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EnWave Corp’s latest results highlight big jump in gross margin

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EnWave Corporation (CVE:ENW) is a Vancouver-based advanced technology company specialising in the development of Radiant Energy Vacuum (REVTM) technology – a proprietary method for the precise dehydration of food and cannabis applications. EnWave’s technology dates back to 1996, with the development of the first prototype REV machine at the University of British Columbia for dehydrating food and nutraceuticals.

Since then, the company has continued to develop, produce and sell on an increasingly large and commercial scale, growing rapidly across several market verticals in multiple sectors. On Friday, EnWave hosted an earnings conference call to report its consolidated interim financial results for the first quarter ended December 31, 2021. EnWave’s stock price rose by 3.19% in response to the positive news as investors scrambled to purchase shares of the company.

Key financial highlights for Q1 (expressed in CAD ‘000s)

The most impressive statistic to emerge from Friday’s EnWave conference call concerns the company’s gross margin growth. Gross margin for Q1 2022 was 43% compared to 23% for Q1 2021, representing a significant improvement. Gross margin increased due to a change in sales mix with higher revenues from the EnWave segment, as well as the growth in high-margin royalty revenue. It was also largely driven by a 39% drop in direct costs from a value of $5,835 in Q1 2021 to $3,581 in Q1 2022.

In addition to gross margin improvements, EnWave also saw significant increases in their adjusted EBITDA figure. Adjusted EBITDA for Q1 2022 was income of $301 compared to a loss of $911 for Q1 2021, an improvement of $610. Looking forward, the company claimed it is focused on achieving its target of achieving consistent, growing profitability in the near-term, which includes NutraDried delivering positive Adjusted EBITDA.

The final key financial highlight to come out of EnWave’s consolidated interim financial results for Q1 regards its operating expense values. The company experienced a 12% fall in operating expenses, which was primarily led by a 26% drop in ‘Sales and Marketing’ costs. This is likely to set the company in good stead for the upcoming months.

Significant corporate accomplishments in Q1 2022 and subsequently

Together with its impressive financial highlights, EnWave reported multiple significant corporate accomplishments. Amongst others, these included the commissioning of a 120kW REV machine for its Illinois-based cannabis partner for the rapid processing of premium smokable cannabis, sale of a 10kW REV machine to Dairy Concepts of Ireland, and advancement of its global strategic partnership with Dole Group.

Investment outlook for EnWave in 2022

On Friday, EnWave’s stock price rose 3.19% (to 0.97 CAD) in response to the company’s conference call as investors perceived the positive news to indicate financial and operational business success throughout 2022 and beyond. EnWave’s recent report certainly suggests the firm will emerge out of the Covid-19 crisis in good health.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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