Nanophase Reports Record Revenue for First Quarter as it Sets Stage for Strong Year

Rhea-AI Summary

Nanophase Technologies Corporation (OTCQB: NANX) reported a record $8.2 million in Q1 2022 revenue, a 15% increase from $7.1 million in Q1 2021. Key highlights include a 29% YOY rise in Solésence revenue and a 70% increase in Active Pharmaceutical Ingredients sales. The company plans to exceed $40 million in revenue for 2022, supported by strong demand and 24 million in open orders. However, production constraints due to staffing issues pose challenges. The addition of 30 new team members aims to enhance operational capacity and support growth.

Positive

• Record Q1 revenue of $8.2 million, a 15% increase YOY.
• Solésence revenue up 29% YOY, reaching $5.6 million.
• Active Pharmaceutical Ingredients sales increased 70% YOY.
• 24 million in open orders to carry over into 2022.
• 30 new hires to support operational growth.

Negative

• Production constraints due to staffing challenges.

— Delivered a record $8.2 million in Q1 revenue   
— In Beauty Science markets, Solésence revenue is up 29% YOY while Active Pharmaceutical Ingredients (API) sales are up 70%  
— Added key team members to support growth

ROMEOVILLE, Ill., May 11, 2022 (GLOBE NEWSWIRE) -- Nanophase Technologies Corporation (OTCQB: NANX), a leader in minerals-based and scientifically-driven health care solutions across beauty and life science categories — with innovations that protect skin from environmental aggressors and aid in medical diagnostics — today announced record financial results for the first quarter ended March 31, 2022.  

“We are pleased to report a record $8.2 million in revenue as we start the year off with a profitable quarter, approximately $3 million billed in April, and $24 million in open orders that will carry over in 2022,” said Jess Jankowski, Chief Executive Officer. “Our demand remains strong, with our results limited primarily due to production constraints and, in particular, staffing challenges. To address this, we have been in the process of expanding our staffing and infrastructure to allow us to increase our throughput.”

Jankowski continued: “We’re in a sweet spot within what our markets want and are making internal investments to expand and accelerate our growth. We’ve augmented our sales operations group to be able to handle the increasing numbers of products and customers that our growth has created, and we’ve strategically expanded across other key areas as we continue to add new customers to our portfolio.”

Kevin Cureton, Chief Operating Officer, commented: “After a challenging finish to 2021, I am particularly proud of our team — including all of our new team members — as we regained traction to launch over a dozen new products in the quarter. While supply chain challenges — particularly related to specialty ingredients and packaging — have made us scramble to meet the demand, our organization’s flexibility and versatility showed up when it really counted to get these products on the shelves of leading retailers like Sephora, Ulta, Credo, Walmart and Target.”

“The momentum of our finish in Q1 has gotten us off to a fast start in Q2. We expect to continue to show rapid top line growth commensurate with the growth rate we have seen over the past two years,” Cureton continued. “More than a half dozen of the Q1 launches are getting great publicity and are up for various awards. As in the past, this type of notoriety helps drive consumer awareness, acceptance and, ultimately, purchase — which then leads to greater reorders for our Company. It is also an affirmation of our unique ability to deliver best-in-class products, in terms of both enhancing skin health and creating aesthetically beautiful products that consumers want to use again and again. We’re excited to discuss more on our market penetration and growth and the operational improvements under way during the upcoming conference call.”

Operational Highlights

New Business Expansion 

• In the first quarter, we had 18 new products shipped, with 9 new brand partners included in this count.
  
  
• New launches represented approximately 29% of the Solésence shipments during Q1.
  
  
• All items shipped during Q1 have open orders still due within Q2/Q3. 
  

Team Expansion 

• In the first quarter, we hired 30 team members across manufacturing, supply chain and commercial teams. This team expansion supports our ongoing growth as we expand our capabilities and deepen our commitment to supporting the growth of our partners. Notable areas of expansion include: 
  • A 40% increase in staffing related to the production of zinc oxide
  • The largest expansion of our sales, marketing and customer service teams in the last 10 years, with a net addition of 6 new team members
  • To facilitate greater throughput and further increases in volume, an increase in staffing in our Quality department, which is now at its largest level in the history of the company

Production Milestone: Record Monthly Revenue

• In March 2022, we experienced our highest single product revenue month in Company history, approximately $3.8 million.
• Over 1 million units of finished goods were shipped during the first quarter 

First Quarter Financial Highlights 

• Revenue for the first quarter was $8.2 million, vs. $7.1 million for the same period in 2021, a 15% increase.
  
