Nanophase Techs Corp

Good day. Thank you for standing by. Welcome to Nanopace Technologies Corporation third quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. After this week's presentation, there will be a question and answer session. If there is a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. Today's call is being recorded. The words believes, expects, anticipates, plans, forecasts, and similar expressions are intended to identify forward-looking statements. Statements contained in this news release are non-historical facts of forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Investigation Reform Act of 1995. These statements reflect the company's current beliefs and a number of foreign factors. could cause actual results for future periods to differ materially from those expressed in the news release. These important factors include, without limitation, a decision of the customer to cancel purchase, order, or supplies agreement, demand for and acceptance of the company's personal care ingredients, advanced materials, and formulated products, changes in development and distribution relationships, the impact of competitive products, and technologies possible disruption in commercial activities occasioned by public health issues, terrorist activity, and armed conflict, and other risks indicated in the company's filings with the Securities and Exchange Commission. Nano-Face undertakes no obligation to update or revise these forward-looking statements to reflect new events or incentives. I will now hand the conference over to your speaker, Mr. Jeff Jankowski, President and CEO. Please go ahead, sir.

Thank you, Livia. Good afternoon to all of those listening live. We appreciate your flexibility in today's timing. Also, thank you to those following up later online. Kevin Curitan, our Chief Operating Officer, is joining me again today on the call. We have some brief prepared comments, then we'll be available for some Q&A afterwards. Dare I say our progress has been scary good so far in 2024. I had to say that. Looking at our quarterly financial results and talking in approximate numbers, At almost $17 million in total revenue and over $3 million in net income for Q3 of 2024, we continue to set new milestones. Year over year, our bottom line went from an 18% loss in Q3 of 2023 to net income of 18%, or $3.1 million in the third quarter of 2024. That's a $4.5 million swing. Looking at our nine-month financial results, again talking in approximate numbers, We're at a record pace, which is not an approximation. With a total $40 million in revenue, our nine-month numbers have exceeded the prior year's nine-month numbers by more than $10 million, or 36%. We've set a new revenue record for each quarter in 2024, and we expect to do it again in Q4. Just through 9-30 of 24, we've exceeded total full-year 2023 revenue by $2.5 million, or 7%, and we have a quarter to go. At $13.4 million in gross profit, or 34% of sales, we exceeded nine-month 2023 gross profit by $6 million, and our gross profit percentage was up nine points, almost 40% over that of the same period in 2023. We also booked $4.8 million in net income for the nine months of 2024 versus a $2.3 million loss for the same period in 2023, more than a $7 million improvement. Looking forward, in the Celescence era, our Q4 revenue has typically been lower as a percentage of total revenue than Q2 and Q3. There are too many variables for us to give a clear indication of full-year results at this point, but we do expect 2024 revenue to exceed $50 million and, with upside, we may well finish in the mid to upper $50 million range. We're looking at solid customer demand into 2025 and, While expecting a typical dip in Q4 results, we see more growth coming as we continue to improve operational efficiencies. Our top focus is preparing to deliver additional volume in 2025 and to increase profitability on every unit we ship. Now I'd like to introduce Kevin Curitan, our Chief Operating Officer, to share his thoughts on our progress in 2024 and our forward outlook. Kevin?

Thanks, Jess. As always, I'd like to thank our team for continuing to demonstrate why we are considered the platinum standard in the industry, our brand partners for the continued commitment to collaborative growth, our supplier partners for keeping their promises to us, and of course, our investors for their patience and faith in our organization. Q3 represents a milestone moment for our organization. Jess has already highlighted some of those financial successes, so I'll spend a brief bit of time on operational milestones that were also achieved. I'm sure it's no surprise that our company in two of the three months of Q3 achieved record throughput levels. The improvement in throughput was largely driven by our adoption of OEE metrics that helped us focus our company on areas that would yield the biggest immediate improvement in performance. In Q3, that focus was on increasing uptime. While the improvement in uptime with the improvement of uptime, we also saw an improvement in labor efficiency as compared to prior quarters. While there is still far to go, with the key additions in our production management and maintenance teams and the realization of the benefits from our automation investments, we expect to consistently improve our performance in these areas. Our other key metrics were also strong. We continue to have excellent inventory availability, allowing us for the first time this year to also achieve a significant improvement in on-time, in-full performance, where over 90% of all planned shipments were completed within the quarter. As we noted at the beginning of this year, we believe that we can simultaneously achieve continued growth at a multiple of the industry's growth rate while improving profitability. While combining these operational improvements with improvements in materials costs, it's clear that our company is now solidly positioned to continue to accomplish that objective. We plan to continue to grind hard at proving this quarter after quarter and are in fact, we are focused on having our EBITDA performance rival some of the best in class companies in the market regardless of industry. In closing, I'd like to mention two additional items, our book of business and our people. It's great to be able to confidently state that we have a strong book of business similar in scope to what we had when we closed Q2. We are poised for excellent top-line growth in Q4 of this year versus the same period in 2023. and are already having volumes in 2025 that will look to be record levels. Turning to our teams, as I noted last quarter, the success is underpinned by the fabulous teams we have throughout the company. We know that while our world-class technology and know-how is how we got this journey started. It's our people that ultimately make the difference and will be the reason that we continue to outperform our market in terms of growth and profitability. We continue to raise our expectations and are excited about what the future holds. Back to you, Jess.