Earnings call transcript: NXT Energy Solutions sees Q1 2025 profit surge

NXT Energy Solutions Inc. reported a significant turnaround in its financial performance for the first quarter of 2025, with net income rising to $7.68 million from a net loss in the same period last year. This improvement was driven by increased survey-related revenues and a strategic focus on business growth, propelling its stock price up by 2.9%. According to InvestingPro data, the company maintains a "GREAT" financial health score of 3.35, with particularly strong momentum in recent months.

Key Takeaways

• Achieved net income of $7.68 million in Q1 2025, reversing a $1.7 million loss from Q1 2024.
• Survey-related revenues surged to $12.6 million from $600,000 in the previous year.
• Ended the quarter with $2.03 million in cash and short-term investments.
• Stock price increased by 2.9%, reflecting positive investor sentiment.

Company Performance

NXT Energy Solutions showcased a remarkable turnaround in Q1 2025, transitioning from a net loss to a solid profit. This shift was largely attributed to a substantial increase in survey-related revenues, marking a strategic success in expanding its market presence. The company has also improved its cash flow from operations, signifying enhanced financial stability.

Financial Highlights

• Revenue: $12.6 million, up from $600,000 in Q1 2024.
• Net income: $7.68 million, compared to a net loss of $1.7 million in Q1 2024.
• Earnings per share: $0.10 basic, $0.08 diluted.
• Cash flow from operations: $1.47 million, a significant improvement from the $590,000 used in Q1 2024.

Outlook & Guidance

Looking forward, NXT Energy Solutions anticipates strong revenue for the remainder of 2025, with high prospects for the first half of 2026. The company is considering expanding its aircraft fleet and personnel to support its growth strategy, focusing on sustainable market expansion. InvestingPro analysis suggests the stock is currently undervalued, with the next earnings announcement scheduled for May 22, 2025.

Executive Commentary

Bruce Wilcox, CEO of NXT Energy Solutions, emphasized the company’s robust business development strategy, stating, "Our business development conveyor belt is in really, really good shape." He also highlighted the company’s focus on growth, noting, "Growth equals shareholder value."

Risks and Challenges

• Market Volatility: Fluctuations in the energy market could impact revenue streams.
• Competition: Intense competition in exploration technology may affect market share.
• Operational Risks: Challenges in expanding aircraft and personnel could strain resources.
• Economic Conditions: Global economic shifts could influence exploration activities.
• Regulatory Changes: New regulations in key markets could impact operations.

Q&A

During the earnings call, analysts inquired about the company’s revenue potential for the rest of 2025, financial stability, and success in the Turkish market. Executives responded with confidence in their growth strategy and highlighted ongoing efforts to manage sensor inventory and equipment capacity efficiently. For deeper insights into NXT Energy Solutions’ financial health and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, featuring detailed analysis and over 30 additional financial metrics.

Full transcript - NXT Energy Solutions Inc (SFD) Q1 2025:

Conference Operator: This conference is being recorded.

Bruce Wilcox, President and CEO, NXT Energy Solutions: All participants, thank you for standing by. The conference is ready to begin. Good day, ladies and gentlemen. My name is Patrick, and I will be your conference operator today. At this time, I would like to welcome everyone to the NXP Energy Solutions Q1 twenty twenty five Results Conference Call.

All participants will be in listen only mode for the first part of the conference call with the ability to ask questions after the presentation by the company. I would now like to turn the meeting over to mister Bruce J. Wilcox, president and CEO of NXT Energy Solutions. Please go ahead, mister Wilcox. Thank you, Patrick.

Welcome, and thank you everyone for joining us today for NXT Energy Solutions twenty twenty five First Quarter Financial and Operating Results Conference Call. My name is Bruce Wilcox, NXT’s Chief Executive Officer. Joining me on today’s conference call is Mr. Jean Wichishan, VP of Finance and CFO. The purpose of today’s call is to briefly discuss the highlights of the release of the NXT twenty twenty five first quarter financial and operating results and to get some color as to how efforts in the last year resulted in the first quarter’s strong results and relate to NXT’s new business growth strategy.

