Nanophase Technologies (NANX) 24 Apr 242024 Q1 Earnings call transcript

Thank you for standing by, and welcome to today's program entitled Nanophase's First Quarter 2024 Financial Conference Call. [Operator Instructions] The words believes, expects, anticipates, plans, forecasts and similar expressions are intended to identify forward-looking statements. Statements contained in this news release that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements reflect the company's current beliefs and a number of important factors that could cause actual results for future periods to differ materially from those expressed in this news release.

These important factors include, without limitation, a decision of the customer to cancel a purchase order or supply 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, terrace activities and armed conflict and other risks indicated in the company's filings with the Securities and Exchange Commission. to or revise uncertainties. -- obligation to forward-looking no new reflect new undertakes update these or statements Nanophase events and/or

now the President hand like to I'd Jankowski, Jess call and over CEO. to

thank and looking play Good performance morning success to results, ensuring outlook online of live. following Thank you, a discussing the in balance you fact. first our to those We're Jonathan. to the our will huge to for those role KPIs all XXXX. our listening which And forward after XXXX up quarter of

on Kevin call Operating Cureton, our Officer, Chief is joining me the today.

for We to success reviewing to be available nature, focus the to covering position well things some news not bright believe the for XXXX continue first future, had comments our which a We'll We certainly we months we we've as which expect done afterwards. operational have and on during results. to ourselves our prepared while one, some lots lucrative of going will contribute XXXX, be forward. Q&A and of X in this as QX to

We growing QX, projects our additional supporting been have to volume. critical profitable which which steady working from closed modest growth, expanded and some requirements None had capital a and both us needed us to in to equity wanted to X capital financings for in support of keep Solesence were XXXX. walk away pressure

the primarily with enhancing growth add but we business through to to improved while margins focusing we're Now per it. to continue capture and gross coming this profitability our on good unit want also throughput able automation. keeps We're via year reducing cost

in they as instrumental all market as in demand believe and Solesence Solesence work growth more be to market, been leads the a opportunities to in has business. lines. natural, brands to results energizing new cosmetics minerals-based for these within don't success as existing we newly prestige product relatively we sales protection. defined left customers Other Given new offering with also Success satisfy the for customers creating behind and nature of want grow launch this skin business,

just weeks settlement of with successful milestone our ago, X was key Another achieved BASF. litigation the

teams of increasing As business. with process focus entire have full available increase businesses bandwidth management Solesence we're The to focus the a respective relationship through commercial to added we'll its to positive looking to our I maintained added and to and running us progress will BASF business API our that Solesence able our apply mentioned, and management forward our being bandwidth, with our value. and Nanophase our allow enterprise the strengthening accelerate be in and our

million identified $X.X had numbers. same We period Now in walk on Unless good a in be XX% revenue in stated gross generating over to compared otherwise, XXXX. gross total through let's a XX% margin approximate results numbers will the QX, in margin terms. all the

also a We in net QX swing. in more $X in million $X.X compared net million year XXXX, of loss this a profit to QX of generated than million almost $X

a continuation yet the more of and the for in need factors were We'll production better history a of improved accurate belts this mix quarters our more efficiencies. favorable as understand contributing driven develop allow few future QX we've by Our gains to margins all under product to enough we've to largely seen a to predictions.

litigation. expenses in the related XX% while almost or to decrease $XXX,XXX. year-over-year about recently plan. XXXX R&D down a for reduction SG&A range XX% XX% of gross were Generally, follows $XXX,XXX About in SG&A expenses or down were XX% the the to X/X legal our margin fees settled

increased expect to continue capacity savings, in we're in also of that time, through results manufacturing the which expect we implementing reorganization these Last XXXX changes and QX some XXXX. Our XXXX. we we to contributed to deliver addressed improved

total a them minutes, commissioning. investments. we XX They is $X in be will require address for themselves projects. KPI some enhanced a which our to broke operating approximately pay from XX few within into will to and by to months We these of these expect implement, going In out of Kevin to performance, million capital three

as First, testing significantly. out times testing make lab. our we're batch required quicker on This us as costs own testing will building microbial allow turnaround we every of outside well reducing

over We a year have at current and in off expect paid save volumes approximately project year. $XXX,XXX per to this just

less. support processing to this Second, greater or lines throughput helping facility. per in least we're increasing savings to in us demand and help at in us X will for to customer in itself satisfaction. our wet This dollar $XXX,XXX addition higher while will pay Bolingbrook transitioning year unit, to Critically, our months result savings per increase

