Nanophase Technologies (NANX) 30 Mar 232022 Q4 Earnings call transcript

Good day, and thank you for standing by. Thank you for joining the Nanophase Fourth Quarter 2022 Financial Conference Call. [Operator Instructions] Please be reminded that this conference is being recorded.

And before we begin, please keep in mind, the words believes, expects, anticipates, plans, forecasts and similar expressions are intended to identify forward-looking statements. Securities news that are the are provisions the this are historical safe in of of statements Act forward-looking made Private contained release not that facts harbor XXXX. Statements Reform Litigation pursuant to These this number important statements news for periods release. factors a from materially results of to actual reflect differ current cause those and company's future the beliefs could expressed in

and for customer armed and factors changes These relationships, and indicated activity of uncertainties. and supply limitation, filings to the the cancel these products competitive the without of or to risks materials occasioned a with new impact technology, conflict company's public include, to in the revise personal or important agreement, or in company's commercial obligation possible and forward-looking decision undertakes demand tourists acceptance no the by statements advanced distribution Nanophase activity care reflect disruption Exchange -- update order Commission. Securities issues, other purchase a of in and development terrorist ingredients, and products, health excuse me, events formulated

I the like to to over Jankowski, Please now go conference CEO. ahead. would Jess turn

our results, plans cover call will joining Chief current those, of later as the current join some be the Thank Kevin for to Officer, Lisa. morning year investor welcome to full XXXX. today our XXXX fourth listening state for online. business Cureton, of on call. us choose all Good and live to We're discussion me you, glad could Today's who will the Operating of listen those you and quarter well. and our

differently After into initial we continue this do much Solesence remarks, my the have within dive to good start in our I portfolio. to that than going deeper growth is volume see call The we'll a a financials. news our little I'm past.

add new we continue customers We continue to and to innovate.

the most were where innovations for of beauty our innovative #X our XXXX. of in as Fast companies the infused Company damage. major list We received recognized Solesence industry seen SPF one have may relating from the award sun won within beauty in inclusive recent at we X You on in other is the recent that our protects all XXXX. products, beauty the skin which award have most awards tones came we to spot This

spot growth As a Solesence. the and core company, to technologies the where advantage. key to with growing this bring represent by commercial we able products we've a found market seen a sweet with bear and in we've evidenced and broad knowledge been successfully rapid And our

in what in you We're market up want than to we make, to past, we developing into able a the our bring is getting Today, to that thing We nauseam this string. can sell we're growth speed start-up we everything the a hardest to there. can the some that for accomplish and on been of future ad shoe about technology want. the markets I've and can optimistic. so said new products make, you more we've on why maybe results and mean

using years sales grew in through from new we million to X revenue in than than new in few $XX blessing been in more $XX past We the We markets in $X than has sales years. less added and in over financing our of a XXXX million XXXX. Solesence, went million customers in fewer thought new nature people curse. faster With possible. The a was most resources

entering we half XXXX. the built are. have of downside this year to in entrepreneurial working been where $XX and capital million to that of we were all of for power, get degree has and than We've were requires administration that second the results disappointing. company million higher we a Clearly, much proceduralization been of will The a knowledge, leveraging grit $XX in

financially notable Some to which of work our execution. have us issues expense infrastructure our planned relating down operational improve some events we expansion, contending weighed directly we're side one-time the as been and to with on

not the in to a going expense fix. grow company clear, want profitable. I we that We're at being further the of be temporary confident we're to we're can situation

be Let's some to otherwise, all numbers specifics. Unless identified go in approximate terms. will stated

$XX.X Our million period revenue the 'XX at million revenue the up year. compared previous was revenue $X.X million same with XX% year, Full QX XXXX then $X.X up $XX.X year for versus million was record last XX%. of for

quarter the of per This a up loss QX million almost $X.XX fourth on was per share 'XX. our $X annual This or or compared we to had net of impact a For $X.X of results. share. material had million 'XX, $X.XX has

loss year per full a net $X.XX the million share. of 'XX, we or had $X.X For

The story change I drastic merits of in more move on. before address it X I'll this discussion parts.

expenses, but struggled First, in of where impact, second, operating is and profit most the had outsized terms which where an invested infrastructure, where also and onetime saw events we impact. to gross that improve in in execution we've are focused; efforts some our

isn't highlight For business full gross year-over-year in representative quarter the typically and weaker profit, year. numbers. I'm the QX of just a our is going to

facility space. X/X square XXXX, burden, production we of this represents facilities, square Bolingbrook, in in XXX,XXX Bolingbrook. the feet in the largest all facility in all X reduce foot while Ridge, operated space, Illinois, of and XXX,XXX about Bolingbrook newest Romeoville the in our the Burr we've approximately to All being and subletting are X For X of largest in, near-term

run our and were assembly finish Our we in in late transfer 'XX our able months all of XXXX. late some scheduled and able QX building filling of Solesence begin in there the QX to only some the was were XXXX. of moving production production for behind, upfitting of to and of We

has cost our of a As all result of factors, our on impacts this space of these costs, mainly goods. had several

margin. million Our costs all This XXXX year-over-year, a $X.X in is which to manufacturing. about facilities accounted of almost reduction charged up are for X% gross

than to be or labor DL, product, was XXXX. the labor it we takes was significantly it the make factor Another direct expected to in critical higher which

revenue what more the labor of production efficiency. we up up direct trend which year, and of product given higher last was Our but direction This have our was was volumes, should increased opposite expected XX%. labor XX% our over both in automation

