From NANX yAhoo board+
06:54am EST 13-Dec-00 Robinson-Humphrey
by: gadflyone 12/20/00 12:45 am
Msg: 5291 of 5293
06:54am EST 13-Dec-00 Robinson-Humphrey (MOFFAT 404-266-6151) NANX
NANX - Highlights from Management Trip, Reaffirm OUTPERFORM
HIGHLIGHTS FROM LUNCH WITH INSTITUTIONAL INVESTORS YESTERDAY
- Management reiterated their goal to triple commercial revenues in FY01
to $12 million and achieve positive net income in 4Q01.
- BASF revenues should account for approximately 60% of commercial sales
in FY00. Although sales to BASF should grow approximately 50% in FY01, the
percentage of total sales to BASF in FY01 should be only 40%, as sales
outside BASF are growing faster. However, other untapped opportunities at
BASF exist in their cosmetics, catalysts, and coatings divisions.
- The company now believes they can reduce production costs by 35% in
FY01, even more than the 30% they were previously targeting.
- Nanophase emphasized that they have the only nanoparticle manufacturing
facility in the world, and the company runs three shifts a day, 24 hours a
day.
- The new gas filtration membrane order announced last Friday is
considered part of Nanophase's ceramics business, and ceramic membranes
have a total market potential of approximately $35 million. Nanophase is
talking with the two dominant players in this market.
- Other new vertical markets the company will target in FY01 are
microelectronics ($70 million market), chemical catalysts ($50 million
market), and thermal plasma sprays ($25 million market).
- The company's transparent abrasion resistance nanoparticles are being
used in coating for a new vinyl floor covering, introduced this past
summer. This particular vinyl product sells at a premium and has a
lifetime warranty on wear resistance.
- Long-term, the company believes they can achieve a 60% - 70% gross
margin and a 20% - 25% operating margin after they achieve critical mass
in production scale.
- They receive 1-2 calls a day from Fortune 100 companies asking "can your
nanoparticles do this?"
- CEO Joe Cross' chief concern is that if they discover a "killer ap",
they might not have the resources to scale up aggressively. An example of
a killer ap would be scratch-proof coating for eyeglasses.
- The company is targeting $9 million in cash balance at the end of FY01,
assuming no equity offering is completed and only the $7 million in
capital expenditures are made.
COMPANY DESCRIPTION
Nanophase Technologies Corporation is the world leader in development and
production of nanocrystalline materials used in a wide range of industrial
applications. Researchers at Argonne National Labs in the early 1980s
developed a process to make materials in nanosize particles, discovering
many unique properties of these particles. The company became public in
November 1997 at $8 a share, with a post offering enterprise value of $86
million.
INVESTMENT THESIS
We believe Nanophase has first-mover advantage and a leading competitive
position in the commercialization of nanomaterials, having patented the
only large-scale production process for nanoparticles. We believe the
apparent long-term potential for nanomaterials is enormous, representing
an extraordinarily significant scientific breakthrough that could impact
production of almost every human-made object and lead to new inventions
not yet contemplated. |
