Nanophase Reports Second Quarter 2019 Financial Results
Announces 150% Growth for Year-Over-Year Formulated Product Sales
The company’s financial conference call is scheduled for August 29, 2019 at 11am EDT
ROMEOVILLE, Ill., Aug. 28, 2019 (GLOBE NEWSWIRE) — Nanophase Technologies Corporation (OTCQB: NANX), a leader in minerals-based personal care ingredients and formulated products for protecting skin from environmental aggressors, such as UV light and pollution, today reported financial results for the second quarter and six-month periods ended June 30, 2019.
“As expected, the markets for our minerals-based personal care ingredients and Solésence products continue to improve. During 2019, we have completed one dozen new product launches within our Solésence business, with an expectation of second half volume exceeding that of the first half. While reduced from our 2018 levels, our Personal Care Ingredients revenue is exceeding our initial expectations, due to a successful new product launch through our largest customer which we expect to continue to grow. Additionally, in July we closed a Joint Development Agreement with Sumitomo Corporation of America to develop additional new types of minerals-based ingredients for the personal care market.”
“We believe that all of these items are indicators of strong consumer acceptance and demand for all of our minerals-based products and ingredients.”
Second Quarter 2019 Financial Highlights
- Revenue for the second quarter was $3.3 million in 2019 compared to $4.1 million in 2018.
- The net loss for the second quarter was $0.6 million, or $0.02 per share, in 2019, compared to a net profit of $0.1 million in 2018, or $0.00 per share, for 2018.
Six Months Ended June 30, 2019 Financial Highlights
- Revenue for the first six months of 2019 and 2018 was $7.0 million for each period.
- The net loss for the first six months of 2019 was $1.2 million, or $0.03 per share, compared to a net loss of $0.8 million, or $0.02 per share, for the comparable period of 2018.
- The Company finished the quarter with approximately $1.0 million in cash and cash equivalents.
Jankowski continued, “Inefficiencies caused by the rapid and increasing growth in our Solésence business, along with the previously disclosed drop in our Personal Care Ingredients revenue due to customer inventory adjustments in 2019, have contributed to first half losses that were greater than we anticipated coming in to the year. We have programs in place to minimize these impacts going forward.”
“Our Solésence® finished products and our Personal Care Ingredients are in high demand by the market. We believe the continued growth of our Solésence business will demonstrate this through 2019, and we expect growth in all of our minerals-based products and ingredients over the coming years.”
Shareholders and members of the financial community are encouraged to participate in the upcoming conference call, where Mr. Jankowski will discuss the company’s current and long-term prospects.
Second Quarter 2019 Conference Call
The Nanophase conference call, to be hosted by Jess Jankowski, the Company’s President & CEO, is scheduled for August 29, 2019, at 10:00 a.m. CDT, 11:00 a.m. EDT. The conference call dial-in number for U.S. callers is 877-312-8776 and for international callers is 408-774-4007. The conference ID is 5824085. 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.
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 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 generally accepted accounting principles.
About Nanophase Technologies
Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leader in minerals-based personal care ingredients and formulated products for protecting skin from environmental aggressors, such as UV light and pollution, as well as providing solutions for industrial product applications. Using a platform of patented and proprietary integrated technologies, the Company creates products with unique performance attributes from two ISO 9001 and ISO 14001 registered facilities. Nanophase delivers commercial quantity and quality engineered materials both as ingredients, and as part of fully formulated products, in a variety of formats.
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 nanocrystalline materials; 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 April 4, 2019. 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.
