Finance

Pacific Trader: After 25 years, food tech company Enwave turns the corner to profitability

Delta-based Enwave, a maker of machines that use microwaves to dry food and cannabis products so they have a longer shelf life, recently saw its first profitable quarter.

By Michael McCullough /

Credit: Moon Cheese

But can the Delta manufacturer leave behind its complicated past?

The stock: Delta-based Enwave Corp. (TSXV:ENW) is a company with a promising patented technology trying to transcend a messy history. Enwave manufactures and sells Radiant Energy Vacuum (REV) machines, based on a process first developed at UBC, which use microwaves to dry food and now cannabis products to give them a longer shelf life. It also has its own food brand, NutraDried, which produces a snack called Moon Cheese as a kind of proof of concept. After more than two decades on the TSX Venture Exchange, last Friday Enwave reported its first substantial net earnings, of $670,000, for the quarter ended June 30.

The drivers: Though sales of NutraDried actually fell after Costco Wholesale (NASDAQ:COST) dropped the brand last quarter, higher machine revenue and royalties more than made up for that setback. (Enwave helps offset the up-front cost of the machines by collecting royalties on its customers’ food and cannabis product sales.) Also in the quarter, Enwave signed a strategic partnership with tropical fruit giant Dole Worldwide Food and Beverages Group to conduct REV trials and potentially come up with new products.

Now for the unfinished business: in July, Enwave launched a lawsuit against Tim Durance, who served as CEO from 1999 to 2018, and other ex-employees and corporate partners over alleged disclosure of confidential information and failure to protect its intellectual property. The company is now led by executive chair John Budreski, an investment banker; and president and CEO Brent Charlton, previously head of marketing and corporate affairs.

Enwave stock is off 10 percent since the start of the year, to $1.03 Tuesday, but enjoyed a small bump following the earnings release.

Word on the street: The latest results “offered clear evidence of the firm’s accelerating turnaround in both divisions,” said Raymond James analyst Steve Hansen, who raised his rating to “outperform” and his target price to $1.65 a share from $1.45.

Coming and going: Vancouver-based BriaCell Therapeutics Corp. (TSX:BCT), a biotech working on cancer treatments, claimed the dubious distinction of having the highest proportional short interest on the Toronto Stock Exchange last week, with 47.3 percent of its stock float sold short. Short sales represent a way for active investors to bet against a stock by selling borrowed shares to be acquired at a later date (presumably at a lower price).