Crown (ticker not provided) has announced its best quarter to date in the third quarter of 2024 with record revenues of $8 million, marking a significant increase from the previous year's corresponding quarter. The company's growth has been primarily driven by contracts from its newer business divisions, particularly in Fiber Optics and Water Solutions. Crown's CEO, Douglas Croxall, expressed confidence in the company's momentum, anticipating continued growth and profitability by 2025.
Key Takeaways
- Crown achieved record revenue of $8 million in Q3 2024, delivering on its top line forecast.
- Growth was mainly driven by the Fiber Optics and Water Solutions divisions.
- The company anticipates profitability in 2025, with revenue guidance of $9 million for Q4 and $22 million for the full year of 2024.
- Crown has introduced a full-year 2025 outlook with expected revenue between $30 million and $35 million.
Company Outlook
- Crown reiterates its revenue guidance of $9 million in Q4 and $22 million for the end of 2024.
- The company expects revenue between $30 million and $35 million in fiscal calendar 2025.
- Crown remains on track to achieve profitability in 2025.
Bearish Highlights
- Net loss for the quarter was $5.9 million, compared with a net loss of $2.9 million in the same period of 2023.
- R&D and G&A expenses increased due to preparations for the Smart Windows division's alpha launch and new business leadership in Crown's new divisions.
Bullish Highlights
- Crown secured three major customer agreements in the Fiber Optics division, expanding its footprint in Oregon and Nevada.
- The Water Solutions division broke ground on a commissioned installation of two slant wells in Cabo San Lucas, with strong demand for additional installations.
Misses
- Despite the record revenue, Crown's net loss widened from the same period last year, primarily due to increased operating expenses.
Q&A Highlights
- CEO Douglas Croxall addressed questions about the impact of the incoming administration on the Lead and Copper Rule Improvements legislation, indicating expectations for continuity and growth under the new EPA leadership.
Crown's third-quarter earnings call has showcased a company on the rise, with significant revenue growth driven by its newer business divisions. The company's strategic focus on innovative technology solutions across multiple industries, including sustainable infrastructure and environmental responsibility, is positioning it for future success. With strategic plans in place and a clear vision for growth, Crown is optimistic about its trajectory towards profitability and its role in driving societal change through its technology solutions.
InvestingPro Insights
Crown Electrokinetics Corp. (CRKN) has shown remarkable revenue growth, aligning with the company's positive outlook presented in their recent earnings report. According to InvestingPro data, CRKN's revenue growth for the last twelve months as of Q2 2024 was an impressive 9093.22%, with quarterly revenue growth in Q2 2024 reaching an even more staggering 12462.16%. These figures support the company's claim of achieving record revenues and underscore the rapid expansion of their newer business divisions.
Despite the strong top-line performance, InvestingPro Tips highlight some challenges. The company is "quickly burning through cash" and "suffers from weak gross profit margins," which explains the widening net loss mentioned in the earnings report. This is further reflected in the gross profit margin of -22.62% for the last twelve months as of Q2 2024.
On a positive note, an InvestingPro Tip indicates that "analysts anticipate sales growth in the current year," which aligns with Crown's guidance for Q4 and full-year 2024 revenue. Additionally, the company "holds more cash than debt on its balance sheet," potentially providing some financial flexibility as it pursues growth and aims for profitability in 2025.
Investors considering Crown Electrokinetics should note that there are 11 additional InvestingPro Tips available, offering a more comprehensive analysis of the company's financial health and market position. These insights could be particularly valuable given the company's ambitious growth plans and the evolving landscape of its target industries.
Full transcript - Crown Electrokinetics Corp. (CRKN) Q3 2024:
Operator: Good day, everyone, and welcome to Crown's Third Quarter 2024 Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the Investor Relations section of Crown's website and will remain posted there for the next 30 days. I will now turn the conference -- hand the call over to Jason Assad, Director of Corporate Communications for introductions and the reading of the safe harbor statement. Mr. Assad, please go ahead.
Jason Assad: Thank you, operator. Good morning, everyone, and welcome to Crown's Third Quarter 2024 Results Conference Call. With us on today's call are Doug Croxall, Chief Executive Officer and Chairman; and Joel Krutz, Chief Financial Officer. Before we begin, I'd like to remind you that today's call contains certain forward-looking statements from management made within the meaning of the Section 27A of the Securities Act of 1933 as amended and Section 21A of the Securities and Exchange Act of 1934 as amended. Words such as should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which will be on the control of the company, including those set forth in the Risk Factors section of the company's most recent 2024 quarterly 10-Q filing. Copies of these documents are available on the SEC website at sec.gov. Actual results may differ materially from those expressed or implied with such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now it's my pleasure to introduce Doug Croxall CEO and Chairman of Crown. Doug, please go ahead.