As of labor X% direct percentage sales, a expanded year-over-year.

to facility A inefficiencies of well. issues as number these our related good

As while pushed to layout, lines timing in we had move, costs Bolingbrook to out We on to stretched our less had the fruition a expected didn't we up through to move get filling and gains assembly maintain linear come labor we in different facilities running. as XXXX. more additional relating this and X achieve and multiple to compressed obviously

while continue at produce levels. we to accomplished record we this Now of all

Most Lastly, QX getting production this building already to much timing and ability going of move automation for ready to get of a the paid been for with has in beginning our bulk XXXX. place. the has degree in of the installation automation of higher the delayed

numbers factors direct expected dollar to labor year-over-year. these our sales of All balloon caused per of

with postponement gains automation The a the the extra to and from new combination resulting year. planned we of the delay layout, were none hit. time X% the labor in us us another to efficiencies, this which contributed of along related margin Had operated profit adding it at have pickup would of took seen last move of, gross we proud XXXX large in

also in a second first. than happening of XXXX and labor are in with than 'XX that expect that in We to come of the direct of closer last to the to labor Total going year, made 'XX in the see We direct not in pulling more in X% in X% cost of fruit which to quarter third gross reduction significant in this per out to should sales labor investments another supporting just existing XXXX in growth, dollar margin. could costs but lead of more improvement production. bear

team and been reorganized. chain has supply expanded Our

Our helped continuing to leads warehouse upon we're control to well us costs. greater put having us our issues This inventory behind is reductions operating as that, our well, improve remediated has weakness during which material as in XXXX. throughput and

been to we Another in his offset and in QX profit implement price cover we XXXX series costs this will costs increases to Kevin generally see comments. able more of material effective in gross beginning benefit we expect XXXX. a QX in saw to has in were labor increases during

during reactive of quickly forced many were which This as to more was in over these prioritizing model. proactive due our markets be we types in areas. growth, our XXXX, been up much in have overhead pricing We growing to critical we than beefing is believe lean

expansion hit with of In costs from operating the XXXX. of separate in terms some were to we the need of investment we our singular expenses,

ongoing litigation recognized had X in resulted which theft, $XXX,XXX of hit BASF, and of they QX in in fees which unfortunate cyber $XXX,XXX We victim of We QX legal 'XX, QX the which of the we and our of QX. to bulk relating in were loss events initiated a with happened XXXX.

in a ongoing of expense saw stock to high relating price. for in things indicative are the granted operations. year-over-year other at few also in stock were increase options, XXXX noncash December that for accounting of treatment which 'XX of a A modern stock $XXX,XXX compensation

this Treasury, to $XXX,XXX no not If credit recognized U.S. consulting changed application the cash in the also Act. expense. We employee receive the and credit have hands. from for retention do accrued will reversed G&A we our be expense related This an under will CARES

drop up along bad changes we between payments, expense, policies, And credit in about expect to resources to finally, late which significantly going on forward. follow aggressive we debt our $XXX,XXX recognized in additional with

Taken $X items loss over up together, million, almost for of our XXXX. made these XX%

ongoing. that be of are BASF. to fees things with these we most expect expenses legal know don't more we there our So do But due litigation to will be structural

noncash price it's Regarding related stock. a of our to expense, stock expense comp directly that's the

structural directly to production which, support support to company engineers the us adding expansion, expenses growth The at $XXX,XXX near plant R&D. the of and engineering our more both a operating optimization. improving at few help were They start of and this of made areas related Looking for to the themselves and up in more costs R&D engineering, pay efficiently, year-over-year. throughput to equipment changes throughput this will year term. we XXXX. About business, with XX% expenses, let's increases more include to are avoiding the in the future smarts and related installation some the

balance roughly The parts. equal was X more traditional split increase the and in in of R&D was

includes coordinate product strength product. counterparts their rounded is at the This group our we brands This to and support complex becoming development collaborative company. new work required in a commercialization process. with work this we process staffing of the our the to with. First, out growing R&D

us viewed to When a well haven't along as added care brands excellent and internal to brands up for their that to are our these making coming our as are partner. and experience both strong with on formulation products, more offerings something an we the help true as to This ship of is regulated strong team, their that own. market long to adding is sun regulated approach demand. products will This our meet heavily history

side, to innovation On to the marketplace competitive be products able and development that innovate to there our we'll to continue update in be product requires keep growth. a also us for

