Nanalysis Scientific (NSCI) Q2 2024 earnings summary

Executive summary

• Achieved record consolidated Q2 2024 revenue of CAD 11.5 million, up 65% year-over-year, driven by strong benchtop NMR, security services, and a large medical imaging hardware sale.

• Positive adjusted EBITDA of CAD 414,000, a significant turnaround from a loss of CAD 2.4 million in Q2 2023, reflecting higher sales and cost reduction initiatives.

• Net loss reduced to CAD 2 million from CAD 4.1 million year-over-year, with ongoing improvements expected.

• Growth driven by both magnetic resonance products and services, with recurring revenue, operational synergies, and cost reduction initiatives.

Financial highlights

• Product sales rose 38% to CAD 5.4 million; security service revenue surged 144% to CAD 5.3 million year-over-year.

• Gross margin on product sales reached 50% for Q2 2024, up from 39% year-over-year.

• Security services gross margin improved to 10% from -36% year-over-year.

• Cash on hand was CAD 1.1 million, with an undrawn credit facility of CAD 3.2 million and working capital of CAD 5.2 million as of June 30, 2024.

• Operating cash flow was positive for the first six months of 2024.

Outlook and guidance

• Management expects the second half of 2024 to outperform the first half, with continued revenue and margin growth, and new product launches targeting the mid-range benchtop NMR market before year-end.

• Confident in maintaining positive EBITDA in Q3 and Q4, despite seasonality in academic markets.

• Ongoing focus on achieving cash flow and net income positivity, with further cost reductions planned.