NanoXplore Inc. (GRA:CA) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reveals strong financial performance, strategic fleet renewal, and new charters with Maersk, indicating positive growth prospects. The Q&A section highlights promising gross margin expansion, successful trials with a large new client, and robust market demand recovery. Despite some management vagueness, the overall sentiment is positive, supported by new partnerships and optimistic financial guidance. Given the company's market cap, this is likely to result in a positive stock price movement of 2% to 8% over the next two weeks.
Key Financial Performance
Total Revenues $27.6 million, 17% lower year-over-year. The decrease was mainly due to a reduction in volume demand from the 2 largest customers and lower tooling revenue, partially offset by new revenues from the Club Car program and higher powdered sales from the CPChem contract.
Adjusted Gross Margins 21.5%, a slight increase from 21.3% last year despite $5.6 million less in revenues. This was achieved due to higher margin contributions from powder sales and the addition of the Club Car program, partly leveraging existing overheads.
Adjusted EBITDA $224,000, a decrease of $880,000 year-over-year. This was due to a $1.1 million decrease in the Advanced Materials, Plastics and Composites Products segment, partially offset by a $260,000 improvement in the Battery Cells and Materials segment.
Cash and Cash Equivalents $30.1 million at the end of the quarter. Operating cash flows were negative $6.4 million due to an increase in working capital, payments to suppliers on tooling projects, and income tax payments.
Cash Flows from Financing Activities Positive $30.1 million, resulting from equity financing in October 2025 and equipment financing, offset by debt and lease repayments.
Cash Flows from Investing Activities Negative $3.6 million, mainly due to capital expenditure payments.
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Operating Highlights
Dry process graphene platform: Installation is on schedule with the first fully commercial module expected to be operational by early April. This will add incremental capacity between 500 to 1,000 tons annually, significantly reducing production costs and expanding the addressable market.
Tribograf and graphene solutions: Successful launch of the program with Club Car, with on-time delivery and seamless integration into manufacturing operations. New takeover contract award from Volvo Trucks expected to contribute CAD 9 million to CAD 10 million annually starting summer 2027.
CSPG project: Decision not to proceed with the $100 million investment due to geopolitical uncertainty, prolonged qualification timelines, and unstable business environment.
Graphene solutions business: Improving market conditions with stabilized demand from the two largest customers and forecasts pointing to recovery in the second half of the calendar year.
Chevron Phillips Chemical collaboration: Advancing with Tribograf shipments to early adopters and field testing NanoSlide with major oil and gas producers in Asia and Latin America.
Revenue and gross margin: Q2 revenues were $27.6 million, 17% lower than last year, but gross margins slightly improved to 21.5% due to higher-margin powder sales and the Club Car program.
CapEx spending: $3.6 million spent in Q2, with an additional $4 million to $5 million expected in Q3 for ongoing projects. Post-project completion, CapEx is expected to reduce to less than $1 million per quarter.
5-year plan adjustments: Removal of the CSPG production initiative, saving over $100 million in required investment. Focus shifted to modular growth of the dry process graphene initiative, with each module costing $1.5 million to $2 million.
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Risk or Challenges
Decision not to proceed with CSPG project: The company decided against a $100 million investment in the CSPG project due to geopolitical uncertainties, prolonged qualification timelines, and an unstable business environment, including nullified agreements.
Demand reduction from largest customers: Revenues decreased by 17% year-over-year, primarily due to reduced volume demand from the company's two largest customers.
Economic volatility: The economic environment remains volatile, impacting revenue forecasts and overall business predictability.
High upfront capital requirements: The CSPG project would have required over $100 million in investment, which was deemed too high given the associated risks.
Cash flow challenges: Operating cash flows were negative $6.4 million, driven by increased working capital needs, supplier payments, and income tax payments.
Uncertain revenue visibility for new products: The new Tribograf product and partnership with Chevron Phillips Chemical face challenges in near-term revenue visibility due to the early stage of customer engagement and testing.
