Q2 2021 BioHiTech Global Inc Earnings Call
Ladies and gentlemen, thank you for standing by good afternoon, and welcome to the bio High Tech Global second quarter 2021 financial results and corporate update conference call. At this time, all participants are in a listen only mode.
Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes.
Webcast replay of the call will be available approximately 1 hour. After the end of the call through November 9th 2021.
I would now like to turn the call over to Scott Gordon President of core IR Bio High Tech Global's Investor Relations firm. Please go ahead.
Thank you Gary good afternoon, and thank you for participating in today's conference call. Joining me from Bio High Tech Global leadership team are Tony Fuller, Chief Executive Officer, and Brian Essman, Chief Financial Officer.
During this call management will be making forward looking statements, including statements that address by a high tech global expectations for future performance or operational results.
Forward looking statements involve risks and other factors that may cause actual results to differ materially from those statements for more information about these risks. Please refer to the risk factors described in <unk>. Most recently filed periodic reports on form 10-K, 10-Q filed with the SEC.
Today August 19, 2021, and bio Hy Tech's press release that accompanies this call, particularly the cautionary statements in it.
The content of this call contains time sensitive information that is accurate only as of today August 9.2021, except as required by law by a high tech disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
Now my pleasure to turn the call over to CEO Tony for Tony. Please go ahead.
Thanks Scott.
Good afternoon to everyone on the call. We welcome here to buy out that global second quarter 2021 financial results and corporate update conference call.
Second quarter 2021 performance demonstrates consistent execution across both of our complementary ways technology solution.
We achieved total revenues of 3 and a half million dollars, representing our third straight quarter of record revenue since the company went public in 2015.
This was largely driven by digester purchases by Carnival Corporation as we continued to fulfill orders across the vast expanse of Carnival brand.
We are encouraged by these results and remain confident in our approach to executing on our operating and our growth plans.
Our complimentary ways technology solution are but 2 of many both deployed and those yet to be developed or deployed in the broad spectrum of solutions.
Our vision is to drive sustainability and lead improved environmental outcomes.
Reduce carbon emissions.
Reduced landfill usage.
And create alternative fuels from that which had been destined for a landfill.
Action and.
And deep commitment are needed to reverse the damaging the impacts of climate change.
We are more driven than ever to provide real world solutions that make immediate impact.
The continued expansion of our relationship with Carnival Corporation is encouraging.
We support their commitment to drive sustainability through environmentally friendly food waste disposal.
Moreover, our digester data analytics platform provide real wage transparency.
Promote changes in the supply chain.
Management purchasing.
Handling and food preparation.
Reducing food waste at its source.
We are actively engaged in opportunities across not only the maritime sector.
But also retail.
Health care.
Government hospitality.
Foodservice and others.
We hope to convert into new client wins in the coming quarters.
We are keenly focused on driving client utilization of our E. P. A recognized solid recovered fuel.
S. Our assets, what we call it.
This year, we produced is that our Martinsburg West Virginia plant.
This facility is capable of processing 110000 tonnes of municipal solid waste annually.
While producing 50 to 60000 ton of S. R L.
For use by cement manufacturers and others.
Is it replacement for coal.
We have improved plant operations throughout the quarter.
As our investments in solving past inefficiencies and cash.
Mechanical and operational issues.
The stage for reliability and process and consistency in production.
Maintenance and repairs shutdowns at our Srs customer.
Led to weaker than anticipated sales performance.
Those issues have been largely resolved and we expect more consistent production.
Delivery and sales growth in the coming quarters.
Okay.
With the passage of West Virginia Senate Bill 3 P..8 into law in May of 'twenty 'twenty..1 this day effectively eliminated solid waste assessment fees or mixed waste processing and resource recovery facility, such as ours in Martinsburg West Virginia.
This is most promising for our expansion plans in 2 additional communities within the state.
We expect this to drive positive.
And near term environmental impact through landfill diversion.
Transportation and fuel conservation.
