Article posted on Yahoo NANX board:
CeramicSources overview of NANX
by: DeliriousDog 04/11/01 02:19 pm EDT
Msg: 6335 of 6341
I found this article on the Ceramics Sources website. It is an interesting read:
Corporations and the US government continue to expand their relationships with Nanophase Technologies Corporation (Nasdaq: NANX), a leader in nanomaterials and nanoengineered products, to develop a growing variety of applications for the company's nanocrystalline technology.
The company remains tightly focused on meeting its business plan goals and objectives for 2000 and positioning business for 2001, concentrating on five major areas:
1. Tripling revenue from 1999 in 2000 and achieving a positive gross margin on products during Q3.
2. Increasing the technology base and intellectual property estate by developing new nano processes and establishing patents and trademarks 3. Reducing manufacturing cost by increasing productivity, output rates, and yields while reducing direct and indirect costs throughout the supply chain
4. Increasing manufacturing capability to introduce new products to address current and targeted market opportunities
5. And keeping a dynamic, rolling 12 month vision, positioning business for 2001
The third quarter's revenue growth was 270% year-over-year and surpassed the internal quarterly goal toward tripling revenue this year. Considering the first nine months of 2000, the company's revenues were 200% above the same period last year and 2.2 times all of 1999 revenue. In fact, revenue for the third quarter alone almost equals revenue for all of 1999 and a positive gross margin was attained. Nanophase conntinued to increase the percentage of revenue coming from product sales to over 92% of total revenues, which was a 25% sequential quarter increase.
Third quarter 2000 product sales to the health care market were 8.3% ahead of second quarter. Bilicki said fourth quarter product sales are expected to be essentially in line with third quarter as customer inventory build has been completed. Product sales of zinc oxide to BASF in 2001 are expected to exceed 2000 by approximately 55%, based on the customer's current forecast. Nanophase has an exclusive long-term contract with BASF Corporation for zinc oxide material for human sunscreen applications on a global basis and BASF has agreed to provide funding to Nanophase to install its proprietary coating system for zinc oxide.
Third quarter product sales to the ceramic market, including thermal spray applications, rebounded from a slow second quarter. Forty eight percent of third quarter product sales were to U.S. Navy-approved contractors to be used to thermal spray critical parts for Navy ships and submarines. The remaining sales were from ceramic membrane applications. Nanophase has provided samples of thermal spray material to a number of major U.S. companies, which are currently evaluating the performance of nano-engineered particles in thermal spray applications.
Product sales in third quarter for coating applications remained essentially the same as second quarter, but the company anticipates potentially rapid growth in anti-abrasion transparent coatings for the flooring and other industries during 2001. Currently, a number of initiatives are underway in transparent abrasion resistant coatings that are expected to result in product sales in 2001.
Article continued
by: DeliriousDog 04/11/01 02:20 pm EDT
Msg: 6336 of 6341
Third quarter product sales to the catalysts market exceeded second quarter by 800%. The sales of cerium dioxide were generated by demand for catalytic converters to be installed on new model year cars. Nanophase cerium dioxide is being utilized by one auto manufacturer on a single platform. Q4 product sales are expected to fall off significantly as demand has been front loaded and the annual purchase order volumes have been essentially achieved. Sales of cerium dioxide into environmental catalyst applications for 2001 are forecasted by Nanophase's customers to exceed 2000 by three-fold.
Cost of revenue as a percentage of total revenue has come down by approximately 18% between the second and third quarters of this year. The company continues to make major progress on reducing manufacturing cost, successfully reduced the cost on one product by over 30% and are completing steps on another, which have yielded a 23% cost reduction exiting September. Nanophase's goal is to achieve the 30%-plus cost reduction on or about mid-November for this major product.
Opportunities for nanomaterials will mature at different rates, and there are substantial opportunities in the near term -- those with a not too demanding level of technical complexity. Building sales of sunscreen products for which Nanophase provides a nanoparticle zinc oxide that meets the strict technical and regulatory requirements for sunscreen active ingredients, is an attractive near-term growth vehicle for the company. Even though Nanophase considers the technology to be relative modest in complexity, a very substantial effort by a dedicated team was required to develop the supply chain and to manufacture, package and ship the quantities required.
Another near-term sales growth opportunity pointed out by management is products for the flooring industry. Nanophase has translated the technology used to make transparent sunscreens into transparent, abrasion-resistant products designed to improve scratch resistance while maintaining high gloss, and estimates that the potential opportunities for Nanophase in this market alone is at least $25 million. Nanophase is currently supplying and working with three large customers in this area.
The additional technologies that Nanophase have developed in current applications are serving as the stepping stones for addressing the next generation of even more technically challenging applications. For example, management believes that Nanophase has a competitive edge in nanoparticle-based functional coatings for use in automotive, architectural, electronics and solar energy control markets. The opportunity is substantial -- potentially at least $50 million . These coatings protect against abrasion and wear, and the harmful effects of static electricity or sunlight.
The technical requirements are more severe than for sunscreens or flooring. For example, developing a Class A scratchproof finish for cars involves very strict criteria, so these applications probably will take a little longer to fulfill. Nanophase is working with a number of large companies to develop and introduce these kinds of coatings to various markets. The company has already developed thermal spray coatings for the U.S. Navy, a potential $25 million market. Coatings are also being evaluated in such diverse applications as improving wear resistance in the plastics molding industry, and in protective coatings for gas turbine and aircraft engines.
Nanophase is also making progress in another key area of focus, catalysts. The company's engineered cerium dioxide product is already used in automotive catalysts. Additional opportunities offer the potential to generate $60 million in revenues to Nanophase from this market segment. The company is developing additional environmental catalyst applications with several customers for its nanocrystalline ceria and iron oxides.
The European patent office has agreed to issue a patent covering Nanophase's process, equipment, and materials. Patents have now been issued in Germany, France, Great Britain, Australia, Japan and the US. At the end of September, agreements and customer commitments totaled approximately $7 million for 2001. |