Our CFO, Gene Lutishan, will start with a financial review, and I will follow with perspective on our business outlook. Following our update, we will open the line for questions. Please note, all statements made by the company and management during this call are subject to the readers advisory regarding forward looking information and non GAAP measures set forth in our Q1 twenty twenty five press release and MD and A issued 05/08/2025. All dollar amounts discussed in today’s conference call are in Canadian dollars unless otherwise stated. The complete financial and operating results and consolidated financial statements for the twenty twenty five first quarter were published on May 8 and are available on NXP’s website, SEDAR Plus website and on EDGAR’s website.

Now over to Eugene for the financial review. Thank you, Bruce. First, I’ll start with a review of our financial results for the first quarter of twenty twenty five. The company completed data acquisition of the SFT survey going forward strategic alliance partners Synergy E and P Limited in Q1. As a result, the company recorded SFT related revenues of approximately 12.4 for the quarter the $12,600,000 for the quarter of twenty twenty five versus $600,000 for the first quarter of twenty twenty four.

Due to the activity of the survey during the quarter, SFP related costs increased over 219%. All this contributed to a net income of $7,680,000 for the first quarter of twenty twenty five, including noncash expenses totaling approximately $1,350,000 This compares favorably to a net loss of $1,700,000 for the first quarter of twenty twenty four. Net income per share for the quarter was $0.10 per share basic and $08 per share diluted as compared to a net loss per common share of $02 in the first quarter of twenty twenty four. Cash flow provided by operating activities is approximately $1,470,000 during Q1 twenty twenty five. This again compares favorably to approximately $590,000 used by operating activities in Q1 twenty twenty four.

We ended the quarter with cash and short term investments of approximately $2,030,000 and net working capital of approximately $610,000 versus a negative working capital of approximately $6,680,000 at 12/31/2024, an improvement of approximately $7,200,000. General administrative expenses increased by approximately $87,000 in q one twenty five as compared to 2024 with the increased business activity and related support costs. For more detail of these items, please review our first quarter twenty twenty five financial statements and management discussion analysis, which are available on both SEDAR plus and on EDGAR. Summarize the key financial points. First, there’s been a significant improvement in profitability fueled by the SFP survey.

Second, as a result, we had positive operating cash flow and net working capital also became a positive number again, all signs of our potential. Finally, and most importantly, our financial position has improved, giving us the ability to begin focusing resources on sustainable growth. One quarter does not guarantee success, but Bruce will discuss how we will move forward methodically on this good start to the year. The company remains focused on the business fundamentals of revenue generation and growth and prudent cost control as we execute the previously announced SFP survey contracts and continue to add to our sales funnel with our strategy of frequency, adjacency, and repeatability. I would now like to hand the call back over to Bruce to further discuss our business update and forward plan.

Thank you, Eugene. To begin, I wanna convey my sincere thanks to everyone for their support over the last year. I especially wish to express my gratitude to our strategic partner, Doctor. Gary Okobo, CEO of Synergy E and P for his leadership, mentoring and tangible support during this period of change for NXT. Our last conference call was over a year ago, and I believe it is an important time to provide comprehensive update on our progress and forward looking plans.

As Eugene mentioned, the company had a strong first quarter, strongest in nine years to be exact. Having spent forty years on Wall Street, I’m reminded of the same one quarter doesn’t make a year, and one year doesn’t make a career. NXT is fully committed to executing new business growth strategy, which was implemented a year and a half ago when I first took over leadership of the company by becoming interim CEO. The central theme of this strategy is frequency, adjacency and repeatability. The business growth strategy’s objective is to generate diversified revenue growth, concentrating efforts on the four most highly active exploration regions in the world: Africa, South And Southeast Asia, The Americas and Turkish Middle East region.

Since inception, we have announced six new contracts, including another repeat contract in Africa, press release May 1, all of which are scheduled to be executed and largely completed by year’s end. I want to reiterate my vision for the company that I brought forward at the beginning of my leadership and our progress on this vision to date. Division strategy can be summarized in a handful of keywords. One, actively market, two, high grade, three, diversify, four, monetize, five, collaborate, and six, grow. Let me report each in more detail.

Actively market. After being nominated for the best exploration technology awarded to twenty twenty three Gulf Energy Awards in Houston, Texas, NXT won the award in October 2024. Shortly afterwards, in December 2024, NXT was in New York City having been named a finalist at the Platts global global energy transition award. By the way, Platts is the oldest industry journal covering the oil and gas sector. This is evidence that industry recognition is increasing.

