Company Achieves Record Quarterly Revenue of $12.3MM and Adjusted EBITDA of $1.8MM

Reports Record Annual Revenue of $45MM and Adjusted EBITDA of $2.8MM

CALGARY, AB , April 24, 2025 /CNW/ - Nanalysis Scientific Corp. ("the Company", TSXV: NSCI, OTCQX: NSCIF, FRA: 1N1), a leader in portable NMR spectrometers and MRI technology for industrial and research applications announces fourth quarter and full year results for the period ending on December 31, 2024, achieving 25% year-over-year revenue growth to $12.3 million in the fourth quarter of 2024 and 60% revenue growth over the prior year to $45 million for the full year ended December 31, 2024. Chief Executive Officer Sean Krakiwsky and Chief Financial Officer Randall McRae will host a conference call at 5 P.M. Eastern Time today to discuss the results. A second call will be held for European investors at 8:30 A.M. Eastern Time tomorrow, Friday, April 25th. All interested parties are invited to join these calls.  All dollar figures in this press release are in thousands of Canadian dollars, except per share amounts or unless otherwise stated.    

"We are very proud of our results for both the fourth quarter and the full year," said Sean Krakiwsky, Founder and CEO of Nanalysis.  "Our revenue growth is attributed to expansion in both of our core business segments, product sales and security services.  This is the culmination of the work and focus we have put into our sales organization that brings our best-in-class Benchtop NMR products to market, with higher average selling prices, and bolstered by ongoing innovation.  Additionally, our team has been able to concentrate on operational excellence in building a world class service organisation with coverage from coast to coast.  In doing so, we have been able to drive efficiencies in both our manufacturing processes and service delivery which resulted in improved gross margins and positive Adjusted EBITDA.  We plan to continue on this path to profitable growth, as a fully vertically integrated scientific instrumentation and service company."

Financial highlights for the three months ended December 31, 2024:

• For the three months ended December 31, 2024, the Company reported consolidated revenue of $12,289, an increase of $2,489 or 25% from the comparative period in 2023. 
• Gross margin percentage for the three-month period ended December 31, 2024, on product sales was 60%, versus 48% for the three-month period ended December 31, 2023. Improvement in gross margin percentage for Benchtop NMR is materializing, as average selling prices have improved and the manufacturing cost reductions started in 2023 and continued in 2024 have taken effect. Also, as previously communicated, low margin third party equipment sales, such as for Mediso Ltd. in Europe, are less important to our business.
• Security service gross margin percentage in the quarter was 16% versus (27)% in prior year comparative period as the Company completed the full transition of 100% of airports serviced to its control from the incumbent provider in the first quarter of 2024.  The Company will work to increase revenue and drive efficiency within this business through 2025.
• Adjusted EBITDA is used by the Company as an approximation for operating cash flows available for reinvestment in the Company and to service financing obligations.  Adjusted EBITDA for the three months ended December 31, 2024, was $1,835 versus an Adjusted EBITDA (loss) of ($677) in the same period last year.  This improvement was driven primarily by full transition of airports to the Company's control resulting in increased security services revenue, the effect of cost reduction initiatives and manufacturing efficiencies, and higher margin dollars in product sales over the prior year because of higher average selling prices and lower cost of product sold.  This was offset partially by a slight decrease in third-party equipment sales. 
• Normalized net loss for the three months ended December 31 2024 was $400 as compared to the three-month loss for December 31, 2023, of $2,123.  Normalized net losses exclude non-cash write downs of carrying values of specific assets. These impairment charges of $7,052 which were recognized in Q4 of 2024 relate to Quad Systems AG ("Quad") (investment, loan, and a contract receivable), and to customer relationship assets acquired in the 2022 K'Prime acquisition. Because the Quad investment and K'Prime customer relationships have been fully written off, the Company's statement of financial position has been simplified and any future related valuation adjustments are expected to be much less.

Financial highlights for the twelve months ended December 31, 2024:

• The Company reported consolidated revenue of $45,495, an increase of $17,029 or 60% from the comparative period in 2023. This includes $19,396 in product sales, $21,010 of security services revenue, and $5,089 of flow-through inventory revenue.
• Gross margin percentage on product sales was 53% for the twelve months ended December 31, 2024, up from 41% in the prior year. Benchtop NMR margin improvement was driven by the reduction of the manufacturing labour force in 2023 and 2024, as well as efficiencies in processes.  The Company continues to analyze a variety of methods to manage parts costs and opportunities for increased manufacturing efficiency, including greater harmonization between the Company's R&D and manufacturing labour force.
• Gross margin percentage on service revenue was 12% for the twelve months ended December 31, 2024, compared to (29%) in 2023. This margin improvement was a direct result of an increase in revenue, as the Company took over services in all airports in 2024, as opposed to 2023 in which the Company was still ramping up services. 
• Adjusted EBITDA for the twelve months ended December 31, 2024, was $2,831 versus an Adjusted EBITDA loss of ($7,913) for the same period last year.
• The Company had cash on hand of $1,376, an undrawn available credit facility of $2.0 million and working capital of $3.9 million as of December 31, 2024.
• The Company's work towards sequential quarterly improvements in Adjusted EBITDA has allowed it to pay down $2.5 million of principal on its term bank loan as scheduled throughout the year.