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Guidance & Outlook
Dry Process Graphene Initiative: Installation is on schedule with the first fully commercial module expected to be operational by early April 2026. This new process is significantly less costly compared to the wet process and will add incremental capacity of 500 to 1,000 tons annually, expanding the addressable market.
Graphene Solutions Business: Market conditions are improving after a period of softness. Demand has stabilized, and OEM forecasts indicate a recovery in the second half of 2026, with gradual volume improvements expected mid- to late 2026.
Club Car Program: Shipments are accelerating and tracking as expected during the peak recreational season. This partnership positions the company for future expansion across Club Car's broader product portfolio.
Volvo Trucks Contract: A new takeover contract is expected to begin in summer 2027, contributing approximately CAD 9 million to CAD 10 million in annual revenue.
Chevron Phillips Chemical Collaboration: The partnership is advancing with field testing of NanoSlide by major oil and gas producers and additional testing programs in Latin America. Near-term revenue visibility is uncertain, but customer engagement and pipeline expansion align with expectations.
Capital Expenditures (CapEx): CapEx spending for Q3 2026 is expected to be $4 million to $5 million to complete the graphene-enhanced SMC initiative and the first module of the dry process graphene line. Post-completion, CapEx is expected to reduce to less than $1 million per quarter, excluding new initiatives.
Fiscal Year 2026 Revenue Guidance: Revenues for the full year are projected to be between $115 million and $120 million, with sequential quarterly revenue growth expected.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What targeted gross margin is expected with more run rate volumes and similar product mix?
A:The gross margin is expected to grow from 21.5% to 22%-23% over the next few quarters, depending on factors like Club Car volumes, Tribograf sales, and recovery in Club Car and Volvo volumes.
Q:What is the sequence from commissioning to commercial revenue for the first commercial dry process mill?
A:The mill is on track to be installed by April. Initial lab-scale quantities have validated performance, and larger volumes will be produced as the mill ramps up. Customers are in different stages of testing, with some requiring more volume for advanced testing. Early results are promising.
Q:Is the company comfortable with the capacity for CPChem given its exceeding expectations?
A:Yes, the company is comfortable with the current capacity and foresees no immediate need for additional capacity. However, future capacity expansion will depend on demand.
Q:Is there a new potential client for CPChem, and what is the scale of this customer?
A:Yes, a large services player, one of the three main players in the world, is trialing the product. This customer is much larger than the initial batch of CPChem clients and is currently moving from lab testing to field testing.
Q:How quickly can the company add incremental capacity if needed?
A:The company can add incremental capacity within 9 to 12 months, with 12 months being a conservative estimate. The dry process has ample square footage for expansion, while the wet process would require additional space.
Q:Will the Volvo contract be fulfilled out of North Carolina, and is it additive to the $40 million composites target?
A:Yes, the Volvo contract will be fulfilled out of the Statesville, North Carolina facility, and it is incremental to the $40 million composites target.
Q:What are the gating factors between installation and meaningful revenue for the dry process in fiscal '27?
A:Different customers and markets have varying timelines for testing and integration. Advanced testing is underway for some markets, while others are in initial to mid-level testing. Final testing, plant trials, and pricing discussions are required before meaningful revenue can be achieved.
Q:How should growth rates be considered without the CSPG investment?
A:The CSPG investment was deemed too risky due to geopolitical and margin concerns. Growth will now focus on the dry process, which allows for incremental capacity additions. Each mill has a capacity of 500 to 1,000 tons, and growth will depend on customer ramp-up.
Q:What is the visibility into the transportation market and customer ramp-up?
A:The transportation market is expected to gradually ramp up starting early next quarter, with volumes approaching levels seen 12-15 months ago by the end of the year.
Q:What is the expected CapEx run rate for 2027?
A:The CapEx is expected to decrease to $1 million per quarter in Q4, and this is considered a reasonable run rate for 2027.
Q:What is the incremental demand from CPChem's marketing efforts?
