SOLESENCE, INC. Q3 FY2024 earnings call

• Thanks to the team, brand partners, supplier partners, and investors. - Q3 was a milestone, with two of the three months achieving record throughput levels, using OEE metrics to focus on increasing uptime and labor efficiency. - Excellent inventory availability led to a significant improvement in on - time in full performance, with over 90% of planned shipments completed within the quarter. - Shipped and open orders at 9/30/2024 were $34 million, about 80% higher than the same period in 2023, and more than a third of that is expected in Q4. - Commercially, APIs offer environmental protection in a safe manner, and Solésence has helped bring finished mineral - based solutions to new markets, with prestige cosmetics consumers demanding more Solésence - enabled products.

In Q3 2024, total revenue was nearly $17 million and net income exceeded $3 million. Year - over - year, the net income went from an 18% loss in Q3 2023 to an 18% net income ($3.1 million) in Q3 2024, a swing of $4.5 million. For the nine - month period of 2024, total revenue was $40 million, which was over $10 million or 36% more than the prior year's nine - month numbers. 2024 revenue is expected to exceed $50 million, and potentially reach the mid - to - upper $50 million range. Gross profit was $13.4 million, 34% of sales, which was $6 million more than the nine - month 2023 gross profit, and the gross profit percentage was up 9 points. The nine - month net income in 2024 was $4.8 million versus a $2.3 million loss in 2023, an improvement of over $7 million.

• Expect 2024 revenue to exceed $50 million, potentially reaching the mid - to - upper $50 million range. - See solid customer demand into 2025 and expect growth as operational efficiencies improve. - Q4 revenue is typically lower as a percentage of total revenue than Q2 and Q3, but expect 2024 revenue to exceed $50 million. - Anticipate record Q4 revenue in 2024 and record Q1 revenue in 2025.

• Decision of customers to cancel purchase orders or supply agreements. - Demand for and acceptance of the company's products. - Changes in development and distribution relationships. - Impact of competitive products and technologies. - Possible disruption in commercial activities due to public health issues, terrorist activity, and armed conflict. - Supply chain risks related to China, although there are alternative non - Chinese sources for materials from China already built into the plan.

Q: John Henderson asked about the peak period of orders in 2025.

A: Kevin Cureton said the business is non - seasonal, but there are timeframes like late first quarter to early second quarter for new launches and reorders, with Q4 also having orders and globalization affecting it.

Q: John Henderson asked about potential 40% gross margins.

A: Jess Jankowski said it's possible, depending on production stability and efficiency.

Q: John Henderson asked about the ability to reach $100 million capacity.

A: Jess Jankowski said they have the capacity now and will adjust capacity for different components as needed.

Q: Jim Liberman asked if the company can provide products to a broader range of end users.

A: Kevin Cureton said brands range from prestige to masstige, and they will be selective to ensure unit profit.

Q: Jim Liberman asked about tax loss carry forwards.

A: Jess Jankowski said they are looking at it at state and federal levels, with a large NOL available.

Q: Anonymous analyst asked about growth in 2025 and beyond.

A: Jess Jankowski said 2025 is expected to have double - digit growth, and Q1 can better indicate 2025, Q3 or can indicate 2026.

Q: Anonymous analyst asked about uplisting.

A: Jess Jankowski said it's being discussed, with the Board regularly discussing it and aiming for more liquidity.

Q: John Henderson asked about stock issuance and China tariff risk.

A: Jess Jankowski said all preferred shares have been converted, and Kevin Cureton said there are alternative non - Chinese sources for Chinese - sourced materials.

Q: Anonymous analyst asked about 2025 production and orders.

A: Jess Jankowski said they are expanding capacity, adding staff, and expect improved throughput and operational efficiency, with on - time delivery bringing reorders