Quarterly Trend:

• The Company has demonstrated continuous growth in Security services revenue quarter over quarter. Into 2025, the Company looks to continue to deliver revenue growth in this segment. Moreover, a key focus will be to drive efficiencies in its service delivery, thereby improving gross margins.
• The Company has reported positive Adjusted EBITDA since the second quarter of 2024 and expects this to continue through 2025. As the Company looks to drive improved gross margins in its Security Services segment, it expects Adjusted EBITDA to continue to improve.
• Normalized net losses, which exclude one-time non-cash impairment charges related to Quad as well as the impairment of acquired customer relationship assets from the K'Prime acquisition, continues to improve in line with the improvements seen in the Company's overall operations.

Recent strategic and operational highlights during and after the fourth quarter of 2024 include:

• Record Quarterly and Annual Revenue: The Company recorded fourth quarter revenue of $12.3 million and $45 million for the full year.
• Record Positive Adjusted EBITDA: For the fourth quarter the Company reported $1.8 million and $2.8 million for the year
• Positive Operating Cash Flow: The Company has generated positive operating cash flow of $1.1 million for the fourth quarter of 2024, and $3.3 million for the year, as compared to negative operating cash flow of $(2.6) million in Q4 2023 and ($11.2) million for the year ended December 31, 2023. This represents an improvement of $14.5 million year over year.
• Margin Expansion in both business segments: The Company was able to reap the benefits of cost cutting and drive efficiencies to grow gross margins, for the twelve-month period, to 53% in product sales and 12% in security services from 41% and (29%), respectively, in the prior year.
• Consistent Revenue in Airport Security Maintenance Business: The mix between scheduled maintenance, unscheduled maintenance and project work will shift quarterly but should provide a consistent balance of billing. The Company is focused on improving its efficiency and planning related to service delivery in order to increase margins in 2025.
• Next generation technology: The Company launched its new 60 MHz Benchtop NMR product, along with advancements in automation software for the pharma and chemical industries. We are very proud of our next generation technology platform, which will yield increased performance, better applications, and new products over the next year.
• Co-marketing with United States Pharmacopeia associated with quantification of active pharmaceutical ingredients using Benchtop NMR.
• Advancements in illicit drug analyzer technology: Benchtop NMR applications that are vertical market specific, such as the illicit drug analyzer technology announced in conjunction with a $1.5 million NRC-IRAP grant in April 2024, will contribute to future growth in product sales. These are the types of initiatives which will take Benchtop NMR beyond R&D labs into QA/QC, manufacturing, and into the field in industries such law enforcement.
• Medical Imaging: The Company continues to leverage its magnetic resonance technology for use in next generation medical imaging applications, with partners that have expertise in FDA approved MRI products and the associated regulatory environment.

Outlook

"Since we went public in 2019 we've quintupled revenue and the company is Adjusted EBITDA and operating cash-flow positive. We've spent the last two years executing a strategy combining growth with generating positive operating cash-flow," continued Mr. Krakiwsky.   

"Like all exporters with global supply chains, we are not immune from global sentiment and have encountered some feelings of uncertainty with some of our U.S. customers regarding tariffs. In response we have taken certain specific measures to mitigate risks associated with tariffs and export controls on key products. Thus far, our mitigation efforts have succeeded, but we do expect some downward pressure on product sales for the first half of 2025.  That being said, our sales funnel is robust and we will remain vigilant on these matters as the landscape evolves.  It should be noted that regarding U.S. tariffs in particular, our products are USMCA compliant and are not currently subject to tariffs. It should also be noted that our service business is currently 99% domestic and not subject to tariffs or export controls."

"For the last three quarters, we've achieved positive Adjusted EBITDA, generating $1.8 million in Q4 2024. Our strategy is to generate increased positive free cash-flow and increase Adjusted EBIDTA margins to reach positive after-tax Net Income, and keeping blue-sky opportunities associated with MRI and high-field NMR intact. We will accomplish that by executing the following:

• Growing Benchtop NMR sales through ongoing technology innovation including software applications, direct sales expansion, and evolution and training of our growing dealer ecosystem.
• Keeping downward pressure on costs as we continue to distill out inefficiencies brought on by past acquisitions, without disrupting important assets.
• Expanding gross margins in our service business.
• Continue to incubate our medical imaging group, as we stay active with partners and gain scientific credibility with our technology for future human applications.
• Sell hardware and software to our strategic partner/customer Quad Systems AG for the high-field NMR opportunity.