various internationally represent in increase for technology partners new is all those patent the spending the and well the bringing our to of half, investment Nothing and and the effective U.S. to on, in the our patent market property. as continued offices through patents through cost focused intellectual piece is R&D relating of are applications, brand maintaining second more Solesence. innovative to testing as shepherding important our In applications This very other expenses Kevin safe, fees I in and something than costs. staff and legal

technology, They example allowance Let's of XXXX, Office and part can in we exclusively with use protecting that sought the Solesence. of health as after for is our technology Patent highly notice discuss which from Technology skin traditional of through series a this applications. of Defense in covers early by for damage, are allowance claims The platform light and are the doors skin of a method is U.S. open. received Trademark of Kleair In wheelhouse. key cosmetic the Kleair our notice Active a Stress a the offered

suppressing human know way a of the is to and and is Another it Kleair as which the they a damage of free as radicals, using method to the mouthful. of externally. claim formation peroxidation, lipid Think internally body I reduce can a in do

added of on of method preventing as method lastly, a will as formulations. also method infused and in features preventing the a intellectual represents This and technology also broad of Another States. with use property technology is It the health in protecting a of the elasticity our loss wrinkles marketable that product provide United is thinning of skin, lines of a preventing company antioxidants or group method protection of a of are of substantial skin Kleair and the and applications. the reducing skin cosmetics in series skin, beauty a space health on

the existing our upon patent, was builds further Technology in IP issued patent company's which XXXX. Stress Active March This in including skin Defense health, original

for area In basis skin received in addition, of on a as skin with in the innovation a UV our Israel. additional absorber allowances all we for per we continue on Australia, some an health global cancer to technology capita scale, plant-based incidence highest along in with drive

expect to be other roll with greeted we We to success out as countries well. similar as this

marketplace. also protecting plant-based leadership to consumers. innovating end in It means We're The investment protecting technology. health of of in the generation to which has introduced brand technologies to yet we property but marketable, markets, has be. offerings. technology, of represents this our existing that We're our minerals-based partners continuing be benefit product not ongoing. next Like of to part our of in technology position protect actively is our Much products, also develop any intellectual our it expect new our and next-generation been and the

process. this up be saw in These expected some our goal comp Also, beneficial pursue that feel and our XXXX. practical to in million consulting fees. $X.X this as for relating costs the as X/X our than ongoing related settlement XXXX. the our million the Of fees or were litigation $XXX,XXX to a the through were more These an way with quickly to negotiated $X.X $X.X stock expense one, accrued with earlier. BASF nonrecurring we increase, also resolving legal Moving expenses. cybertheft to This case SG&A and a mentioned as work we'll We in we company. mentioned, good is as to of ongoing will expense but is 'XX issue million of

and in more than I we increase added to of control team, we've much about mentioned, expect forward. to recognized our items expense, customer with which up we Further, These as debt sales $XXX,XXX resources additional make bad the going better half experience increases, the spike up year-over-year marketing, of trade staffing insurance and shows, SG&A. our to costs about total our growth. is business XX% of increase of then a balance the related making up the The exhibitions in in made software and

SKUs volume, from in exponentially. of Solesence that years. only through hasn't in from but volume XX sales having our and hundreds inventory a went or mentioning worth to unit growth been expanded dollar We product It's the incoming few managing codes has having them in

inventory We also in went to from of millions of having thousands items. items

volume company Our years few ago. a multiple of a transaction the was throughout is what it

keep by established XXXX a to all it series too frequently on new with happening company-wide, course, entering germane managed to related roles. production work experience complexity, challenges much had of of and we to efficiently. it, in absorb the this the new few and to the the newly people all was volume, in and Of work There not this building enough managerial people we've place learning too additional curves balanced as

added some and in accounting marketing business senior as well an and critical sales, finance as We development function. leadership

strengthened help our We with the total increases new products team product volume experience big launches. new customer in to in unit and customers, also

expenses and All better allowing future, supply increase SG&A amount to of to investment us R&D not also chain, control in these things, our but engineering, in to or only throughput. whether

profit in purchases spent expect XXXX, This during following We we support in represents much $X.X of automation $X.X also XXXX. that spending investment capital 'XX. the to about required in from million the in equipment to million

in discuss in and greater these Cureton, our Now Operating their areas strategic Kevin? Kevin Officer, like I'd detail. to progress drivers Chief to introduce

Jess. Thanks,

world-class of Jess becoming no our relative to been and achieve do needed begin Many helping to to would to we our like performance already is the effort toward team tirelessly foundational as in more to I for a has the thanking people's by also have their mission as shareholders. There lives through always, creating we for company doubt customer-centric, products our noted, valuable enhancing care investments, our that world's this have a improve fulfill skin work work made. As best manufacturer.

