EnWave Corporation (TSX.V:ENW) is a Canadian technology company with proprietary advantages in the dehydration technology market. It provides machines that can help companies in the food, hemp, and pharmaceutical industries dehydrate products faster for transportation and storage. And so on is cheaper than other methods, while maintaining excellent product quality.
This month, we interviewed Brent Charleton, CEO of EnWave, to learn about the company's recent developments.
EnWave's business depends on the licensing and sale of its dryers (Radiant Energy Vacuum-also known as REV), which come in different sizes and can be scaled up as required. These are measured in terms of energy consumption-for example, EnWave signed an agreement with one of the largest multi-state cannabis operators in the United States in September that involved the purchase of large 120kW REV machines. At the same time, it recently obtained a deal in Australia for a 10kW machine for cannabis drying.
This is important because it allows new partners to test the technology with smaller, cheaper hardware first, and then gradually upgrade to larger devices as they increase their reliance on it in the manufacturing process. These are also a fee-based manufacturing service that allows companies to use REV to test water.
The company's core business model is to ensure multiple and diversified royalties flows through its technology licensing-equipment sales, royalties/licensing fees, equipment leasing and OEM manufacturing.
The toll manufacturing launched earlier this year is worth mentioning: EnWave here uses a new department within the company called REVworx, which aims to use its technology to accelerate the commercialization of more food.
The plan will use both pilot scale and large-scale REV equipment to pay for service facilities. It aims to complement the current equipment sales and royalty licensing business model that EnWave has adopted. It can also serve as a low barrier to entry for companies that want to try out the technology in their own processes.
Investors should note that the company already has its own wholly-owned subsidiary NutraDried Food Corp, which operates in the United States and uses REV technology to make dry cheese snacks using two 100-kilowatt machines. Currently, its Moon Cheese snacks are sold in more than 25,000 locations in the United States and Canada.
EnWave is valued in the cannabis field for its Terpene Max drying protocol, which provides a fast and gentle drying method that uniformly removes water from cannabis at a controlled low temperature. These are below the point where decarboxylation occurs and help preserve the necessary terpenes. This can provide cannabis companies with an important competitive advantage in terms of production quality.
This is the key to EnWave's appeal to its customers: maintaining the quality of the components in the dehydrated material for storage and transportation, superior to other processes.
The EnWave business is divided into three core distribution divisions-cannabis, food and pharmaceuticals. Charleton said the company has achieved significant growth in all three areas. He reported on the progress in the pharmaceutical field, and the company has participated in trials of drug drying technologies including vaccines.
We asked Charlton whether the opening of the global economy after the pandemic has proven to be a boon. It sounds like EnWave has made significant progress in many international markets. Australia has already been mentioned, but the company is already active in the European pharmaceutical sector and has entered into a deal with India’s M/S Lalsai Dehy Foods, which will use a 10kW REV machine to evaluate REV technology.
"We are traveling now and in the past, we are having face-to-face meetings, we are completing the transaction, and we are completing the international installation of the machine," Charleton said.
He expects to see more large-scale orders for REV technology early next year. He is particularly optimistic about the prospects of the U.S. cannabis market and expects the U.S. market to grow further in 2022.
Starting in early 2022, Charleton is expected to achieve strong growth through several new transactions for large-scale REV machines. These include existing partners who have already tested the technology on the road and want to scale up. Although some of these transactions have not yet been made public, what is impressive is their geographic diversity. The European dry food industry is starting to look like next year will be particularly productive for EnWave.
Charleton said the company continues to apply for permits to companies active in the fruit and vegetable market, dairy products and hemp. It is working on some very customized licensing agreements.
Pea protein isolate is another potentially huge area of this technology. It is now one of the most common substitutes for dairy and meat products. It is often used by athletes and bodybuilders, and it is also used by manufacturers of alternative meat products.
Regular readers of The Armchair Trader will know that we are already big fans in this field, so they will be interested in knowing what progress EnWave can make here. The company is already in discussions with operators in the field to understand how it will play a role in the future production pipeline of zero meat and zero dairy alternatives. This is a large and rapidly expanding area of the food market.
However, EnWave has not stood still. The company is also committed to making subtle improvements to its technology to make it easier to transport and transport its iconic REV machine. This includes making machines with a more compact footprint, which means they can occupy a smaller footprint in the factory where they are located.
EnWave shareholders have a lot of expectations for 2022: the company has indicated that there are multiple repeat order opportunities, and it has also generated considerable interest in the joint development relationship between its pharmaceutical vertical and GEA Lyophil. By the beginning of October, sales of REV machines in 2021 were also much higher than any of the previous four years. The year-to-date (third quarter) financial performance of the licensing and royalties business shows that net profit and EBITDA are expected to exceed the figures in 2020, and revenue is also expected to reach the highest level in FY20.
Use SharePad to become a better investor Sharepad is designed to give you the confidence to choose your investment. Sharepad gives you access to a wealth of information about UK, US and European stocks. learn more
Please note that this article does not constitute investment advice. Investors are encouraged to research or consult professional advisers in advance.
Stuart Fieldhouse has 25 years of journalism and marketing experience, including serving as a wealth management editor for the Financial Times Group, covering capital markets and international private banking, as well as an investment banking reporter for Euromoney in Hong Kong. He is the founding editor of Hedge Fund Magazine.
Stuart worked at CMC Markets and supported the restart of its global financial spread betting and CFD trading platform. He is also the author of two books on trading published by the Financial Times Pearson Press. Stuart is based in The Armchair Trader's London office and continues to advise fund managers, private banks, family offices and other financial institutions.
Here are some of the small companies we follow most closely. In our view, they all represent important growth stories. Our in-depth report explains in more detail why we like them.
Your email address will not be published.
UK stocks start at £3 per transaction. Commission-free for U.S. stocks
£11.95* per transaction. Discounts for active traders
Explore our innovative UCITS exchange-traded funds (ETF) and exchange-traded products (ETP).
Our trusted partners provide trading courses designed for all levels. Some courses also have discounts. Learn more here
Our partners are mature, regulated companies, and we thank them for their support.
36 Spital Square, 4th Floor, London E1 6DY