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Posted: April 24, 2008

Nanophase Achieves Record First Quarter Revenue and Narrows Loss

(Nanowerk News) Nanophase Technologies, a leader in nanomaterials and advanced nanoengineered products, announced that for the quarter ending March 31, 2008, total revenue was $3.05 million compared to $2.9 million in the first quarter of 2007. Gross margin as a percentage of revenue increased to 35%, versus 25% in the first quarter of 2007, while gross margin dollars increased 48%.
Nanophase continues to narrow its losses with increasing revenues and gross margin growth. Nanophase reported a net loss of $950,000, or $0.04/share, versus a net loss of $1.2 million, or $0.06 per share, in the first quarter of 2007. Management noted that of the $950,000 loss, approximately 71%, or $670,000, was due to non-cash items.
"Nanophase delivered another solid quarter, especially in a difficult economic environment," noted Joseph Cross, Nanophase's president and CEO. "In spite of some general and specific market caution entering 2008, comparing the first quarter of 2008 to the prior year, we experienced relatively solid customer demand in personal care and sunscreens, an 82% increase in architectural coatings revenues, twenty-five fold revenue growth in chemical/mechanical planarization nanomaterials, and 37% growth in biosensor nanomaterials. The Company's revenue declined 26% for industrial coatings and plastics, primarily, we believe, reflecting one customer's inventory build in the first and second quarter of 2007 that was not duplicated during the first quarter of 2008. We anticipate that industrial coatings and plastics revenues should improve over the next three quarters."
Cross added: "As we have stated before, our business model requires developing unique value-added solutions that are ready to integrate into customers' products and, therefore, command higher margins. We believe Nanophase's consistent margin growth since 2005 has demonstrated that our model and market tactics are having positive effects. Our gross margin this past quarter continues that trend."
"Operationally, Nanophase continues to perform at a high level with 100% on-time delivery and absolutely zero customer returns in the first quarter. The Company also ended the first quarter with over 875,000 hours, or over 420 man years, worked without a lost time accident -- a quite exemplary record for a company of our size."
Markets and Outlook
Cross noted that while first quarter revenue was encouraging, the Company continues to have limited visibility and is maintaining its 5 to 15% revenue growth estimate for 2008. "Using our improved market development and sales approach, we have made sound progress adding targeted new revenue opportunities to our stage gate sales process. While we continue to work closely with our market partners, we have been developing a greater in-house ability to directly market new nanomaterial-based solutions. To further that effort, we increased our sales staff this past quarter with the addition of an experienced chemical sales professional to expand targeted customer initiatives."
"But, it remains pragmatically difficult for us to accurately forecast the speed of movement through the stage gates, the start of revenue generating activities, and the ensuing growth ramp," Cross noted. "At this point, we anticipate that second quarter 2008 revenue will be relatively flat with the current quarter. We do not believe that the inventory build-up from two major customers that benefited the second quarter of 2007 will recur in 2008."
Cross noted that the Company finished the first quarter with $16 million in cash and equivalents and should be adequately capitalized to meet its growth objectives in the foreseeable future. Nanophase believes that it has adequate facilities and equipment to support a $20-25 million revenue run rate, depending on product mix, and does not anticipate material capital spending during 2008.
Cross concluded: "We continue to expect an increased revenue run rate in the second half of 2008 based on market partner forecasts and opportunities that we are pursuing. As we see how the second quarter unfolds and have increased information on new opportunities, we will re-evaluate our 2008 outlook at the appropriate time."
Nanophase has scheduled its quarterly conference call for April 24, 2008 at 4:00PM CDT (5:00PM EDT), which will be hosted by Joseph Cross, president and CEO, and Jess Jankowski, CFO. The call may be accessed through the Company's website, http://www.nanophase.com, by clicking on the link under Investor Relations and Calendar of Events. If you are unable to attend, a replay will be available through May 1, 2008 by dialing 706-645-9291 and entering code 44233587, or by logging onto the Company's website and following the above directions.
Nanophase Technologies Corporation (NANX), http://www.nanophase.com, is a leader in nanomaterials technologies and provides nanoengineered solutions for multiple industrial product applications. Using a platform of patented and proprietary integrated nanomaterial technologies, the Company creates products with unique performance attributes from two ISO 9001:2000 and ISO 14001 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. The Company owns or licenses 18 United States and 49 foreign patents and patent applications. Information about Nanophase may be found in the Company's public filings or on its website.
Source: Nanophase Technologies
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