TOMI Environmental Options, Inc. (NASDAQ:TOMZ) Q1 2024 Earnings Convention Name Could 15, 2024 4:30 PM ET
Firm Individuals
John Nesbett – IR, IMS
Halden Shane – CEO and Chairman
E.J. Shane – COO
Nick Jennings – CFO
Convention Name Individuals
Operator
Good day women and gents and welcome to the TOMI Environmental Options First Quarter 2024 Monetary Outcomes Convention Name. Our host for at the moment’s name is John Nesbett of IMS Investor Relations. At the moment, all contributors are in a listen-only mode. Later, we’ll conduct a question-and-answer session.
I’d now like to show the decision over to your host, Mr. Nesbett, it’s possible you’ll start.
John Nesbett
Convention name. On at the moment’s name is TOMI’s Chief Govt Officer and Chairman of the Board, Dr. Halden Shane; TOMI’s Chief Working Officer, E.J. Shane; and TOMI’s Chief Monetary Officer, Nick Jennings.
Dr. Shane will present an summary of current enterprise highlights; E.J. will report on future plans; Nick will present the financials, then all can be out there for Q&A.
A phone replay of at the moment’s name can be out there by way of Could 29th, 2024, the small print of that are included within the firm’s press launch dated Could 15th, 2024. A webcast replay can even be out there at TOMI’s web site, www.steramist.com.
Please be aware that data contained inside this presentation is related solely to the date of which it was recorded, Could 15th, 2024 and you might be subsequently suggested that time-sensitive data could not be correct on the time of any replay.
Sure written and oral statements made by administration of TOMI could represent forward-looking statements as outlined within the Personal Securities Litigation Reform Act of 1995. These forward-looking statements ought to be evaluated in mild of vital danger elements that would trigger precise outcomes to vary materially from our anticipated outcomes.
The knowledge supplied in this convention name relies upon the information and circumstances identified right now. The corporate undertakes no obligation to replace these forward-looking statements after the date of this name.
As well as, TOMI will focus on sure non-GAAP monetary measures throughout this name. The corporate makes use of non-GAAP measures as a result of it believes they supply helpful details about working efficiency ought to be thought of by traders along side the GAAP measures. A reconciliation of those non-GAAP measures to comparable GAAP measures is included within the earnings launch dated Could 15th, 2024.
I’ll now flip the decision over to TOMI’s Chairman and Chief Govt Officer, Dr. Halden Shane. Please go forward.
Halden Shane
Thanks, John. Good afternoon and thanks for becoming a member of the TOMI Environmental earnings name. At the moment, we’ll present an replace on operations and financials for the primary quarter of 2024. This name can be comparatively brief for people who have joined previously in comparison with our earlier calls on account of the truth that we simply had a name 30 days in the past, whereas additionally offering perception into key present endeavors of the corporate for the previous month and quick future.
Through the quarter, on account of income recognition, we reported solely $1.1 million in income. This was disappointing and beneath the place we anticipate it to be. That mentioned, our income stays prone to timing of enormous orders as we scale. So, it is vital to notice that our backlog, which displays agency orders was $900,000, a lot of which was closed through the quarter.
So, our whole gross sales exercise for the quarter combining gross sales and backlog was roughly $2 million, which is about 27% improve in gross sales over the primary quarter of 2023.
Additionally, we’re inspired by our gross sales pipeline throughout a number of finish markets given our expanded base of distribution companions. So, the gross sales within the quarter doesn’t totally seize the rising curiosity in our know-how and the move in sale inquiries and engagements over the previous 30 days.
It’s our expectation that we are going to see sequential development and cut back loss in quarter two and are presently laser-focused on driving the enterprise to profitability as quickly as third quarter of this yr.
We obtained information by a U.S.-based multinational pharmaceutical buyer confirming that two of their CES programs that had been put in in September of 2022 are certified and scheduled to start use within the fourth quarter of 2024. As soon as these programs are up and working, we anticipate annual answer income of roughly $250,000.
As you recognize, dilution gross sales are the blade in our razor/razor blade mannequin, and it is a excellent instance of the long-term evolution of our financial mannequin. I assume, persistence is a advantage within the life science verticals, actually, most likely in all verticals.
Along with our industrial successes, we disclosed two groundbreaking research showcasing the efficacy of our answer towards foot and mouth illness virus, FMDV, an African swine flu virus ASFV, reinforcing our pursuit of a further EPA label.
