EnWave Reports 2023 Second Quarter Consolidated Interim Financial Results
Vancouver, B.C., May 26th, 2023
EnWave Corporation (TSX-V:ENW | FSE:E4U) (“EnWave”, or the “Company”) today reported the Company’s consolidated interim financial results for the second quarter ended March 31, 2023.
All values in thousands and denoted in CAD unless otherwise stated.
- Reported net income from continuing operations of $687 and Adjusted EBITDA(1) of $1,151 for Q2 2023, representing an increase of $2,386 and $2,190 respectively relative to the comparable period of the prior year. The increase was primarily due to the resale of two large scale machines and the wind down of NutraDried in Q2 2023.
- Completed the sale of NutraDried assets and a 100kW unit to Creations Foods U.S. incorporated for total consideration of $2,608 USD.
- Reported revenue for Q2 2023 of $4,635, representing an increase of $3,137 relative to the comparable period of the prior year.
- Commissioned two large scale 120kW units for the dehydration of fruit and vegetables in Italy and Thailand.
Consolidated Financial Performance:
(1) Adjusted EBITDA is a non-IFRS financial measure. Refer to the Non-IFRS Financial Measures disclosure below for a reconciliation to the nearest IFRS equivalent.
Key Financial Highlights for the Six Months Ended Q2 2023 (expressed in ‘000s):
- The Company reported revenue for the six months ended Q2 2023 of $7,420 compared to $5,564 for the six months ended Q2 2022, an increase of $1,856. The increase in revenue is primarily due to the resale of two large scale machines in the first half of 2023, relative to the comparable period of the prior year which had one machine resale.
- Royalty Revenues of $690 for the six months ended Q2 2023 compared to $750 for the six months ended Q2 2022, a decrease of $60. Some partners had higher base royalties during the calendar year, resulting in a smaller royalty obligation to meet the minimum annual royalty threshold. Additionally, some partners decided to forego exclusivity.
- Gross margin for the six months ended Q2 2023 was 44% compared to 51% for six months ended Q2 2022. EnWave sold two high margin machines in the quarter however, due to increased large-scale machines in fabrication, direct costs increased.
- SG&A expenses (including R&D) were $2,954 for the six months ended Q2 2023 compared to $3,656 for the six months ended Q2 2022, a decrease of $702. The decrease resulted from concerted efforts to reduce discretionary spending, including lower personnel costs in all departments.
- Adjusted EBITDA (refer to Non-IFRS Financial Measures section below) for the six months ended Q2 2023 was $895 compared to a loss of $430 for the six months ended Q2 2022, an increase of $1,325. The increase in adjusted EBITDA was primarily due to the wind down of NutraDried and its classification as discontinued operations, the resale of two large scale machines and the reduction of SG&A expenses (including R&D).
Significant Corporate Accomplishments in Q2 2023 and Subsequently:
- Commissioned a 120kW large-scale REV™ machine for Orto al Sole in Italy for production of premium dried fruits and vegetables for snacking.
- Commissioned a 120kW large-scale REV™ machine in Asia for Dole to start production of better-for-you snack products under the brand Good Crunch™ (https://www.dolefoodservice.com/good-crunch) using EnWave’s REV™ technology.
- Sold and commissioned a 120kW REV™ machine to a major Canadian cannabis company to produce premium smokeable flower, cannabis plant material for extraction and edible products.
- Sold two 10kW REV™ machines to a current royalty partner tripling its North American REVTM manufacturing capacity for production to support a growing market demand.
- Signed a license with PiP International Incorporated (“PIP”) to allow for the commercialization of high-value plant-based ingredients. Additionally, PIP purchased a 10kW REV™ machine for continued product development.
Non-IFRS Financial Measures:
This news release refers to Adjusted EBITDA which is a non-IFRS financial measure. 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 or recovery and non-recurring impairment, restructuring and severance charges, government assistance and discontinued operations. 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 reconciliation between Adjusted EBITDA and the most comparable IFRS financial measure reported in the Company’s consolidated financial statements.
Non-IFRS financial measures should be considered together with other data prepared accordance with IFRS to enable investors to evaluate the Company’s operating results, underlying performance and prospects in a manner similar to EnWave’s management. Accordingly, these non-IFRS financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For more information, please refer to the Non-IFRS Financial Measures section in the Company’s MD&A available on www.sedar.com.
EnWave is a global leader in the innovation and application of vacuum microwave dehydration. From its headquarters in Delta, BC, EnWave has developed a robust intellectual property portfolio, perfected its Radiant Energy Vacuum (REV™) technology, and transformed an innovative idea into a proven, consistent, and scalable drying solution for the food, pharmaceutical and cannabis industries that vastly outperforms traditional drying methods in efficiency, capacity, product, quality, and cost.
With more than fifty royalty-generating partners spanning twenty six countries and five continents, EnWave’s licensed partners are creating profitable, never-before-seen snacks and ingredients, improving the quality and consistency of their existing offerings, running leaner and getting to market faster with the company’s patented technology, licensed machinery, and expert guidance.
EnWave’s strategy is to sign royalty-bearing commercial licenses with food and cannabis producers who want to dry better, faster and more economical than freeze drying, rack drying and air drying, and enjoy the following benefits:
Mr. Brent Charleton, CFA
President and CEO
For further information:
Brent Charleton, CFA, President and CEO at +1 (778) 378-9616
Dylan Murray, CFO at +1 (778) 870-0729
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, the Company ceasing to make investments in NutraDried, the timing of the wind-down and dissolution of NutraDried, expectations around the cost of winding down NutraDried, and the Company’s intended focus for the future are forward-looking statements. 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, including that the process of winding up NutraDried will involve time and expense to the Company materially greater than anticipated, that the realization of assets of NutraDried will not sufficiently cover the orderly wind-up of NutraDried, which could result in the requirement for additional funding by the Company to complete such wind-up, that the foregoing developments will adversely affect the Company, in terms of cost, management time and focus, outlook or reputation; the ability of the Company to achieve its longer-term outlook, the ability to lower costs, and the other risk factors set forth in the Company’s public filings. 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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.