Lastly, automation time than it less further allowing and expanding adding assembly we're to date. operation in our be and Bolingbrook, filling volumes increased for produced in more to takes

existing support footprint. million we've within than represent This terms the in we our place. to It finished We cash profits. completed opportunities greater to solid, this savings. able growth for are which expect will business more in $XXX Solesence in about should a create also double once in of about sales and itself enhanced to base project more stable put year, be will what this Combined, current size X for projects hard years of these pay products from with our

Solesence XX% $X demand or products The over here. is sales. our or million of $X QX XXXX sales QX of million up 'XX made XX% versus

Chief thoughts Kevin Cureton, and through his to to progress our Officer, Now KPIs the I'll invite Kevin? taking share our approach we're on Operating XXXX.

Thanks, Jess.

ones. to trust of loved the a our lot And to teammates demonstrate who this journey. what at begin the to to and thank continue next do and without support we leadership as As best we what not would are do. industry like of teammates be in day our we would I also we as ask our usual, every our we our families energy take do of team, who the able on I'd investors our we that indeed like steps thanking by

introduced inventory on-time and will we to indicators These info guidance that we or this year OTIF. key provide throughput three KPIs month, on availability, throughout performance performance. our reference Last are

we noted financial are us never-ending the to we our As help a need to to and these to how sight move path analysis, month, actions clear when we give continue line KPIs company to our the take combined performing assessment of excellence. with operational on on our last

we refer a as result, As to operating KPIs. these

has increasing overall how enterprise KPIs. growth addition how operating are KPIs, goals on KPIs value. are indicators toward are our company therefore, our important In also our growth relative we performing to trending and to These we

to providing at year during these and for to strong currently, in talk is conference this call. detail greater in say the about point indicators While growth, QX much will except introduce we premature them our it discuss

reviewing on KPIs. So our operating let's get started

we begin the on will as when last timing which I on we hand with both those of We materials materials. described a being availability, of and month the have inventory receive measurement amount

able over During QX, to finish QX we XX%. availability bring in inventory work the that were to to we our started had late

us team means would that half been materials commend on the I team reach issues teams all bring as that inventory forward our to at alternative well together possible. effort on R&D growth includes, we milestone second availability performance virtually as development Further to on tight from performance around XXXX. the out-of-stock of improvements programs, above other further on where is of effectively for are the working brought have spots addressed to volume or for have additional through to our to small world current primary already which we augment due this ability like producers their This past collaborative continue sources and our alternative these also solid this to good bringing and this risk several purchase qualify in performance. To level, amongst identify suppliers to some impactful reliance yielded materials. getting and Through in us minimize the key our but news month, sourcing. sustained This the to elements, and point. our work materials our still key availability has and purchasing is position, drag our in during that price maintaining working milestone. both tirelessly These we this single-source over hard and the it's suppliers have qualified materials XX% confident team our vendor management going implementing raw in

still made and miles have progress have ahead to in confident move many performance pleased with we of we that professional While the us, is us best-in-class management in we to the are continue this area. toward executed being

dollars the perform this our as shipments sell. by KPI Last Our we to how to assets yield company throughput week. of is measuring goods of finished goods output the we exactly measured next produce that. I units leveraging measure we the a The is More our relative every KPI and simply, month, from as described throughput. of

availability the QX we the March to are our in availability increased which so finished improved, production was as our throughput of by around -- requirements this while be the target improve throughput, investments we us than throughput in the XX% us An will XXX% these our the We performance, alone in of in in production due and throughput are goods of of a quarter, It on packaging additional XX% total are little our higher on yielding produce. to level, throughput of fully consider QX QX. improvement achieve QX. that QX, at which During to address end inventory in bottlenecks during benefits in represented of indicator from than for further or of At excuse lagging measures the average greater rectifying context March, XXX% guidance a have of of for March. each we requirements, target increased still and specifically, of issues XX% provide bulk bulk for some XX%. To can to month these meeting the quarter. that some issues. More inventory revenue production January in realizing during seen progress of work strength secondary for area over me, plan XX% the enabled more important it throughput improvement hard upstream improvement the strong and

on towards there brand partners. also percentage Finally, our lagged OTIF OTIF, will referring folks were OTIF target. O-T-I-F for we're we turning standard, to dates or online with full, to less Relative our XX% our define with manufacturing lagged. that of OTIF we the no in upon of our be than orders time surprise we've as the again throughput agreed Remember shipped the that consistent attention when

company that are will very as be into and XX% QX, we on our of us, might OTIF large throughput -- remains a improve performance. end add. the goal But improving we to stretch target by we objective through Our confident with QX, I the significantly goal greater for execute goal than this

company continued our the and footing. have fully able regained call, few Finally, few to months, the as change the hard, is massive last we development company noted to over focus of past our foundational It's our years. and alone Through to let have journey the handle the we and in measures the on teammates, teams our better. past solidly we our made

continue these them raise into ahead you, Our challenge growth. Back profitable expectations the to remains time to same performance so the over to our significant our opportunities Jess. turn embrace coming and months, at raise to we

