EnWave Corp’s Revenue Increases Over 100% in Fourth Quarter 2018

EnWave Corporation (TSXV:ENW – $1.32 CAD & OTC:NWVCF – $0.97 USD & Frankfurt:E4U – €0.86), which offers industrial-scale dehydration technologies for organic materials, reported revenue of $7.35 million for the fourth quarter 2018, ended September 30, 2018, compared with $3.63 million in the comparable quarter last year. An increase of 103%!

Thanks to this solid rise in revenue, the Company posted a positive net income for Q4 2018 of $75,000 compared to a net loss of $1.06 million for Q4 2017, an improvement of $1,135.

Annual revenue in fiscal year 2018, reached $22.82 million, an increase of $6.87 million, or 43%, compared with revenue of $16.50 million last year. The net loss decreased from $2.04 million in fiscal year 2017 to $945,000 in 2018. Moreover, if it hadn’t been for a one-time impairment charge of $865,000 in the third quarter in regards to the Sutro agreement, EnWave would have been close to being profitable! The Company did have net cash inflows from operating activities of $4.09 million for 2018.

Especially booming sales of Moon Cheese, the crunchy cheese snacks produced by EnWave’s 100% owned subsidiary NutraDried, contributed to this outstanding performance. In fact, NutraDried recorded the highest quarterly sales ever in the fourth quarter of 2018.

Next to the outstanding financials, EnWave also announced this week that it had signed an Equipment Purchase Agreement with Milne Fruit Products d.b.a. Milne MicroDried Inc. to provide Milne with its third 120kW Radiant Energy Vacuum machine for the production of an extensive portfolio of dried vegetable and fruit applications. Milne is already one of EnWave’s largest customers with more than 50 consumer products on the market today that use its MicroDried ingredients.

2019 looks extremely bright for EnWave thanks to growing Moon Cheese sales, growing royalty income, and a growing sales pipeline.

Especially booming sales of Moon Cheese, the crunchy cheese snacks produced by EnWave’s 100% owned subsidiary NutraDried, contributed to the outstanding fourth quarter and full year results.

NutraDried’s Impressive Growth

NutraDried’s rise in revenue and profitability was due to the fact that it significantly expanded its distribution of Moon Cheese throughout Canada and the U.S. in 2018. The Company also increased marketing at the regional level in the U.S. to improve consumer awareness with the goal of creating further demand pull.

More specifically, NutraDried began selling its Moon Cheese product in a 10oz Club Pack format to Costco in the first quarter of 2018 as a product rotation in Costco’s Midwest division. During the year, NutraDried expanded the product rotation to the Southeast and Northwest divisions.

Currently, the 10oz Club Pack is distributed only through Costco. However, NutraDried is targeting additional Club Pack distribution opportunities. NutraDried’s strategy is to further grow revenue and profitability by leveraging its network of food brokers in the United States, as well as by further investing in marketing activities to increase consumer demand and awareness for Moon Cheese.

In order to fulfill the ever higher demand, NutraDried commissioned a second 100kW nutraREV machine in September 2018 at its Ferndale facility, doubling its production capacity for Moon Cheese. This second REV unit is currently also running at full capacity.

It also expanded its packaging and warehousing capacities through the purchase of additional manufacturing equipment to match processing capacity with the additional dehydration capacity. We understand that the conservative guidance for total NutraDried sales in fiscal year 2019 is around $25 million.

To further increase sales, NutraDried may soon launch a couple of Moon Cheese extension products coined “Moon Cheese Mixems”. For example, different types of cheese will be dried and mixed with a dehydrated tomato. In addition, a Moon Cheese salad topper will be launched as an alternative to croutons. These will be distributed through the existing Moon Cheese channels.

Financials and Balance Sheet

EnWave generates revenue from two business segments: EnWave Canada and NutraDried. EnWave Canada sells REV machinery to royalty partners, rents REV units to prospective royalty partners, and earns royalties from customers that sell REV dried products. Note that royalties are payable to EnWave as a percentage of the value of products sold or based on the number of units produced by its royalty partners. NutraDried, on the other hand, sells Moon Cheese snacks into retail and wholesale distribution channels.

Three Months Ended
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Fiscal Year Ended
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Amounts in $000’s
Net Sales
Direct Costs
Net Income (Loss)
Earnings (Loss) Per Share
Selected income statement data for the quarters and fiscal year ended September 30, 2018 and September 30, 2017. Source: Company Filing

EnWave Canada had revenue of $823,000 for the three months ended September 30, 2018 compared to $1.63 million for the three months ended September 30, 2017, a decrease of $803,000. The decrease in revenue for the three months ended September 30, 2018 relative to September 30, 2017 is due to lower purchase order volume for machinery in the fourth quarter of 2018 relative to 2017.