COMPANY CONTACT
Investor Relations
630-771-6705
| NANOPHASE TECHNOLOGIES CORPORATION | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited Consolidated Condensed) | ||||||||||
| June 30, | December 31, | |||||||||
| ASSETS | 2019 | 2018 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 1,015,440 | $ | 1,345,492 | ||||||
| Trade accounts receivable, less allowance for doubtful accounts | ||||||||||
| of $9,000 on June 30, 2019 and on December 31, 2018 | 1,651,643 | 828,417 | ||||||||
| Inventories, net | 2,092,905 | 2,242,228 | ||||||||
| Prepaid expenses and other current assets | 351,903 | 273,235 | ||||||||
| Total current assets | 5,111,891 | 4,689,372 | ||||||||
| Equipment and leasehold improvements, net | 2,126,885 | 1,864,881 | ||||||||
| Operating lease right-of-use assets | 2,058,962 | – | ||||||||
| Other assets, net | 13,694 | 14,928 | ||||||||
| $ | 9,311,432 | $ | 6,569,181 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Line of credit, related party | $ | 1,246,101 | $ | 832,272 | ||||||
| Current portion of finance lease obligations | 227,446 | 218,203 | ||||||||
| Current portion of operating lease obligations | 328,713 | – | ||||||||
| Accounts payable | 1,422,668 | 1,607,406 | ||||||||
| Accrued expenses | 925,655 | 979,243 | ||||||||
| Total current liabilities | 4,150,583 | 3,637,124 | ||||||||
| Long-term portion of finance lease obligations | 389,907 | 506,006 | ||||||||
| Long-term portion of operating lease obligations | 2,038,078 | 500,000 | ||||||||
| Long-term loan, related party | 500,000 | – | ||||||||
| Long-term deferred rent | – | 343,867 | ||||||||
| Asset retirement obligations | 202,203 | 198,184 | ||||||||
| Total long-term liabilities | 3,130,188 | 1,548,057 | ||||||||
| Stockholders’ equity: | ||||||||||
| Preferred stock, $.01 par value, 24,088 shares authorized and | ||||||||||
| no shares issued and outstanding | – | – | ||||||||
| Common stock, $.01 par value, 42,000,000 shares authorized; 38,100,792 and 33,911,792 | ||||||||||
| shares issued and outstanding on June 30, 2019 and December 31, 2018, respectively | 381,368 | 339,117 | ||||||||
| Additional paid-in capital | 100,559,667 | 98,795,105 | ||||||||
| Accumulated deficit | (98,910,374 | ) | (97,750,222 | ) | ||||||
| Total stockholders’ equity | 2,030,661 | 1,384,000 | ||||||||
| $ | 9,311,432 | $ | 6,569,181 | |||||||
| NANOPHASE TECHNOLOGIES CORPORATION | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| (Unaudited Consolidated Condensed) | ||||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Product revenue, net | $ | 3,257,175 | $ | 4,043,201 | $ | 6,753,908 | $ | 6,910,132 | ||||||||||||
| Other revenue | 36,310 | 73,359 | 294,708 | 104,193 | ||||||||||||||||
| Net revenue | 3,293,485 | 4,116,560 | 7,048,616 | 7,014,325 | ||||||||||||||||
| Operating expense: | ||||||||||||||||||||
| Cost of revenue | 2,462,062 | 2,711,741 | 5,332,723 | 5,199,891 | ||||||||||||||||
| Gross profit | 831,423 | 1,404,819 | 1,715,893 | 1,814,434 | ||||||||||||||||
| Research and development expense | 485,321 | 538,476 | 961,848 | 1,096,728 | ||||||||||||||||
| Selling, general and administrative expense | 943,571 | 769,521 | 1,821,054 | 1,533,772 | ||||||||||||||||
| Income/(Loss) from operations | (597,469 | ) | 96,822 | (1,067,009 | ) | (816,066 | ) | |||||||||||||
| Interest income | – | – | – | – | ||||||||||||||||
| Interest expense | 50,039 | 9,205 | 93,143 | 19,900 | ||||||||||||||||
| Other, net | – | – | – | – | ||||||||||||||||