We obtained notification from the Division of Homeland Safety that our SteraMist know-how has been included of their Science and Expertise Directorate Finances overview for the acquisition of 16 SteraMist setting programs within the quantity of roughly $2 million, the place our SteraMist Expertise can be used to help the decontamination of Plum Island Animal Illness Middle.
Furthermore, our participation at Interfax 2024 in New York Metropolis supplied the proper platform to unveil our newest product growth. E.J. will go into the specifics of our participation and the innovation showcased through the occasion.
Lastly, through the quarter, we had been invited to use for a $three million grant from the Division of Protection for use by the Military, Air Power, and Marines specializing in mitigating ethylene oxide sterilization. In Could of 2024, we submitted our proposal and utility below the DoD program, and we’ll maintain shareholders of appraised.
Now, I would like to show the decision over to Nick Jennings, for his remaining name to offer our quarter one financials. Nick has resigned on account of private well being and household points. He can be changed by Joe Rzepka. Joe has been our Senior Vice President of Finance and our Senior Controller for our firm for 5 years. You’ll welcome Joe throughout our subsequent earnings name.
Nick plans to remain on as a part-time foundation as a advisor to help with a number of the finer facets of submitting Qs and Ks. Joe comes from a robust background in monetary reporting in each private and non-private firms, together with a protracted stint in an aviation firm. All of us want Joe and Nick the most effective of luck of their new positions at TOMI.
Now, I am going to flip the decision over to Nick.
Nick Jennings
Thanks, Dr. Shane and good afternoon everybody. I am going to present a quick overview of our monetary outcomes for the primary quarter of 2024 in comparison with the identical prior yr interval.
For the three months ended March 31st, 2024 in comparison with March 31st, 2023, our consolidated web income was $1.114 billion in comparison with $1.582 million. Consolidated gross revenue was 60.2% in comparison with 59.5%. The rise in gross revenue was on account of our product mixture of gross sales.
The consolidated working loss was $1.226 billion in comparison with $1.188 million. Our consolidated web loss was $1.310 million or $0.07 per fundamental and diluted share in comparison with $1.187 million or $0.06 per fundamental share.
Shifting on to the steadiness sheet. As of March 31st, 2024, our money and money equivalents had been roughly $1.1 million, working capital was $6.6 million, and our shareholder fairness was $7.1 million.
As Dr. Shane talked about, that is my final name with the corporate and I simply wished to take a fast minute to thank Dr. Shane for giving me the chance to work right here. It has been an honor and a pleasure. And I additionally wished to thank the Board, staff, and everybody concerned with this firm. I want you all the very best shifting ahead, and I do know we’ll proceed on our mission to make the world a safer place.
Now, I’ll flip the decision over to E.J. Shane to offer perception on the present firm actions.
E.J. Shane
Thanks, Nick and good afternoon everybody. I wish to present everybody with some context round our strategic progress. Whereas quarter one income was decrease than we anticipated, our pipeline is powerful and wholesome, and it consists of firms throughout a number of finish markets.
We’re very targeted on executing towards the important thing aims that we specified by the April name. These aims embrace closing extra CES gross sales and guaranteeing that present customized installations generate the anticipated BIT answer income; driving traction for our SIS or SteraMist Built-in Methods; fostering repeat enterprise with OEMs of decontamination enclosures; rising iHP Company Service revenues; and increasing gross sales of our cell tools to each current and new clients and to our worldwide distribution community.
Let’s please take every of those factors individually. In February, we secured a brand new contract with a California-based life sciences firm for the set up of a SteraMist iHP-CES valued at roughly $600,000. This method is provided with six applicators, is slated for integration right into a scientific suite by the top of the third quarter and 2024, and the undertaking stays as scheduled.
Upon full performance, we anticipate all present CES installations to collectively yield roughly $600,000 in BIT answer income. That is based mostly on present buyer schedules and assuming these manufacturing and manufacturing schedules don’t change.
As well as, we anticipate two further CES contracts to shut within the very close to future for related builds because the California firm I simply referenced with supply schedules for quarter 4 of 2024 and quarter two 2025.
Now we have carried out enhanced inner operational strategies to watch and help our clients with these installations as they require a unique stage of help than our cell gadgets. Clearly, the sooner they’ll get these bigger programs put in, the earlier we will help these programs with BIT options.
The SIS merchandise are, in essence, a CES on a smaller scale, the decontamination of enclosures. It is vital slide in enhancing TOMI’s popularity as a flexible and user-friendly decontamination answer know-how, the power to supply fast and efficient options for organic security cupboards or BSCs, decontamination chambers, and numerous different enclosures will result in long-term monetary rewards.
