CALGARY,
AB, Aug. 25, 2022 /CNW/ - Nanalysis Scientific
Corp. ("the Company", TSXV: NSCI, OTCQX: NSCIF, FRA: 1N1), a
leader in portable NMR machines and MRI technology for healthcare
and industrial applications, releases its second quarter results
ending June 30, 2022. Chief Executive Officer, Sean
Krakiwsky and Interim Chief Financial Officer, Randall
McRae will host a conference call at 5 P.M. Eastern
Time today to discuss the results. A second call will be
held for European investors at 8:30am ET on
Friday, August 26th. All interested parties are
invited to join these calls.
"We continue to record substantial year over year revenue
growth," said Sean Krakiwsky, Founder and CEO of
Nanalysis. "With that being said, we are not satisfied with
our Q2 revenue results, and a lot of focus is being given to regain
our previous trajectory. In the second quarter a lot of time,
focus, and resources were given to closing the $160 million CATSA contract, which we did on
May 25th. Additionally, we
underestimated certain operational challenges associated with
scaling our benchtop NMR sales organization which impacted our Q2
revenue. We have redoubled our efforts in this area, which is going
well, as are other important areas of our business, and are seeing
improvments in the current quarter."
Financial highlights for the three months ended June 30,
2022:
- For the three months ended June 30,
2022, the Company reported consolidated revenue of
$5,187K, an increase of $844K or 19% from the comparative period in
2021.
- Gross margin was 62% for the three months ended June 30, 2022 compared to 67% for the three
months ended June 30, 2021.
- (Loss) Income before other items for the three months ended
June 30, 2022 was $(947K) versus $1,234K compared to the same period last
year.
- Net loss for the three months ended was $(2,532K), as
compared to the three month net income for June 30,
2021 of $222K.
- The Company had cash on hand of $12,278K, an undrawn
credit facility of $6,465K, working capital
of $13,476K and an undrawn government contribution
funding of $4,985K as of June 30, 2022.
Recent strategic and operational highlights during and
subsequent to the second quarter of 2022 include:
- Awarded $160 Million Multi Year Service and
Maintenance Contract: The Company's wholly owned
subsidiary K'(Prime) Technologies (KPrime) has won a six
year $160 million service and maintenance contract with
Canadian Air Transportation Security Authority ("CATSA"), which
includes a gradual phase in period of approximately one year.
Furthermore, it is common for these types of contracts to be
renewed for an additional five years, making it a potential 11 year
recuring revenue opportunity, with inflation-adjusted contractual
price increases. The effective date of the executed contract
is May 25, 2022 and it expires on May 31, 2028.
Nanalysis expects to begin billing the customer in Q4 of 2022, and
ramping up billing amounts in expectation of completion of the
phase-in period in mid-2023.
- Integrated K'Prime into Nanalysis and restructured sales
model: The Company has restructured their internal sales
force with a focus on higher quotas and smaller, more targeted
territories combined internal technical support that used to be a
cost center and are now being mobilized to revenue generating
activities. Additionally, the Company will also be leveraging
external manufacture representatives. All in all, the changes we
have made will result in roughly 25 people on the ground in
the United States to scale up
benchtop NMR revenue.
- Manufacturing: Nanalysis continues to invest in
incrementally increasing production capabilities for all our
product lines, in anticipation of strong demand going forward.
Recently, the company purchased a state of the art five axis
machining center and a wire electrical discharge machine, both from
Makino, a global leader in CNC machining center design and digital
innovation. These machines will contribute to Nanalysis' continued
innovation as well as cost reduction initiatives.
- Quad Systems: The company continues to move towards
full high-field NMR product launch with Quad System. There have
been delays in the completion of the complete suite of modules, but
revenue generation has begun. The company is expecting that
material revenue from this acquisition will start in 2023.
- MRI / Medical Imaging: Nanalysis continues to be
active in medical imaging which is consistent with its publicly
disclosed strategy. In Q2 the Company won a C$1 million purchase order (P.O.) to deliver a
full pre-clinical medical imaging system to a customer in
France and was recently notified
of an additional contract win of C$1.1
million for a custom MRI system from another France based customer (pending P.O.).
Additionally, the previously announced European Union gamma MRI
project is proceeding well.