  
• Solésence revenue was $5.6 million, up 29% from $4.3 million in 2021.
  
  
• Personal Care Ingredients revenue was $2.4 million, up 71% from $1.4 million in 2021.
  

“We expect that our growth during the remainder of the year will exceed our Q1 performance in terms of revenue, volume, and profitability,” continued Jankowski. “Our expectations are high for the rest of 2022, with plans to exceed $40 million in 2022 revenue, with upside dependent on the timing and success of our planned operational improvements. Kevin and I are looking forward to sharing more in our call tomorrow, and as our strategy drives further growth throughout 2022.” 

Conference Call  

Nanophase will host its First Quarter conference call on Thursday, May 12, at 10:00 a.m. CDT, 11:00 a.m. EDT to discuss its financial results and provide a business and financial update.   

Live audio webcast/conference call:
Webcast: https://edge.media-server.com/mmc/p/5so3sk4b
U.S. Dial-In Number: 877-312-8776
International Dial-In Number: 408-774-4007
The conference ID is 1360727.

Please dial in to the conference at least five minutes before the call is scheduled to begin.  
  
The call may also be accessed through the company’s website, at www.nanophase.com, by clicking on Investor Relations, Investor News, and the link in the conference call announcement release.

FINANCIAL RESULTS AND NON-GAAP INFORMATION   
  
Use of Non-GAAP Financial Information  
Nanophase believes that the presentation of results excluding certain items, such as non-cash equity compensation charges, provides meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. The Company uses these non-GAAP measures for internal planning and reporting purposes. These non-GAAP measures are not in accordance with, or an alternative for, Generally Accepted Accounting Principles (“GAAP”) and may be different from non-GAAP measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or net income per share prepared in accordance with GAAP.   

About Nanophase Technologies   
Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leading innovator in minerals-based and scientifically driven health care solutions across beauty and life science categories, as well as other legacy advanced materials applications. Leveraging a platform of integrated, patented, and proprietary technologies, the Company creates products with unique performance, enhancing consumers' health and well-being. We deliver commercial quantity and quality engineered materials both as ingredients and as part of fully formulated products in a variety of formats.   
  
About Solésence Beauty Science  
Solésence, LLC, www.solesence.com, a wholly owned subsidiary of Nanophase Technologies, is changing the face of skin health with patented, mineral-based technology that is embraced by leading performance-driven and clean beauty brands alike. Our patented products for brands transform the way mineral actives look, feel and function — enabling textures never-before-seen in the mineral space and inclusivity never-before-seen in the sun care space. Solésence’s innovative formulations offer best-in-class UV protection, unparalleled free radical prevention to protect against pollution, and enhanced antioxidant performance.  

Forward-Looking Statements   
This press release contains words such as “expects,” shall,” “will,” “believes,” and similar expressions that are intended to identify forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements in this announcement are made based on the Company’s current beliefs, known events and circumstances at the time of publication, and as such, are subject in the future to unforeseen risks and uncertainties that could cause the Company’s results of operations, performance, and achievements to differ materially from current expectations expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, without limitation, the following: a decision by a customer to cancel a purchase order or supply agreement in light of the Company’s dependence on a limited number of key customers; uncertain demand for, and acceptance of, the Company’s engineered materials, ingredients, and fully formulated products; the Company’s manufacturing capacity and product mix flexibility in light of customer demand; the Company’s limited marketing experience; changes in development and distribution relationships; the impact of competitive products and technologies; the Company’s dependence on patents and protection of proprietary information; the resolution of litigation in which the Company may become involved; the impact of any potential new government regulations that could be difficult to respond to or too costly to comply with while remaining financially viable; the ability of the Company to maintain an appropriate electronic trading venue; and other factors described in the Company’s Form 10-K filed March 31, 2022. In addition, the Company’s forward-looking statements could be affected by general industry and market conditions and growth rates. Except as required by federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties, or other contingencies.

NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited Consolidated Condensed)
			(in thousands except share and per share data)
			March 31,				December 31,
				2022				2021
ASSETS
Current assets:
	Cash		$	897			$	657
	Trade accounts receivable, less allowance for doubtful accounts of $80
		for March 31, 2022 and $60 for December 31, 2021		5,274				3,937
	Inventories, net			8,559				6,095
	Prepaid expenses and other current assets			1,005				910
		Total current assets		15,735				11,599
	Equipment and leasehold improvements, net			4,997				4,712
	Operating leases, right of use			11,718				12,075
	Other assets, net			7				8
	Total assets		$	32,457			$	28,394
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Line of credit, related party			3,709				1,351
	Current portion of finance lease obligations			70				105
	Current portion of operating lease obligations			890				589
	Accounts payable			4,953				3,566
	Current portion of deferred revenue			848				783
	Accrued expenses			961				946
	Total current liabilities			11,431				7,340
	Long-term portion of finance lease obligations			4				6
	Long-term portion of operating lease obligations			11,389				11,700
	Long-term debt, related party			1,000				1,000
	Long-term portion of deferred revenue			661				661
	Asset retirement obligations			224				222
	Total long-term liabilities			13,278				13,589
Contingent liabilities
Stockholders' equity:
	Preferred stock, $.01 par value, 24,088 shares authorized and
		no shares issued and outstanding		-				-
	Common stock, $.01 par value, 60,000,000 shares authorized;
		49,026,741 and 48,893,573 shares issued and outstanding on March 31, 2022
		and December 31, 2021, respectively		490				489
	Additional paid-in capital			104,643				104,423
	Accumulated deficit			(97,385	)			(97,447	)
	Total stockholders' equity			7,748				7,465
	Total liabilities and shareholders' equity		$	32,457			$	28,394

NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited Consolidated Condensed)
(in thousands except share and per share data)
						Three months ended
						March 31,
							2022				2021
Revenue:
Product revenue						$	8,046			$	7,050
Other revenue							110				22
	Total revenue						8,156				7,072
Cost of revenue							5,988				5,042
	Gross profit						2,168				2,030
Operating expense:
Research and development expense							666				499
Selling, general and administrative expense							1,397				1,034
Income from operations							105				497
	Interest expense						43				139
	Other income, net						-				(952	)
Income before provision for income taxes							62				1,310
Provision for income taxes							-				-
Net income						$	62			$	1,310
Net income per share-basic						$	-			$	0.03
Weighted average number of basic shares outstanding							48,984,312				38,221,292
Net income per share-diluted						$	-			$	0.03
Weighted average number of diluted shares outstanding							51,064,312				39,811,292
NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
(Unaudited Consolidated Condensed)
(in thousands except share and per share data)
						March 31,
							2022				2021
Revenue:
Product revenue, net						$	8,046			$	7,050
Other revenue							110				22
	Total revenue						8,156				7,072
Operating expense:
Cost of revenue detail:
Depreciation							119				86
Non-Cash equity compensation							25				5
Other costs of revenue							5,844				4,951
	Cost of revenue						5,988				5,042
		Gross profit					2,168				2,030
Research and development expense detail:
Depreciation							9				9
Non-Cash equity compensation							41				13
Other research and development expense							616				477
	Research and development expense						666				499
Selling, general and administrative expense detail:
Depreciation and amortization							7				6
Non-Cash equity compensation							81				24
Other selling, general and administrative expense							1,309				1,004
	Selling, general and administrative expense						1,397				1,034
Income from operations							105				497
	Interest expense						43				139
	Other income, net						-				(952	)
Income before provision for income taxes							62				1,310
Provision for income taxes							-				-
Net income						$	62			$	1,310
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):
	Addback Interest, net						43				139
	Addback Depreciation/Amortization						135				101
	Addback Non-Cash Equity Compensation						147				42
	Addback Other Income, net						-				(952	)
	Addback Provision for Income Taxes						-				-
	Adjusted EBITDA					$	387			$	640

FAQ

What were Nanophase Technologies' Q1 2022 revenue results?

Nanophase Technologies reported a record Q1 2022 revenue of $8.2 million, a 15% increase compared to Q1 2021.

How much did Solésence revenue increase in Q1 2022?

Solésence revenue increased by 29% year-over-year, reaching $5.6 million in Q1 2022.

What challenges did Nanophase Technologies face in Q1 2022?

Nanophase faced production constraints primarily due to staffing challenges.

What are Nanophase Technologies' revenue expectations for 2022?

Nanophase aims to exceed $40 million in revenue for 2022, supported by strong demand.

What key operational improvements are being made by Nanophase Technologies?

Nanophase is expanding its workforce, having hired 30 new team members to support growth and operational capacity.