Mr. Pedro Azevedo reports

NANOXPLORE REPORTS RECORD RESULTS IN Q4 AND FULL YEAR 2023

Nanoxplore Inc. has released its financial results for the year ended June 30, 2023.

All amounts in this news release are in Canadian dollars, unless otherwise stated.

Highlights:

• Higher total revenues of $33.3-million in Q4 2023, compared with $28.3-million in Q4 2022, representing an 18-per-cent increase, and total revenues of $123.9-million in 2023, compared with $94.3-million in 2022, representing a 31-per-cent increase;
• Gross margin on revenues from customers of 20.8 per cent in Q4 2023, compared with 16.8 per cent in Q4 2022, and of 17.4 per cent during the year 2023, compared with 10.2 per cent in 2022;
• Record adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)* of $1.1-million for the advanced materials, plastics and composite products segment offset by negative $600,000 for the battery cells segment (Voltaxplore initiative) for a net adjusted EBITDA in Q4 2023 of $500,000, compared with $100,000 in Q4 2022;
• Cash flows from operating activities were once again positive by $1.7-million in Q4 2023, bringing the company's year 2023 to $2.4-million, a significant improvement over 2022 and past years;
• Total liquidity of $46.5-million as at June 30, 2023, including cash and cash equivalents of $36.2-million;
• Total long-term debt of $7.9-million as at June 30, 2023, down by $1.6-million compared with 2022.

Overview

Pedro Azevedo, chief financial officer, stated: "I am very pleased to have ended our fiscal year 2023 with our strongest quarter and strongest full-year results in our history. Our record revenues and record adjusted EBITDA were the result of our focus on expanding volume of graphene-enhanced products and improving manufacturing efficiencies. Graphene's benefits as an additive are real and compelling, and more and more customers are recognizing this. We are still in a new material introduction phase, but the direction is clear and momentum is building."

Soroush Nazarpour, president and chief financial officer, said: "I am very proud of our team in delivering our strongest operating results to date both on a quarterly and full-year basis. Despite a challenging macro environment, we were able to increase our revenues and gross margins, and reached record adjusted EBITDA, while maintaining a strong balance sheet. In addition to the financial achievements, we achieved significant milestones during the year, including: converted one of our OEM clients to fully graphene-enhanced parts, increased our overall volume of graphene-enhanced products, put in place a pilot manufacturing facility for the anode materials initiative and graphene-enhanced silicon additives for energy storage market, made significant progress in making the Voltaxplore gigafactory a reality, and have begun investments in the SMC materials initiative. I have to thank all the employees of Nanoxplore, in each of our operating companies, for their hard work and for having helped us achieve these results."

Reporting segments

Subsequent to Nanoxplore's acquisition of the non-controlling shares of Voltaxplore, the corporation has determined that segmented reporting would be more appropriate for Nanoxplore's financial performance beginning in Q4 2023. As such, Nanoxplore now reports its financials in two distinct segments: advanced materials, plastics and composite products; and battery cells.

The advanced materials, plastics and composite product segment provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging and electronics, and other industrial sectors.

The battery cell segment, which encompasses the Voltaxplore initiative, provides silicon-graphene-enhanced lithium-ion batteries for the electric vehicle and grid storage markets.

Results of operations variance analysis -- three-month periods

Revenues

All revenues are coming from the segment of advanced materials, plastics and composite products.

Revenues from customers increased from $31,125,291 in Q3 2023 to $33,010,658 in Q4 2023. This increase is mainly due to positive product mix, including graphene-enhanced products and higher volume.

Revenues from customers increased from $28,080,085 in Q4 2022 to $33,010,658 in Q4 2023. This increase is mainly due to a positive product mix, including graphene-enhanced products, higher volume, a positive foreign exchange (FX) impact and price increases, partially offset by lower tooling revenues.

