Nanalysis Announces First Quarter 2025 Results

Delivers Another Quarter of Positive Adjusted EBITDA & Operating Cash Flow

CALGARY, AB, May 28, 2025 /CNW/ - Nanalysis Scientific Corp. ("the Company") (TSXV: NSCI) (OTCQX: NSCIF) (FRA: 1N1), a leader in portable NMR spectrometers and MRI technology for industrial and research applications announces first quarter results for the period ending on March 31, 2025. Chief Executive Officer Sean Krakiwsky and Chief Financial Officer Randall McRae will host a conference call at 5 P.M. Eastern Time today to discuss the results. A second call will be held for European investors at 8:30 A.M. Eastern Time tomorrow, Thursday, May 29th. All interested parties are invited to join these calls.  All dollar figures in this press release are in thousands of Canadian dollars, except per share amounts or unless otherwise stated.    

"The first quarter of this year was not without some macro headwinds which were felt at a global scale," said Sean Krakiwsky, Founder and CEO of Nanalysis.  "In spite of that, the Company has been able to continue generating positive Adjusted EBITDA and positive operating cash-flows of $2.7 million. We are seeing significant margin improvement within product sales as a direct result of improvements to our manufacturing process and overall cost cutting measures.  We have now turned our focus on operational excellence to our services organisation. We have begun to apply the same discipline that created efficiencies in our manufacturing processes to our service delivery to improve gross margins and drive increases in Adjusted EBITDA.  Our plan hasn't changed as we remain focused on continuing to build a fully vertically integrated scientific instrumentation business with innovative products, as well as a growing service business, progressing on the path to profitable growth."

Financial highlights for the three months ended March 31, 2025:

		Three months ended March 31
($000's)		2025	2024	Change	Change
Product sales		3,687	4,216	(529)	-13 %
Security services revenue		5,023	4,723	300	6 %
Flow-through inventory revenue		1,884	2,223	(339)	-15 %
Total sales and revenue		10,594	11,162	(568)	-5 %
Gross margin percentage - product sales		66 %	47 %	19 %
Gross margin percentage - service revenue		6 %	8 %	-2 %
Adjusted EBITDA		180	(104)	284
Net loss		(1,307)	(2,522)	1,215	48 %

• For the three months ended March 31, 2025, the Company reported consolidated revenue of $10,594, a decrease of $568 or 5% from the comparative period in 2024.  This decrease was caused by the macro uncertainties emanating from the United States which impacted product sales.  Within the security services segment, revenue was flat with an increase in services revenue being offset by a decrease in flow-through inventory revenue.
• Gross margin percentage for the three-month period ended March 31, 2025, on product sales was 66%, versus 47% for the three-month period ended March 31, 2024. The improvement in gross margin is a direct result of cost reductions and efficiency programs in place since mid-2023.
• Security service gross margin percentage in the quarter was 6% versus 8% in the prior year comparative period as a result of the higher costs of service in the quarter including overtime wages.  The Company has begun a specific program to improve efficiency and margins within this project given the setback seen in Q1 2025.
• Adjusted EBITDA is used by the Company as a proxy for operating cash flows available for reinvestment in the Company and to service financing obligations.  Adjusted EBITDA for the three months ended March 31, 2025, was $180 versus an Adjusted EBITDA (loss) of ($104) in the same period last year.  This was primarily a result of 19% improvements in margins for product sales, as well as the effects of cost reduction measures taken in 2024.
• Net loss was $1,307 for the first quarter of 2025, which is an improvement of $1,215 over the same period in 2024. The decrease in net loss was due to improvements in product sales gross margin, the effects of 2024 cost reductions taken, lower depreciation due to the impairment of an acquired intangible asset in 2024, and finally the fact that losses from associate are no longer recorded in the consolidated statement of loss and comprehensive loss due to the impairment of the Quad investment in 2024.

