US and Canada. We'll have more clarity next quarter.
Q: Regarding your guidance, is the wide range due to lower expectations for truck deliveries from key customers like Paccar and Volvo?
A: Pedro Azevedo, Chief Financial Officer: Yes, both Paccar and Volvo have indicated a more flat growth outlook. We expect some recovery, but the wide range reflects current uncertainties.
Q: How should we think about sales mix for the year, especially regarding high-margin graphene powder?
A: Pedro Azevedo, Chief Financial Officer: While parts sales to key customers impact revenue, graphene and graphene-enhanced materials are growing well. The impact on margins from graphene sales is still small but expected to increase over time.
Q: Can you provide an outlook on selling out new capacity from your five-year expansion plan?
A: Pedro Azevedo, Chief Financial Officer: US expansion will start towards the end of the fiscal year, with full capacity likely selling out by 2026-2027. We are selling two years out, and as we fill plants, we will add more capacity.
Q: Are you seeing any delays in orders for Q2, and have you added any new customers?
A: Pedro Azevedo, Chief Financial Officer: We see a slowdown in forecasts but expect Q2 to show double-digit growth. We are cautious about Q3 and Q4 but remain optimistic about new customer interest.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
