Nanophase Techs Corp

Good day. Thank you for standing by. Welcome to the Solescence fourth quarter 2024 conference call. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Today's call is being recorded. During this call, management will make statements that include forward-looking statements within the meaning of the federal securities laws which are pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This conference call may contain statements that reflect the company's current beliefs and a number of important factors could cause actual results for future periods to differ materially from those stated on this call. These important factors include, without limitation, a decision of the customer to cancel purchase order or supplies, agreement, demand for an 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 technology, possible disruption in commercial activities occasioned by public health issues, terrorist activity, and armed conflict and other risks unindicated in the company's filings with the Securities and Exchange Commission. 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. I will now hand the conference over to your speaker, Mr. Jess Jankowski, President, CEO, and CFO.

Thank you, Operator. Good morning, and thanks to all of you who have joined our call today. Joining me on today's call is Kevin Curitan, our Chief Operating Officer. I'll begin with a summary of our fourth quarter results and a business update. Kevin will then discuss our operational initiatives. Then we will take your questions. We're excited to be hosting our first conference call as Celescence, reflecting our simple yet profound mission, deliver joy. We believe that joy comes from confidence, self-expression, and well-being, and we're committed to enhancing all lives by transforming skincare through our groundbreaking innovations. Our rebranding also reinforces the broad success of our beauty science platform, which has not only revolutionized mineral-based sun and environmental protection, but it has also enabled us to achieve four consecutive years of growth. With more beauty brands recognizing the novel skin health benefits that our platform brings, we remain confident in our ability to sustain rapid and profitable expansion in the years ahead. In connection with our rebrand, we launched a new investor relations website, enabling current and prospective investors to stay better informed of our developments. Our new IR site offers comprehensive information about the company, including detailed financial reports, historic nanophase financials and disclosures, leadership team and board of director profiles, the company's news and announcements, and much more. We invite our investors to view our site. Moving to our financial results, we had an impressive 2024, achieving record net profit and positive operating cash flow, while reducing our outstanding debt. These milestones highlighted the continued success of our growth strategy, underscored by the ingenuity and creativity of our team as we continued to promote our award-winning products. Revenue for the fourth quarter reached $12.6 million, representing an increase of 57% year-over-year. For the full year, we generated $52.3 million in revenue, an increase of more than 40%, exceeding our base guidance expectations. These record results reflect the continued strength of our commercial execution and the continued demand for our products. The elevated fourth quarter revenue was primarily driven by a shift in customer mix and the timing of product launches, many of which occurred later in the year than in previous cycles. We're pleased to be growing at a robust pace and thrilled to be doing this while expanding our margins. Gross margin expanded to 22% from 6% year over year in the fourth quarter. On a full year basis, our success was more evident as we increased our gross margin to 31% from 21% year over year. I'd like to remind listeners that the fourth quarter has typically been our seasonally weakest, but in spite of these usual fluctuations, our business continues to yield positive results. Our fourth quarter 2024 net loss was narrowed to $600,000 from a $2.1 million net loss in the prior year period. For the full year 24, We generated net income of $4.2 million, a sharp increase from a net loss of $4.4 million in 2023, representing an $8.6 million improvement year over year. Our business model and products underscore the success that we're able to achieve. Customers recognize the value of our products, and that speaks to the quality that we deliver. We continue to execute well, growing relationships with a series of leading brand partners across our line of consumer products. These include Color Science, a leading dermatologist-recommended brand, Tatcha, a Japanese-inspired prestige brand, and Credo, the leading clean beauty retailer. There are a series of other brand partners who are not at liberty to disclose but represent a large percentage of our revenue mix. Our strong financial results were achieved in part because we have an amazing product that just won another award. Olay Facemilk SPF 50 Plus featuring Solescence Clear Technology was named a winner in the Best Prestige Finished Formula category at the 2025 Cosmetics and Toiletries Alley Awards. This award recognizes the company's achievements across criteria including novelty and practicality, sustainability, safety, stability, and proof of efficacy. It also marks the company's third consecutive win at the prestigious Alley Awards. Listeners may recall that in 2024, in addition to an Alley Award, we also won our third consecutive COSMOPAC Award for Best Formulation at COSMOPROF North America. Shifting gears, another customer that recognizes the quality and performance inherent in the personal care ingredients we supply is BASF, one of our largest customers in 2024. We have a long-term exclusive relationship with BASF, primarily to provide nanoscale-specific zinc oxide-based active pharmaceutical ingredients, or APIs, in personal care cosmetics, with sunscreens and daily wear products being the dominant applications. We expect that these successful relationships, as well as future customer demand, will contribute to our future growth. Looking ahead to 2025, we anticipate sustaining momentum both on the top and bottom lines. We expect to generate continued growth supported by solid demand from brand partners and customers who remain enthusiastic about the unique benefits and performance that our products bring to enhance end consumers' health and well-being. We remain on track to deliver additional volume in 2025 as demand for our products outpaces the current market growth rate while continuing to enhance our operational efficiencies and scale for growth. At this time, I'll turn the call to Kevin Curitan, our Chief Operating Officer, to share an update of our progress and outlook. Kevin?

Thanks, Jess. As I always like to begin, I would like to thank our amazing team for their tireless commitment in demonstrating through our results their ability to consistently deliver solid performances for our investors, our brands, and for ourselves. To echo Jess's comments, 2024 was a transformative year for Celestin. We achieved record revenue, strong year-over-year growth, and expanding margins, all which contributed to our positive operating cash flow. Operationally, we remain focused on improving and expanding our facilities to maximize both the growth we can achieve and the improvements we can make in both product quality and profit margin over the next few years. As we take the next step in our evolution, I'd like to share some of the key operational initiatives we have undertaken were completed in Q4 in order to meet the growing demand for our business. First, we expanded our batch making capabilities at our Bolingbrook facility by adding the infrastructure for six production suites. We believe this will provide capacity to meet current customer demand as well as allow for the creation of substantial additional capacity to enable expansion of key product lines. In total, the increased capacity will support in excess of $200 million on an annual basis from the consumer products line. Second, we continue to ramp up throughput. During the fourth quarter, we produced twice as much unit volume as we did in the same period in 2023. Third, we continue to develop and expand our formulating capabilities. This resulted in the launch of more than two dozen new SKUs of fully formulated finished cosmetic products. These products address markets focused on skin health, with the majority sold in the prestige beauty segment. Finally, we further strengthened our competitive position with two new patents related to our plant-based antioxidant technology and our skin-soothing technology. In keeping with our IP strategy, both of these patents increased our ability to create sustainable competitive advantages for our brand partners and for ourselves. In closing, as we have stated previously, a core goal for our business is to continue to sustain rapid top-line growth while improving overall profitability. We expect that as product volume increases, our fixed manufacturing costs will be more efficiently absorbed, which should lead to increased margins. We also remain focused on reducing controllable variable manufacturing costs while executing our growth strategy to sustain a profitable growth trend. Combined, we believe this will help us in the long term create the valuable company our shareholders expect and deserve. I'll now turn the call back to Jess. Jess?