Quarterly Trend:

	2025	2024
($000's)	Q1	Q4	Q3	Q2
Product sales	3,687	5,536	4,242	5,402
Security services revenue	5,023	5,602	5,420	5,265
Flow-through parts revenue	1,884	1,151	908	807
Total revenue	10,594	12,289	10,570	11,474
Adjusted EBITDA	180	1,904	545	759
Normalized net loss	(1,307)	(400)	(1,570)	(1,795)

• In Q1 2025 sales were down by $1,695 from Q4 2024. This was due to Q1 being seasonally slower than Q4 in product sales generally, the negative effect of American economic and tariff uncertainty on the Company's sales prospects in Q1, and operational setbacks in the Security Services segment.
• The Company has reported positive Adjusted EBITDA since the second quarter of 2024 and expects this to continue through 2025. As the Company looks to drive improved gross margins in its Security Services segment, it expects Adjusted EBITDA to improve.
• Normalized net losses, which exclude one-time non-cash impairment charges related to Quad as well as the impairment of acquired customer relationship assets from the K'Prime acquisition recognized in Q4 2024, have increased in the first quarter as increased costs in the security services segment and normal seasonality in product sales impacted results.

Recent strategic and operational highlights during and after the first quarter of 2025 include:

• Operational Focus and Changes in Airport Security Maintenance Business: The Company welcomes Marc Tomlinson as its new EVP of Services. With his extensive background in strategic operations management, the Company believes it will quickly return to its services growth trajectory seen in the first three quarters of 2024.
• Renegotiated Term Loan Facility: The Company has successfully renewed and renegotiated its term loan facility with ATB Financial, resulting in a twelve-month reduction in principal repayments and Company friendly debt covenants for 2025.
• Margin Expansion in product sales: The Company continued to drive manufacturing efficiency and reap the benefits of cost reductions to grow product gross margins by 19% year over year to 66%, versus 47% in Q1 2024.
• Next generation technology: At the beginning of 2025 the Company launched its new 60 MHz Benchtop NMR product, along with advancements in automation software for the pharma and chemical industries. We are very proud of our next generation technology platform, which will yield increased performance, better applications, and new products over the next year.

Outlook

"As 2025 continues, we have maintained a strong sales funnel into the second quarter and full year.  While the Company is optimistic that sales for the full year will not be impacted by tariffs and economic uncertainty, it is possible that product sales growth in 2025 will face some headwinds.  We are working diligently to navigate these uncertainties and implementing risk mitigation strategies, including improving distributor relationships in markets outside the United States," continued Mr. Krakiwsky.

"In focusing our efforts on what we can control, we will continue to offer and innovate on our core Benchtop NMR products.  We look to leverage new sales channels and partnerships as well as enter into new verticals.

"In our latest initiative, we are taking the same diligent approach to efficiency and process improvement that was implemented in our product business and applying it to our Services business.  We have made leadership changes and have brought in a seasoned, operational focused leader. This process will center around workload management, process improvement, and continuing to implement automation and tools to help our team deliver their services effectively and efficiently. We have every confidence that we will be able to make improvements that will drive margins and results upward. 

"I am quite positive on what the future brings for Nanalysis," concluded Mr. Krakiwsky. 

Conference Call:

Investors interested in participating in the live full year call can dial 1-888-510-2154 or 437-900-0527 from abroad. Investors can also access the call online through a listen-only webcast here https://app.webinar.net/eXAlax953qK or on the investor relations section of the Company's website HERE.

The webcast will be archived on the Company's investor relations webpage for at least 90 days and a telephonic playback will be available for seven days after the conference call by calling 1-888-660-6345 or 289-819-1450, conference ID #  00805.

Additionally, the Company will be hosting a Q&A session for its European investors at 8:30am ET tomorrow, Thursday, May 29^th, which can be accessed by the following link:Join the meeting now.

Non-IFRS and Supplementary Financial Measures

The Company prepares and reports its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, ‎as adopted ‎by the Canadian Accounting Standards Board ("IFRS"). However, this press release may make reference to certain non-IFRS measures including key ‎performance indicators used by management. These measures are not recognized measures under IFRS ‎and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable ‎to similar measures presented by other companies. Rather, these measures are provided as additional ‎information to complement those IFRS measures by providing further understanding of the Company's results of ‎operations from management's perspective. Accordingly, these measures should not be considered in ‎isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.

