Release Date: February 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EnWave Corp (NWVCF, Financial) reported an increase in third-party royalties to $559,000 for the quarter, up $80,000 year-over-year.
- The company signed two new license agreements with ELEA Technology of Germany and CNTA in Spain, expanding its international partnerships.
- Gross margin remained strong at 29%, indicating efficient cost management.
- EnWave secured a credit facility with Desjardins Group, providing financial flexibility for growth plans.
- The company has a robust sales pipeline and is experiencing positive momentum in its REVworx toll drying operation, with significant potential for future contracts.
Negative Points
- Revenues for Q1 decreased by 7% to $1.2 million compared to the previous year, primarily due to reduced equipment construction contract revenue.
- The company reported an adjusted EBITDA loss of $624,000 for Q1 2025, although this was an improvement from the previous year.
- There is uncertainty regarding the impact of potential tariffs on EnWave's royalty partners' ability to import products into the US.
- Only one 120-kilowatt machine is currently available for immediate deployment, which may limit the ability to meet sudden increases in demand.
- The company is still working towards breakeven, with profitability dependent on the consummation of large-scale sales.
Q & A Highlights
Q: Can you provide additional color on the potential impact of tariffs, especially with partners in the United States?
A: Brent Charleton, CEO: Potential tariffs would not directly impact our imminent machine sales, as they involve companies outside the United States. However, tariffs could affect our royalty partners' ability to import snacks and ingredients into the US, depending on future tariff implementations.
Q: How many 120-kilowatt machines are currently available in inventory, considering the ramp-up in sales activity?
A: Brent Charleton, CEO: Currently, we have one 120-kilowatt machine under construction, which is the only one available for immediate deployment. Once this machine is sold, we will begin constructing another, as we expect to sell several large-scale units this fiscal year.
Q: Is there an update on the vaccine front?
A: Brent Charleton, CEO: Our collaboration with GEA continues, with positive results from ongoing projects. We also have a third-party pharmaceutical co-manufacturer in the US working on a project with a large pharmaceutical company, which could lead to a sale of a pilot-scale pharmaceutical-grade unit this year.
Q: When do you expect EnWave to breakeven?
A: Brent Charleton, CEO: We aim to reach a breakeven position or better this fiscal year. Profitability can vary quarter-to-quarter, depending on the consummation of large-scale sales.
Q: What are the financial highlights from Q1 2025?
A: Dylan Murray, CFO: Revenues for Q1 were $1.2 million, with third-party royalty revenue increasing by 16% to $559,000. Gross margin improved to 29%, and we reported an adjusted EBITDA loss of $624,000, an improvement over the previous year. We ended Q1 with $4 million in cash and a net working capital surplus of $6.8 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