down So place, in result. certain our ability this now been person having working remain right have and which to in our now we improvement the comes to of to address. procedures both achieve We

ability We affirmed confident in color SPF with what cosmetics have past very world-class generate and organization believe We also significant has a marketing this. year that creation, our a in our this and and market. value that just this has the business certainty to world company our is care in leader not remain of our clearly in but shareholder transformative skin to and a opportunity create the also will solidified achieve infused world-class, formulation

all fundamentals above we product growth mind, in also With noted, as in of I some business that approximately the with the Solesence Jess of of the certainty to outcome. will our year-over-year share our you growth XX%. has revenue To already with, around like begin today, would your hope same build

existing revenue by as partners. from Growth of XX% delays from however, a year I half a share experience these mention companies new The partners, brand should reduced new revenue we of also we that from was which brand partners did around here, purchases in XX%. second and the revenue in brand year-over-year that first by about us of growth receiving during from $X partners, define combination packaging is their revenue over year brand the from grew from million. grew which of

you these have brand the added as about partners I of nearly names disclosure we in asked XXXX the the of doubled added past partners partners. brand in of know the of of new we the in number compared number to Further, XXXX. many brand

as business our excuse keep brand most in partners our to what we prefer relationship are We can of limited confidential. me, reveal

However, standing have to other ]. segment of Credo, a us small mention business and longest These them Bloomeffects, ] largest our Colorescience, clients, and include and our Relevant such still set allowed [ and publicly. clients as leaders of one [ companies KINLO industry

market. include partners these makeup couple in instrumental leading of also influential we we cosmetics to a that brand an be clients, skin clients companies, couple these also multimillion how consumers use can Each the brands. and in buy a and of succeed and are color addition changing are to serving honored our clean and In those they dermatology say of on dollar care part how

our to the noted average above and growth X%, unit were This our while combination achieving almost product XXXX's to of back we metrics, a per level. earlier, Coming a result price also XXXX of mix. increases able increase in by price is

However, it raw than significant materials increase transportation materials to -- when positive is in helped in This experienced as being in our costs per XXXX unit a midyear at price the trend achieve those XXXX. was turned margins very in equal around experience material us XXXX. increases XXXX, margin net despite having despite and in to lower

us also any really prior for of achieved business. gross well years a XXXX performance the or we profit the position of stronger It our Solesence than in have either in years helps in prior

and key All of investments top grow affirmation ability indicators resources to our an are of our strength business. fundamental also improving we of affirm while help metrics, overall profitability. our line They our these these performance the to

comments. some Jess to for I'll it Jess? back now turn closing over

Thanks, series last cost allow goals building. XXX,XXX new strategic executed to will we've operations profitable. We Kevin. throughput and and foot efficiency. our on more square leased Solesence our and a to a more of ultimately It to consolidate Nanophase a larger capable, make us series year, Since of enhance designed

up get running to all timetable assembly out, our in of our the and of warehousing all stretched this is filling building. is now and While and that

enhance these operations We other consolidate and this year will further further. operations

in providing a new capital. our million growing support working closed capital also on available more We financing to $X demands,

technology our not acceptance latest, and filled roles with stronger early support And leadership supply develop being manufacturing, QX and in created staff have These our relationships changes our newly resulted of X leader a partners our XXXX, Kleair key our brand teams. as last a we team, and and powerhouse controller with chain we the in among commercial wider technology new continue customer service across in top our supply patent but in During the markets innovator. our to impressive chain offerings. added new added

we more growth in to been to Now by Solesence. be in massive have and We're we're XX% quickly the a and much We and growth expecting needed to we we suit in us do, gain, have much to grow envisioned. the this efficiencies we're business expect company to reflected our investment more the improvements position and position more with the as pave follow operational we've Solesence cost be of to since profitable through XXXX efficiency. expecting seen than accomplished stronger and help exciting more but reduce higher this to have to the than always more XXXX growth regard profitable that and more. we for still way

that is company grow million goal and it next sales $XXX to plus do build to years. the over a Our few in will

invite call questions the to your you transcript may most investors we know today's We'd in Although ask to of like the to share to webcast live any participating comments. have after the or those review listen that call. or our

session? begin please the you Q&A would Lisa,

will [Operator Instructions] Our John Henderson KTG. from be of first coming call

when can might be Number lot on Maybe of year? of to profitability salient any digest. return kind just this A you one, to estimate kind able get to we points. the to most

year that Sure, to beginnings as have the the able and see to John. of go should QX. that of and do then and QX in we be a for But a year will Obviously, we the year. the be in quarter. estimating increase back-loaded is as profitable we able We're everything, thinking are timing we we the should beginning through it be

now obviously, of generally really of you maybe can't you sure interest, sketch too BASF you out kind guys. just I'm just commentary kind kind Can suit, of kind line the report, very are for And be You much guys Excellent. of comment about annual I but to important work? like out to -- how in the helpful might sketch saw going it were it's of in best some what's And would when trial the phase? like phase, not you Any can't be et of kind if of what it come obviously, discovery to line of for be case, estimate like successful, reach sort the would of the you kind would like to welcome. commentary time then if be to cetera? agreement kind the challenge of very of the kind to time a

we going the a end would if we'd late not feel the we in I'm then sure be although every a more Well, I'd into think going process. judge like this Sure. the lawyer, that year This this some I point, at day. that more -- continuing year and It's some And one and fall. and I'm have discovery I following. say likelihood, be will some or to with earlier meetings trial, summer, up leaders. depositions with

and resources, things that it it's those one spend will the time think of and keep I wanes, the going. it waxes So we on and

