Nanophase Reports Third Consecutive Year of Record Revenue for 2022

Rhea-AI Summary

Nanophase Technologies Corporation (OTCQB: NANX) reported a 27% year-over-year growth in revenue, totaling $37.3 million for the full year 2022, up from $29.5 million in 2021. The fourth quarter revenue reached $8.3 million, a 12% increase compared to the same period last year. Notable segments included Solésence revenue, which rose to $23.1 million, and Active Pharmaceutical Ingredients (API) which saw a 44% increase to $11.1 million. Despite these gains, the company reported a net loss of $2.6 million for the year, primarily due to atypical expenses and infrastructure challenges. However, they achieved recognition as one of Fast Company’s World’s Most Innovative Companies in 2023.

Positive

• 27% year-over-year revenue growth, reaching $37.3 million.
• Solésence revenue increased 27% to $23.1 million.
• Active Pharmaceutical Ingredients sales grew 44% to $11.1 million.
• Named one of Fast Company’s World’s Most Innovative Companies for 2023.

Negative

• Net loss of $2.6 million for the full year 2022, compared to $2.3 million net income in 2021.
• Atypical expenses of $1.6 million constituted over 69% of the total annual loss.
• Challenges in operationalizing a new facility.

— Another record year with 27% YOY growth
— Delivered $37 Million in full year revenue
— In Beauty Science markets, Solésence revenue is up 27% YOY while Active Pharmaceutical Ingredients (API) sales are up 44% 

ROMEOVILLE, Ill., March 29, 2023 (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 financial results for the fourth quarter and fiscal year ended December 31, 2022. 

Jess Jankowski, President and Chief Executive Officer, commented: “We have had some big wins in 2022 and so far in 2023. However, while the last year clearly shows that we are one of the world’s best in terms of innovating and creating products that are broadly sought after by beauty consumers, we are keenly focused on achieving these same standards in the manufacturing and operating sides of our business.”

Kevin Cureton, Chief Operating Officer, commented: “Our top priority for 2022 was to ready our infrastructure to handle a multiple of our current volume to meet demand. However, we experienced some challenges, including the delay in the operationalization of our new facility, along with some one-time atypical expenses, all of which contributed to our loss for 2022. We look forwarding to discussing the year further on our conference call this week.”

Fourth Quarter and Full Year 2022 Financial Highlights 

• Revenue for the fourth quarter was $8.3 million, vs. $7.4 million for the same period in 2021, a 12% increase.
• Revenue for the full year was $37.3 million vs. $29.5 million for the same period in 2021, a 27% increase.

For the full year of 2022: 

• Solésence revenue was $23.1 million, up 27% from $18.2 million in 2021.
• Personal Care Ingredients revenue was $11.1 million, up 44% from $7.7 million in 2021.
• Advanced Materials revenue was $3.1 million, down 14% from $3.6 million in 2021.
• Net loss for the quarter was $2.0 million in 2022, or $0.04 per share, compared to a net loss of $0.4 million, or $0.01 per share, for 2021.
• Net loss for the full year 2022 was $2.6 million, or $0.05 per share, compared to net income of $2.3 million, or $0.05 per share, for 2021.
• We saw a loss for the full year 2022 amounting to $2.6 million, in part due to investments in current and future growth across facilities, engineering, new intellectual property, and the resumption of trade shows. Some atypical expense items amounted to $1.6M or slightly over 69% of our loss for the full year.
  • Legal fees of $0.4M for litigation
  • Social engineering cyber theft loss of $0.7M
  • Accrued consulting fees for ERC credit of $0.2M
  • Additional bad debt expense of $0.3M

Selected Operational Highlights 

• Nanophase and Solésence Beauty Science were named in Fast Company’s World’s Most Innovative Companies for 2023, positioning us as No. 2 in the Beauty category.
  
• We received a Notice of Allowance for our award-winning Kleair™ technology in the United States, which covers claims that are highly sought after in skin health and cosmetics applications and will provide the Company with substantial added IP protection for the use of health-infused beauty products in the United States. We also received allowances in Australia and Israel for a plant-based UV absorber technology.
  
• We successfully completed the move of our filling and packaging operations to our new facility.
  

Conference Call
Nanophase will host its Fourth Quarter and Year End 2022 conference call on Thursday, March 30, 2023, at 10:00 a.m. CDT, 11:00 a.m. EDT to discuss its financial results and provide a business and financial update. On the call will be Jess Jankowski, the Company’s President & CEO, joined by Kevin Cureton, the Company’s Chief Operating Officer.

Registration to dial-in, and/or participate in the Q&A, has recently changed.

Participant Registration:
https://register.vevent.com/register/BI98de431c894c43d4b34f238120cb9077

To receive the dial-in number, as well as your personalized PIN, you must register at the above link. Once registered, you will also have the option to have the system dial-out to you once the conference call has begun. If you forget your PIN prior to the conference call, you can simply re-register.

The process for accessing the webcast as listen-only remains the same. The same link can be used after the call to access the replay 1-2 hours after the call. A Telco replay is no longer available.

Listen-Only Webcast & Replay:
https://edge.media-server.com/mmc/p/y7xh9iuy

If a participant will be listen-only, they are encouraged to listen via the webcast.