The ‎Company uses Flow-through parts revenue, Security services revenue, Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA"), and Normalized net loss as non-IFRS measures, which may be calculated ‎differently by other companies. These non-IFRS measure are used to provide investors supplemental measures of the Company's operating performance and liquidity and thus highlight trends in the Company's ‎business that may not otherwise be apparent when relying solely on IFRS measures. The Company also ‎believes that securities analysts, investors and other interested parties frequently use non-IFRS measures ‎in the evaluation of companies in similar industries.

Flow through parts revenue and Security services revenue

		Three months ended March 31
($000's)		2025	2024	($) Change
Security services revenue		5,023	4,723	300
Flow-through inventory revenue		1,884	2,223	(339)
Total Service Revenue		6,907	6,946	(39)
Security services costs		4,724	4,355	369
Flow-through inventory costs		1,884	2,223	(339)
Total Cost of Services		6,608	6,578	30

Adjusted EBITDA

		Three months ended March 31
($000's)		2025	2024	($) Change
Net loss		(1,307)	(2,522)	1,215
Depreciation and amortization expense		924	1,152	(228)
Finance expense		327	354	(27)
Stock-based compensation		131	260	(129)
Other (income) expenses		(138)	254	(392)
Amortization of deferred wages		190	190	-
Loss from associate		-	200	(200)
Current income tax expense		27	32	(5)
Deferred income tax expense (recovery)		26	(24)	50
Adjusted EBITDA		180	(104)	284

Adjusted EBITDA by Quarter

	2025	2024
($000's)	Q1	Q4	Q3	Q2
Net loss	(1,307)	(7,452)	(1,644)	(1,995)
Depreciation and amortization expense	924	1,155	1,165	1,154
Finance expense	327	293	341	357
Stock-based compensation	131	199	181	388
Other (income) expenses	(138)	124	(94)	150
Amortization of deferred wages	190	215	214	276
Loss from associate	-	345	305	235
Impairment of assets	-	7,052	74	200
Current income tax expense (recovery)	27	33	(22)	2
Deferred income tax expense (recovery)	26	(60)	25	(8)
Adjusted EBITDA	180	1,904	545	759

Normalized net loss

	2025	2024
($000's)	Q1	Q4	Q3	Q2
Net loss	(1,307)	(7,452)	(1,644)	(1,995)
Impairment of assets	-	7,052	74	200
Normalized net loss	(1,307)	(400)	(1,570)	(1,795)

Supplementary Financial Measures

The Company may also use supplementary financial measures which are intended to be disclosed on a periodic basis to depict the historical or expected future financial performance, cash position, or cash flow of the Company, are not a non-IFRS measure, and are not presented in the financial statements. The measures as discussed in this press release include:

• Gross margin percentage, which is defined as either (Product sales less Cost of product sold) divided by Product sales or (Security services revenue less Security services costs) divided by Security services revenue

About Nanalysis Scientific Corp. (TSXV: NSCI, OTCQX: NSCIF, FRA:1N1)

Nanalysis Scientific Corp. in operates two primary business segments: Scientific Equipment and Security Services. Within its Scientific Equipment business is what the Company terms "MRI and NMR for industry". The Company develops and manufactures portable Nuclear Magnetic Resonance (NMR) spectrometers or analyzers for laboratory and industrial markets. The NMReady-60™ was the first full-feature portable NMR spectrometer in a single compact enclosure requiring no liquid helium or any other cryogens. The Company has followed up that initial offering with new products and continues to have a strong innovation pipeline. In 2020, the Company announced the launch of its 100MHz platform, which has the highest usable field on a fully featured benchtop NMR on the market.  In early 2025, the Company launched its new 60MHz instrument which is based on the successful 100MHz product line. The Company's devices are used in many industries (oil and gas, chemical, mining, pharma, biotech, flavor and fragrances, agrochemicals, law enforcement, and more) as well as numerous government and university research labs around the world. The Company is working to expand into new global market opportunities independently and with partners.  With its partners, the Company provides scientific equipment sales and maintenance services globally. 

Within the Company's Security Services business, the core activity is providing airport security equipment maintenance in each province and territory of Canada.  In addition, the Company provides commercial security equipment installation and maintenance services to a variety of customers in North America. 

Notice regarding Forward Looking Statements and Legal Disclaimer

This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

SOURCE Nanalysis Scientific Corp.

Contacts: Matthew Selinger, Firm IR Group, 415-572-8152, [email protected]