Nanophase Technologies (OTCMKTS:NANX), whose executives referred to the business as Solesence on the call, reported lower first-quarter 2026 revenue but improved gross margin as management said it is in the early stages of a multi-year operational and strategic initiative called Transform & Transcend.
President and CEO Kevin Cureton said the company has changed significantly over the past six years, moving “from a small-scale materials company into a leading developer and manufacturer of SPF-infused beauty products in the United States.” He said that evolution produced a compounded annual growth rate of more than 50%, supported an uplisting to Nasdaq and contributed to a more than fivefold increase in market capitalization.
Revenue Declines as Shipment Timing Weighs on Quarter
Chief Financial Officer Laura Riffner said first-quarter revenue was $13 million, down from $14.6 million in the first quarter of 2025. She said the company had expected order shifts that would have made year-over-year revenue more comparable, but “soft OTIF performance” led to shipment delays. OTIF refers to on-time, in-full performance.
Despite the lower revenue, gross margin rose 300 basis points to 26%. Riffner attributed the improvement to better labor efficiency and the elimination of product quality-related waste that affected the year-earlier quarter.
The company posted a net loss of $0.8 million for the quarter, compared with net income of $0.08 million in the prior-year period. Adjusted EBITDA was a loss of $107,000, compared with positive adjusted EBITDA of $609,000 in the first quarter of 2025.
Riffner said the quarter reflected early investments connected to Transform & Transcend, particularly in operational infrastructure. She said the company introduced an updated shift structure to reduce extended process changeovers and related downtime, which had contributed to elevated labor costs as production volume scaled. The company also invested in employee training tied to a lean manufacturing structure.
Management Reiterates 2026 Margin Targets
Riffner said shipped and open orders now total $47 million. She described booking trends as encouraging and said they remain consistent with the company’s previously communicated expectations for a more normalized revenue environment in 2026.
The company reiterated its previously communicated guidance establishing a 30% floor for gross profit margins. Riffner also said management remains on track to return to double-digit EBITDA margins by the end of the year, citing expected improvements in labor efficiency and six-figure annual savings from facility consolidation.
The CFO said 2026 priorities remain focused on executing Transform & Transcend, beginning with operational excellence. Those priorities include improving inventory management through sales, inventory and operations planning implementation, increasing efficiency across manufacturing and supply chain processes, and enhancing procurement and working capital discipline.
Transform & Transcend Progress Includes New Technologies
Cureton said the company has made progress in three of the four pillars of Transform & Transcend. He said the first pillar, operational excellence, was reflected in higher gross margin and reduced inventory levels.
He also highlighted progress in the second pillar, which focuses on using intellectual property to expand the company’s addressable market. Cureton said the company announced the launch of two proprietary technologies, Chromalüm and WHSPR. He said the technologies build on the company’s existing platform and allow it to develop SPF-infused hybrid products that combine UV protection, skin health benefits and consumer-friendly user experiences.
According to Cureton, the convergence of health, wellness and beauty is changing consumer expectations and creating opportunities for brands that can substantiate claims. He said WHSPR and Chromalüm open product categories and formats that were previously unavailable to brands and consumers and could allow the company to participate in adjacent categories in the future, including hair and scalp care.
Service Model and Brand Partnerships
Cureton said the third pillar of Transform & Transcend is focused on evolving the company’s service model to capture a greater share of the value chain for itself and its brand partners. He said co-marketing activations, which the company is developing into a formal program, have been well received.
The company has completed four such initiatives with brands including Colorescience, Bloomeffects and Ciele. Cureton said those efforts helped drive product-level performance while deepening strategic relationships.
“While there are many more miles to go on this Transform & Transcend journey, our early footsteps have reinforced that we are on the right track,” Cureton said.
Executives Address Demand and Shipment Delays
During the question-and-answer portion of the call, a private investor asked whether the lower sales number reflected less interest in the company’s products or whether management expected sales to ramp over the remaining three quarters of the year.
Cureton said the first quarter was primarily affected by OTIF performance, which he linked to process changes during the quarter. He said those changes are expected to deliver improved results through the rest of the year. He added that management still views 2026 as a year of “rationalized performance” relative to revenue, reflecting market conditions rather than reduced interest in the company’s products.
“There still continues to be quite a bit of excitement in the new technologies that we deliver and specifically in the SPF-infused beauty space,” Cureton said.
In response to a question from James Liberman of American Trust Investment Services, Cureton said revenue would have been more in line with prior periods if OTIF performance had been better. He explained that the company must align both raw materials used in formulations and componentry needed for packaging. That alignment was inconsistent, particularly early in the quarter, but he said the company saw “substantial improvements” exiting the quarter and entering the second quarter.
Cureton also clarified that the $47 million figure represents a combination of orders already shipped during the year and open orders due for delivery later in the year. Riffner said the company remains “very confident” about its results for 2026.
In closing remarks, Cureton said the company remains confident in its long-term value creation opportunity and its ability to execute the Transform & Transcend strategy. He said the company plans to post a one-page overview of the initiative, including details and a general timeline, on its investor relations website.
About Nanophase Technologies (OTCMKTS:NANX)
Nanophase Technologies, Inc (OTCMKTS: NANX) is a specialty materials company that develops and manufactures advanced nanomaterials for a wide range of industries. The company focuses on producing high-performance nano-oxides, nano-ceramics and custom nanomaterial formulations designed to enhance product durability, functionality and aesthetic appeal. Through proprietary synthesis and coating technologies, Nanophase delivers materials with controlled particle size, shape and surface chemistry to meet specific application requirements.
Nanophase’s core product portfolio includes nanometer-sized oxides such as aluminum oxide, zirconium oxide and silicon dioxide, along with composite materials that integrate multiple metal oxides.
