Mr. Soroush Nazarpour reports

NANOXPLORE REPORTS RESULTS FOR ITS Q1-2024

Nanoxplore Inc. has released its financial results for the three-month period ended Sept. 30, 2023.

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

Highlights

• Total revenues of $28,936,031 in Q1 2024 compared with $27,232,525 in Q1 2023, representing a 6-per-cent increase;
• Gross margin on revenues from customers of 19.7 per cent in Q1 2024 compared with 11.6 per cent in Q1 2023;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $170,654 for the advanced materials, plastics and composite products segment offset by negative $618,986 for the battery cells segment (VoltaXplore initiative) for a net adjusted EBITDA in Q1 2024 of negative $448,332 compared with negative $1,977,032 in Q1 2023;
• Total liquidity of $39,581,390 as at Sept. 30, 2023, including cash and cash equivalents of $28,933,670;
• Total long-term debt of $7,498,468 as at Sept. 30, 2023, down by $377,420 compared with June 30, 2023;
• Nanoxplore expects total revenues of $130-million for the year ending June 30, 2024.

Overview

Pedro Azevedo, chief financial officer, stated: "The quarter produced some strong results even though our Q1 is traditionally our slowest quarter. We have won some important new business that will start to benefit us in the second half of calendar 2024 and maintained the margin improvements we have fought to achieve over the last year. While we acknowledge that growth is slowing down as a result of central banks interest rates hikes, our graphene initiatives are steadily growing and we are well positioned to deliver the returns our shareholders are expecting from us."

Soroush Nazarpour, president and chief executive officer, said: "I am very pleased with the performance of Nanoxplore's team as we have been able to significantly improve our gross margin to almost 20 per cent compared with the first quarter of last year. In addition, we announced new contract wins totalling $24-million in annual revenues that will contribute positively to our future financial performance. Our graphene enhanced composite light weighting solutions are gaining momentum, and more OEMs are interested in our products. Graphene brings several technical improvements to these products which translates into higher gross margins, well over traditional composite part suppliers. Our focus on margin expansion, including reducing the manufacturing cost of graphene, focusing on high-margin applications such as battery materials will further contribute to our financial performance in the years to come. Furthermore, our continued focus on accelerating the market adoption of graphene and graphene enabled products has led us to achieve a major innovation in manufacturing graphene -- developing a dry processing method to produce graphene at significantly lower cost. We believe the expected cost reductions achieved via this process will allow us to make Nanoxplore competitive to carbon black selling price thus eliminating one of the major obstacles in adoption of graphene."

Reporting Segments results

NanoXplore reports its financials in two distinct segments: advanced materials, plastics and composite products, and battery cells.

All revenues are coming from the segment of advanced materials, plastics and composite products, except for $21,930 of other revenues (Q1 2023 -- nil) from the segment battery cells.

Revenues from customers increased from $27,147,167 in Q1 2023 to $28,706,752 in Q1 2024. This increase is mainly due to a positive product mix including graphene enhanced products, higher volume, a positive FX impact and price increases partially offset by lower tooling revenues.

Other income increased from $85,358 in Q1 2023 to $229,279 in Q1 2024. The variation is due to grants received for R&D (research and development) programs.

Adjusted EBITDA

1) From advanced materials, plastics and composite products

The adjusted EBITDA improved from negative $1,977,032 in Q1 2023 to $170,654 in Q1 2024. The variation is explained as shown:

• Gross margin on revenues from customers increased by $2,499,095 compared with Q1 2023 due to higher sales as described herein, favourable product mix, improved productivity and cost control;
• Partially offset by higher administrative expenses (SG&A and R&D) of $513,400 mainly due to additional headcounts and higher wages, including higher accrued variable compensation.

2) From battery cells

The adjusted EBITDA passed from nil in Q1 2023 to negative $618,986 in Q1 2024. The variation is explained by the administrative expenses (G&A and R&D) of $640,916 from this new segment.

C. Other

Additional information about the corporation, including the corporation's interim management discussion and analysis for the three-month periods ended Sept. 30, 2023, and 2022 (MD&A) and the corporation's unaudited condensed interim consolidated financial statements for the three-month periods ended Sept. 30, 2023, and 2022 can be found on the company website.

Webcast

Nanoxplore will hold a webcast tomorrow, Nov. 8, 2023, at 8:30 a.m. ET to review its Q1 2024. Soroush Nazarpour, CEO and president of Nanoxplore, and Pedro Azevedo, chief financial officer, will host the event. To access the webcast please access the link from the original version of this news release or you can access through the company's website in the investors section under events and presentations. A replay of this event can be accessed via the aforementioned link or 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, electronics and other industrial sectors. The corporation is also a silicon-graphene-enhanced Li-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.

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