Nanalysis Scientific Corp. (NSCI) Earnings Call Transcript & Summary

Good morning or good afternoon. We'll wait for everybody else to kind of get joined here. I'm Matthew Selinger. I handle the Investor Relations. We will ask that everyone remain muted unless kind of if asking a question. You could also raise your hand, and there are a few different -- there's also some chat options. So we'll kind of wait for more people to log on and then we'll get started.

Good morning, everyone.

Good morning, Randall.

Or yes, afternoon.

Yes, afternoon, correct.

It would be more appropriate.

I'm not sure if everyone had a chance to listen to the replay but we did host our call at 5:00 yesterday Eastern Time, and you can access that on Nanalysis website in the Investor Relations section. I'll just wait a few more minutes here and kind of get started. There you are, Randall. I don't know if it was my computer, but I couldn't see it first.

No. I was configuring all my IT, so I figured everybody didn't maybe see me waving my hands around the camera while I was doing that.

We could see you clear now. Good morning, Sean.

You're muted there.

Good morning everyone.

Good morning, Sean.

Good afternoon to everybody in Europe.

So Sean, I've asked -- we seem to have a smaller group at this time than normal. I don't know if you want to wait a little bit, but I have asked everybody to kind of remain in a mute unless they're asking a question. And again, through this meeting here, we are allowed to -- you can raise your hand. On the top optionality is also a chat function, but we've tended to have pretty good interaction on these calls. So I'll kind of let people go with that. Do we want to get started now?

Yes, I think so. I don't see Walter on there. So he is usually the one that sort of coordinates a lot of the discussion on that side. He's probably on vacation right now is what I suspect. But since we only have 4 people -- yes, I would say let's keep things informal. And if there are no sort of questions at the beginning and we want to kind of get the juices flowing, I don't mind making a few opening remarks. Matt, have you had a chance to ascertain if people have listened to the recorded part?

Well, I've not. I kind of asked that, and I'd let people know if they have not, right, where they can access that, right? So again, I did ask that right before, Sean.

Okay. So I think maybe what I'll do is make a few opening remarks. So thank you to everyone for joining this call. It's always a pleasure to speak with shareholders. As I mentioned in the recorded part of the session, we feel like this quarter represents a little bit of a turning point for us. We went public in June of 2019. And by the way, that was right after an opportunity for an exit. There was a large NASDAQ-listed company that tried to buy us and our Board and management and key shareholders decided that we wanted to stay independent. And so with that decision, also came another decision that we wanted to go public, and we wanted to execute an acquisition strategy that I've kind of been percolating for a few years. And it entailed acquiring sort of partner companies that we've been working with or had material discussions with and kind of bringing together into the Nanalysis fold. And so in June of 2019, we embarked on that journey. The first company we bought was electronics and software company based in Strasbourg. We were going to license their technology and circumstances evolved such that we could acquire the company. We incorporated their technology into our products, made their CTO our CTO and so on and so forth. And it's been a great relationship. And we did several other acquisitions as well. And I want to point out, at that time and indeed, still today, we're not a large company. We're a venture-oriented company. We don't have an M&A team and formal processes in that regard. So we did it all from an entrepreneurial perspective with talented, hard-working people. And we've successfully digested -- acquired and now digested 4 companies during that span, which is quite an accomplishment. And we really worked hard to sort of bring up our baseline revenue and position ourselves for not only growth but also some heft. And I feel like this quarter is emblematic of what we've accomplished. We still have a long way to go in terms of the numbers really manifesting the value that we created. But we saw about $3 million or more in services revenue this quarter or Q2, I should say. We did well in terms of the MRI part of the business, which we continue to incubate and we have some sort of medium and longer-term plans for that. And then the remaining item that we still need to sort of get firing on all cylinders is the backstop NMR group, which I still think of as our core business. But I'm very optimistic that you're going to see some really great progress in that business unit in Q3 and Q4. And then I think we're going to be positioned for prosperity in 2024. So those are just some opening remarks. Maybe there are some questions that have arisen now, and so I'll maybe take a break and see if there are any questions or comments, by the way, happen to just hear some comments that you might have. Anybody with questions or comments? Again, I apologize, usually Walter from Belgium is on the call, and he usually tries to get a little bit of momentum going for the European group, but I don't see him on there today. So...

