Record Revenue for Second Quarter: Nanophase’s Success

— Achieved a remarkable $11.2 million in Q2 revenue
— In the Beauty Science sector, the revenue from Solésence surged by 44% year-over-year, while sales of Active Pharmaceutical Ingredients (API) skyrocketed by 79%   

ROMEOVILLE, Ill., Aug. 17, 2022 (GLOBE NEWSWIRE) — Nanophase Technologies Corporation (OTCQB: NANX), a pioneering company specializing in minerals-based and scientifically-driven health care solutions across beauty and life science industries — known for innovations that protect skin from environmental aggressors and enhance medical diagnostics — has proudly reported its second consecutive quarter of record financial performance for the period ending June 30, 2022.

“We are thrilled to announce another quarter of exceptional growth, with Q2 revenues exceeding $11.2 million, primarily fueled by our Solésence business,” stated Jess Jankowski, Chief Executive Officer. “As sun care becomes a staple in beauty routines, integrating into daily life throughout the year, our brand partners are achieving remarkable success with products that seamlessly blend skincare and cosmetics. Our dedicated growth strategy over the past two years has positioned us strongly within the market.”

Jankowski elaborated: “The first half of 2022 has been a strategic balancing act, wherein we maintained our growth trajectory while simultaneously expanding our operational capacity to meet rising demand. Now that we have solidified our market presence and status, we can concentrate on the organizational changes initiated in Q1, while continuing to execute our growth strategies.”

Kevin Cureton, Chief Operating Officer, remarked: “The achievements of our record quarter also brought about challenges, along with opportunities for enhancements that we are already addressing in Q3. Throughout the second quarter, our unwavering focus remained on customer service and fulfilling demand to ensure successful product launches for our brand partners – a critical aspect of our long-term success. This involved making strategic decisions regarding raw materials inventory and labor allocation to mitigate the challenges faced earlier this year, which have impacted our industry since 2020. Consequently, our brand partners have successfully launched their products in the market, driving growth for both them and us.”

“The increasing evidence of the impact our developed products have with brand partners is significant. For instance, we have collaborated to develop nearly half of the products featured in Bustle’s June article, ‘The Most Innovative Sunscreens You Can Buy,’ along with UV protection offerings from leading beauty brands, particularly those owned by Black entrepreneurs, such as Relevant (Thirteen Lune) and Credo’s EleVen by Venus Williams. The sun care market has experienced a remarkable 51% growth in Q2 compared to 2021, following a 60% growth in Q1 – a clear indication that we are at the forefront of innovation in this sector,” Cureton continued. “With the foundation we have established and the commercial team in place, our senior leadership is now focusing significantly on enhancing our operational processes to facilitate more cost-effective and timely performance, accommodating our increased business levels. This includes consolidating our warehouses and recruiting additional mid-level and senior team members with specialized industry experience.”

Key Operational Highlights for Q2
  
Strategic Business Expansion Initiatives

• During the second quarter, we successfully shipped over 40 new products, collaborating with 20 new brand partners in this initiative.
• These new product launches accounted for approximately 25% of the total Solésence shipments in the first half of the year.

Streamlined Warehouse Operations

• We consolidated operations from three separate warehousing locations into a single facility, increasing our storage space by more than three times and enhancing racking capacity by six times. This consolidation involved implementing cutting-edge scanning and barcoding technology to significantly improve our inventory management and tracking efficiency.

Record-Breaking Production Milestone: Second Consecutive Quarter of Record Revenue

• In June 2022, we achieved our highest monthly revenue in the company’s history, totaling approximately $4.9 million.
• During the second quarter, over 1.5 million units of finished goods were shipped, reflecting our robust operational capacity.

Impressive Financial Highlights for Q2

• The revenue for the second quarter reached $11.2 million, compared to $7.1 million during the same period in 2021, reflecting a remarkable 58% increase.
• Specifically, Solésence revenue hit $7.1 million, which is a 58% increase from $4.5 million in 2021.
• Revenue from Personal Care Ingredients totaled $3.3 million, marking an impressive 86% growth from $1.8 million in 2021.

Six-Month Financial Performance Highlights

• For the six months ended June 30^th , our revenue amounted to $19.4 million, compared to $14.2 million during the same period in 2021, showcasing a 37% increase.
• Solésence revenue reached $12.7 million, reflecting a 44% increase from $8.8 million in 2021.
• Revenue from Personal Care Ingredients was $5.7 million, which signifies a substantial 79% increase from $3.2 million in 2021.