I think parties to that also But a some positive it in are bringing in resolution interested both way.

things that as are So well. -- those ongoing

that So until again, there next the forth what we contest of a process a of all it. and that's back an up sometime and to unfair way I would things go But result, year. that don't through if be lot are in ended as because having to tell, it's the difficult going viewed we imagine lot

seen the outlook in the going And still the obviously, QX of terms you of over terms they any mean, expectations like kind mean in them million different API of kind Have is I on in is shift there it business, of still of I -- past. it side XXXX? business? in divisions, the looks like $X.X it from did a other,

both -- got commercial primarily that I'll we're dealing the on with the business. Kevin. I'll more side that the have side, contractual with direct primarily every I Well, with He's that of effort side kind of in the team people relationship there a But pass the segregate I'm Kevin's will people conversations. commercial the a that the minute, to over X made dealing where to being is on and say

relative was contract. we the there first seen interested in thing terminating by was in the canceling and seen they response being to changes in or market haven't haven't very suit. impacted that behavior or we to So the that commercial were the The not suit

to more color with is we a know I'd So this give little to it the the on what for -- outlook the that, over how for Kevin extent APIs year.

Jess. Yes, say this significant we necessarily that usually is significant up it enter can have see Thanks, general, year. we last QX. expect John, don't to the don't thing that more we say We in I or materially down. clarity we than a be point a different anything at But will as on that

is being for the of there business the of nature volume the late Just built not, the or it are a what's and happens early QX, called sort QX. lot the is ingredients of their that selling second in half of season, year business, believe

terms So on we'll few what's give more of weeks. here clarity going in in another

is The James coming Lieberman Instructions] from next question [Operator Revere. of

of impressed so manage growth had company, with by time, companies in to of all cost challenges period understanding of kind the very So of I'm that this actually address. even very the few this you've effectively transformation the

as my So statement. beginning

matter claims on Regarding of the in? that you each some independent them applications require couldn't other just you're that you're are for Or to statements of elasticity FDA the you're Do skin a of skin of market features. I kind working as care those study? all. talking sort able these other make and claims, catch about

me do you want Jess to...

I'm sorry, go ahead.

and I different in today, so Jess locations are Yes. Yes. X sorry about that.

we protection of the type of be the UV protection, comments. that is the this do advantages So relative a of clear, particularly products And claims business of one business, UV the just the those FDA, being and Jim, to upon to to of based we thanks we inherently UVA lot for because type your is inherent in which create. that work

we So part will, those that an won't studies. work specific but from we would Kleair. do study. claims FDA for have of you to that And those separate to standpoint, supporting make -- And studies are our of as want -- related as FDA-related we ongoing we the studies do in an do for less think some would do to an might claims additional consumers basis. than what on Those to clients formal the

a that's broad-based skin but it protect areas the if were are which is areas, damage, it's something in gains can something mean about. get the UV from I'm person you you health I the this, talking skin lay than you other inherently broad-based,

like almost an it is of sorts? equation So

first you a Yes, free those. which that protect space. unique then make technology what want the our UV, in is is to of protection address combination a It's does. combination from UVA radicals, to sure have And of UV second you you

get pile to to enable able on But to sort the claims technical. the that other are Sorry we're top of make. of of each those kind that things

on the much. the again you're like work and narrative I getting, Congratulations very

Yes.

either to would I our that think the about, I are frequently, those was absorbed Kevin add those costs that, frequently or things shared that talking are testing as consumer well. by partners

things. to impact that those So are there we work mitigate the ways of

next ]. coming K. of is RKA Rand [Operator from question Instructions] The [

of of adding staff much chain. on so -- a of supply that and would areas this. way guys very I forth, of to didn't to your in bit you staff I operations. in lot service, a listened to were in significant really additions staff little the of answer a so appreciate variety I heard about hear I in customer

have to for something help from company why, been done phase. that -- getting as for hired specific you you product new trial And has any more question methodology that question what trial to is Kevin, manifested example, not really my error is to a tradition the away your you has And in historically, through changed this expertise operational a you, and this mindset of that is are of significant guide and through moving error that? else, there, and my

Thanks, ]. That's [ Rand solid a question certainly there.

first saying hire So hiring. things of me start We manufacturing. by a people in let the did actually couple on

But I we're expect and our the to area of away Where we've I we very a are something quarter. reasons. do. within now overstate to to are different our careful we as that's in actually next actively, strived quite give what that that. very want And manufacturing We process to now part doing doing the experienced have that or adding be of for a lot strong And been company leader of own we're what in honestly. looking

there some that about We've of now last possibilities it be realize. are that bring need take to steps that in done us understated, we're leaders realize we honestly, the to seeking shouldn't But profitability chain. help take through losses excited to wins and able And forward that really quite now we had be some in year. the the we'll we've what the to to supply

seeking to that something do. is So been we've

a are think, We in good place I realize to now, that.