In fiscal year 2018, EnWave received equipment orders for two 60kW REV machines from Tilray for cannabis production, and sold seven small-scale 10kW REV machines.

Also during fiscal year 2018, royalty revenue for EnWave, excluding royalties from NutraDried, increased to $571,000 compared to $370,000 in 2017, an increase of 54%. NutraDried royalties increased from $317,000 in 2017 to $821,000 in 2018, an increase of $504,000 or 158%.

Revenues from NutraDried reached $6.53 million for the three months ended September 30, 2018 compared to $2.00 million for the three months ended September 30, 2017, an increase of $4.53 million. The increase in revenue for the fourth quarter was due to NutraDried filling repeat orders for Costco rotations, as well as increased distribution to several new retailers.

For the full year, EnWave Canada achieved revenue of $6.32 million and NutraDried $16.50 million, compared to $9.40 million and $6.56 million, respectively, in the same period of the prior year.

Furthermore, the Company achieved a gross profit of $8.91 million for 2018 compared to $4.30 million during 2017, an increase of $4.61 million or 107%. Gross margin as a percentage of revenue was 39% for 2018 compared to 27% for 2017.

Amounts in $000’s
September 30,
September 30,
Cash and Cash Equivalents
Restricted Cash
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Total Current Assets
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Selected balance sheet data for the periods ended September 30, 2018 and September 30, 2017. Source: Company Filing

On September 30, 2018, the Company had working capital of $12.01 million, compared to $6.50 million on September 30, 2017. On September 30, 2018 the cash and cash equivalents balance was $9.10 million compared to $1.32 million on September 30, 2017, an increase of $7.78 million. The change in cash and cash equivalents is primarily due to the private placement that grossed $10 million on November 15, 2017. Note that on February 22, 2018, the Company used cash of $2.31 million (USD $1.80 million) to acquire the 49% non-controlling interest in NutraDried.

Inventory on September 30, 2018 includes completed machines and machine components of EnWave Canada of $1.72 million, which is a decrease of $715,000 compared to September 30, 2017. EnWave Canada sold several small-scale machines from inventory during 2018. NutraDried’s food product and packaging supplies inventory was $1.16 million, which is an increase of $616,000 compared to September 30, 2017 due to the increased production.

Chock Full Sales Pipeline

EnWave’s current sales pipeline comprises of 11 companies that have entered into a Technology Evaluation and License Option Agreement (“TELOA”) as well as many earlier-stage prospects that are in active discussions about using REV for applications in the dairy, fruit products, vegetable products, meat products, and cannabis verticals.

The strategy under these arrangements is to co-develop product applications using the technology for specific partner opportunities and to ultimately convert them into Commercial License Agreements (CLAs). EnWave does earn revenue under TELOAs from short-term REV machine rentals as well as fees for access to EnWave’s R&D facilities and product development expertise.

The Company anticipates several long-term projects in the pipeline to convert to CLAs as well as additional REV machine capacity to be ordered by existing partners in 2019.

One such order on which the investment community is waiting for is the follow up order from Bonduelle for a large 300kW quantaREV machine. As the multinational food processor’s commercial success of its InFlavor products continues to increase, the production capacity of its 120kW REV machine, currently in operation, has to be near its limit.

Another major expansion that everybody is looking forward to in the new year is situated in the cannabis space. In October 2017, EnWave signed a royalty-bearing CLA with Tilray, a large, well established Canadian medical cannabis licensed producer. Tilray will pay EnWave royalties based on the units of cannabis dried using EnWave’s technology.

So far, Tilray has purchased a 10kW REV machine for R&D purposes and two 60kW continuous REV machines for the dehydration of cannabis in Canada and Portugal. The first 60kW processing line is scheduled to be installed in early 2019 at Tilray’s new Ontario production facility.

There may also be some further exciting developments from the US Army Natick Soldier R&D Center (NSRDEC). On July 30, 2018, this organization purchased a 10kW REV machine for research and development purposes. EnWave and the NSRDEC are conducting a collaborative R&D project for the development of nutrient rich field rations for soldiers. This opportunity for EnWave is enormous, as potentially hundreds of thousands of men and women in active duty could be served REV-dried rations.

EnWave and the NSRDEC are currently looking to collaborate with potential vendors to manufacture and supply REV-dried nutrient rich field rations moving forward.


EnWave performed extremely well in fiscal year 2018. Annual sales increased 43% and its balance is very strong. As for 2019, we expect another strong surge in NutraDried sales to at least $25 million, a boost in total royalties to $2.5 million, and some significant machine purchase orders.

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For important disclosures, please read our disclaimer.Latest Company Report (pdf)

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