“We have successfully developed a strong market demand and product differentiation, establishing ourselves as industry leaders in these dynamic markets. This is where many growth companies face challenges,” continued Jankowski. “Our expectations for the remainder of 2022 are high as we aim to align our rapid growth with operational excellence.”

Upcoming Conference Call Announcement

Nanophase is set to host its Q2 conference call on Thursday, August 18^th at 10:00 a.m. CDT, 11:00 a.m. EDT, where we will discuss our financial results and provide a comprehensive business update.

Please note that the registration process for participation in the Q&A has changed.

Participant Registration:
https://register.vevent.com/register/BIf95c35deed704fef931dde5bafab926c

To obtain the dial-in number and your personalized PIN, please register using the link above. After registration, you also have the option to receive a call from the system once the conference call begins. If you forget your PIN prior to the call, simply re-register.

The process to access the listen-only webcast remains unchanged. The same link can be used after the call to listen to the replay. Please note that a Telco replay is no longer available.

Listen-Only Webcast & Replay:
https://edge.media-server.com/mmc/p/2sviy3z6

We recommend connecting to the conference at least five minutes before the scheduled start time.

The call can also be accessed through the company’s website at www.nanophase.com by navigating to Investor Relations, then Investor News, and clicking the links provided in the conference call announcement release.

Understanding Financial Results and Non-GAAP Information  
  
Rationale for Non-GAAP Financial Information
Nanophase believes that presenting results excluding certain items, such as non-cash equity compensation charges, offers valuable supplemental insights for both management and investors. This approach facilitates a more meaningful evaluation of performance across reporting periods. The Company utilizes these non-GAAP measures for internal planning and reporting purposes. These measures do not conform to, nor are they a substitute for, Generally Accepted Accounting Principles (“GAAP”), and may differ from non-GAAP measures employed by other companies. The presentation of this additional information should not be viewed in isolation or as a replacement for net income or net income per share prepared in accordance with GAAP.
   
Overview of Nanophase Technologies Corporation
Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leading innovator in minerals-based and scientifically-driven health care solutions across beauty and life science sectors, as well as other advanced materials applications. The Company harnesses a platform of integrated, patented, and proprietary technologies to create products with unique performance, thereby enhancing consumers’ health and well-being. We provide commercial-grade quality engineered materials both as ingredients and as components of fully formulated products in various formats.
  
Insights on Solésence Beauty Science
Solésence, LLC, www.solesence.com, a wholly owned subsidiary of Nanophase Technologies, is revolutionizing skin health with its patented, mineral-based technology that is embraced by leading performance-driven and clean beauty brands. Our innovative products transform the functionality and aesthetic of mineral actives, enabling unprecedented textures in the mineral space and fostering inclusivity in sun care. Solésence’s cutting-edge formulations deliver top-tier UV protection, superior free radical defense against pollution, and enhanced antioxidant performance.

Forward-Looking Statements Disclaimer  
This press release includes forward-looking statements characterized by terms such as “expects,” “shall,” “will,” “believes,” and similar phrases that identify them as forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect the Company’s current beliefs, known events, and circumstances at the time of publication and are subject to unforeseeable risks and uncertainties that could cause actual results to differ materially from the expectations expressed in, or implied by, these forward-looking statements. These risks and uncertainties include, but are not limited to: the decision by a customer to cancel a purchase order or supply agreement, given the Company’s reliance on a limited number of key customers; uncertain demand for and acceptance of the Company’s engineered materials, ingredients, and formulated products; the manufacturing capacity and product mix flexibility in response to customer demand; the Company’s limited marketing experience; changes in development and distribution relationships; competitive pressures from products and technologies; dependence on patents and protection of proprietary information; litigation outcomes; potential government regulations that may be challenging to navigate or prohibitively costly to comply with while remaining financially viable; the ability to maintain a suitable electronic trading venue; and other factors described in the Company’s Form 10-K filed on March 31, 2022. Additionally, the Company’s forward-looking statements may be influenced by general industry and market conditions and growth rates. Except as mandated by federal securities laws, the Company assumes no obligation to update or revise these forward-looking statements based on new events, uncertainties, or other contingencies.

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Sienna Blake

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Sienna Blake is a licensed aesthetic consultant and beauty writer specializing in cosmetic surgery advancements and non-invasive treatments. With a background in dermatology and over eight years of industry experience, Sienna is passionate about helping people achieve confidence through informed beauty decisions. She holds a Bachelor's degree in Health Sciences and regularly collaborates with top plastic surgeons to stay at the forefront of aesthetic innovations. Outside of her work, Sienna enjoys traveling, skincare research, and practicing Pilates.

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