Operating Results
For the six months ended June 30,
2022, the Company reported consolidated revenue of
$10,741K, an increase of $3,129K or 41% from the comparative period in
2021. The increase from Q2 prior year can be attributed to the
shipment of more units of the 100MHz, coupled with revenue from the
recent acquisition, K'Prime.
Gross profit for the six months ended June 30, 2022, was $6,577K (a margin of 61%) compared to gross
profit of $5,037K (a margin of 66%)
for the six months ended June 30,
2021.
The Company's net loss for the six months ended was $(4,024K), as compared to the six-month loss
June 30, 2021, of $(253K). The increased loss was due to higher
costs, specifically sales and marketing expenses, increased general
and administration expenses and increased research and development
expenses, both in the Nanalysis segment and from the new
acquisitions. In addition, there were business acquisition costs
from the two transactions completed, increased depreciation and
amortization expense, increased finance expense partially offset by
no RS2D earnout in the quarter and increased revenues.
Outlook
"Our main objective through next year is to capitalize on our
recent acquisitions and CATSA service contract. This means we are
restructuring and refocusing our benchtop NMR salesforce; we expect
to launch the full multi-module high-field NMR product at Quad
Systems, and are successfully executing on a methodical rollout of
coverage across Canada's airports
for the CATSA project," said Sean
Krakiwsky.
"We do believe that by the end of 2022, it will become clear
that Nanalysis is well positioned for solid growth for years to
come, with a strong economic moat, and a motivated team energized
for the future. Operational excellence still remains our most
important mantra, as we will continue to leverage existing customer
relationships, along with our technologies, to fuel growth. So, the
rest of 2022 is about consolidation, execution and capitalizing on
synergies. We are confident that we will deliver the value we've
created by our recent acquisitions to our shareholders," concluded
Mr. Krakiwsky.
Conference Call
Investors interested in participating on the live call can dial
1-888-664-6392 or 416-764-8659 from abroad. Investors can also
access the call online through a listen-only webcast here:
https://app.webinar.net/32l7RdQB0Zw , or on the investor
relations section of the Company's website HERE. The webcast
will be archived on the Company's investor relations webpage for at
least 90 days and a telephonic playback will be available for seven
days after the conference call by calling 1-888-390-0541 or
416-764-8677, conference ID # 484317.
Additionally, the Company will be hosting a Q&A session for
it's European investors tomorrow, Friday,
August 26th at 8:30am
ET which can be accessed by the following link: Click here
to join the meeting,or call in (audio only) +1 437-703-4522, Phone
Conference ID: 636 080 139#.
About Nanalysis Scientific
Corp. (TSXV: NSCI, OTCQX: NSCIF, FRA:1N1)
Nanalysis trades on the TSX Venture Exchange (TSXV)
in Canada with ticker symbol 'NSCI', OTC and
the Frankfurt exchange under the ticker symbol '1N1'. The
company's business is what we term "MRI and NMR for industry". The
company develops and manufactures portable Nuclear Magnetic
Resonance (NMR) spectrometers or analyzers for laboratory and
industrial markets. The NMReady-60™ was the first full-feature
portable NMR spectrometer in a single compact enclosure requiring
no liquid helium or any other cryogens. The company has followed-up
that initial offering with new products and continues to have a
strong innovation pipeline. Nanalysis recently announced that it
has begun selling a 100MHz device in 2020. The Company's new device
will be the most powerful and most advanced compact NMR device ever
brought to market.
Nanalysis devices are used in many industries (oil and gas,
chemical, mining, pharma, biotech, flavor and fragrances,
agrochemicals, law enforcement, and more) as well as numerous
government and university research labs around the world. The
Company continues to exploit new global market opportunities
independently and with partners.
With the recent acquisition of K'Prime, the company maintains a
North American sales and service company of over 40 individuals who
cover scientific instrumentation for pharma, food, chemical and oil
& gas customers, as well as imaging systems for security
applications.
Additionally, the Company has a 43% ownership in Quad Systems AG
("Quad Systems"), with an option to purchase the remaining
shares. Quad Systems is a Zurich-based Nuclear Magnetic
Resonance (NMR) company focused on high-field NMR for
pharmaceutical and other vertical markets.
Notice regarding Forward Looking
Statements and Legal Disclaimer
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by
words such as "anticipates", "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed", "positioned" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services
Provider accepts responsibility for the adequacy or accuracy of
this release.
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SOURCE Nanalysis Scientific Corp.