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EnWave Announces Fourth Quarter and 2018 Annual Consolidated Financial Results
dec 17th 2018, 06:00
EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the “Company”)today reported the Company’s consolidated financial results for the fourth quarter and year-ended September 30, 2018.
Key Financial Highlights for 2018 and Q4 (expressed in ‘000s):
- Continued revenue growth with Q4 2018 revenue of $7,355 compared to $3,630 for Q4 2017, an increase of 103%. Annual revenue of $22,825 for 2018 was higher than the previous year of $15,954, an increase of 43% of $6,871. NutraDried’s revenue increased by 252% to $16,503 for 2018 compared to $6,556 for 2017, driven by increased sales and distribution of its product Moon Cheese®.
- Achieving gross profit of $8,910 for 2018 compared to $4,300 for 2017, an increase of $4,610 or 107%. Gross margin as a percentage of revenue was 39% for 2018 compared to 27% for 2017.
- Reported positive net income for Q4 2018 of $75 compared to a net loss of $1,060 for Q4 2017, an improvement of $1,135. Decreased the annual consolidated net loss to $945 for 2018, compared to $2,986 for 2017, an improvement of $2,041 year-over-year.
- Strengthened cash flow profile by reporting Adjusted EBITDA(*) for 2018 of $2,932, compared to $6 for 2017, an increase of $2,926. Adjusted EBITDA(*) for Q4 2018 was $1,300, compared to negative $278 for Q4 2017, an increase of $1,578. The increase in Adjusted EBITDA(*) throughout fiscal 2018 represents the Company’s growing ability to generate cash from its operations.
- Further invested in selling activity with S&M expenses of $3,731 for 2018 compared to $2,160 for 2017, an increase of $1,571. S&M expenses increased as part of the strategy to invest in marketing, selling and promotional activities of Moon Cheese®. The Company also continues to invest in its business development strategy to commercialize its proprietary REVTM
- Controlled growth in G&A and R&D expenses while maintaining appropriate spending to scale and support growth and to maintain the Company’s intellectual property. G&A expenses and R&D expenses were lower at 11% and 5% of revenue, respectively for 2018, compared to 13% and 7% in 2017.
- Strengthened the balance sheet by completing a prospectus offering and concurrent private placement of 9,530,000 Units of the Company at $1.05 each for combined gross proceeds of $10 million on November 15, 2017. Each Unit consisted of one common share and one-half of one common share purchase warrant (each whole common share purchase warrant, a “Warrant”). The Warrants were accepted for listing by the TSX Venture Exchange and commenced trading under the symbol ENW.WT on November 22, 2017.
Significant Accomplishments in 2018:
- Completed the acquisition of the 49% non-controlling interest in NutraDried, bringing the Company’s ownership to 100% of the equity interest in NutraDried Food Company, LLC. NutraDried is a wholly owned subsidiary in the business of manufacturing and distributing Moon Cheese®. This purchase was completed at valuation multiples of 1.3 times 2018 net income and 3 times 2018 revenue. NutraDried financial returns have improved dramatically since the purchase.
- Expanded sales and distribution of Moon Cheese® with additional product rotations in a number of Costco divisions; Q4 2018 was the single highest ever quarterly sales for Moon Cheese® of $6,532.
- Launched REVTM technology into the rapidly growing cannabis industry and signed a royalty-bearing Commercial License Agreement (“CLA”) with Tilray® providing rights to use REVTM technology for processing cannabis in Canada and Portugal. Secured purchase agreements with Tilray® for a 10kW REVTM machine and two 60kW REVTM The first 60kW processing line is scheduled to be installed in early 2019.
- Signed a CLA with Arla Foods (“Arla”), the world’s largest manufacturer of organic dairy products and an innovation leader. The CLA grants Arla the exclusive right to use REV™ technology to process dairy products in Denmark, Sweden, Finland and Norway. Arla purchased a 10kW small-scale machine to initiate commercial production.
- Received purchase orders from Bare Foods Co. (“Bare Foods”), a leading American snack food company recently acquired by PepsiCo, and installed three small-scale commercial 10kW REVTM machines to initiate and expand commercial production of healthy fruit snack products
- Signed a royalty-bearing license with AvoLov, LLC (“AvoLov”), a U.S. based snack company to produce a new, and innovative avocado snack product. AvoLov purchased a 10kW REVTM machine to initiate commercial production.
- Signed a royalty-bearing license with Howe Foods, the second largest producer of bananas in Australia. Howe Foods purchased a small-scale 10kW REVTM machine to initiate commercial production.
- Signed a royalty-bearing license with Nomad Nutrition, a Canadian company focused on distributing premium, shelf-stable, nutrient-packed gourmet products that are made from locally sourced organic ingredients. Nomad Nutrition purchased a small-scale 10kW REVTM machine to initiate commercial production.
- Advanced a research project with the U.S. Army to develop innovative field rations for warfighters and sold the U.S. Army a 10kW REVTM machine to facilitate an accelerated path to improved Close Combat Assault Ration deployment. EnWave’s strategy is to work closely with the U.S. Army and its suppliers to jointly develop nutrient-rich field rations for potential distribution to the U.S. Army.
