NanoXplore TSE: GRA reported higher revenue and a return to positive adjusted EBITDA in its fiscal first quarter, while reiterating its full-year sales forecast and expectation of positive free cash flow.
The company reported revenue of CAD 31.8 million, up 36% from a year earlier, and adjusted EBITDA of CAD 714,000, compared with a loss of CAD 1.4 million. Adjusted gross margin rose to 21.7% from 17.3%.
Chief Financial Officer Pedro Azevedo attributed the revenue increase primarily to a recovery in the solutions business and the full benefit of Club Car business. Higher volumes, manufacturing efficiencies and cost controls contributed to the margin improvement, he said.
Azevedo said material costs remained elevated compared with levels before the U.S.-Iran conflict. NanoXplore passes those costs through to customers without a markup, protecting gross margin dollars but reducing the gross margin percentage.
Outlook Calls for Stronger Second Half
NanoXplore reiterated fiscal 2027 revenue guidance of CAD 130 million to CAD 140 million and said it expects to be free cash flow positive for the full year. Azevedo said that would be a first for the company.
For the second quarter, the company expects revenue of CAD 31 million to CAD 32 million, followed by higher sales in the second half. Azevedo said the anticipated ramp includes insulating foam sales, steady-to-higher volumes from existing solutions customers and potential contributions from films and conductive additives.
The guidance is largely based on the solutions business, Azevedo said. He estimated that graphene-related initiatives could contribute roughly CAD 2 million to CAD 5 million before the end of the fiscal year. He also cautioned that anticipated business from additional customers could be delayed.
Azevedo said NanoXplore continues to expect gross margin expansion and projected a sequential improvement of more than 100 basis points in the second quarter. Higher graphene-enhanced product content should support further improvement in the third and fourth quarters, he said.
Foam Supply Begins
Chief Executive Officer Rocco Marinaccio said NanoXplore began commercial supply to its lead North American insulating foam customer in October with an initial 40-ton order of masterbatch containing 30% graphene.
The company expects masterbatch volumes for the customer to exceed 500 tons this fiscal year and reach roughly 1,000 tons annually in its first full year of production. Marinaccio said shipments are expected to ramp from a couple of loads a month to a steady rate of four to five loads a month by mid-2027.
The company is discussing additional masterbatch capacity to meet the customer’s needs. Marinaccio said NanoXplore’s two extrusion lines are expected to fill quickly, and the planned expansion would focus on masterbatch rather than graphene production.
Other foam manufacturers are conducting plant trials and could begin purchasing this fiscal year, Marinaccio said. Azevedo said the initial commercial foam opportunity was already included in the annual revenue guidance.
Other Commercialization Efforts
Marinaccio said NanoXplore began a collaboration with a global consumer trash bag brand on films intended to reduce plastic use, increase recycled content and lower material costs. He said some industrial film customers could commercialize sooner than large consumer brands after successful plant trials.
In drilling fluids, partner CPChem has shipped NanoSlide samples to prospective customers. Marinaccio said customers that completed laboratory testing confirmed a performance advantage, while well trials remain the next step toward adoption.
NanoXplore also launched a graphene-enhanced sheet molding compound, with internal adoption and external commercialization expected to begin in the fiscal third quarter. Marinaccio said two previously awarded Volvo programs remain on track for fiscal 2028 and are expected to generate approximately CAD 25 million in annual revenue at maturity.
At battery venture VoltaXplore, qualification testing continues with prospective defense customers. Marinaccio said it was difficult to put a timeline on purchase orders. He described the current facility as pilot scale, with capacity for upward of 100,000 cells.
Cash Position and CFO Transition
NanoXplore ended the quarter with CAD 23.5 million in cash and CAD 28.5 million in liquidity, including unused revolving credit capacity. Operating cash flow was positive CAD 1.5 million, while overall cash declined by CAD 1.5 million during the quarter. The company expects capital expenditures of CAD 3 million to CAD 4 million for fiscal 2027.
Constantino “Dino” Malatesta, formerly interim CFO at CAE, is scheduled to become NanoXplore’s CFO on November 11. Azevedo said he will remain with the company through its December 10 annual general meeting to assist with the transition.
About NanoXplore (TSE:GRA)
NanoXplore is a graphene company and the largest manufacturer and supplier of high-volume graphene powder for use in multiple end markets with up to 5,000 tonnes of annual production capacity. The Corporation also provides standard and custom graphene-enhanced plastic and composite products to customers in the recreational vehicle, transportation, packaging, electronics, and other industrial sectors, and manufactures silicon-graphene-enhanced Li-ion batteries for the energy storage, industrial, and defense markets.
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