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Nine Month 2007 Revenues Increase 41% Year-Over-Year
Nanophase Technologies , a technology leader in nanomaterials and advanced nanoengineered products, announced the Company's eleventh consecutive quarter of year-over-year revenue growth.
For the quarter ended September 30, 2007, revenue rose to $2.6 million compared to $2.4 million in third quarter 2006, a 5% revenue increase year-over-year. Gross margin on sales for the third quarter 2007 was 21%, decreasing on a year-over-year basis due to unfavorable product mix. Nanophase reported a third quarter 2007 net loss of $0.96 million, or $0.05 per share (fully diluted), compared with a net loss for the third quarter of 2006 of $0.92 million, or $0.05 per share (fully diluted).
For the first nine months of 2007, total revenues rose to $9.6 million compared to $6.8 million in the first nine months of 2006, an increase of $2.8 million, or 41% year-over-year. Gross margin for the first nine months of 2007 reached 29% of revenue versus 23% in the same period of 2006; in total dollars, gross margin increased 73% year-over-year. Nanophase reported a net loss for the nine months of 2007 of $2.4 million, or $0.12 per share (fully diluted), compared with a net loss for the same period of 2006 of $3.6 million, or $0.20 per share (fully diluted).
"Third quarter 2007 revenue was disappointing compared with our outlook entering the quarter due to an unexpected revenue reduction in architectural coatings," stated Joseph Cross, Nanophase's president and CEO. "Based on customer information, we believe that the architectural coatings order rate was markedly impacted by a reduction in new housing starts and reduced consumer spending in the do-it-yourself (DIY) market. Tracking available data, this view seems to coincide with recent public information from home builders, DIY retailers and some architectural coatings companies. Given the uncertainty in demand level for the DIY architectural products over the near term, we have taken a conservative approach and corresponding actions to reduce our operating costs accordingly."
Cross noted that the Company's continuous operational improvement efforts advanced during the third quarter. Nanophase successfully completed a third party audit and was recertified to ISO14001, the international environmental standard, and passed a new milestone in employee safety with over 800,000 hours worked without a lost time accident. "Over the last several years, we have continuously worked to improve reactor output in our PVS process and this last quarter hit yet another new achievement level. Since approximately 1999, we have increased PVS reactor output an aggregate of ~1900% while improving product consistency and quality under the Company's Lean Six Sigma process."
"Despite the near-term slowdown in current architectural coating products, we are optimistic about growth in our present markets and those where we have initiated penetration. Sunscreen and daily care continue to grow in 2007 over 2006 levels. The new focus on full spectrum UVA products, such as in the proposed FDA monograph and similar legislation in the EU, offer improved potential for adoption going forward. We are working on an increasing number of new opportunities in industrial and architectural coatings markets and remain positive for material long-term growth. We have also achieved substantial progress in manufacturing nanomaterials for CMP and other polishing markets this past quarter and believe that these improvements are encouraging indicators of future opportunity."
Nanophase has scheduled its quarterly conference call for October 18 at 4:00 PM CDT, 5:00 PM EDT, which will be hosted by Joseph Cross, president and CEO, and Jess Jankowski, CFO. The call may be accessed through the Company's website, http://www.nanophase.com , and clicking on the link under Investor Relations and Calendar of Events. If you are unable to attend, a replay will be available through October 25, 2007 by dialing 706-645-9291 and entering code 20976692, or by logging onto the Company's website and following the above directions.
About Nanophase Technologies
Nanophase Technologies Corporation (NANX), http://www.nanophase.com , is a leader in nanomaterials technologies and provides nanoengineered solutions for multiple industrial product applications. Using a platform of patented and proprietary integrated nanomaterial technologies, the Company creates products with unique performance attributes from two ISO 9001:2000 and ISO 14001 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. The Company owns or licenses 18 United States and 49 foreign patents and patent applications. Information about Nanophase may be found in the Company's public filings or on its website.
Based on the financial data accompanying this release, results are stated in approximate terms with earning per share fully diluted. This press release contains words such as "expects", "shall", "will", "believes" and similar expressions that are intended to identify forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements in this announcement are made based on the Company's current beliefs, known events and circumstances at the time of publication, and as such, are subject in the future to unforeseen risks and uncertainties that could cause the Company's results of operations, performance and achievements to differ materially from current expectations expressed in, or implied by, these forward-looking statements. These risk and uncertainties include the following: a decision by a customer to cancel a purchase order or supply agreement in light of the Company's dependence on a limited number of key customers; uncertain demand for, and acceptance of, the Company's nanocrystalline materials; the Company's manufacturing capacity and product mix flexibility in light of customer demand; the Company's limited marketing experience; changes in development and distribution relationships; the impact of competitive products and technologies; the Company's dependence on patents and protection of proprietary information; the resolution of litigation in which the Company may become involved; and other risks described in the Company's Form 10Q filed August 8, 2007 and other filings with the Securities and Exchange Commission. In addition, the Company's forward- looking statements could be affected by general industry and market conditions and growth rates. 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.