These scalable fashions are in excessive demand as we’re presently engaged in lots of communications on this matter. And I do acknowledge the repetition from our earlier replace in April on our SIS product launch.
We should work with many events, first within the design and meeting, then within the testing of cycle developments, and eventually, the registration procedures to make sure the information and compliance of those options. Nonetheless, I’m happy to announce vital developments with 4 distinct manufacturing firms.
Our in-house service workforce is performing extraordinarily nicely. iHP service income serves ceaselessly as our main introduction to organizations and results in repeat orders. As talked about, service income elevated by 21% in quarter certainly one of this yr.
I am additionally happy to report iHP service alternatives have elevated considerably this quarter, some leading to six-figure gross sales. These alternatives usually supply clear income forecast and expedited gross sales cycles, usually tied to immediate decontamination wants.
Extra importantly to report is that we’re witnessing a major shift within the decontamination service market, presenting us with a considerable quantity of alternatives.
As acknowledged all through final yr, we introduced a distribution community to america to affix our worldwide distribution community. Permit me to share an replace on a few of our companions around the globe.
ARES distribution is dealing with the 2025 CES construct alternative talked about earlier, together with certainly one of our high-value iHP service decontamination initiatives scheduled for this summer time.
Furthermore, they’re exploring quite a few alternatives for his or her current stock, together with potential further gross sales to finish customers in america. One in all these alternatives can be by an impartial company of the U.S. authorities, which when permitted to publicly share, can be significantly thrilling to announce.
Tecnimont in Canada has a strong pipeline throughout the EMS trade, that includes seven alternatives, every involving purchases of double-digit SteraPak or transport items. The standing of those alternatives varies, starting from budgeting processes to presentation, tremendous administration, or the necessity for contracts to be finalized with present suppliers earlier than continuing with SteraMist.
Emitec in Malaysia stays optimistic about 4 BIT tailor-made particularly for SteraMist with the anticipation of securing the primary contract quickly.
One other worldwide BIT tailor-made for SteraMist for shipments to Africa through the U.S. Embassy is about to shut by the top of this month for 10 SteraPak gadgets and related equipment.
IBD in Italy, having positioned their preliminary order final quarter, engages with us ceaselessly to discover partnerships aligned with our SIS technique and past.
Common Disinfection in Germany continues to domesticate their pipeline. They’ve additionally expanded their focus from life sciences and aviation to incorporate the meals security market. We eagerly anticipate formal EU registration, which can unlock vital gross sales alternatives for our key European distributors.
Tecan in Turkey maintains a biannual buy pipeline with their second order slated for the top of 2024. Moreover, we just lately onboarded a brand new distributor in India, Sts Technocrat, comprising of three Administrators with 35 years of collective expertise in technical consumable gross sales. Their clientele consists of notable names reminiscent of Sanofi, Mylan, and SunPharma. This overview covers seven of the 30-plus lively companions we collaborate with.
Lastly, I would like to the touch upon our confidence within the pipeline, significantly in capital tools cell purchases. As Dr. Shane talked about earlier, our presence at Interfax in April was impactful, facilitating interactions with present and potential clients resulting in lots of of high quality leads in addition to beneficial face time with our companions, a number of of whom I supplied updates on at the moment.
Most of the new leads will lead sooner or later initiatives and gross sales, whereas additionally serving as a platform to introduce our newest merchandise, specifically the SISSA or standalone and the NV Plus, each which had been well-received.
Whereas suggestions is at all times large ranging, each gadgets have already been quoted to alternatives recognized on the present, and so they all had been in settlement with the need of those purposes.
Remarkably, that is the primary time our participation at a commerce present resulted in quick request for quotes, even earlier than dismantling our cubicles. A few of these finances approvals align with upcoming summer time initiatives.
Moreover, the second half of 2023 and this yr had been intensified our proactive method to this an infection in industrial and healthcare sectors, emphasizing the significance of routine disinfection past the teachings of any pandemic.
To expedite this course of, we’re growing an academic platform tailor-made for all our TOMI service community members in addition to service suppliers and inner departments to healthcare amenities assembly a specified standards.
The SteraMist Professional licensed program stays a major step in direction of trade excellence. As a recap, our purpose is to determine a normal that displays a dedication to steady enchancment, adherence to evolving disinfection biohazard response norms, and dedication to setting benchmarks within the area.
