Executive Summary

Q4 delivered record revenue of $12.57M (+57.0% YoY) with gross margin at 22% (vs 6% LY); full-year 2024 revenue reached a record $52.35M (+40% YoY) and net income was $4.24M (vs a $4.38M loss in 2023) .
Profitability dipped sequentially vs Q3 on mix, overtime, inventory build/obsolescence, and seasonal factors; Q4 net loss was $0.56M vs a $3.05M profit in Q3, while adjusted EBITDA remained positive at $0.25M .
Management guided to record Q1 2025 revenue and indicated Q2 2025 looks “particularly strong”; gross margin is expected to run in the 30s, with episodic moves toward the 40s, while Illinois corporate tax (9%) will apply due to state NOL limits .
Strategic catalysts: rebrand to Solésence, expanded capacity enabling >$200M of annual consumer products capacity, continued brand wins/awards, and a planned NASDAQ uplisting in 2025 (no equity raise planned) .

What Went Well and What Went Wrong

What Went Well

Record top-line: Q4 revenue rose 57% YoY to $12.57M; FY24 revenue up 40% to $52.35M, with FY24 gross margin expanding to 31% (from 21%) and net income at $4.24M .
Execution and capacity: Produced 2x YoY unit volume in Q4; added infrastructure for six new production suites, supporting >$200M consumer products capacity .
Innovation/commercial wins: Prestigious industry award for Au Lait Face Milk SPF 50+ (Kleair); strong brand partner momentum cited (e.g., Colorescience, Tatcha, Credo) .

What Went Wrong

Sequential margin compression: Q4 GM 22% vs 36% in Q3, driven by mix, overtime to meet launches, inventory build for facility consolidation, and some obsolescence; management targets margins in the 30s going forward .
Tax headwind: Illinois temporarily disallows use of NOLs; corporate tax (~9%) impacted Q4 despite prior-year losses .
Inventory elevated: Inventory rose to $20.27M at year-end vs $10.03M LY, reflecting raw material safety stock, launch timing, and consolidation buffer; management plans to improve working capital management in 2025 .

Financial Results

Consolidated P&L vs Prior Periods and Sequential

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$8.011	$16.866	$12.567
Gross Profit ($USD Millions)	$0.471	$6.102	$2.766
Gross Margin (%)	6%	36%	22%
R&D Expense ($USD Millions)	$0.785	$0.970	$1.091
SG&A Expense ($USD Millions)	$1.583	$1.934	$1.898
Operating Income ($USD Millions)	$(1.897)	$3.198	$(0.223)
Net Income ($USD Millions)	$(2.122)	$3.045	$(0.558)
Diluted EPS ($USD)	$(0.04)	$0.04	$(0.01)
Adjusted EBITDA ($USD Millions)	$(1.499)	$3.589	$0.253

Revenue Mix (Product vs Other)

Metric	Q4 2023	Q3 2024	Q4 2024
Product Revenue ($USD Millions)	$7.716	$16.785	$12.411
Other Revenue ($USD Millions)	$0.295	$0.081	$0.156
Total Revenue ($USD Millions)	$8.011	$16.866	$12.567

Balance Sheet Highlights

Metric	Dec 31, 2023	Sep 30, 2024	Dec 31, 2024
Cash & Equivalents ($USD Millions)	$1.722	$2.925	$1.409
Accounts Receivable, net ($USD Millions)	$3.467	$8.732	$4.869
Inventories, net ($USD Millions)	$10.031	$15.043	$20.267
Deferred Revenue, current ($USD Millions)	$2.353	$6.228	$5.571
Total Stockholders’ Equity ($USD Millions)	$1.902	$15.169	$14.946

KPIs and Operating Indicators

KPI	Q4 2023	Q3 2024	Q4 2024
Units Produced (YoY change)	—	—	2x vs Q4’23
Open + Shipped Orders ($USD Millions, point-in-time)	$35	—	$38
Q4 Gross Margin (%)	6%	36%	22%
Adjusted EBITDA ($USD Millions)	$(1.499)	$3.589	$0.253

Note: Segment-level revenue details (e.g., Solésence vs other) were not provided for Q4; Q3 Solésence revenue was $13.6M of $16.9M total .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue (qualitative)	Q1 2025	—	“Anticipate record revenues for Q1 2025”	New qualitative view
Revenue cadence	Q2 2025 vs Q3 2025	—	“Q2 looks particularly strong; could be stronger than Q3”	New qualitative view
Gross Margin (%)	2025 run-rate	—	“Should be in the 30s, possibly touching 40s episodically”	New qualitative view
Tax (IL corporate)	2025	—	~9% corporate tax applies due to IL NOL pause	New information
2H vs 1H revenue	FY 2024	“2H revenue expected to exceed 1H by >20%” (stated mid-year)	Achieved via strong Q3; Q4 timing/mix impacted profitability	Achieved; no new FY25 numeric guidance
Uplisting	2025	—	Target NASDAQ uplisting in 2025; timing “months,” no offering planned; float sufficient	Announced initiative
Working capital	2025	—	Plan to proactively reduce elevated inventory and improve WC turns	Operational focus