Yes, nor have I seen -- sometimes he'll send e-mail questions ahead of time, and I'm not seeing those either.

And I don't see any names that I recognize clearly as being European. So it's possible that there's other people on the call. And of course, everybody is welcome. If there's anybody from Calgary on this call, please come to our barbecue today. If you're further away from that, I understand if you're not able to join us. Okay. Well, like I mentioned, we had our main call yesterday at 5 -- at 5:00 p.m. Eastern Time, which is sort of the orthodox approach after an earnings press release, and that's just to sort of fit in with the schedules and expectations of the analysts and the investment bankers that tend to be in New York and Toronto. So we did that yesterday in case anybody on this call is wondering why this is a little bit lower key. And then we do this one the following day to accommodate people in Europe that don't want to stay up until midnight on the first day. So because I see -- I do recognize some of these names. And so I just want to just -- and some of the people on this call, I think, are maybe on this for the first time. So I don't see any more questions. Please just interrupt me if there is, we don't need to be overly formal here. But yes, we're really excited about where we're going. We expect the revenue in the security services business to gain a lot of steam. We've implemented this large project successfully and we're nearing sort of 100% deployment of the resources associated with that. Our customer is essentially the government of Canada or if we want to be more particular, it's the Canadian version of the TSA in the United States and in Canada, the TSA is called CATSA and that project is going very well. It's very sticky. We're more embedded with the customer. I think of us as almost an essential service in Canada to keep all equipment -- scientific equipment in airports, operating well, including the imaging equipment, future 3D imaging equipment. And one of the reasons why we won that contract is because we're not seen by the customer as just sort of a low-tech service provider, but they see us as a world-class R&D company, manufacturing company and now with a world-class service organization, which is critical to our business going forward, where we want to provide service, the high-field NMR machines, preventative maintenance, corrective maintenance, we have aspirations to provide service to MRI machines. We -- in fact, we do that in some markets. In France, we do provide preventative and corrective maintenance to preclinical MRI machines all over the country, and we do a very good job of it. And as part of our vision to be in a position with our partners, and I see some people on this call that might be considered MRI partners. So thank you for joining. We're positioning ourselves to be able to provide service on different types of MRI machines, whether it's something that we develop ourselves or sell on behalf of a partner. So we're very proud of that aspect of our business. And then, yes, like I mentioned, we have some really exciting developments happening with our benchtop NMR part of our business in terms of partnerships and vertical market penetration and so on. So I'll give it one more try, Matt, to see if there's any questions or comments.

Yes. I'll pipe it. These calls, right, as Sean said, is we want to -- while we're a public company, right, we realize we do have shareholders and stakeholders around the world, right? So when we do our earnings calls as Sean said, there -- we want to do them at non-trading hours, which we do, but we really want to be open and give access for everybody to talk with management, right, to talk with Sean and Randall, to ask questions. That's why we host these calls as well and we've had a good feedback in the past. And on that, we, myself, running the Investor Relations or management is accessible. So if people do have questions, feel free to reach out to us. My e-mail and number's on the bottom of every press release, it's on the website. You can contact us at multiple different avenues. And as Sean said also, as I said early on, the conference call replay information is listed in the press release as well on the Investor Relations section of our website. So again, we want to be accessible. We want to give information about the company. We're excited about the company and happy to talk about it. So that's the purpose here of this call as well. But with that, if we're not -- if everybody doesn't have any other questions or comments, we may just wrap this up, and we would look forward to talking to everybody else again in the near future. I think we can wrap it then.

Okay. Yes, thanks again for joining. I didn't mention any numbers. Usually, the way Randall and I work is, I talk about the qualitative aspects of the business and then he refers to specific numbers. And we kind of do that in the context of questions. So it's more of a conversational kind of format. And if you are interested in specific numbers, please refer to our press release that we issued yesterday at approximately 4:00 p.m. Eastern Time. It's easy to find on Google or on our web page, and you'll see the specific numbers for our financial performance in the second quarter. And then I look forward to having the opportunity to address everybody on this call at the end of our next quarter. So thank you very much, and have a wonderful day if you're in North America and then have a wonderful afternoon and evening if you're here in Europe. Thank you very much. Bye-bye.

Thank you.