EnWave (TSXV:ENW) (OTC:NWVCF) reported second-quarter results for fiscal 2019 after the market close on Tuesday, May 28. 

Revenue soared 110% year over year, which is an acceleration from growth of 73% last quarter and 103% in the fourth quarter of fiscal 2018. As with the last two quarters, earnings per share came in at breakeven.

The Canada-based company makes all-natural dried cheese snacks and licenses, manufactures, and installs equipment for dehydrating organic materials, including cannabis. 

EnWave shares traded on Canada's TSX Venture Exchange (TSX) have gained 80.9% in 2019 through May 28, while shares traded over the counter (OTC) in the United States are up 79.6%. The S&P 500 has returned 12.6% over this period.

Here's how the second quarter worked out for EnWave and its investors.

Dried cannabis buds in glass jars sitting on a flat surface.

Image source: Getty Images.

EnWave's results: The raw numbers

All monetary figures are in Canadian dollars.


Fiscal Q2 2019 

Fiscal Q2 2018

Year-Over-Year Change


CA$8.77 million

CA$4.17 million   


Operating income

CA$3.06 million

CA$1.81 million


Net income




Earnings per share (EPS)




Data source: EnWave. Results based on International Financial Reporting Standards (IFRS). 

Revenue growth was primarily driven by increased sales of Moon Cheese, produced by EnWave's wholly owned NutraDried Food subsidiary in Washington State, but the company's EnWave Canada Radiant Energy Vacuum (REV) dehydration technology business also contributed, as detailed below.

Gross margin came in at 35.6%, up from 31% in the year-ago period, and down from last quarter's 38.9%. Gross margin will be "lumpy" from quarter to quarter, due largely to lumpiness in EnWave Canada's results. 

What happened with EnWave in the quarter?

Here's how results broke out by segment:


Fiscal Q2 2019 Revenue

Year-Over-Year Change

Fiscal Q2 2019 Segment Income*

Year-Over-Year Change*


CA$6.76 million


CA$1.39 million


EnWave Canada (REV dehydration business)

CA$2.01 million

14% (CA$1.61 million) N/A. Loss widened from CA$149,000 in year-ago period. 


CA$8.77 million

110% (CA$224,000) N/A. Loss narrowed from  CA$519,000 million in the year-ago period.

Data source: EnWave. *Author's calculations from numbers the company provides.

For the first half of fiscal 2019, EnWave Canada earned royalties of $376,000, up 17% year over year. 

Major happenings in the quarter included:

  • NutraDried began distributing its new premium salad topping called Toppers to more than 2,000 Walmart locations across the U.S.
  • In January, as I previously reported, "EnWave and its licensed cannabis partner, major Canadian grower Tilray (NASDAQ:TLRY) signed a royalty-bearing sublicense with The Green Organic Dutchman Holdings (OTC:TGOD.F) giving its fellow Canadian company non-exclusive rights to use REV tech to dry organic cannabis in Canada. EnWave also received a purchase order from TGOD for a large-scale 60kW REV machine. In the same month, EnWave and Tilray signed a royalty-bearing sublicense with Your Wasabi Farms, which extends YWF's rights to include using REV tech to dry industrial hemp."
  • In January, the company signed a royalty-bearing license agreement with Royal FrieslandCampina, a Dutch multinational dairy cooperative that will launch REV products in the European market. The dairy company purchased a 10kW REV machine to kick off production.
  • In March, "EnWave and TGOD signed an equipment purchase agreement for three additional large-scale 120kW REV machines equipped with Optional Support Equipment and Robotic Arms," according to EnWave's management discussion.

Major cannabis market activity soon after the quarter ended

In late April (fiscal third quarter), EnWave entered a licensing deal and formed an intellectual-property partnership with Aurora Cannabis (NASDAQ:ACB), a top Canadian marijuana grower. In addition, Aurora made a $10 million strategic equity investment in EnWave, giving it an approximate 4.91% stake. As I've written about this multifaceted teaming:

The royalty-bearing license agreement gives Aurora the exclusive rights to EnWave's patented radiant energy vacuum (REV) drying technology for the production of cannabis materials in the European Union, excluding Portugal. "Aurora has also secured exclusive license options for both Australia and South America, excluding Peru, exercisable pursuant to minimum REV machine purchase order requirements," according to the press release. "Additionally, Aurora has signed a non-exclusive sub-license to use REV technology in Canada." Canadian grower Tilray has the exclusive right to use and sub-license EnWave's REV tech in Canada, so it also stands to financially benefit from Aurora's using REV in Canada.

Moreover, Aurora placed a purchase order for two of EnWave's 120kW REV dehydration systems for its Aurora Sky and Aurora Sun facilities in Canada, and intends to purchase a third 120kW system for its Aurora Nordic facility in Denmark within sixty days of the agreement.

What management had to say

Management didn't provide a quote in the earnings release, nor did it hold a conference call. This isn't unusual for small companies.

Looking ahead

In the quarter, EnWave continued to grow revenue at a brisk pace, driven by its NutraDried segment. The company remains on the cusp of profitability, with EPS coming in at breakeven for the third consecutive quarter.

EnWave Canada's revenue is on track to increase in the second half of the year as open purchase orders are completed and booked as revenue. It had four large-scale REV machine purchase contracts open in the second quarter along with the three large-scale machine orders received from Aurora in the third quarter. 

The company doesn't provide guidance.

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