No formal numeric guidance (ranges) was issued for revenue/EPS/margins/tax beyond the qualitative commentary above.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q2’24)	Previous Mentions (Q-1: Q3’24)	Current Period (Q4’24)	Trend
Capacity expansion & operations	Implemented KPI integration and OEE; added planning manager	Added 3 ISO 6 clean rooms; automation across key processes	Added infrastructure for six suites; capacity supports >$200M; doubled Q4 unit volume YoY	Scaling up steadily
Gross margin trajectory	“Now demonstrating margin performance above industry averages”	Q3 GM 36% record	Q4 GM 22% on mix, overtime, inventory build; targeting 30s in 2025	Near-term pressure; improving outlook
Demand/booking visibility	—	Nine-month revenue exceeded FY23 by $2.5M	Shipped+open orders $38M vs $35M LY; customers ordering closer to need; record Q1’25 expected	Healthy but shorter visibility
Rebrand / IR	—	—	Rebranded to Solésence; launched new IR site	Strategic repositioning
Tariffs & macro	—	—	Monitoring U.S./Canada tariff risk; signs of anti-American sentiment in Canada; suppliers seeking price increases	Risk to watch
Innovation & IP	Won third consecutive Cosmopack NA Formulation Award	—	Au Lait Face Milk SPF 50+ award; two new patents (antioxidant, skin-soothing delivery)	Strengthening moat

Management Commentary

“Revenue for the fourth quarter reached $12.6 million, +57% YoY... Gross margin expanded to 22% from 6% YoY... For the full year, we generated $52.3 million in revenue... gross margin to 31% from 21%” .
“Expanded batch-making capabilities... six production suites... capacity to support in excess of $200 million annually... produced twice as much unit volume in Q4 as in Q4’23” .
“Shipped and open orders currently are at $38 million vs about $35 million at the same time in 2023” with order timing shifting closer to need; “anticipate record revenues for Q1 2025” .
Gross margin outlook: “22% is not an acceptable number... We should be in the 30s and possibly... 40s this year [episodically]” .
Uplisting: process could be “months... at most,” with belief in eligibility; searching for a dedicated CFO; no offering planned; float sufficient .

Q&A Highlights

Gross margin drivers and outlook: Q4 margin compression from mix, overtime for late-year launches, inventory build and obsolescence linked to facility consolidation; target margins in 30s with potential 40s peaks .
Taxes: Illinois NOL freeze drove ~9% state corporate tax in Q4; limitation expected to sunset after 2025 .
Inventory and working capital: Elevated to ensure supply for Q1/Q2 and to buffer consolidation; plan to improve WC turns in 2025 as supply chain team ramps .
Uplisting: Aiming for 1H 2025; subject to NASDAQ process with some subjectivity; company believes it is eligible; not planning an equity offering .
Demand cadence: Q2 looks particularly strong and could exceed Q3; customers ordering closer to need due to macro/tariff uncertainty; average customer and order sizes increasing .

Estimates Context

Consensus data: Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable for NANX due to missing mapping; therefore, no versus-consensus comparison is presented [GetEstimates error].
Implication: With no external consensus, investors should benchmark Q4 to the very strong Q3 and to prior-year Q4; management’s 1H 2025 commentary (record Q1, strong Q2) suggests upward bias to near-term growth expectations absent macro/tariff shocks .

Key Takeaways for Investors

Growth intact; profitability reset: Despite a seasonal/mix-driven step down from a record Q3, Q4 still posted record revenue and positive adjusted EBITDA; FY24 shows substantial operating leverage that should resume as mix normalizes and overtime subsides .
Margin recovery path: Management expects gross margins in the 30s in 2025 with episodic 40s; monitoring indicates drivers (mix, overtime, inventory actions) are transitory rather than structural .
Capacity in place for scale: Added six production suites supports >$200M annual consumer products capacity, positioning Solésence to capture larger brand partners and globalization opportunities .
Near-term catalysts: Record Q1 2025 revenue anticipated; Q2 looks particularly strong; potential NASDAQ uplist within months without equity raise—both could expand investor base and liquidity .
Working capital normalization: Elevated inventory and deferred revenue reflect timing and consolidation buffer; management targets improved inventory turns and working capital discipline in 2025 .
Risk watchlist: Tariff uncertainty (U.S.-Canada) and supplier pricing actions may affect demand timing and COGS; IL NOL freeze implies a ~9% state tax drag through at least 2025 .
Brand/innovation moat: Continued awards, two new patents, and growing roster of larger partners support durable revenue growth and pricing power over time .

Appendix: Full-Year 2024 Highlights

FY24 Revenue $52.35M (+40% YoY); Gross Profit $16.19M (+107% YoY); Gross Margin 31% (from 21%); Net Income $4.24M (vs $(4.38)M LY); Adjusted EBITDA $6.78M (vs $(2.03)M LY) .

NANOPHASE TECHNOLOGIES Corp (NANX)·Q4 2024 Earnings Summary