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01/09 16:51
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings report indicates strong financial performance with significant year-over-year growth in revenue, net income, and EBITDA. The Q&A reveals a robust pipeline for large-scale machines and potential in new markets, including alternative proteins and pharmaceuticals. Despite some uncertainties, the overall outlook is optimistic with plans for expansion and profitability targets. The company's strategic focus on new markets and potential breakeven achievements suggest a positive stock price movement over the next two weeks.
Q4 Revenue $6.2 million, up 71% year-over-year. The increase was primarily due to the sale and commissioning of 6 small-scale machines, ongoing fabrication of 2 large-scale machines, and the resale of a higher-margin large-scale machine.
Fiscal Year Revenue $13.8 million, up 69% year-over-year. This was the highest fiscal year revenue generated by EnWave's licensing royalty business as a stand-alone entity.
Net Income from Continuous Operations (Q4) $928,000, up 58% year-over-year. The increase was driven by strong revenue growth and operational performance.
Adjusted EBITDA (Q4) $1.4 million, an increase of $950,000 year-over-year. The growth was primarily driven by machine sales and the production sales mix.
Base Royalties (Q4) $418,000, up 31% year-over-year. Growth was due to increased royalty partner activity and machine capacity utilization.
Base Royalties (Fiscal Year) $1.8 million, up $228,000 year-over-year. Growth was attributed to an increased number of royalty partners and higher machine capacity utilization.
Total Royalties (Year-over-Year) Flat. This was due to a royalty partner reallocating funds from exclusivity payments to capital expenditures for acquiring large-scale machines.
Gross Margin (Q4) 41%, up from 40% in Q4 2024. The increase was due to the production mix of large and small-scale machines at various stages of production.
SG&A Expenses (Q4) $1.5 million, up 17% year-over-year. The increase was primarily related to sales personnel and increased trade show attendance.
Cash and Cash Equivalents (End of Q4) $6.4 million. The company also had a net working capital surplus of $9.7 million.
New REV machines: Built 2 60-kilowatt REV machines for Milne MicroDried, resold a 120-kilowatt REV machine to BranchOut Foods, and commissioned 6 10-kilowatt machines.
New licenses: Signed a new royalty-bearing commercial license with Solve Solutions of Brazil, which also purchased a 10-kilowatt machine for initial production.
Product expansion: BranchOut Foods will install a 120-kilowatt machine in Peru, bringing their total to 4 large-scale REV units and 1 10-kilowatt unit for 2026.
Geographic expansion: Solve Solutions of Brazil plans to grow manufacturing capacity for fruit, vegetable, and dairy products, with a focus on Brazil.
New market entry: Signed licenses with a U.S. snack company (production in Mexico) and Shinyway of New Zealand (cannabis drying).
Revenue growth: Q4 revenue of $6.2 million, up 71% year-over-year. Fiscal year revenue of $13.8 million, up 69% year-over-year.
Royalty growth: Base royalties reached $418,000 in Q4, the highest ever, and $1.8 million for the fiscal year, up 14% year-over-year.
Gross margin: Improved to 41% in Q4 2025 from 40% in Q4 2024.
Strategic investments: Invested $3 million from a private placement to build 2 large-scale machines and 2 additional 10-kilowatt units for inventory.
Sales strategy: Increased trade show attendance and sales personnel to drive machine sales and royalty growth.
Exclusivity Royalty Payments: A royalty partner decided not to pay an annual exclusivity royalty to maintain rights to produce certain tropical fruit products in a Central American country. This decision could impact total royalty revenues.
Cannabis Market Challenges: A 120-kilowatt machine was repurchased from a U.S. cannabis company, indicating potential challenges in the cannabis market that could affect future sales or royalties.
Dependence on Existing Partners: All four large-scale REV sales in fiscal 2025 were repeat orders from existing royalty partners. Heavy reliance on existing partners could pose a risk if these partners face financial or operational difficulties.
Economic and Market Uncertainty: The company acknowledges risks, uncertainties, and assumptions in its forward-looking statements, which could impact future performance.
Supply Chain and Production Risks: The manufacturing and fabrication process for large-scale machines takes approximately six months, which could delay order fulfillment and impact revenue if supply chain disruptions occur.
Geographic Concentration Risk: A partner redeployed capital to a different strategic area, which may indicate potential risks associated with geographic concentration or market shifts.
Increased SG&A Expenses: SG&A expenses, including R&D, increased by 17% year-over-year, primarily due to sales personnel and trade show attendance. This could pressure margins if revenue growth does not keep pace.
Royalty Growth: Base royalties are expected to grow due to increased capacity utilization by royalty partners and the commissioning of new large-scale machines in fiscal 2026. Four large-scale machines sold in fiscal 2025 are expected to begin commercial production and generate royalties in fiscal 2026.
Machine Sales: The company anticipates superior machine sale performance in fiscal 2026, with at least half of potential orders expected to come from existing royalty partners. Two large-scale machines and two additional 10-kilowatt units are being built to meet prospective demand.
BranchOut Foods: BranchOut Foods is expected to grow its production needs in 2026, with a bullish outlook for sales growth and subsequent royalty payments to EnWave.
Solve Solutions of Brazil: Solve Solutions plans to grow manufacturing capacity through 2026 for fruit, vegetable, and dairy product production. To maintain product exclusivity in Brazil, they are required to purchase a large-scale REV machine by March 31, 2026.
U.S. Snack Company: A U.S. snack company is expected to acquire additional REV units in fiscal 2026 to expand production.
Sales and Marketing: The company plans to attend three additional trade shows in Q2 2026 to enhance sales and marketing efforts.
Inventory and Order Fulfillment: The company is manufacturing two large-scale machines and two additional 10-kilowatt units to ensure faster order fulfillment and support prospective future machine sales.
The selected topic was not discussed during the call.
The earnings report indicates strong financial performance with significant year-over-year growth in revenue, net income, and EBITDA. The Q&A reveals a robust pipeline for large-scale machines and potential in new markets, including alternative proteins and pharmaceuticals. Despite some uncertainties, the overall outlook is optimistic with plans for expansion and profitability targets. The company's strategic focus on new markets and potential breakeven achievements suggest a positive stock price movement over the next two weeks.
The earnings call reveals mixed signals: while there are declines in U.S. revenue and subscriber base, there are positive aspects such as growth in Canadian revenue and free cash flow. The Q&A highlights potential EBITDA pressures but also opportunities for growth. The lack of specific guidance and transparency in some areas may cause investor hesitation, balancing out the optimism from Canadian growth and strategic initiatives. Overall, the sentiment is neutral due to these offsetting factors.
The earnings call summary and Q&A reveal a generally positive outlook. The company anticipates growth in its HIP segment and cost reductions, while the epoxy business is expected to return to profitability. Despite a $727 million impairment, management remains confident in long-term asset value. Nonrecurring expenses and improved reliability suggest better future performance. The lack of a market cap limits the prediction's precision, but the overall sentiment leans towards a positive stock price movement.
The earnings call summary presents mixed signals: while there are cost reductions and operational improvements, guidance is lowered, and sales pressures persist. The Q&A reveals ongoing pricing pressures and unclear management responses, particularly in guidance and financial impacts. These factors suggest a balanced outlook, neither strongly positive nor negative.
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