Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nanalysis Scientific Corp (NSCIF, Financial) reported a 50% increase in consolidated revenue for Q3 2024 compared to the same period in 2023, reaching $10.6 million.
- The company's gross margin on product sales improved significantly to 52% from 41% in the previous year.
- Adjusted EBITDA turned positive at $264,000, a substantial improvement from a loss of $1.4 million in the same period last year.
- The transition of airport services to Nanalysis' control has led to a positive gross margin of 15% in the Security Service segment, up from a negative 3% in the prior year.
- The company is seeing strong demand and horizontal expansion for its Benchtop NMR products, with sales to large enterprises and government labs globally.
Negative Points
- Despite improvements, Nanalysis Scientific Corp (NSCIF) reported a net loss of $1.6 million for Q3 2024.
- The company experienced seasonality in order flow during the summer months, with approximately $600,000 of business pushed to Q4.
- The MRI and medical imaging business remains lumpy, with sales and partnerships subject to variability.
- Nanalysis' third-party equipment sales, primarily reselling Agilent products, are not a focus for future growth due to limited control over growth.
- Quad Systems AG, in which Nanalysis holds a 43% stake, requires additional capital to fund its go-to-market strategy, indicating potential financial strain.
Q & A Highlights
Q: Could you describe what drove the strength in Benchtop NMR demand in Q3, and should we expect this to persist into Q4?
A: Sean Krakiwsky, CEO: We saw steady growth across the board, driven by an expanded sales organization and improved distributor network. While Q3 was solid, some orders were pushed into Q4, indicating continued strength. We believe we're just beginning to tap into the potential of Benchtop NMR and expect further growth, with new product announcements in 2025.
Q: Are you experiencing pricing power on your units, and what factors are contributing to this?
A: Sean Krakiwsky, CEO: Yes, we are seeing pricing power due to improved software and machine performance, which allows us to discount less. Our distributors are also more confident in maintaining firm pricing.
Q: When do you expect to optimize the workforce for the CASA contract to explore other opportunities in the security space?
A: Sean Krakiwsky, CEO: We are now actively considering other contracts with the same team and expect to make tangible progress in 2025.
Q: Was the recent medical imaging sale fully reflected in Q3, or will it spill over into Q4?
A: Sean Krakiwsky, CEO: The specific sale was fully reflected in Q3, but we expect similar sales to be recognized in Q4. We are also pursuing new partnerships to expand our MRI business.
Q: Can you provide more insight into NMR segment vertical partnerships as a growth strategy?
A: Sean Krakiwsky, CEO: Strategic partnerships are crucial for our growth. We are working hard on these opportunities, and while some have not materialized yet, we remain optimistic. The potential for Benchtop NMR machines in various industries is significant, and we continue to evangelize this vision.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
