EnWave (ENW) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered stronger performance than previous quarters, with record base royalties, improved profitability, and revenue rising to CAD 2.6 million, up 5% year-over-year, driven by high-margin machine sales and increased royalties.

• Adjusted EBITDA was positive at CAD 85,000 for only the second time in eight quarters, compared to a loss of CAD 192,000 in Q3 2023, reflecting operational improvements.

• Net loss from continuing operations narrowed to CAD 235,000 in Q3 2024 from CAD 918,000 in Q3 2023; net loss from discontinued operations also improved.

• Multiple new large-scale REV machine orders and commercial licenses were secured, supporting future growth.

• Royalty revenues increased to CAD 425,000, up 8% year-over-year, reflecting higher sales and production from royalty partners.

Financial highlights

• Q3 2024 revenue was CAD 2.6 million, up CAD 136,000 or 5% year-over-year, driven by high-margin equipment sales and royalty growth.

• Gross margin rebounded to 44% from 29% in Q3 2023, attributed to high-margin machine resale and increased royalties.

• Adjusted EBITDA was CAD 85,000 in Q3 2024, compared to a loss of CAD 192,000 in Q3 2023.

• Cash and cash equivalents stood at CAD 3.6 million, with a net working capital surplus of CAD 6.5 million and no debt.

• SG&A (including R&D) for Q3 2024 was CAD 1.36 million, up CAD 178,000 year-over-year due to higher personnel, legal, and sales costs.

Outlook and guidance

• Q4 is expected to be another solid quarter, with strong volume forecasts from major royalty partners.

• Total royalties for fiscal 2024 are projected at approximately CAD 2 million, a 37% increase over fiscal 2023.

• Multiple new large-scale REV machine sales are anticipated in the next twelve months.

• Management highlights volatility in large-scale machine orders as a key factor affecting revenue trends.

• Ongoing focus on signing royalty-bearing commercial licenses and expanding the partner base.