NANOPHASE TECHNOLOGIES CORPORATION BALANCE SHEETS (Unaudited) September 30, December 31, ASSETS 2007 2006 Current assets: Cash and cash equivalents $563,582 $132,387 Investments 16,513,125 8,434,793 Trade accounts receivable, less allowance for doubtful accounts of $13,000 and $22,000 on September 30, 2007 and December 31, 2006, respectively 1,481,018 1,459,391 Inventories, net 1,660,335 923,223 Prepaid expenses and other current assets 442,722 534,407 Total current assets 20,660,782 11,484,201 Equipment and leasehold improvements, net 7,601,479 7,608,326 Other assets, net 777,763 651,218 $29,040,024 $19,743,745 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of deferred other revenue 127,273 127,273 Current portion of capital lease obligations 42,150 32,972 Accounts payable 659,172 478,694 Accrued expenses 1,551,834 1,643,585 Total current liabilities 2,380,429 2,282,524 Long-term debt, less current maturities and unamortized debt discount 1,478,956 1,383,707 Long-term portion of capital lease obligations 42,575 50,552 Deferred other revenue, less current portion 106,061 201,515 1,627,592 1,635,774 Contingent liabilities: -- -- Stockholders' equity: Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding -- -- Common stock, $.01 par value, 30,000,000 shares authorized; 21,063,500 and 18,995,581 shares issued and outstanding on September 30, 2007 and December 31, 2006, respectively 210,635 189,956 Additional paid-in capital 89,995,439 78,380,962 Accumulated deficit (65,174,071) (62,745,471) Total stockholders' equity 25,032,003 15,825,447 $29,040,024 $19,743,745 NANOPHASE TECHNOLOGIES CORPORATION STATEMENTS OF OPERATIONS (Unaudited) Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 Revenue: Product revenue, net $2,442,890 $2,329,738 $9,252,306 $6,546,100 Other revenue 111,233 96,052 333,762 276,161 Total revenue 2,554,123 2,425,790 9,586,068 6,822,261 Operating expense: Cost of revenue 2,012,938 1,705,725 6,817,462 5,220,154 Gross Profit 541,185 720,065 2,768,606 1,602,107 Research and development expense 405,650 550,208 1,379,819 1,584,487 Selling, general and administrative expense 1,296,510 1,143,530 4,067,727 3,772,388 Loss from operations (1,160,975) (973,673) (2,678,940) (3,754,768) Interest income 232,605 90,563 421,434 248,045 Interest expense (34,968) (32,275) (102,188) (93,889) Other, net 191 (328) (68,906) 2,655 Loss before provision for income taxes (963,147) (915,713) (2,428,600) (3,597,957) Provision for income taxes -- -- -- -- Net loss $(963,147) $(915,713) $(2,428,600) $(3,597,957) Net loss per share- basic and diluted $(0.05) $(0.05) $(0.12) $(0.20) Weighted average number of common shares outstanding 20,962,150 18,380,334 19,686,578 18,128,994 NANOPHASE TECHNOLOGIES CORPORATION STATEMENTS OF OPERATIONS - EXPANDED SCHEDULE (Unaudited) Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 Revenue: Product revenue, net $2,442,890 $2,329,738 $9,252,306 $6,546,100 Other revenue 111,233 96,052 333,762 276,161 Total revenue 2,554,123 2,425,790 9,586,068 6,822,261 Operating expense: Cost of revenue detail: Depreciation 281,518 227,391 839,650 690,825 Non-Cash equity compensation 4,013 5,471 31,902 20,737 Other costs of revenue 1,727,407 1,472,863 5,945,910 4,508,592 Cost of revenue 2,012,938 1,705,725 6,817,462 5,220,154 Gross profit 541,185 720,065 2,768,606 1,602,107 Research and development expense detail: Depreciation 60,016 62,258 173,990 184,719 Non-Cash equity compensation 5,316 21,502 67,282 87,521 Other research and development expense 340,318 466,448 1,138,547 1,312,247 Research and development expense 405,650 550,208 1,379,819 1,584,487 Selling, general and administrative expense detail: Depreciation and amortization 21,145 18,467 59,971 45,822 Non-Cash equity compensation 94,104 92,282 320,027 336,643 Other selling, general and administrative expense 1,181,261 1,032,781 3,687,729 3,389,923 Selling, general and administrative expense 1,296,510 1,143,530 4,067,727 3,772,388 Loss from operations (1,160,975) (973,673) (2,678,940) (3,754,768) Interest income 232,605 90,563 421,434 248,045 Interest expense (34,968) (32,275) (102,188) (93,889) Other, net 191 (328) (68,906) 2,655 Loss before provision for income taxes (963,147) (915,713) (2,428,600) (3,597,957) Provision for income taxes -- -- -- -- Net loss $(963,147) $(915,713) $(2,428,600) $(3,597,957)
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Nanophase Technologies Corporation
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