Our own business development and outreach efforts are proving successful, increased survey activity in multiple international markets that are active in exploration also raise industry awareness. Two, high grade. Quality prospects with regards to value, revenue potential and adjacent opportunities are announcing on May 1 of another African SFT survey in 2025 as an example of our focus on high grading works. Three, diversify. First by geography.

We are focusing efforts on highly active areas of exploration. These include Africa, South And Southeast Asia, The Americas and Turkish regions. We’ve been have seen success in these strategies as per our announcement of contracts in Africa, Southeast Asia and Pakistan. Second, by company size and type, we will continue to target national oil companies, which generally can produce larger contracts but tend to be slower to commit. We are increasingly engaging with independent oil companies in all focus regions.

Our current announced and completed contracts are with a diversified set of companies. Four, monetize. NXT possesses over 140,000 line kilometers of survey data, which remain unmarketed to the industry. Five, collaborate. We continue discussions with other oil and gas service providers, such as seismic survey and data service providers to explore opportunities to work together to our mutual benefit.

These discussions are exploratory in nature with the purpose of determining if and where possible synergies exist. And six, grow. Grow revenues and earnings. Growth equals shareholder value. Quarter one was a good start.

We will continue to focus on the business fundamentals of excellent execution, which will lead to organic growth. In summary, we remain committed to executing our business growth strategy and increasing shareholder value. Before closing, I want to recognize and thank our outstanding staff for their dedication, perseverance, and accomplishments. On behalf of the of our board of directors and the entire team at NCT, I want to thank all of our shareholders for their continued support. I now ask the operator Patrick to open the line for to take your questions.

Thank you. You may now press star one if have question. This question is from Jerome Hunt from Lightwater Partners. Please go ahead.

Conference Operator: First, I’d like to congratulate whole team for an excellent quarter for the best one in recent memory. So well done on that. And also, I’m very impressed with the fact that you were able to hold Cisco discipline despite growing the top line as you did. So kudos on that. My question is with regards to best prospects for this year.

Is it possible you could outline what the potential revenues would look for for the remainder of this year?

Bruce Wilcox, President and CEO, NXT Energy Solutions: So, Jerome, this is Bruce speaking. We are precluded in virtually all of our contracts in closing revenue, and you should not expect quarter over quarter growth because, you know, sometimes we do demonstration projects. But I think that, you know, we’ve announced a second Nigerian contract, and I don’t wanna put a number on it, but it will be a strong revenue year. The next question is from Tom Wood from Woodleff. Please go ahead.

Hey, there. It’s Thomas here. I’ll say my congratulations. I’m for sure it’s a good quarter and and a long memory. I I just wonder if we could talk about where you’re just feeling at in terms of runway.

This is obviously a great thing having a good quarter like this. I’m wondering, do you still feel like we’re in kind of emergency mode, or does it feel like, you know, we’ve got enough in the pipeline right now that we’re feeling more optimistic? Okay. Bruce speaking again. We are definitely not in emergency mode.

We are in the you know, I’ve been on the board of directors since 02/2015. This is the most, you know, sustainable and substantial financial and operational position we’ve been in in in that entire time. So, you know, we are continuing to we we’ve got a fairly full calendar for 2025. We have very high prospects for the first couple of quarters of twenty twenty six. So my goal is that we build out the pipeline, you know, in the the geography that we’ve discussed and, you know but we are we are in a a secured financial position and and have the luxury of thinking about, you know, how we expand our reach and and functionality.

K. Thank you. Next question is from Charles Davidson from Private Investor. Congrats. And you’ve been you’re holding for a long time, and this is really a terrific news and a great quarter.

We’ve got a lot of confidence in your team now. Just a quick question. Where’s the company in terms of thinking about backup sensors? Now they the additional growth, but there’s something unforetold, but you’re happening to the existing equipment? Well so all of our sensors were not being deployed in the field, a large in our office in, you know, Calgary.

But we have a good inventory of Sentry. We continue to build new sensors and test them and condition them. So I I think that, you know, I I suppose if you really wanted to get extreme about it, it could be a locational risk. But I think we are very secure with regards to our equipment and and the our capacity with the with the existing and emerging center inventory. Yeah.