Central to our mission is guaranteeing that the SPC program resonates with customers by inserting their wants on the forefront, portraying the certification as user-centric reasonably than SteraMist-centric. This system seeks to make sure licensed entities worldwide are geared up to ship disinfection decontamination, whereas prioritizing public well being, security, and environmental sustainability.
I’ll now flip the decision again to Dr. Shane for closure.
Halden Shane
Thanks, E.J. and Nick. We proceed to suppose out-of-the-box and discover new markets for our SteraMist iHP Expertise. And I encourage the corporate itself to suppose additional out-of-the-box as a result of there’s plenty of these alternatives out there.
So, the biofuel trade is only one that has a excessive incentive to acquire higher various biofuel. iHP is understood to be the quickest and the second strongest oxidizer identified to man, which might be able to be utilized within the conversion of cellulose and biofuels.
We’re additionally within the early levels of promoting our SteraMist Expertise for use within the decontamination course of in server farm trade and knowledge facilities. One of many largest areas of the brand new infrastructure spend over the subsequent one to 5 years is knowledge facilities.
Main tech firms are pouring $1 trillion into knowledge facilities over the subsequent 5 years. Third-party knowledge heart operators are one of many many beneficiaries of this AI growth. These knowledge facilities will want high-level disinfection to take care of ranges of cleanliness that’s wanted to maintain their facilities tools.
We’ll maintain our shareholders up-to-date in our endeavors to unfold the appliance in as many verticals as doable. Thanks in your time at the moment. Keep tuned. I am going to open the decision to questions and solutions.
Query-and-Reply Session
Operator
At the moment, we’ll conduct the question-and-answer session. [Operator Instructions]
Your first query comes from Adam Hoffshire [ph] with Hoffshire Capital. Your line is open.
Unidentified Analyst
Hey, thanks for taking the query. Relating to the $2 million allocation from the Division of Homeland Safety for the acquisition of 16 programs, are you able to make clear the anticipated timeline for income recognition from the contract?
Halden Shane
Certain. So, they are going to decontaminate Plum Island and I imagine it must be carried out within the first or the latter finish of the primary or second quarter of 2025. So, I must suppose that the finances itself and the acquisition order would are available in someplace in our fourth quarter of this yr.
Unidentified Analyst
Obtained it. Obtained it. Thanks. After which only one extra. Are you able to present a bit extra colour on the expansion within the CES enterprise and the way that impacts the razor/razorblade mannequin? Is it true that type of the CES clients are extra reliable on the customers of the high-margin — depending on the makes use of of the high-margin BIT answer?
Halden Shane
Good query Adam. Sure. So, as soon as we’re on this market the place we’re constructing these gadgets for plenty of cash for main gamers in each the life sciences, prescribed drugs, a variance area. And although the utilization of answer on this area is not as nice as, for instance, when you’re out spraying it day by day in a hospital, it is constant, and we will begin going forward and placing collectively experiences onto what we anticipate our answer orders to be going ahead. So, I believe that is a breakthrough for the corporate. And we now have an incredible pipeline in life science professionals firms, Bavarian universities in these areas that we’re very completely happy about.
Unidentified Analyst
Obtained it. Obtained it. Okay, nice. Thanks. That is all for me.
Operator
[Operator Instructions]
Your subsequent query comes from John Nelson, shareholder. Your line is open.
Unidentified Analyst
Hello to all of you and thanks for the abstract. I am the — it is unimaginable that such a small firm has so many alternatives in entrance of it, in my view. However the money place appears low. Is the money — present money place of the corporate sufficient to get you to profitability in your opinion?
Halden Shane
It would get us to profitability, however we will be in search of some money as we have to make this firm bigger. And with a purpose to take the alternatives that we now have and switch them into income, we will need to construct on the corporate. So, I believe that is the easiest way to reply it. So, it is positively a risk.
Unidentified Analyst
Okay. Are you investigating financial institution line of credit score or you have already got one locked up?
Halden Shane
No, we do not. We’re investigating plenty of sources.
Unidentified Analyst
Okay. Thanks.
Halden Shane
We do have the noteholders that we initially handled in November, September actually of final yr which are taken with furthering the road of credit score in that order.
Unidentified Analyst
Okay. You talked about the 2 CES programs that had been delivered in 2022 which are cleared now to start out up and may begin off on the — within the fourth quarter of this yr. Are you able to clarify why it took so lengthy — or is it going to take so lengthy to get these programs began up?