A:CPChem began marketing in mid-November, and initial trials have validated the product's performance. Seasonal factors like weather have impacted demand in certain regions, but there has been no negative technical feedback.
Q:What are the details of the Volvo SMC award?
A:The Volvo SMC award is a 4-5 year contract for an oil pan component used across the entire North American trucking platform. It is a takeover business with margins in line with expectations for graphene-enhanced solutions.
Q:What efforts are needed for material sourcing after the CSPG initiative was dropped?
A:No significant efforts are needed as the company's process is flexible and can adapt to various raw material sources. Agreements are in place with multiple suppliers.
Q:What geopolitical risks influenced the decision to drop the CSPG initiative?
A:Geopolitical risks include trade and tariff uncertainties, which could impact margins and competitiveness. The company deemed the CSPG initiative too risky given these factors.
Q:Will improvements in performance accelerate throughout the year?
A:Yes, improvements are expected to accelerate as PACCAR and Volvo volumes recover. Club Car and CPChem contributions will continue to grow quarter-over-quarter.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timelines or commitments for certain milestones, such as the exact growth rate of Tribograf sales, the timeline for filling the dry process mill's capacity, and the precise impact of the large services player trialing CPChem. Additionally, responses about geopolitical risks and the CSPG initiative lacked detailed explanations.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CAD
CPChem
CSPG
Car program
Club Car
Corporate Development
Foreign Language
Materials
NanoXplore result
OEM
President Corporate
SEDAR
SMC initiative
Tribograf
aspect plan
contract launch
decision
decrease
expansion
graphene
improvement
increase
initiative plan
line expectation
margin
mid
module
need investment
payment
platform
process
product
project
solution
spending
today
volume
SFL Transcript
NanoXplore Inc. (GRA:CA) Q2 2026 Earnings Call Transcript
Positive2-11
The earnings call summary reveals strong financial performance, strategic fleet renewal, and new charters with Maersk, indicating positive growth prospects. The Q&A section highlights promising gross margin expansion, successful trials with a large new client, and robust market demand recovery. Despite some management vagueness, the overall sentiment is positive, supported by new partnerships and optimistic financial guidance. Given the company's market cap, this is likely to result in a positive stock price movement of 2% to 8% over the next two weeks.
SFL Corporation Ltd. (SFL) Q4 2025 Earnings Call Transcript
Unknown2-11
The earnings call shows a mix of stable financial performance, with consistent EBITDA and a large charter backlog, but also a net loss due to nonrecurring items. The Q&A reveals optimism in certain segments, like Suezmax vessels, but lacks clarity on future dividends and Hercules rig opportunities. The dividend yield is high, but no guidance is given. The market cap suggests moderate volatility, and the absence of clear guidance or new partnerships results in a neutral sentiment.
SFL Corporation Ltd. (SFL) Q3 2025 Earnings Call Transcript
Positive11-11
The earnings call summary reveals strong financial performance with high utilization rates, reduced operating expenses, and a solid liquidity position. The $4 billion charter backlog and dividend yield indicate stability and shareholder focus. The Q&A section confirms management's proactive approach to market opportunities and risk management. New charters with Maersk and a robust buyback plan further bolster confidence. Despite minor uncertainties around the Hercules rig, the overall sentiment is positive, suggesting a stock price increase in the short term, particularly given the company's small-cap status.
SFL Corporation Ltd. (SFL) Q2 2025 Earnings Call Transcript
Unknown8-19
The earnings report shows mixed signals. Financial performance was weak with revenue and EBITDA decreases, but the charter backlog is strong, providing cash flow visibility. The dividend cut may concern investors, but it's offset by a 9% yield. The Q&A reveals uncertainties around the Hercules rig and unclear acquisition strategies, which could worry investors. However, the strong charter backlog and cash flow resilience offer positive aspects. Given the market cap, the stock is likely to experience a neutral reaction, as positive and negative factors balance each other.
SFL Report
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