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The cannabis processing tech provider's revenue fell 15% year over year in its fiscal second quarter.
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EnWave (ENW +0.00%) (NWVCF 0.04%) reported fiscal second-quarter 2020 results on Friday, May 29, before the market open. The cannabis player's revenue declined 15% year over year, driven by the fallout from the COVID-19 pandemic. It posted a loss per share of 0.02 Canadian, whereas it broke even in the year-ago period.
The company's NutraDried segment, based in Washington state, makes all-natural dried cheese snacks. Its Canada-based EnWave segment licenses, manufactures, and installs equipment for dehydrating organic materials, including food, pharmaceuticals, and cannabis.
The market reaction was slightly positive. On Friday, EnWave shares on Canada's TSX Venture Exchange (TSX) gained 2.6%, and shares traded over the counter (OTC) in the United States were up 1.3%. The S&P 500 index rose 0.5%.
Image source: Getty Images.
All monetary figures are in Canadian dollars.
|
Metric |
Fiscal Q2 2020 |
Fiscal Q2 2019 |
Change |
|---|---|---|---|
|
Revenue | CA$7.49 million |
CA$8.77 million |
(15%) |
|
Net income | (CA$1.85 million) |
(CA$0.22 million) |
N/A. Loss expanded more than 700%. |
|
Earnings per share |
(CA$0.02) |
CA$0.00 | N/A. Result worsened to negative from breakeven. |
Segment revenue results were as follows:
Gross margin came in at 25%, down from 36% in the year-ago period. The decline was driven by a change in sales mix. The NutraDried segment sports higher margins than the EnWave segment.
During the quarter, EnWave announced plans to begin the commercial deployment of REV technology into the U.S. cannabis market. The company said that it's "in talks with numerous U.S. cannabis companies."
In its earnings release, EnWave included a lengthy discussion of the COVID-19 pandemic's impact on its operations. Here are what I view as the key points (wording directly from release):
EnWave's balance sheet remains solid. It has a working capital surplus of CA$24.4 million and cash position of CA$15.6 million. Indeed, management believes that it's "in a strong position to pursue growth across both segments."
In light of the pandemic, EnWave turned in a fairly solid quarter.
The company doesn't provide guidance. It's a given that its results in fiscal Q3 (corresponding to calendar Q2) will also be negatively affected by the global crisis -- and probably more so than in fiscal Q2, at least on the revenue side.
It's also highly likely that fiscal Q4 results will be hurt, though the pandemic's impact on its operation seems poised to lessen by fiscal Q4. U.S. states have largely begun to reopen their economies, which should help its NutraDried segment get back on track.