| Income/(Loss) before provision for income taxes | (647,508 | ) | 87,617 | (1,160,152 | ) | (835,966 | ) | |||||||||||||
| Provision for income taxes | – | – | – | – | ||||||||||||||||
| Net income/(loss) | $ | (647,508 | ) | $ | 87,617 | $ | (1,160,152 | ) | $ | (835,966 | ) | |||||||||
| Net income/(loss) per share- basic and diluted | $ | (0.02 | ) | $ | – | $ | (0.03 | ) | $ | (0.02 | ) | |||||||||
| Weighted average number of basic and diluted | ||||||||||||||||||||
| common shares outstanding | 36,136,759 | 33,847,793 | 35,030,422 | 33,847,793 | ||||||||||||||||
| NANOPHASE TECHNOLOGIES CORPORATION | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS – EXPANDED SCHEDULE | ||||||||||||||||||||
| (Unaudited Consolidated Condensed) | ||||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Product revenue, net | $ | 3,257,175 | $ | 4,043,201 | $ | 6,753,908 | $ | 6,910,132 | ||||||||||||
| Other revenue | 36,310 | 73,359 | 294,708 | 104,193 | ||||||||||||||||
| Net revenue | 3,293,485 | 4,116,560 | 7,048,616 | 7,014,325 | ||||||||||||||||
| Operating expense: | ||||||||||||||||||||
| Cost of revenue detail: | ||||||||||||||||||||
| Depreciation | 60,396 | 65,730 | 119,882 | 135,670 | ||||||||||||||||
| Non-Cash equity compensation | 12,280 | 6,399 | 20,312 | 12,936 | ||||||||||||||||
| Other costs of revenue | 2,389,386 | 2,639,612 | 5,192,529 | 5,051,285 | ||||||||||||||||
| Cost of revenue | 2,462,062 | 2,711,741 | 5,332,723 | 5,199,891 | ||||||||||||||||
| Gross profit | 831,423 | 1,404,819 | 1,715,893 | 1,814,434 | ||||||||||||||||
| Research and development expense detail: | ||||||||||||||||||||
| Depreciation | 12,444 | 9,656 | 24,449 | 19,582 | ||||||||||||||||
| Non-Cash equity compensation | 11,979 | 11,816 | 26,392 | 23,390 | ||||||||||||||||
| Other research and development expense | 460,898 | 517,004 | 911,007 | 1,053,756 | ||||||||||||||||
| Research and development expense | 485,321 | 538,476 | 961,848 | 1,096,728 | ||||||||||||||||
| Selling, general and administrative expense detail: | ||||||||||||||||||||
| Depreciation and amortization | 5,350 | 5,198 | 10,789 | 10,426 | ||||||||||||||||
| Non-Cash equity compensation | 33,907 | 26,474 | 68,668 | 51,447 | ||||||||||||||||
| Other selling, general and administrative expense | 904,314 | 737,849 | 1,741,597 | 1,471,899 | ||||||||||||||||
| Selling, general and administrative expense | 943,571 | 769,521 | 1,821,054 | 1,533,772 | ||||||||||||||||
| Income/(Loss) from operations | (597,469 | ) | 96,822 | (1,067,009 | ) | (816,066 | ) | |||||||||||||
| Interest income | – | – | – | |||||||||||||||||
| Interest expense | 50,039 | 9,205 | 93,143 | 19,900 | ||||||||||||||||
| Other, net | – | – | – | |||||||||||||||||
| Income/(Loss) before provision for income taxes | (647,508 | ) | 87,617 | (1,160,152 | ) | (835,966 | ) | |||||||||||||
| Provision for income taxes | – | – | – | – | ||||||||||||||||
| Net income/(loss) | $ | (647,508 | ) | $ | 87,617 | $ | (1,160,152 | ) | $ | (835,966 | ) | |||||||||
| Non-GAAP Disclosure (see note regarding Non-GAAP disclosures): | ||||||||||||||||||||
| Addback Interest, net | 50,039 | 9,205 | 93,143 | 19,900 | ||||||||||||||||
| Addback Depreciation/Amortization | 78,190 | 80,584 | 155,120 | 165,678 | ||||||||||||||||
| Addback Non-Cash Equity Compensation | 58,166 | 44,689 | 115,372 | 87,773 | ||||||||||||||||
| Adjusted EBITDA | $ | (461,113 | ) | $ | 222,095 | $ | (796,517 | ) | $ | (562,615 | ) | |||||||||