- Doubled the Company’s production capacity of Moon Cheese® through the installation of a second 100kW nutraREV® machine and a 10kW REVTM The expansion was facilitates continued sales growth of Moon Cheese® and positions for future projected demand in the consumer marketplace.
- Delivered the first scaled-up Good Manufacturing Practices (“cGMP”) freezeREV® machine to Merck after passing factory acceptance testing. The machine is undergoing testing at Merck’s facilities prior to planned future development work by Merck to use freezeREV® technology as a continuous dehydration alternative to lyophilization.
- Signed a Collaboration and License Option Agreement with GEA Lyophil GmbH, (“GEA”), a Liquid Dosage organization of the Business Application Pharma of the GEA Group. EnWave and GEA will jointly evaluate a potential partnership to facilitate the manufacture and deployment of continuous cGMP REV™ lyophilization equipment into the global pharmaceutical sector.
- Jointly ended the collaboration agreement with Sutro Biopharma Inc. (“Sutro”) to deliver a commercial powderREV® During factory acceptance testing EnWave and Sutro were unable to satisfy certain quantitative bioactivity measures for the excipient-free, dried cell-free extract formulation.
- Hired Mr. Mike Pytlinski as the new CEO of NutraDried. Mr. Pytlinski brings nearly 30 years of experience in marketing and strategy with consumer packaged goods companies
Currently, the Company has 11 prospective royalty partners actively engaged in Technology Evaluation and License Option Agreement (“TELOA”) projects and the U.S. Army in an advanced stage of technology evaluation. The Company’s objective is to convert these TELOA projects into royalty-bearing commercial license agreements and to secure purchase commitments for REVTM machine capacity. The Company also has several existing royalty partners that have tested the market with small-scale REVTM machinery and are evaluating the business case to scale-up to large-scale REVTM processing lines. The Company anticipates several long-term projects in the pipeline to convert to CLAs as well as additional REVTM machine capacity to be ordered by existing partners in 2019.
EnWave’s strategy is also to address the expanding medical and recreational cannabis processing sector in legalized jurisdictions. The Company has validated the business model for licensing its patented REVTM dehydration technology for the rapid dehydration and decontamination of cannabis with Tilray®, and the business case is sound. The strategy in the near-term is to secure additional royalty-bearing licenses for processing of cannabis, as well as additional equipment purchase orders for REVTM machine capacity in Canada and other legalized markets.
EnWave has been growing its prospective royalty partner pipeline as it commercializes REVTM across the food, legalized cannabis and pharmaceutical sectors as part of its strategy to build a large, diversified royalty-bearing portfolio.
(*) Non-IFRS Financial Measures:
Adjusted EBITDA is not a measure of financial performance under IFRS. We define Adjusted EBITDA as earnings before deducting amortization and depreciation, stock based compensation, foreign exchange gain or loss, finance expense or income, income tax expense and non-recurring impairment charges. This measure is not necessarily comparable to similarly titled measures used by other companies and should not be construed as an alternative to net income or cash flow from operating activities as determined in accordance with IFRS. Please refer to the discussion included in the Company’s annual MD&A for the year ended September 30, 2018.
EnWave Corporation, a Vancouver-based advanced technology company, has developed Radiant Energy Vacuum (“REV™”) – an innovative, proprietary method for the precise dehydration of organic materials. EnWave has further developed patent-pending methods for uniformly drying and decontaminating cannabis through the use of REV™ technology, shortening the time from harvest to marketable cannabis products.
REV™ technology’s commercial viability has been demonstrated and is growing rapidly across several market verticals in the food, and pharmaceutical sectors including legal cannabis. EnWave’s strategy is to sign royalty-bearing commercial licenses with industry leaders in multiple verticals for the use of REV™ technology. The company has signed over twenty royalty-bearing licenses to date, opening up nine distinct market sectors for commercialization of new and innovative products. In addition to these licenses, EnWave has formed a Limited Liability Corporation, NutraDried Food Company, LLC, to develop, manufacture, market and sell all-natural cheese snack products in the United States under the Moon Cheese® brand.
EnWave has introduced REV™ as the new dehydration standard in the food and biological material sectors: faster and cheaper than freeze drying, with better end product quality than air drying or spray drying. EnWave currently has three commercial REV™ platforms:
1. nutraREV® which is used in the food industry to dry food products quickly and at low-cost, while maintaining high levels of nutrition, taste, texture and colour;
2. powderREV® which is used for the bulk dehydration of food cultures, probiotics and fine biochemicals such as enzymes below the freezing point, and
3. quantaREV® which is used for continuous, high-volume low-temperature drying.
An additional platform, freezeREV®, is being developed as a new method to stabilize and dehydrate biopharmaceuticals such as vaccines and antibodies. More information about EnWave is available at www.enwave.net.
For further information:
John P.A. Budreski, Executive Chairman at +1 (416) 930-0914
Brent Charleton, CFA , Senior Vice President, Sales and Business Development at
Deborah Honig, Corporate Development, Adelaide Capital Markets at + 1 (647) 203-8793
Safe Harbour for Forward-Looking Information Statements: This press release may contain forward-looking information based on management’s expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product development, market position, expected expenditures, and the expected synergies following the closing are forward-looking statements. All third party claims referred to in this release are not guaranteed to be accurate. All third party references to market information in this release are not guaranteed to be accurate as the Company did not conduct the original primary research. These statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements.
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