And do we have enough excuse me. Go ahead. Go ahead. Okay. I’ll just add a that so we we actually just had some test sensors up on a on a flight two weeks ago.

And so we are constantly trying to get our get these sensors built and qualified. So but so that is it’s an important thing to make sure that we don’t have a risk on the sensors. Okay. That’s great. So, for example, if the volume continues to increase, we could possibly run two aircraft if we needed to do that.

Okay. So let me address that. We have a strategic planning committee, and we are thinking ahead. I mean, I think as as I look forward, it is possible and maybe even likely that we will have an additional aircraft in, you know, the next few years. But the aircraft is is the easy part.

It’s the, you know, deployable staff that is, you know, more, you know, complicated not complicated, but that that need, you know, very cheerful thought. So but, look, my my goal as a career Wall Street buy side, you know, portfolio manager is to develop a sustainable growth path for this company. So, yeah, that probably implies additional maybe an additional aircraft, maybe and and certainly additional people. But those are things that we’re gonna do very thoughtfully and very, very carefully. Great.

Well, that’s good news, and we all have a lot of confidence in what you guys are doing because, obviously, it’s reducing. So congrats, and it’s really great to be part of this program. Well, thank you. Thank you very much for your questions and your comments. Appreciate it.

Thank you. You may still press star one if you have a question. The next question is from Norman Saffarian from RBC Wealth Management. Please go ahead. Yes.

Congratulations, Bruce. And, Eugene, I really appreciate seeing good news. As you know, I’m I’m in the investment business, and that’s what we we really want. And, boy, did you come through. Congratulations.

I had one question about Turkey, though. I just wondered how that worked out in the summary of business activities. And is it over? Or is there any opportunity to continue to grow business in Turkey? And just curious how that how that turned out for you.

Well, hi, Norm. It’s good to hear your voice. So I I would say Turkey was a very large success. The the primary contract we did was for a Turkish independent company partnered with a I think they were Scottish. You never remind me, Eugene, but, you know, it’s a a UK based company.

The executed survey, the Turkish entity decided that they wanted some more data from us. They did some independent work, and it led to this is the adjacency part of my kind of business formula. We did a demonstration survey for a I’ll just call it a very, very, very large Turkish entity. So Turkey, in in my view, was a world success. And the and and, you know, all these E and P communities are pretty small and pretty close, and a lot of people were paying attention.

We have an outstanding agent in in Ankara. And so he’s he’s sort of working in the the field there, which is not just confined to Turkey, but there are Turkish operating companies that have interest in interest in and or projects in North Africa. And so, again, you know, my theme is frequency, adjacency, and repeatability. I think we’ve demonstrated frequency, but the adjacency part is really, really important. And so Turkey, what we’ve done so far has been a tremendous success.

And and I think will lead to some, you know, pretty promising leads in adjacent geographies. That’s fantastic. That’s that’s what the that’s fantastic news. Do you feel confident that that’s the way it works on the other projects too? Are you seeing people knocking on the door, so to speak, or are you having to solicit everything you can one by one?

How how does it go with the prospecting or the gathering of new opportunities going forward? Well, okay. So, Norm, the, you know, having, you know, highly qualified regional agents is sort of the, you know, the foundation of our outreach. And so in Southeast Asia, for instance, we’re going to do a fairly small project in the Southeast Asian country, but there are a lot of people, including some giant entities, paying attention. So, you know, so I I think that our business development, you know, conveyor belt is in really, really good shape with with our own efforts and with, you know, a handful of really, really qualified agents around the world, Southeast Asia, you know, Pakistan, India, Brazil, you know.

So I I think the pipeline development is in really good shape. Well, I appreciate your response. Thank you so much, Bruce, and thank you. Thank you, Norman. Good to hear you voice.

Yes. You too. Thank you. You may still press star one if you have a question. There are no further questions registered at this time.

I would like to turn the meeting back over to mister Wilcox. Okay, Patrick. Thank you very much. For all the listeners, thank you for attending. Stay tuned.

We’re on a really good development path. We appreciate your attendance today, and, you know, we’re always available for questions, you know, Jean and myself. But thank you very much for your attendance and your questions. Thank you. The conference has now ended.

Please disconnect your lines at this time, and thank you for your participation.

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