Other income decreased from $455,269 in Q3 2023 to $308,306 in Q4 2023 and increased from $200,391 in Q3 2022 to $308,306 in Q3 2023. The variations are due to grants received for research and development (R&D) programs.

Adjusted EBITDA

From advanced materials, plastics and composite products

The adjusted EBITDA improved from $112,735 in Q4 2022 to $1,130,962 in Q4 2023. The variation is explained as follows:

• Gross margin on revenues from customers increased by $2,147,592 compared with Q4 2022, due to higher sales as describe above, favourable product mix, improved productivity and cost control;
• Partially offset by higher administrative expenses (SG&A (selling, general and administrative) and R&D) of $1,237,280, mainly due to additional headcounts and higher wages, including higher variable compensation.

From battery cells

The adjusted EBITDA passed from nil in Q4 2022 to negative $604,822 in Q4 2023. The variation is explained by the administrative expenses (G&A (general and administrative) and R&D) of $604,822 from this new segment.

Results of operations variance analysis -- year-end

Revenues

All revenues are coming from the segment of advanced materials, plastics and composite products.

Revenues from customers increased from $92,333,826 last year to $122,700,485 this year. This increase is mainly due to a positive product mix, including graphene-enhanced products, the acquisition of Canuck in December, 2021, higher volume, a positive FX impact and price increases, partially offset by lower tooling revenues.

Other income decreased from $1,973,333 last year to $1,156,686 this year. The decrease is mainly explained by the end of the CEWS (Canada emergency wage subsidy) program set up by the Canadian federal government to help businesses deal with the COVID-19 pandemic. The corporation received nil under this program this year, compared with $840,249 last year, as the program ended in October, 2021.

Adjusted EBITDA

From advanced materials, plastics and composite products

The adjusted EBITDA improved from negative $9,170,924 last year to negative $234,795 this year. The variation is explained as follows:

• Gross margin on revenues from customers increased by $11,907,931 compared with last year, due to higher sales as describe above, favourable product mix, improved productivity and cost control;
• Partially offset by higher administrative expenses (SG&A and R&D) of $2,816,392, mainly due to additional head counts and higher wages, including higher variable compensation.

From battery cells

The adjusted EBITDA passed from nil last year to negative $623,092 this year. The variation is explained by the administrative expenses (G&A and R&D) of $623,092 from this new segment.

Other

Additional information about the corporation, including the corporation's management discussion and analysis (MD&A) for the years ended June 30, 2023, and June 30, 2022, and the corporation's consolidated financial statements for the for years ended June 30, 2023, and June 30, 2022, can be found on the company's website.

* Non-IFRS (international financial reporting standards) measures

Results of operations may include certain unusual and other items that have been separately disclosed, where appropriate, in order to provide a clear assessment of the underlying corporation results.

The financial statements and MD&A were prepared using results and financial information determined under IFRS. However, the corporation considers certain non-IFRS financial measures as useful additional information in measuring the financial performance and condition of the corporation. These measures, which the corporation believes are widely used by investors, securities analysts and other interested parties in evaluating the corporation's performance, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable with similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to financial measures determined in accordance with IFRS. Non-IFRS measures include adjusted EBITDA.

Webcast

Nanoxplore will hold a webcast tomorrow, Sept. 12, 2023, at 8:30 a.m. EDT, to review its year ended June 30, 2023. Mr. Nazarpour and Mr. Azevedo will host the event. You can access the webcast through the company's website in the investors section under events and presentations. A replay of this event can be accessed on the company's website.

About Nanoxplore Inc.

Nanoxplore is a graphene company -- a manufacturer and supplier of high-volume graphene powder for use in transportation and industrial markets. Also, the corporation provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging and electronics, and other industrial sectors. The corporation is also a silicon-graphene-enhanced lithium-ion battery manufacturer for the electric vehicle and grid storage markets. Nanoxplore is headquartered in Montreal, Que., with manufacturing facilities in Canada, the United States and Europe.

We seek Safe Harbor.