Douglas Croxall: All right. Thank you, Jason. Thanks, everyone, for joining today for our Third Quarter 2024 Earnings Call. We had our best quarter to date, achieving record revenue of $8 million, delivering on our top line forecast. As we scale, we expect this momentum of meeting and exceeding guidance to continue. This quarter's growth was primarily driven by contracts from our newer businesses. Before we dive into the updates on the 3 business divisions, I want to a moment to discuss our vision for Crown and the foundation guiding everything that we do. At Crown, we are committed to delivering innovative technology solutions that address critical challenges across multiple industries. From advancing sustainable infrastructure to promoting environmental responsibility. Our mission is to drive positive societal change that benefits both our communities and the environment. We're working towards a future where our solutions meet industry demands and shape a better tomorrow. We are actively making this vision a reality through our 3 business divisions: Smart Windows, Fiber Optics and Water Solutions. Each business spearheaded by extremely talented industry experts is focused on delivering cutting-edge solutions that are disrupting the status quo while redefining and modernizing industry standards. While we're enthusiastic about the impact of our current offerings, we also have ambitious plans to continue Crown's growth, believing the best is yet to come. We anticipate driving future growth both organically and through select strategic accretive acquisitions. Now let's discuss our operational updates, starting with the Smart Windows division, which is focused on developing technology for buildings that improves energy efficiency, lowers carbon footprint and increases comfort. Recently, we unveiled our 3-phase rollout strategy for the Smart Window Inserts, expected to commence in Q1 of '25. While the development of our Smart Window Inserts has admittedly been a costly time-consuming, L&D latent process we're rapidly approaching commercialization where we anticipate starting to generate return on investment. Importantly, while our launch has taken longer than anticipated, the overall market opportunity and total addressable market has grown in tandem. In the first phase or the alpha phase, we plan to deliver prototype Smart Window Inserts to a select group of customers in major U.S. cities. These targeted installations will support an eventual expansion across entire buildings for our customers. This phase is designed to provide us with valuable feedback on both products performance and the overall customer experience, enabling us to refine and enhance our solution as we progress toward full market launch. Following alpha, our beta phase will replace the prototypes with more advanced inserts, introducing updated features in a fully integrated control system while expanding the number of installations. Again, the insights gathered in beta will be crucial to shape the final first-generation product. Finally, in the [indiscernible], we'll prepare for market launch by establishing scalable manufacturing, customer management, installation and sales teams and start presales with delivery anticipated in early 2026. After years of dedicated development, we're getting very excited to near alpha launch. All right. Next (LON:NXT) is Fiber Optic division. The Fiber Optics division specializes in the design and construction of fiber optic networks, connecting rural and urban communities. We deliver state-of-the-art fiber optic solutions by deploying high-tech equipment and subcontractor expertise. In the third quarter, we secured 3 major customer agreements, expanding our footprint in Oregon and Nevada. Crown is a trusted partner to a range of clients from Fortune 500 Tier 1 telecoms to local municipalities. We see a strong demand for our services. we believe our uncontracted pipeline revenue is estimated at over $50 million. Lastly, let's review our Water Solutions division, which provides multiple solutions that improve water quality for communities. The division includes our slant wells business line and our lead pipe services business line with Element 82 and PE pipeline. I'll begin with slant wells. Our first-of-a-kind proprietary design as previously announced, we have commissioned -- been commissioned by Twin Dolphin in Cabo San Lucas to install 2 slant wells in an area challenged with clean water access. I'm pleased to report that in the third quarter, we broke ground on the installation and are on track to conclude before the end of the year. Our project has driven a lot of interest in the Los Cabos area for additional slant well installations. We have now engaged with new customers for survey work to determine if their subsurface conditions will work for our slant wells. The strong demand we are seeing underscores a significant opportunity to expand our slant well installations not only throughout Mexico, but also in other regions of the world that face similar challenges with clean water access. We are solving a very prevalent problem and confident that our slant wells represent a scalable revenue stream as we position ourselves as a trusted solution provider for water-scarce regions. Now let's cover work with lead pipes through Element 82 and PE pipelines. Our efforts to support the U.S. environmental protection agencies recently passed Lead and Copper Rule Improvements legislation, also known as LCRI have gained significant momentum this quarter. With an estimated 9 million to 12 million lead pipes in the U.S., there's a highly unmet need and opportunity for lead pipe identification and lead pipe remediation to help the millions of American households at risk of lead exposure. Element 82 secured initial lead pipe protection projects in Florida and New York representing an important first step in identifying and mitigating lead risk in these communities. We also signed over $15 million in revenue in Element 82 lead pipe inspection projects across Washington, D.C. and Maryland, making our expansion into these regions. Most recently, we were awarded 2 initial lead pipe remediation contracts for PE pipelines totaling $33 million. While pleased with these recent wins, we believe we've just scratched the surface. We now have over $48 million in anticipated secured projects and currently estimate over $70 million in expected projects. Now I'm going to pass the call over to Joel, who will review our financial results in greater detail. Joel?
