NanoXplore TSE: GRA reported higher fiscal third-quarter revenue and sequential improvement across key operating metrics, while management said the company remains on track to meet its full-year revenue outlook and begin generating new revenue streams from recent expansion projects in fiscal 2027.
For the third quarter of fiscal 2026, the graphene and advanced materials company posted revenue of CAD 32.3 million, adjusted gross margin of 22.9% and adjusted EBITDA of CAD 1.2 million. Chief Executive Officer Rocco Marinaccio said the results represented sequential improvements from the second quarter and year-over-year gains on a normalized basis, excluding one-time items from the prior year.
“The trajectory is clear, and we are executing,” Marinaccio said on the call. He cited steady volumes from the Club Car launch in Statesville, North Carolina, a continued recovery in the company’s transportation business and sales of Tribograf, NanoXplore’s lubricant product, as drivers of the quarter’s performance.
Revenue Rises as Club Car and CPChem Contribute
Chief Financial Officer Pedro Azevedo said third-quarter revenue increased 6% from the same period last year, mainly because of new revenue streams from the Club Car program, shipments under the Chevron Phillips Chemical, or CPChem, contract and higher tooling revenue.
Those gains were partly offset by lower government grant revenue, which was unusually high in the year-earlier period, and lower revenue from NanoXplore’s two largest customers, whose volumes are improving but remained below last year’s levels. Azevedo said revenue has increased by nearly 40% since the first quarter.
Adjusted gross margin, excluding depreciation as a percentage of sales, rose 50 basis points from 22.4% a year earlier. Azevedo said the improvement was limited by a higher mix of lower-margin tooling revenue and by ramp-up costs in Beauce, Quebec, where the company rehired workers as volumes increased.
Adjusted EBITDA declined by CAD 240,000 from last year. Azevedo said the prior-year period included CAD 550,000 of grant revenue as a one-time benefit. Excluding that impact, he said third-quarter adjusted EBITDA would have been CAD 350,000 higher than last year.
Full-Year Guidance Reaffirmed
NanoXplore maintained its fiscal 2026 revenue guidance of CAD 115 million to CAD 120 million. Azevedo said fourth-quarter gross margin is expected to improve modestly from the third quarter, by about 50 basis points, with further improvement expected into fiscal 2027 as new programs begin contributing revenue with limited additional overhead.
The company ended the quarter with CAD 24.4 million in cash and cash equivalents and CAD 16.8 million in short- and long-term debt. Total liquidity was CAD 34.4 million as of March 31, including unused capacity under revolving credit lines.
Operating cash flow was negative CAD 3.5 million, mainly due to higher working capital tied to increased sales and supplier payments on tooling projects. Investing cash flow was negative CAD 3.2 million, primarily from capital expenditures, while financing cash flow was positive CAD 900,000 due to equipment financing, partly offset by debt and lease repayments.
Azevedo said NanoXplore expects to spend CAD 2 million to CAD 3 million in the fourth quarter to complete its graphene-enhanced materials and dry-process graphene line initiatives. After those projects are completed, quarterly capital spending is expected to fall to less than about CAD 1 million, excluding new initiatives. The company also expects to receive between $500,000 and $700,000 in IEEPA tariff refunds related to imported equipment installed in Statesville.
Dry Graphene Process and New Product Grades Advance
Marinaccio said NanoXplore has started up its dry graphene manufacturing process, meeting a prior commitment to have the equipment operational by early April. He said the equipment is powered on and mechanically running, with the company now scaling the process under its manufacturing protocols.
The company expects to begin qualifying commercial material in the fourth quarter, with the goal of fulfilling customer orders from the platform in fiscal 2027.
Marinaccio also highlighted the company’s recently announced xGnP D500-HP product, which he said is aimed at the conductive carbon additives market. According to Marinaccio, the product has 99.8% purity and a surface area of 500 square meters per gram, verified at commercial production volumes. He said it is designed for applications including lithium-ion battery electrodes, electrostatic discharge-safe plastics and conductive coatings.
Marinaccio said D500-HP is intended to compete with conductive carbon blacks and carbon nanotubes by matching conductivity while offering improved flexural strength and stiffness. He said the product will be priced competitively with conductive carbon blacks.
Contracted Revenue Pipeline and Tribograf Trials
NanoXplore said it has previously announced CAD 50 million in business wins for its solutions business. Marinaccio said CAD 15 million of that has launched in Statesville with Club Car, while the remaining CAD 35 million is expected to ramp over the next 18 months as part deliveries begin in line with customer forecasts.
Marinaccio said those contracted revenues give the company “clear line of sight to free cash flow generation” as programs ramp.
On Tribograf, Marinaccio said NanoXplore’s partnership with CPChem continues to advance through customer lab and field trials across multiple geographies. He said the product is designed to lower the coefficient of friction and increase lubricity, reducing drilling times by up to 20%.
During the question-and-answer session, Marinaccio said Tribograf is being tested in more difficult horizontal drilling environments, including North Dakota, the Colorado Rockies, Western Canada, South America and Australia. He said the product is an off-the-shelf, drop-in replacement for competing lubricants and that CPChem is focused on higher-volume applications that could launch toward the end of the calendar year and into calendar 2027.
Azevedo said increased Tribograf and graphene sales should be accretive to gross margin, adding that the benefit may be more visible in EBITDA than in revenue because those sales remain a subset of the company’s overall business.
Transportation Demand Improving
In response to a question from RBC Capital Markets analyst James McGarragle about Volvo and PACCAR demand, Marinaccio said customer volumes declined into the first quarter but have been progressively improving since then. He said NanoXplore expects demand to continue improving through the end of the calendar year and that the company should benefit as heavy truck industry volumes move in the right direction.
Marinaccio also said NanoXplore’s leadership team and board have made “meaningful” insider share purchases in recent months, saying management remains aligned with shareholders as the company works to expand its markets and convert its pipeline into revenue.
About NanoXplore TSE: GRA
NanoXplore Inc is a graphene company, manufacturer, and supplier of high-volume graphene powder for use in industrial markets. The company provides graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. Geographically, it generates a majority of revenue from the United States.
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