[Operator coming Rubin Instructions] ]. next question from of Suisse is [ Tony Our

different series a of of questions. kind Just

address didn't I issue, if You that? we confidentiality confident you the about BASF understand, I that there. no sometimes could was But talked and I I on wondering what will that hear or there's a is the is these calls prevail claim obviously, what merit. hear highly management has

in as chain just deferred million different that be Then basically supply QX. expect of And the mentioned QX because you is, with you from profitable company that you packaging question $X do not that well? profitable only in Kevin, are issue nothing Notwithstanding sales be but in of QX supplier. into year, then QX expecting were to the to to the difference from full timing mentioned

quarters operational disappointment. certainly, consecutive when execution of along It's mean scope far words, honestly, operational greater lines, issue. of and the than an the And we've is problem see expect a to an excuse. we similar is that. I other of gross And equipment then end? installing In part normalized multiple nightmare But X had when will locations margins? would this now

see steady-state is we when what And will question margins? margins? normalized gross targeted those would be gross the So

And release released in few then last backlog recall finally, to or a sales I you've the a few like that seeing net didn't to I press either in or but Is respect in XXXX? add that's the the with expected in over the the mouthful, and/or wanted that's calls, ask. backlog. what least know increases at press on different and I or a or are those statement comment directions, comments. a in you'd there release backlog historically, quarters, to

all I down. Well, wrote Sure. them

way work we'll our these. So through

that good long that confidence top. out regarding one our and our they're should claims a take that That and first our is come understanding all being to the on BASF, we're The we are relative these confident costly. situation the said, -- things of time

judge really so a that's to want we something what that our where has whether And to reach resolution or do is a point resolution, is decide. in that confidence level negotiated a a

where any in voluminous relative you confident issues, we've we'd series better had And lawyers draft nothing have that. the if we've of of to which through, the those, and company had Whichever gone heading, we one the for that be XX-K, claims. the are and things is essentially, but in but substance procedural our of look is are a

So that's would I view how that.

I've backlog growing backlog. we'll I and off we've because have still the billion and by in dollars in And more. forward year. the I the should in what's a several see and XX% another what set jump got head, We of top this speak had this backlog. Solesence, say week. shift it to as this orders and I received -- number about question we that think blended of between can have We On numbers don't mentioned, be just Kevin But build QX I remaining my

made have always last required we number And in pretty think orders earlier year. are bigger to the year in particularly advance, that looking have the we're year, point, which BASF We this I at in pretty condition is comes We which business. to there, difficult a what orders beyond it to good for -- Solesence when about had don't project. from

try shift we're of probably or more $XX -- terms $XX So in I'll the in year. at build this to million, for build million least we're think that maybe to in

X other to cetera. rolls deferred due series but for at a financials, run to how can profitability question profitable The get revenue, and expecting the reasons. items, the we'll get year. some -- the of we out goes will team a And home it analysis I in as are into QX et for we done tag it your be be think, these, we'll for quarter to the when not more that QX relative about

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margin the minute I hand et cetera. that, gross -- With about it execution issues, a talk question, for and Kevin your to to over particularly

Yes. Jess. Thanks, Tony and

I the that do your correct. as good your I sense have of do So getting in all as Jess questions, think question. Tony, I general you're wasn't but

the and team game. we of saying, place We through and number are from the people have we've company really the of all this the where our everyone to call. way name Board and our who the all at that and execution is believe -- listening ultimately we point a a got It's management

listening who's call for works everyone company as to this our So well. that

the a I is issue our ware, you bit work management a lot the focus, it's to to the need and But it. management means resolution that actually this We So as see business is empty we'll that it didn't have efficiently. of refer space operate little without to space what of on better. everyone understanding and space having nature of

operating we That So that good share make any for excuse. isn't have to weren't now make. We we XXXX. efficiently want excuse nor can that of longer a eliminated an

mention having confident appropriately layout there. there, in something I Jess specifically efficiencies so production And that's forward on the was will just the yes, win where to better dollar backlog, to there in trick have utilization capitalize -- may orders expense correct efficiency. I but we and terms missed with space in actually of that QX, multimillion improvement direct terms and labor are million, for of we associated therefore, and have are moving we orders but on are. We starting We're are. where of

We what we've that and manner. be. to to us XXXX's will and orders open that revenue a in of profitable exceed a so overstate have shipped We put profitable -- how in very position do combination won't the

overstate I to than us prove think it's it to better and this point that. try for out at

So happy your of hopefully, questions, redirect. I most if to captured not,

product the else for specific this Yes. think Again, And just I go awards. and and to and call very is the I add the technology everybody again, like you the happy on with if good would strong XXXX and $X in issues, the in million year-over-year it of sounds chain deferred and that was growth, the there. the you both supply is have like year, that quarter had because

frustration. blocking always So good. as or is the from It's and Jess the says, everything hard the tackling stuff,

what that QX? steady-state Is Is that to transitional drill you expectation margin, not margin? QX? if understand, not we your want also chaos do is think, when of were questions the or And you gross that And of what margin? gross expectations those Is open. achieve was Because you specific your you'll that but question down achieve left steady-state QX? against gross were kind are the temper So don't performance?