This bodes well for Bayou, Jack and our stakeholders as we forge ahead to make renewable energy as a norm and leverage the opportunities offered by the state's action.
To make the development of additional renewable facilities economically more attractive.
Do those end.
In June we entered into a project management services agreement with loan Cypress Energy services.
Specializing in the development of waste to energy solutions.
Together.
We are evaluating and developing new plans for <unk> project.
We're also exploring additional uses for our S. R L.
This includes additional project.
In connection with hydrogen and other renewable technologies.
Including the use of our feedstock regasification and Bioplastics.
In summary.
We are executing on our growth plan, our corporate objectives.
And our overarching goals of 2021.
We continued to drive record revenue.
Weird smartly leveraging our expenses.
We've significantly improved our plant operations.
We've engaged with and learn from our shareholders as we've shared our story.
And we strengthened our team and executing is at record levels.
With that.
I will now pass the call over to Brian Essman, who will review our financial results, Brian take it away.
Thanks, Tony and Hello, everyone.
The company continued its revenue growth in the quarter ended June 30th 2021 with total revenues of $3.5 million, increasing 14% over the first quarter of 'twenty 'twenty 1.
38% over the fourth quarter of 2020, and 171% over the comparative second quarter of 2020.
Total revenues of 3.5 million marks the third consecutive new quarterly highs since the company went public in 2015.
During the second quarter of 2021 all of the business lines reported revenue growth over the first quarter of 'twenty 'twenty 1.
The overall contribution revenues less direct costs increased to 14% of total revenue in the second quarter of 2021 as compared to 8 per cent and the comparative second quarter of 2020, however decreased from 29% in the first quarter of 2020.
1 primarily driven by supply chain pressures and an increase in stainless steel prices that are used in our equipment sales.
Selling general and administrative expenses as a percentage of revenues increased to 58% in the second quarter of 2021 as compared to 54 per cent and the first quarter of 2021 and decreased as compared to 149 per cent and the comparator.
The second quarter of 2020.
The increase in the second quarter was the result of a decrease of $190000 in the digester and corporate line offset by an increase of about 305 in the Hebei offline.
The loss from operations as a percentage of revenue decreased to 59 per cent and the second quarter of 2021 as compared to 186% and the comparative second quarter of 2020.
N E increased from 42% in the first quarter of 2020.1.
The company continues to achieve growth in the digester and corporate line of business that has been driven by sales Carnival Corporation.
Such that the second quarter revenues increased to this in the second quarter of 2021 by 15% to $3.1 million as compared to the first quarter revenues of $2.7 million.
The revenues of the he be outline have continued to be hampered by maintenance and repair shutdowns at its S RF customer resulting.
And a 7% increase in revenues to 377000 during the second quarter of 2021 as compared to the first quarter of 'twenty 'twenty 1.
As compared to the second quarter of 2020, the second quarter of 2021 digester and corporate line of business revenues increased by over 700%.
From 381000 to $3.1 million driven by Carnival Corporation equipment sales.
Wall the he be outlined decreased by 58% from 893000 to 377000 due to the continued maintenance and repairs shutdowns at its SRO customer as well as by an adjustment in 2020 relating to a take or pay per vision and the <unk>.
S RF customers contract.
For the 3 months ended June 30th 2021 the company had.
A consolidated loss attributable to the parent of $2.4 million.
A consolidated net loss of $3.1 million.
Incurred a consolidated loss from operations of $2 million.
And for the 6 months ended June 30th 2021 used net cash and consolidated operating activities of $4.2 million.
At June 30th 'twenty, 'twenty, 1 unrestricted cash was $2.3 million.
I will now turn the call back to Tony before we turn the call back over to the operator for Q&A.
Thank you Brian.
It is essential that we do everything in our power to drive sustainability and positive environmental outcomes.
It is essential that we adapt to the needs of tomorrow.
Biologics is exceptionally positioned to lead this charge and drive immediate impact.
That is our responsibility.
That is our charge and we take it very seriously.
We recognize that change is a slow process.
But our products and services and the team that stands behind them all drive to a singular goal.