Kevin. Thanks,

As of progress on to strategic we've this launched believe and that. a to years intend in see, we you some can all we charted position course the put capitalize Solesence. ago ourselves we win, along We when reflects

to week, million and shipped sales more our this Demand through than has follow. have not $XX We more and in we been expect confirmed issue. orders

products supply been past Our demand to few over our biggest Solesence limiting the for factor has our struggle that years.

expect this last overcome hurdle year. We that to

questions comments we'd hear any your Now or on our to take like results.

our you or those have call please listen of the session? review or I'll any webcast offer the feedback. a to begin your would to questions comments. Jonathan, we the ask While of call, most you live investors that to on after closing share Afterwards, live invite the participating to few happy transcript know we're you today's Q&A may

Ron comes for of Richards, investor. [Operator Instructions]. first question today the line from And individual our

of what were Jess, can a not but general sure terms this I'm the quarter. the bad settlement answer with BASF. you not such question,

be product said high will stopped. keep that -- to make a we've forward the cleaned not of well we've products between clear of won't a are as our and agreed to and Solesence in by new we and contract, continue available for Ron. as we we more we sort as that that we specific we -- up that ahead we that pipeline kind be work of been and business on that any a move had the that will our level, agreed agreements would them, to a little there's that we with. supply violation sure us as and will continue to work go mandated a at develop Well, We've that,

a broad going the the kind we're have to grand say and able things It I'm and codified switch concerns to And in of doing, move those things my of both on I some a settlement other know same in we the So to some we successful And were Kevin of each certainly be scheme, business we this -- about sense, things. at think glad attention, I forward. was of other's for that can focus more the been point. us.

Were agreement there the any payments? -- monetary aspects of

you you -- beyond and just mean, the there we of were No, the on get But a like sense can sense you a go it. things. it yes, if now, missing were no there [indiscernible] a experience if we And inducements. filed through you get nothing monetary I documents filed can agreement you No. was the of felt those of

Instructions]. from the Investor. question [Operator next Individual our line And Tony comes of Ruben,

been this, execute to able but on great the a time that Congratulations. say to Good hear I've to quarter. you're a waiting promises. long

very it's exciting. So

was follow-up your try did But previous But which it's resolve usual. it wonder just to summary, to first documents, get like mind that you to from negative handle. business to I there's sounds sounds leads I nothing So to your caller, just more confirm a litigation as it read that me root correct. in my It the like canal wanted to Nanophase, could as place. this was the why but than and frankly honestly,

to gross a comments targeting I QX for XX% tremendous are XXXX. And to that Secondly, backlog. think opening for QX, litigation mentioned And mention your just how margins you in could as you much improvement. we so that. was year in $XX confirm in XXXX, the wanted saving. full obviously I see did a XX% million Then

that everything. primarily that is is Solesence? So Or

So those work. a hard I you're your this probably of again, But with to are negativity you to lot from there I'm there's results, a congratulation. know it's go really, some tickled great just audience, again, that very through of able of really congratulations. that I execute to had and my but know questions. lot was see

Thank you, Tony.

XXXX. XXXX the quarter in at around $X.X it entire need quarter total, about was year, Regarding million, biggest -- minutes quarter I but I'm not sure I if started the first that those know quarter as the filed the BASF, with number doesn't $XXX,XXX 'XX. the get to about include for that the of experience of started, the would fees later. numbers together. we legal And I last of X and in of you suit we -- was were was litigation. imagine, of first The August last And think

numbers So of putting But the I'll the together. rest essentially, is is together. mean, in sitting get that here the information for we're million the I Actually, our controller range year. and $X

would while okay, total specific was and terms X.X that business XXXX was our of yes. One say $X.X key million he's -- XXXX was million. So in for criticism, doing as that, usual, for for $X.X I

billion period, that it, $X.X the sure $XXX,XXX about, of in And last next that calling piece in time of call out, the the as improvement. get that that X So make out XXXX. quarters we for pulling I'm I'll I'll as talk so

