GRA NanoXplore Inc

NanoXplore Inc. (“NanoXplore” or “the Corporation”) (TSX: GRA and OTCQX: NNXPF), a world-leading graphene company, reported today financial results for the three and six-month period ended December 31, 2023.

All amounts in this press release are in Canadian dollars, unless otherwise stated.

HIGHLIGHTS

• Total revenues of $29,063,024 in Q2-2024 compared to $31,725,122 in Q2-2023, representing an 8% decrease due to a 6-week strike at one of our major customers;
• Gross margin on revenues from customers of 19.4% in Q2-2024 compared to 17.8% in Q2-2023 and of 19.5% for YTD 2024 compared to 14.9% for YTD 2023;
• Adjusted EBITDA* of $416,000 in Q2-2024 compared to $141,300 in Q2-2023 for the advanced materials, plastics and composite products;
• Adjusted EBITDA* of -$508,806 in Q2-2024 compared to nil in Q2-2023 for the battery cells segment (VoltaXplore initiative);
• Net adjusted EBITDA* in Q2-2024 of -$92,806 compared to $141,300 in Q2-2023 and net adjusted EBITDA* of -$541,138 for YTD 2024 compared to -$1,835,732 for YTD 2023;
• Total liquidity of $37,880,673 as at December 31, 2023, including cash and cash equivalents of $27,558,073;
• Total long-term debt of $7,072,298 as at December 31, 2023, down by $803,590 compared to June 30, 2023;
• NanoXplore maintains its annual revenue guidance of $130 million for the year ending June 30, 2024.

OVERVIEW

Pedro Azevedo, Chief Financial Officer, stated: “The lower sales in the quarter compared to last year were the result of a six-week strike at one of our major OEMs without which sales would have been higher. The strike ended at the end of November and we see a recovery in the second half of our fiscal year. Moreover, with the start of tooling deliveries related to contract awards recently announced, we remain confident with our Fiscal Year 2024 full revenues expectations. Graphene-enhanced parts volumes continue to increase, and we have lined up new OEM programs that will begin delivering financial returns in the coming quarters.”

Soroush Nazarpour, President & Chief Executive Officer, said: “I am very pleased with the performance of NanoXplore’s team as we have stayed focused and delivered a good quarter. Our execution was on point and translated into a solid performance in our second quarter where our Graphene Enhanced Composite operations continue to improve on profitability. As a testament to that, our gross margin increased by more than 150 bps compared to the second quarter of last year. Our outlook for the second half is robust, demonstrating strong demand for our graphene-enhanced products. Case in point, we recently announced more than $30M of new program wins and expansion of existing programs.”

A. REPORTING SEGMENTS RESULTS

NanoXplore reports its financials in two distinct segments: Advanced materials, plastics and composite products and Battery cells.

	Q2-2024	Q2-2023	Variation		YTD 2024	YTD 2023	Variation
	$	$	$	%	$	$	$	%
From Advanced materials, plastics and composite products
Revenues	29,058,796	31,725,122	(2,666,326)	(8%)	57,972,897	58,957,647	(984,750)	(2%)
Non-IFRS Measure *
Adjusted EBITDA	416,000	141,300	274,700	194%	586,654	(1,835,732)	2,422,386	132%
From Battery cells
Revenues	4,228	—	4,228	100%	26,158	—	26,158	100%
Non-IFRS Measure *
Adjusted EBITDA	(508,806)	—	(508,806)	(100%)	(1,127,792)	—	(1,127,792)	(100%)

B. RESULTS OF OPERATIONS VARIANCE ANALYSIS - THREE-MONTH PERIODS

Revenues

	Q2-2024	Q2-2023	Variation		Q1-2024	Variation
	$	$	$	%	$	$	%
Revenues from customers	28,559,390	31,417,369	(2,857,979)	(9%)	28,706,752	(147,362)	(1%)
Other income	503,634	307,753	195,881	64%	229,279	274,355	120%
Total revenues	29,063,024	31,725,122	(2,662,098)	(8%)	28,936,031	126,993	0%

All revenues are coming from the segment of advanced materials, plastics and composite products, except for $4,228 of other income [Q2-2023 – Nil] from the segment battery cells.

Revenues from customers remained stable, varying from $28,706,752 in Q1-2024 to $28,559,390 in Q2-2024.

Revenues from customers decreased from $31,417,369 in Q2-2023 to $28,559,390 in Q2-2024. This decrease is mainly due to lower volume representing approximately $3,000,000 resulting from a 6-week strike at one of our major customers and to lower tooling revenues.

Other income increased from $307,753 in Q2-2023 to $503,634 in Q2-2024. It amounted to $229,279 in Q1-2024. The variation is mainly due to grants received for R&D programs.

Adjusted EBITDA

1) From Advanced materials, plastics and composite products

The adjusted EBITDA improved from $141,300 in Q2-2023 to $416,000 in Q2-2024. The variation is explained as follows:

• Higher other income of $191,653 due to grants received for R&D programs; and
• Lower administrative expenses (SG&A and R&D) of $171,412 mainly due to lower headcounts.