Halden Shane
Sure, John. I imply, that is the irritating a part of the enterprise. So, these giant firms spend lots of of hundreds of {dollars} and so they put these programs into play, then they need to undergo {qualifications} and validations.
And plenty of occasions, they purchase the items and so they do not even transfer into their amenities for a yr. And generally they cannot even validate them for 2 years. So, it is excellent news that this very, very giant pharmaceutical facility is now qualifying their two items and shortly, we’ll be receiving income from their answer use.
Unidentified Analyst
Okay. And let’s examine the — one of many issues that — from the year-end name that you just had talked about had been investigating fentanyl testing? Any feedback on that?
Halden Shane
Not but. Now we have a few sources which are investigating it. I believe we’ll positively be capable to neutralize it. Those which are — one goes to take somewhat longer as a result of it is concerned within the army and nothing occurs shortly. And the opposite one is inside our service finish. So, we would have some knowledge comparatively quickly.
Unidentified Analyst
Okay. Additionally what sort of — do you’ve got any concepts on what sort of function SteraMist might play in PFOS and PFOA’s therapy?
Halden Shane
Once more, if we had been a a lot bigger firm, we might deal with that. I do know it is a huge, huge trade, and it is a huge downside on the earth. I believe quite a bit has to do with soil and vegetation and naturally, water and air contaminants. They’re discovering these traces in every single place in people and the whole lot. So, it is a huge situation. And we’re — once more, we’re sporting plenty of hats throughout the measurement of our firm and doing as a lot as we will, however we’re nonetheless trying into it.
Unidentified Analyst
Okay. And on the — additionally from the year-end name, you talked about the U.S. Division of Organic Choose Brokers and Toxins, Biorisk Program Workplace accomplished a research, which demonstrated SteraMist as an efficient know-how for decontaminating organic toxoid. And my query is, would possibly this presumably result in down the street to authorities stockpiling of SteraMist dispensers and answer for emergency functions?
Halden Shane
Certain might. In the event that they thought such as you and I are considering now, we might. When did we are saying that we mentioned that on the final — the top of final yr?
Unidentified Analyst
Sure. I believe it was within the name, I am going to ask you from now on the This fall name.
Halden Shane
So, that is Could. We simply lastly and thank goodness to them obtained the ultimate signed off paper and certification, occurring this week.
Unidentified Analyst
Okay.
Halden Shane
Like I mentioned, persistence is a advantage.
Unidentified Analyst
Any updates on SteraMist use for meals produce, hospital cleansing, or — you have talked about the information facilities, additionally semiconductor vegetation?
Halden Shane
Not something aside from what I simply talked about. So, we’re nonetheless — we renewed an settlement with the USDA to proceed their analysis in some particular focused areas that we’re taken with. And they’re — and so they at all times provide you with some actually good papers, which you’ll decide up on the internet and any listeners can go forward and overview on meals security and pathogen kill.
We’re additionally going to be working with them additional on residuals and purposes in — for the areas of the meals provide. We’re getting plenty of curiosity in meals security as I believe we must always. I am simply — I learn a paper at the moment that Invoice Gates is spending $26 million to manage farts and burps from cows. So, I believe that we might hook all of them up with SteraPaks and determine that out.
Unidentified Analyst
Okay. And — have you ever had any inquiries from any firms about treating animals with the — or I ought to say, animals or their environments to forestall hen flu?
Halden Shane
We’re getting some curiosity and we’re advertising that as a result of I imagine that we may help with the management of avian flu and presumably forestall the culling of thousands and thousands and thousands and thousands of birds in the event that they comply with a protocol utilizing our product.
And my complete stance has been about these avian flus, which have been occurring for years, particularly the H5N1 has been that if they are going to cull all these animals, why do not they struggle one thing that will assist them survive. And I believe that is — ultimately, any person will come up and say, sure, let’s go forward and do a program and experiment this space.
Unidentified Analyst
Okay, nice. Effectively, that is all of my questions. Thanks very a lot.
Halden Shane
Thanks John. Thanks in your help.
Operator
At the moment, I wish to flip the decision again to administration for any additional remarks.
Halden Shane
I simply wish to thank everyone for becoming a member of at the moment and thank Nick for his help and the whole lot he is accomplished for the corporate. With that, I say good night time.
Operator
This concludes at the moment’s TOMI Environmental Options’ first quarter 2024 monetary outcomes convention name. Thanks for attending. Have an exquisite remainder of your day.