Yes.

beyond that's happening if what operational right you take will that the of that And output efficiencies and a Tony. so And representative -- a first what steady state. as in look it, half that. half is quickly Q of or expecting half, me, see represent that of are should sustainable the and we asking, the that, It we have terms of XXXX at you're we be comment now we're I'll that first where excuse -- first should

number? saying, there I want range a a percentage a to you or target out to was would get you And in put target? when margin do

would to is that do, rapidly further think that I point to relative have liked I go half inventory, the being took resolved. material what of inventory lot have And continue it grow thing us to of representative. mentioned part -- at as to we a us the hard end weakness year possible. to about we're trying we get Kevin's remediated our than our that's first still north say, XX%. than And the the to but given that I goals longer One would as of to it's

was so much And January month. is better February a tough a month.

expect to We yet. be March better

it but representative, perfectly be good. not should may it be So

fits I be machine system where company our is team to where a to we faster the I just the into right had put and a place. growing marketing because more do that that growth that think we'd at system about we we want is the fact I be you get could knowledge And a we yields leave Kevin that's if here, and think sales, that profit mean, trying resources growth imperfect. I to we it away, what more the profitable keep know getting on in all think this we've growth talked product into that based developing and are and faster. -- volume have to we

more that things are we company, And we're hard is keep nascent and calls an these without it's -- being have static money. as think a words. still which industry growth hasn't that and commented no there's where in products, because on not that's you think of to have growing deeper and quality much faster that we faster with understanding all in making there clarity And because and innovating and losing money trying a these as here. our of there's going grow. far all But it's hit hard Yet something really an are and there's -- where have many internally, as we've point from growing, I point no the other as shareholders you're can a growing much our as is to we to too a share we're what's these we industry

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XXXX So I investments in and fact to on want think the gross anywhere based this a getting infrastructure on we're the But side. year will a the that that is of be can near what margin things, growing be lot optimal we don't critical. to going lot keep be our do smaller clearly done

a looks It [ have Rand follow-up from K.] we though as

fact you systems, been standpoint financial has I the Obviously, I control control very, been feel feel My that enough is but from do execution the a question, financial that and is and that, issue cetera, cetera, that though, are can it. mean, from place? are about the your controls you substantial other financial which it we side with in think the happen, around hacked were et the concerned millstone neck. have of your robust very And standpoint do et the

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or financial changed standpoint philosophically So has what inside what your mentally control organization a mind? in the from

higher I I some pieces, some terms true. it and X break need that later shape. assets, Well, questions been of year think big of this people the the the piece, degree which safety is company's relative think controller into it's And our in the -- accounting. good assets our hate may added Rand, it because we same so Board in of the I I'd doing QX, aren't in -- their controls is not a more a we -- to the asking we're We've jobs. implies responsiveness, term responsiveness, that demanding of financial

I think level, higher still, are at to we a some those also want man away from. obviously things, but of get we degree, to a which handling

has on And getting think a which little -- time that the senior bit the I it and lot us pointing becomes up it, orders of to data to discussed bit do those do something by is you're turnover fresh basis get a and We're more with relative KPIs think a to should the things, are on taken spend job being daily order help, running little has to faster. that in it and I a also is the to a adding and all Kevin newness is to to versus we to need work analyze all of data, -- the doing we manufacturing which daily help better I happening to data. analytically, little again. person historical a coordinate We we that yet to us do going That's what than closer a think, collecting relative that. pushed. are you bit getting good time information

up from -- a as is such on that have that's the a more certainly finance And to and to something as extent think fighting struggled I people great And having and the water than accounting do that a that knowing doing of the pretty having things above I processing I side, you the your nose a analyzing. background, you one think analysis end keep do, that think coming because things so been doing year, volume resource-wise have make on, our this focus transaction I And stuff, of have this we've and new to we area changes we I to there already day-to-day have cost controller that -- that help absorbed been we're along. high a other in some accounting with small has probably think function a to operational going crazy. try we

of things key throw progress. what requirement being to the long and and higher Kevin need on a mean, top are in and analysis detail the show in -- are the down, term tops than P&L to from we our pointing at me term the that and order Board, I us a we being KPI have -- that around But to the flow more key higher top and are what entire is improve them level looking our through you

And of relative team that of things color getting as things directly maybe on Kevin bit he's of add could his the those on improved and some working a some been to little well.

