VANCOUVER, BC, USA – NEXE Innovations Inc., a compostable and innovative materials company, announces its financial results for the three-month period ended November 30, 2022 (“Q2 2023”). During the quarter, the Company was focused on transitioning to a vertically integrated manufacturing facility in Windsor, Ontario (the “Windsor Facility”).
The Windsor Facility is close to production with the infrastructure and key equipment in place at the end of January. NEXE is working with vendors and suppliers to complete various tests, including site acceptance tests (SATs) and factory acceptance tests (FATs) and commissioning the equipment for production.
At the Windsor Facility, NEXE expects to control the manufacturing process from end-to-end, including both component and finished goods manufacturing.
“We are excited about our Windsor Facility and the progress we have made with our vertically integrated manufacturing process that we can scale to producing ~500 million pods annually,” stated Ash Guglani, President, NEXE Innovations, “the team is working on the final phases and have started to build an operations team in Windsor”.
Key Highlights
- Given the significant advancements made with the vertically integrated manufacturing process, NEXE decided not to continue running a parallel production of its current composite single-use pod (the “NEXE Pod”) and decided to consolidate the two different manufacturing operations sooner than initially planned. As a result of this transition, NEXE started to reduce the current composite NEXE Pod inventories to prepare for the switchover. This resulted in lower revenues in Q2 2023 compared to the previous quarter Q1 2023. For the new injection molded NEXE Pods, we do expect production to ramp up over the year as it relates to our strategy to target private label and co-manufacturing opportunities.
- NEXE is in the process of acquiring the BPI certification. As part of this process, NEXE submitted the new version of the injection molded NEXE Pods to an independent third-party (approved by BPI) to conduct testing. The rigorous testing is now in the later stages, and once the third-party testing is complete, the results will be submitted to BPI for validation. This BPI certification is not required to produce or sell our products and not all of our potential clients require these certifications.
- For the calendar year 2023, a key strategic focus is on growing the Company’s customer base, focusing on private label and co-manufacturing segments of the market. Currently, the Company is actively in discussions with several private label and co-manufacturing companies to secure large commercial contracts as the Windsor Facility capacity comes online. The sales cycle associated with private label and co-manufacturing companies does take time as there are many steps involved including testing and an auditing phase. Based on the sales pipeline and inbound requests, we expect we will receive more purchase orders over the next few months, however there will be a lag between purchase orders and revenues booked.
- In September 2022, the Company announced its first U.S. purchase order with Awaken Brands Ventures Ltd (“Awaken Brands”). The partnership with Awaken Brands is the first entry point for NEXE to sell its proprietary technology of fully-compostable NEXE Pods for the Keurig® Brewing Systems into Awaken Brand’s ecosystem and help companies to meet their sustainability goals. NEXE is currently in the final stages of onboarding Awaken Brands, such as finalizing designs. The production for this purchase order is also being transitioned to the Windsor Facility.
Financial Position
- The Company continues to have a solid balance sheet and is disciplined with deploying capital and keeping expenses at a minimum. At the end of Q2 2023, the Company had a working capital of $26.5 million with cash and GICs of $21.7 million that will help weather increased volatility in the financial markets and with executing NEXE’s strategy.
Given the increased focus for companies and governments to reduce plastic waste, NEXE expects there to be a rapid increase in demand for compostable alternatives. NEXE’s capacity and ability to set up a vertically integrated manufacturing process will strengthen NEXE’s position in a growing market. NEXE expects that it will be able to expand into different markets quickly and in a more cost-effective way.
The Company’s Q2 2023 financial statements and related management’s discussion and analysis are available on NEXE’s SEDAR profile at www.sedar.com and the Company’s website at www.nexeinnovations.com.
*NEXE Innovations Inc. is not affiliated with, endorsed, or sponsored by Keurig®. Keurig® is a registered trademark of Keurig Dr Pepper Inc.
**NEXE Innovations Inc. is not affiliated with, endorsed, or sponsored by Nespresso®. Nespresso® is a registered trademark of Société des Produits Nestlé S.A