But old, making should push time the we part bringing have made is to one long but which only happened -- in same sure to and all think that that XXXX I that just will things direction. et do BASF that some deliver XXXX, the including of ago. old guarantees with anyway something that had thing a things we same with on our of which it's in a stuff the that will it's do supply this to a whether that is, And of in of relative whole to transparent COVID as want inventory we other as and what not do the thing, business, is, wanted their each part on chain. better, things, we would we were to that were have be cetera, we those terms our I need of and lot response more what parts unable In would quickly say done also as head

thing. Developing anymore and one But piece. growing, We've on I new from don't see business that was interested think the And from that think takes is we always helped I has products. going want codifying of that for is where the I helping is don't nonprestige hit yes, been APIs The we So there. build that them XXXX. we comment And in strong probably I for to internally. further don't perspective API of change in the that the the business. were off. noncosmetic, lot for think sunscreen, where anything business, a demand lately. The to is hope do which business business our the business going them been

market probably minerals that's But in. still everybody are angst be that to in total So wants and area the of to over the the all is contributed growing it. still

huge So to But that small big hold I that or of who for essentially, anybody absorption instance, in you we through. understand overhead coming hit it, the there. level inventory built a you take accounting if for build, that bore sell doesn't don't inventory being see cost company is your really reason a consistently when I'll you from there And QX. the fair not way. a out you amount perspective, on back that we're margins notice, as question can with things margins. Part also impact of still let that the and the about solid. And that -- wanted out I the if in regarding a

going relative the to we getting to we out also and they year, is And a targeted. we've the to have XX% of those to -- I feeling financial had customers. demand. things be growing -- to range some be door think issues in But of so business that the challenge, results, can. when biggest their We with the has think, the I customers, us a fluid, have challenges. able I I been think, we'll through have we've that barring kind quickly terms get nature growing new but XX% number there of is getting just addressed think And lumpy of it's quickly what relative we share

holdups that their in we One them do, challenges not contribution that the that of we new that packaging And that customers XXXX the of on in and companies have turnkey, discussed existing all challenges, that there we in our the there may that's own to had is because meaning than the components, 'XX as are this customer in market relatively 'XX probably to a cases, lot call more here what for labels that you've be and supply and is got been well. some we particular. business

minimum has discuss our to and to weekly guess, or -- it But where which we So and to backlog I'll $XX.X it. over that's hit the question expect steady that in range grows stays every million the something that's at. volume that's had that. With do the have. been million wish every $XX that flat Kevin we volume can't of My that, that's I but we the week your grows quarter, adds always lumpiness on every to hand my and to all on week, always greatest revenue the is whether that disclaimer

to and And try put in perspective. comments. your it just for Tony, Thanks,

is a the plus plus what what that we've to sold So be is of mentioned, the $XX number Jeff sold. million still mix

we would what can and and math you shift up with. pretty the come open do The call quickly backlog, orders. So it's

term in, -- -- those backlog industry. since the million in hey, one that looking the it is as quarter. That the that roughly this -- were to entered of in and make majority common clear isn't was didn't we QX we are ship of QX, But or about some have of thing as folks are we when that we sure talk that QX that therefore, it's end million, means that it $XX plus the waiting. into number it's these $XX but QX number. orders used last at everything? orders a Solesence quarter open As we've on first backlog, orders that's for as for there then all into already your part the The of is great question, is QX significant is everything. and and actually hand. are orders It There is that And

Solesence roughly now of is XX% in terms revenues. of the company

for be So XX% more may expect correctly the we is what year.

represent -- Solesence, mostly it's the of does it so So business. but all

I'd [Operator remarks. Jess Jankowski does Instructions]. the like hand to this session. back conclude for to question-and-answer And now program any the further

We for look all falling Jonathan. people we has today. you, building a appreciate of to to will we good minutes and a enjoy engagement. joining are We'll make everyone all all our we expect this hope take the expect us everybody. Thanks Thank expecting shared. and the call. pieces day we've to Thank will really forward We profitable solid lot next but healthier good expectations news We're us. be the call. have are to we're and you, few can on I meantime, We're your high. that In and positioned our deliver, a in do a place year. of outlast us something happier and for

This and today's conference. ladies gentlemen, conclude in you, for participation your program. does Thank the

You day. may now Good disconnect.