2) From Battery cells

The adjusted EBITDA passed from nil in Q2-2023 to -$508,806 in Q2-2024. The variation is explained by the administrative expenses (G&A and R&D) of $513,034 from this new segment.

C. RESULTS OF OPERATIONS VARIANCE ANALYSIS - SIX-MONTH PERIODS

Revenues

	YTD 2024	YTD 2023	Variation
	$	$	$	%
Revenues from customers	57,266,142	58,564,536	(1,298,394)	(2%)
Other income	732,913	393,111	339,802	86%
Total revenues	57,999,055	58,957,647	(958,592)	(2%)

All revenues are coming from the segment of advanced materials, plastics and composite products, except for $26,158 of other income [YTD 2023 – Nil] from the segment battery cells.

Revenues from customers decreased from $58,564,536 in the last year period to $57,266,142 in the current period. This decrease is mainly due to lower volume representing approximately $3,000,000 resulting from a 6-week strike at one of our major customers and to lower tooling revenues.

Other income increased from $393,111 in the last year period to $732,913 in the current period. The variation is due to grants received for R&D programs.

Adjusted EBITDA

1) From Advanced materials, plastics and composite products

The adjusted EBITDA improved from -$1,835,732 in the last year period to $586,654 in the current period. The variation is explained as follows:

• Gross margin on revenues from customers increased by $2,446,730 compared to the last year period due to favourable product mix, improved productivity and cost control;
• Higher other income of $313,644 as described above; and
• Partially offset by higher administrative expenses (SG&A and R&D) of $341,988 mainly due to higher wages, including higher accrued variable compensation.

2) From Battery cells

The adjusted EBITDA passed from nil in the last year period to -$1,127,792 in the current period. The variation is explained by the administrative expenses (G&A and R&D) of $1,153,950 from this new segment.

D. OTHER

Additional information about the Corporation, including the Corporation’s Interim Management Discussion and Analysis for the three and six-month periods ended December 31, 2023 and 2022 (“MD&A”) and the Corporation’s unaudited condensed interim consolidated financial statements for the three and six-month periods ended December 31, 2023 and 2022 (the “financial statements”) can be found at www.nanoxplore.ca.

* Non-IFRS Measures

Results of operations may include certain unusual and other items which have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying Corporation results.

The financial statements and MD&A were prepared using results and financial information determined under IFRS. However, the Corporation considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the Corporation. These measures, which the Corporation believes are widely used by investors, securities analysts and other interested parties in evaluating the Corporation’s performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include "Adjusted EBITDA”.

WEBCAST

NanoXplore will hold a webcast tomorrow, February 14, 2024, at 8:30 am EDT to review its Q2-2024. Soroush Nazarpour, CEO and President of NanoXplore, and Pedro Azevedo, Chief Financial Officer, will host the event. To access the webcast please click on the link https://edge.media-server.com/mmc/p/zzuperi8 or you can access through our website in the Investors section under Events and Presentations. A replay of this event can be accessed via the above link or on our website.

ABOUT NANOXPLORE

NanoXplore is a graphene company, a manufacturer and supplier of high-volume graphene powder for use in transportation and industrial markets. Also, the Corporation provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. The Corporation is also a silicon-graphene-enhanced Li-ion battery manufacturer for the Electric Vehicle and grid storage markets. NanoXplore is headquartered in Montreal, Quebec with manufacturing facilities in Canada, the United States and Europe.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements and forward-looking information (together, “forward-looking statements”) within the meaning of applicable securities laws. All statements, other than statements of historical facts, are forward-looking statements, and subject to risks and uncertainties. All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors deemed appropriate in the circumstances. No assurance can be given that these assumptions and expectations will prove to be correct. Forward-looking statements are not facts, but only predications and can generally be identified by the use of statements that include phrases such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “foresee”, “grow”, “expect”, “plan”, “intend”, “forecast”, “future”, “guidance”, “may”, “predict”, “project”, “should”, “strategy”, “target”, “will” or similar expressions suggesting future outcomes.

Forward-looking information is not a guarantee of future performance and involves a number of risks and uncertainties. Such forward-looking information necessarily involves known and unknown risks and uncertainties, including the relevant assumptions and risks factors set out in NanoXplore’s most recent annual management discussion and analysis filed on SEDAR+ at www.sedarplus.ca, which may cause NanoXplore’s actual results to differ materially from any projections of future results expressed or implied by such forward-looking information. These risks, uncertainties and other factors include, among others, the uncertain and unpredictable condition of global economy, notably as a consequence of the Covid-19 pandemic. Any forward-looking information is made as of the date hereof and, except as required by law, NanoXplore does not undertake any obligation to update or revise any forward–looking statement as a result of new information, subsequent events or otherwise.

Forward-looking statements reflect management's current beliefs, expectations and assumptions and are based on information currently available to management. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated by such statements.

No securities regulatory authority has either approved or disapproved the contents of this press release.

For further information, please contact:

Pierre Yves TerrisseVice-President Corporate Development py.terrisse@nanoxplore.caTel: 1 438 476-1965