We continue to pursue operational excellence and, while we have continuously improved over the last two years, we are just getting started. We are enthusiastic about the market potential for our core Benchtop NMR products which we are focused on, and we are confident that our investments in medical imaging and high-field NMR constitute blue-sky opportunities for us in the future.  Our service business has achieved consistent revenues and we are exploring new service opportunities to leverage the platform.  As we improve and optimize this business, the margin improvement will go directly to the bottom line."

"I am enthusiastic about the next five years of profitable growth, with a focus on creating value for shareholders," concluded Mr. Krakiwsky. 

Director Resignation

The Company announces that René Lenggenhager has resigned from the Board of Directors. The Company thanks him for his service and wishes him well.

Conference Call:

Investors interested in participating in the live full year call can dial 1-800-510-2154 or 437-900-0527-1350 from abroad. Investors can also access the call online through a listen-only webcast here https://app.webinar.net/LkYbxKE2Qe6 on the investor relations section of the Company's website HERE.

The webcast will be archived on the Company's investor relations webpage for at least 90 days and a telephonic playback will be available for seven days after the conference call by calling 1-888-660-6345 or 289-819-1450, conference ID #  87924.

Additionally, the Company will be hosting a Q&A session for its European investors at 8:30am ET tomorrow, Friday, April 25th, which can be accessed by the following link:  Join the meeting now.

Non-IFRS and Supplementary Financial Measures

The Company prepares and reports its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, ‎as adopted ‎by the Canadian Accounting Standards Board ("IFRS"). However, this press release may make reference to certain non-IFRS measures including key ‎performance indicators used by management. These measures are not recognized measures under IFRS ‎and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable ‎to similar measures presented by other companies. Rather, these measures are provided as additional ‎information to complement those IFRS measures by providing further understanding of the Company's results of ‎operations from management's perspective. Accordingly, these measures should not be considered in ‎isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.

The ‎Company uses Flow-through parts revenue, Security services revenue, Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA"), and Normalized net loss as non-IFRS measures, which may be calculated ‎differently by other companies. These non-IFRS measure are used to provide investors supplemental measures of the Company's operating performance and liquidity and thus highlight trends in the Company's ‎business that may not otherwise be apparent when relying solely on IFRS measures. The Company also ‎believes that securities analysts, investors and other interested parties frequently use non-IFRS measures ‎in the evaluation of companies in similar industries.

Flow through parts revenue and Security services revenue

Adjusted EBITDA

Normalized net loss

Supplementary Financial Measures

The Company may also use supplementary financial measures which are intended to be disclosed on a periodic basis to depict the historical or expected future financial performance, cash position, or cash flow of the Company, are not a non-IFRS measure, and are not presented in the financial statements. The measures as discussed in this press release include:

• Gross margin percentage, which is defined as either (Product sales less Cost of product sold) divided by Product sales or (Security services revenue less Security services costs) divided by Security services revenue

About Nanalysis Scientific Corp.  (TSXV: NSCI, OTCQX: NSCIF, FRA:1N1)

Nanalysis Scientific Corp. in operates two primary business segments: Scientific Equipment and Security Services. Within its Scientific Equipment business is what the Company terms "MRI and NMR for industry". The Company develops and manufactures portable Nuclear Magnetic Resonance (NMR) spectrometers or analyzers for laboratory and industrial markets. The NMReady-60™ was the first full-feature portable NMR spectrometer in a single compact enclosure requiring no liquid helium or any other cryogens. The Company has followed up that initial offering with new products and continues to have a strong innovation pipeline. In 2020, the Company announced the launch of its 100MHz device, the most powerful and most advanced commercial compact NMR device ever brought to market. 

The Company's devices are used in many industries (oil and gas, chemical, mining, pharma, biotech, flavor and fragrances, agrochemicals, law enforcement, and more) as well as numerous government and university research labs around the world. The Company is working to expand into new global market opportunities independently and with partners.  With its partners, the Company provides scientific equipment sales and maintenance services globally. 

Within the Company's Security Services business, the core activity is providing airport security equipment maintenance in each province and territory of Canada.  In addition, the Company provides commercial security equipment installation and maintenance services to a variety of customers in North America. 

Notice regarding Forward Looking Statements and Legal Disclaimer

This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

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SOURCE Nanalysis Scientific Corp.