Joel Krutz: Thank you, Doug, and good day, everybody. Today, I'll review our financial results for the 3 and 9 months ended September 30, 2024, comparing them to the period -- same period in 2023. We reported record revenues of $8 million for the quarter, which was an increase from 0 in the same period of 2023. The growth in revenue is primarily attributable to new contracts from Crown's Fiber Optics and Water Solutions divisions which include the new slant wells and Element 82 lead detection business. Gross profit was $1.4 million for the quarter compared to 0 in the same period of 2023. R&D expenses were $0.7 million for the quarter, increased from $0.5 million for the same period of 2023, the increase being primarily driven by accelerated preparations for our upcoming alpha launch plus salaries and benefits. G&A expenses were $6.5 million for the quarter, up from $2.9 million for the same period of 2023. The increase in G&A expenses primarily due to increases in comp benefits with the new business leadership in Crown's new divisions. Stock compensation expense, professional fees and other expenses made up balance. Operating expenses were approximately $7.2 million for the quarter, up from $3.4 million in the same period of 2023. Net loss was $5.9 million for the quarter compared with a net loss of $2.9 million in the same period of 2023. Moving on to the financial results for the 9 months ended September 30, 2024. We have achieved record revenues of $13.4 million, increased from $0.1 million in the same period of 2023. Gross profit was $0.9 million compared to a gross profit of 0 in the same period of 2023. R&D expenses were $2.6 million compared to $1.5 million for the same period of 2023. And G&A expenses were $12.8 million, up from $10.5 million for the same period of 2023. Operating expenses overall were approximately $15.4 million compared to $12.4 million in 2023. And net loss was $15.5 million compared to $19.7 million in the same period of 2023, 9 months year-to-date. While cash flow remains challenging to project due to the level of new business Crown is capturing and executing as well as the working capital investment required upfront. We are closely managing expenses to align with our growth plans and anticipate reaching profitability in 2025, a testament to our strategic process. Moving to the balance sheet and our stockholders' equity was $9.9 million as of September 30, 2024, and cash was approximately $3.1 million. Now I'll turn the call back to Doug to discuss our strategic growth plans.
Douglas Croxall: All right. Thanks, Joel. As we look forward to the end of '24 and to '25, we continue to build momentum across our diverse yet complementary businesses, each with very strong pipelines of projects in place. We've made significant headway in our Fiber Optics and Water Solutions divisions, which are driving new interest in substantial growth opportunities. Our customer engagements have broadened, reaffirming our position as a trusted partner in Fiber Optics Construction and a trusted leader in addressing critical water infrastructure needs. With our expanded capabilities, and expert leadership, Crown is well positioned to achieve our growth objectives for the remainder of '24 and beyond. We reiterate our revenue guidance of $9 million in Q4 and $22 million for the end of the year '24. We're pleased to introduce our full year of 2025 outlook. We are expecting revenue between $30 million and $35 million in fiscal calendar 2025. Importantly, we remain on track to achieve profitability in 2025. Last night, I got a note from one of our strategic partners, Chuck Hansen at Electro Scan, he provides us with the equipment that does the lead pipe inspection work. And Chuck wanted me to know that there's a lot of questions about the incoming administration in the new proposed Chief of the EPA. And Chuck reminded me that it was Trump's first administration that actually took a 1991 proposal that became lead and copper rule improvement. That's the legislation that we're working under today. It was dusted off in 2017, it was finalized under Biden's regime in 2021, and we expect it to continue and to grow under Trump's administration. So with that, I'd like to thank everyone who are in the call today, thank our investors for being supportive. We're very excited about the future that we have ahead of us and the foundations that we put in place already, and we look forward to talking to you again in the new year. Thank you.
Operator: Thank you, and this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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