Please connect 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 http://www.nanophase.com/, by clicking on Investor Relations, Investor News, and the links in this 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 (OTCQB: NANX), www.nanophase.com, is a leading innovator in minerals-based and scientifically driven healthcare 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, 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 29, 2023. 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
			As of
			December 31,				December 31,
			2022				2021
			(in thousands except share and per share data)
ASSETS
Current assets:
	Cash		$	2,186			$	657
	Trade accounts receivable, less allowance for doubtful accounts of $139
		for December 31, 2022 and $60 for 2021		4,734				3,937
	Inventories, net			8,839				6,095
	Prepaid expenses and other current assets			866				910
		Total current assets		16,625				11,599
	Equipment and leasehold improvements, net			7,949				4,712
	Operating leases, right of use			8,978				12,075
	Other assets, net			6				8
	Total assets		$	33,558			$	28,394
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Line of credit, related party		$	7,282			$	1,351
	Current portion of finance lease obligations			-				105
	Current portion of operating lease obligations			-				589
	Accounts payable			6,363				3,566
	Current portion of deferred revenue			2,167				783
	Accrued expenses			1,023				946
	Total current liabilities			16,835				7,340
	Long-term portion of finance lease obligations			-				6
	Long-term portion of operating lease obligations			9,823				11,700
	Long-term debt, related party			1,000				1,000
	Long-term portion of deferred revenue			21				661
	Asset retirement obligations			230				222
	Total long-term liabilities			11,074				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 and 55,000,000 shares authorized;
		49,320,680 and 48,893,573 shares issued and outstanding on December 31, 2022
		and December 31, 2021, respectively		493				489
	Additional paid-in capital			105,226				104,423
	Accumulated deficit			(100,070	)			(97,447	)
	Total stockholders' equity			5,649				7,465
	Total liabilities and shareholders' equity		$	33,558			$	28,394

NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
	Three months ended								Years ended
	December 31,								December 31,
	2022				2021				2022				2021
	(in thousands except share and per share data)
Revenue:
Product revenue	$	8,216			$	7,354			$	36,731			$	29,325
Other revenue		45				11				586				150
Net revenue		8,261				7,365				37,317				29,475
Operating expense:
Cost of revenue		7,298				6,197				28,957				20,785
Gross profit		963				1,168				8,360				8,690
Research and development expense		727				566				3,037				2,235
Selling, general and administrative expense		2,088				902				7,581				3,896
Income/(loss) from operations		(1,852	)			(300	)			(2,258	)			2,559
Interest expense		(150	)			(58	)			(382	)			(1,154	)
Other income, net		-				-				-				952
Income/(loss) before provision for income taxes		(2,002	)			(358	)			(2,640	)			2,357
Provision for income taxes		(17	)			37				(17	)			37
Net income/(loss)	$	(1,985	)		$	(395	)		$	(2,623	)		$	2,320
Net income per share-basic	$	(0.04	)		$	(0.01	)		$	(0.05	)		$	0.05
Weighted average number of basic shares outstanding		49,260,295				48,774,542				49,117,000				45,021,173
Net income per share-diluted	$	(0.04	)		$	(0.01	)		$	(0.05	)		$	0.05
Weighted average number of diluted shares outstanding		49,260,295				48,774,542				49,117,000				47,039,173
NANOPHASE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE
	Three months ended								Years ended
	December 31,								December 31,
	2022				2021				2022				2021
	(in thousands except share and per share data)
Revenue:
Product revenue, net	$	8,216			$	7,354			$	36,731			$	29,325
Other revenue		45				11				586				150
Net revenue		8,261				7,365				37,317				29,475
Operating expense:
Cost of revenue detail:
Depreciation		138				110				503				392
Non-Cash equity compensation		24				8				95				44
Other costs of revenue		7,136				6,079				28,359				20,349
Cost of revenue		7,298				6,197				28,957				20,785
Gross profit		963				1,168				8,360				8,690
Research and development expense detail:
Depreciation		8				9				34				37
Non-Cash equity compensation		40				21				162				94
Other research and development expense		679				536				2,841				2,104
Research and development expense		727				566				3,037				2,235
Selling, general and administrative expense detail:
Depreciation and amortization		8				7				30				25
Non-Cash equity compensation		106				7				366				22
Other selling, general and administrative expense		1,974				888				7,185				3,849
Selling, general and administrative expense		2,088				902				7,581				3,896
Income/(loss) from operations		(1,852	)			(300	)			(2,258	)			2,559
Interest expense		(150	)			(58	)			(382	)			(1,154	)
Other income, net		-				-				-				952
Income/(loss) before provision for income taxes		(2,002	)			(358	)			(2,640	)			2,357
Provision for income taxes		(17	)			37				(17	)			37
Net income/(loss)	$	(1,985	)		$	(395	)		$	(2,623	)		$	2,320
Non-GAAP Disclosure (see note regarding Non-GAAP disclosures):
Addback Interest, net		150				58				382				1,154
Addback Depreciation/Amortization		154				126				567				454
Addback Non-Cash Equity Compensation		170				36				623				160
Addback Other Income, net		-				-				-				(952	)
Addback Provision for Income Taxes		(17	)			37				(17	)			37
Adjusted EBITDA	$	(1,528	)		$	(138	)		$	(1,068	)		$	3,173

FAQ

What were Nanophase Technologies' full year 2022 revenues?

Nanophase Technologies reported full year revenues of $37.3 million for 2022, a 27% increase from 2021.

How much did Solésence revenue increase in 2022?

Solésence revenue increased by 27% to $23.1 million in 2022.

What was the net loss for Nanophase Technologies in 2022?

Nanophase Technologies reported a net loss of $2.6 million for the full year 2022.

When did Nanophase Technologies release its financial results for 2022?

Nanophase Technologies announced its financial results for 2022 on March 29, 2023.

What recognition did Nanophase Technologies receive in 2023?

Nanophase Technologies was named No. 2 in the Beauty category of Fast Company's World's Most Innovative Companies for 2023.