Rand. Thanks, address, Yes. One Jess. to comment

beginning the clear, So we it it's Jess, from lease building from a the grow actually that have we we to things had so space addition, to that need lines. in intent into, that amount we along we Bolingbrook. day sublease, that consolidate with ultimately are the opportunity because released the start X and knew would of we space to as larger those we and able be would and an facilities to

on a where lease. we've executed we didn't ever since sublease we day So this not had that have going

-- that clarify So to from just point.

relative The and day is one we and challenge to isn't business in think try to have other them I XXXX. went had nicely. was teammates that day creating and to what in I growing we them done were out the experience that Jess the that positions were evaluation. the work that used outsized worked what you that The change relative growing. that from trial we from within in thing maybe and to were mentioning as there meteoric particularly the didn't doing I thing had related Obviously, awesome for that into earlier to teammates XXXX little we have that And we allowed was asking missed a a call experience our what business the that that would we but while, folks. applied between asking we've were se, do, into more have, and are error to per be really XXXX, our able grow we as pretty but the And we

that team that but manage to we I in need help So clear make we out want them. apply -- experience new to understand and the to it's get that best that really additional also believe of sure there's just team, that an we

been that target have. to for issues very tracking scope the understand, everyone nice day is Within that, that major and been a some as a we we having simple going that's there's that there. to where well. we out added are customers, basis we've were the of satisfied to in we've around one, in applying also important opportunity comparison we seen XXXX often labor is in are where one some those meeting We've And And KPIs some metrics on-time in improvements and other relative it's happen doing like feel day full, we're and that's th of particularly on referring. to that our since OTIF to relative utilization more are now. we're what as to tracking

those have types measures do in we place. So of

then all to so controller grew to I where to the financial the our business, able and of we the is course, team team last add challenge, that help. and until the really never grew been that year or think, we the when scaled as Jess support volume, mentioned, transaction we the also we've of adding over

we've So we're organization, parts it there's the to overwhelming has correct been our well. of effort that and there or been I as of but some actions load a taking realized think that correct

concern, gentlemen, here my kernel of the okay. Well, is

For surprised. way commentary punctuated the were we too has with long, been

to and and throw guys Okay. has okay, concerned about concern we I need there that there, here going either are at we bit point, comfortable few And the bodies light it. I were in a manufacturing. you that been afraid light been, still not finance the well, this force And the and about, in company. am to the a manufacturing that that appreciate I'm operations in My preeminent we mentality is that at and were done do or there, more I'm fact

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And it to Let I sense it not understanding percolate is from am both seeing that management. I'm up wondering, you a or correctly? an just of this there is

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this. of when do trying think difficult that been a things the of do of of that's are is really side, coming streamline to we the processes these of lot internally. you, to and process just all And the we're trying the to on a piece in is one big at -- hose I finance fire are things

of So it. I'm cognizant

the is plenty should of to on I think you're do that done, of fact in many and whom app on that was a the we're bandwidth expertise, cognizant what some the this -- forward, shoestring along of did our of we us, part I I areas, do that working and think have our and but that. cost point of be of and running these Kevin the and also all don't the further of we of line that cognizant have Board we to be the needs hit where fact

add we when do what maybe we need commercial operating do it the supply to chain the just than piggyback and And the add Yes. material the did We on I side director on leadership. side. think we it recognize had did faster an on said, were and quickly That's experienced a really commercial we experienced we impact. we added comment, it Jess did Rand, side, of adding we need for that's but

in the same are have about to We of that type addition manufacturing.

and we so recognize And them. we do needs addressing the are

call to the over for remarks. back Q&A would Jankowski today's like turn I closing concludes Jess to session. This

in over And Thank million required our taking have Solesence you, but be commercialize we to company amazing to this the Lisa. We'll years. good or this has next coveted $XXX facilities. expect may into road, capitalize grow next the our by grow in We've we has but that be infrastructure a We built XX% Solesence -- marketable this people, our can there developed initial million long to increase few successfully really This to and investments technology to and a investment. in expect $XXX year. we're getting been company more business have spot a them. company step technologies a shoestring, demonstrated and the gotten ability some on

this already. in improvements QX seen year labor costs in of We've

results. have a XXXX that expect impact We to material on continue,

intellectual which We that the got profit this thing be last. to are The was the critical. blocking commercialize done us. operations stronger great ever intend year. we've tackling the first get we've important And to Company patents -- won't the win Fast to which had, first It next it's wasn't from over it year, on made won't pipeline and a We've on working and the we several say early a is be our this side the other than property, strides and for in years.

exciting your in you the a hoping in the White Thank Chicago and for looking said, I'm month. you day. our all on to attention opening about discuss again that this splendid of business of That Appreciate a Sox the in that your and Houston. everybody. opportunity day have you, with I And throw support to company. have

for your call. good and may the participation event. concludes today's on you you all disconnect. day, conference This Thank have Everyone, a