DENVER, CO / ACCESSWIRE / April 23, 2018 / US Nuclear Corp. (OTC PINK: UCLE), a company that provides a full line of radiation detection equipment and services to clients' industries that range from nuclear reactor plants, universities, local and state hospitals, government agencies, to emergency medical technicians or EMT/first responders, recently released their annual 10-K report showing an impressive jump in sales of 47% year over year (YoY).
The Company is known for having designed and built the first industrial-grade radiation monitors, and has a diverse customer base of both government agencies and private industry including; Homeland Security, Lawrence Livermore Labs, Los Alamos National Labs, Department of Defense, FBI, CIA, US Navy, Chevron Corporation, Bechtel Corporation, Biotechnology Laboratories, Hospitals, Universities, and Civil Emergency Management departments such as Fire, Paramedics and Law Enforcement.
Annual Numbers Show Improvement Across The Board
US Nuclear Corp. reported 2017 annual sales of $3.07M compared to 2016 annual sales of $2.09M, an increase of 46.4%. In that same time period, gross margins increased 7% to 43.8%, while gross profit increased by an impressive 72% to $1.34M. While S,G,&A expenses did increase 17.2% YoY, the more important way to look at this figure is the cost of S,G,&A relative to sales. Looking at that metric, we see that the percentage of sales that SG&A actually dropped significantly from 53.3% to 42.7%. The net result of these across the board improvements was a positive swing of $1.6M for the bottom line.
Robert Goldstein, CEO of US Nuclear Corp, had this to say about the past year ''We're thrilled to report on a successful year in 2017 with total sales revenue growth of 46.4%. The increase in revenue was due to robust sales of our signature air monitors to nuclear power plants in addition to the popular demand of our tritium air monitors, which included a large contract with the USAF. Gross margin is increasing as we finish R&D on several new products that are being brought to the market. Overall, 2017 was a very strong year for us, but we are not at our full manufacturing capacity yet and will focus our efforts in 2018 to increase volume even further by capturing more of the global tritium monitor market, focusing on business from new power plant and fusion development, and introducing our new products mentioned above.''
What does this mean for the future? Let's look at that next.
What Is the Potential Profitability For the Next 5 Years?
Two key factors were involved with US Nuclear achieving profitability in 2017, the first was the increasing of gross margins, the second being the drop in S,G,&A expenses as a percentage of sales. The margin between these two in 2017 was positive 0.9% (profitable) versus a year ago when this gap was -16.6%, an improvement of 17.5% in a single year.
Since past performance is a good indicator of future potential, let's extrapolate this year's performance numbers out for the next 5 years, from 2018 - 2022. Using conservative numbers compared to last year, let's assume a 40% YoY increase in sales (actual increase was 46%), a 5% annual increase in gross margins due to operational efficiencies (actual increase was 18% YoY), and a 3% annual drop in S,G,&A as a percentage of sales (actual drop this last year was 10.7%)
Using those numbers we come up with the below table showing the potential for US Nuclear Corp over the next five years, impressive numbers for a company with a market cap of only $39M.
Now let's look at the plans US Nuclear has for reaching full manufacturing capacity, and the numerous verticals they have in place to achieve that goal.
Tritium is produced during nuclear weapons explosions, and as a byproduct in reactors producing electricity. Today, sources of tritium come from commercial nuclear reactors, research reactors, and government weapons production plants. Tritium may also be released as steam from these facilities or may leak into the underlying soil and ground water. Additionally, self-luminescent devices illegally disposed in municipal landfills come into contact with water, which pass through waterways, carrying dangerous levels of tritium. Tritium holds a very dangerous health risk and high levels of exposure to tritium increases risk of developing cancer. To combat tritium leaks and to maintain acceptable levels, US Nuclear has developed several tritium monitors to gauge tritium in water and in the air.
US Nuclear Corp is one of a handful of companies that currently operate within the tritium space, with the company's Overhoff Technology Corp unit being their manufacturer of tritium detection and monitors. The demand for tritium detection and monitors is steadily increasing as countries around the globe continue to develop solutions to their complex energy needs. In addition to CANDU reactors (Canada Deuterium Uranium), the next generation of nuclear reactors called Molten Salt Reactors, (MSR) and Liquid-Fluoride Thorium Reactors (LFTR) utilize fuels other than traditional uranium and plutonium sources. In the process of energy production, MSR and LFTRs produce high amounts of tritium, a byproduct that is required to be constantly monitored for detection.
A key aspect of the LFTR reactors is that they are less hazardous than the current light-water uranium-plutonium reactors; as a result, LFTR reactors provide a higher level of safety and security against terrorist threats. The Company states in their 10-K that they expect that a significant portion of their future sales and business strategy to be tied to the growth of MSR and LFTRs, as well as from CANDU reactors.
DroneRAD Aerial Radiation Detection
Drone robotics paired with high tech sensors is an exciting and new field that US Nuclear Corp has recently expanded into after partnering with FlyCam UAV (hi-tech drone supplier). The two companies have brought their two technologies together to create the NEO, an all-weather UAV octocopter capable of carrying a number of radiation and chemical detection sensors. The commercial grade, heavy lift, all-weather drone is capable of carrying a 19.8-pound payload and has 8 motors for increased stability when in flight.
With the merging of FlyCam UAV's NEO and US Nuclear Corp. sensor technology, aerial radiation and chemical detection are now available for the first time. Having these UAV mounted sensors quickly and efficiently surveying large areas for contamination represents a significant advance in environmental and health risk mitigation, and should prove out to be a worthwhile partnership as sales ramp up in 2018.
Medical Isotope Generators
U.S. Nuclear also recently announced that it has signed a preliminary agreement with MIFTEC, a subsidiary of MIFTI, to become the exclusive contractor to manufacture medical isotope generators in the nuclear medicine market. While this is still in the pre-commercial stage, the potential for radioisotopes is enormous with the market expected to reach $17B by the end of 2020.
MIFTI/MIFTEC scientists at the University of California, Irvine, have successfully developed and patented a technology that will help solve the current crisis of worldwide shortages in radionuclide/medical isotopes. This patented new technology enables production of large amounts of medical isotopes and can cut the current cost of production by 50%, thereby allowing even greater access to individuals that need them. Because of the very short lives of the radioisotopes, U.S. Nuclear and MIFTEC plan to have their generators operating at strategically placed distribution facilities in the United States that will be close to users and therefore will offer a significantly longer useful lifespan than today's only options of distant nuclear power plants in Canada and Europe.
This will be a vertical to watch closely in the coming years, as even capturing 1% of the worldwide market for radioisotopes would mean sales in excess of $170M a year.
After having recorded record sales, and profitability in 2017, all while having every major financial indicator trend in the correct direction, US Nuclear Corp. appears well-positioned going into 2018 and beyond.