Go to evolve the ways in which we address our future world.
We do have a choice.
Bio hijacked global enables the right 1.
Thank you for your time today and for your continued support as we carry forward our mission.
I am confident that we're on the right track.
And our strategies for growth are sound.
We are executing and implementing.
Together, we are all making a difference.
Operator, please open the call to questions.
Ladies and gentlemen, if you wish to ask a question on today's call you will need to press Star then the number 1 on your telephone.
If your question has been answered and you wish to withdraw your request you may do so by pressing Star then 2 if.
If you were using a speakerphone. Please pick up your handset before entering requests and speaking on the call..1 moment. Please for the first question.
Our first question comes from Amit Dayal with H C. Wainwright. Please go ahead.
Thank you Ah graph with everyone.
Tony just you know with regards to the carnival or contract how much Oh, you know those.
Orders have been fulfilled so far you know what remains and.
You know the portion that is remaining do you expect to complete that by the end of the year or you know maybe spilling into 'twenty 2.
Thank you and thank you to them yet.
You know the bulk of the Carnival orders will certainly be fulfilled in 2021, I think you'll see just a little bit of spill over in regard to maybe some part and a few other.
Pieces, where perhaps where perhaps the.
Net deployment was underestimated.
Carnival tried to balance their their occupancy with their needs here.
We're seeing some early results that might make you think that could happen, but we are no. We originally said that we would execute in 2020 and 'twenty 'twenty 1.
And I think youll see the bulk of this happened in 2021, so we feel good about where we're positioned with our with that.
So I think youll see youll see us continue to progress with carnival throughout the year.
Understood and then outside of Carnival are we you know do we have any significant other customers for the digesters.
You mean, the pipeline just any color on what's in the pipeline would be very helpful. Thank you.
Yeah.
No you know 1 of the things that we had hoped for.
What he did carnival and 1 of the things we recognized is that for us that was a transformative relationship.
And we knew that our ability to execute on that was going to be observed and Ed.
Depending upon our success with them, we could earn other opportunities and that we would attract the attention of other people are we've seen that so.
Tell you specifically, who we're working with in the pipeline at this moment not free to do that yet, but we are we have seen our result.
The Tianjin where.
In discussion and evaluation, whereas some others as I've said in the.
In my previous comments that we hope to have some news on inherent in coming quarters.
Absolutely, but we are heartened.
By the attention and by that the Digesters have attracted and our execution in the contract editor.
And Mr. Thank you just 1 last 1 from you.
With respect to the Martinsburg plant I know it seems the numbers a little pressure because of maintenance and shutdown related issues, you know getting into sort of the third quarter and fourth quarter of this year do you see some sort of a bounce back over there.
Any color on that would be helpful. Thank you.
I think the I think you're right I mean, we would've liked to have seen better revenue numbers for Martinsburg Theres No theres no way that we are going to communicate that we're comfortable with that level of revenue I think the important thing though to take note of here is that we are.
Our operating the plant consistently and that the shutdown or the lack of revenue that we saw in the second quarter was really a result of our customers' ability to take our product. It was not at all the result of our inability to produce the product. So we are heartened by.
That and we do anticipate better results as we go through the last half of this year I think I mentioned in the comments you know we have been working closely with our with our customer there and believe that we are certainly positioned now to do better or less out of this.
At year end were excited too.
Move that to everybody honestly.
The other thing that debt.
And I Wanna.
I don't know that.
This is a last half of the year solution, but I think it's an important data point for all of us.
The other thing that that that does is it underscores for us. The reason that we're looking at other usage for the Q. The reason that we're investing the time and energy that we are in the broadening the marketability for this fuel and we're encouraged by what we're finding there as well.
Hopefully that helps.
Sure.
It is Tony Thank you so much that's all.
The next question is from Christopher Souther with B Riley. Please go ahead.
Hey, guys. Thanks for taking my question here.
It's great to see the momentum with Carnival, maybe you could just talk a little bit about the runway potential beyond what you currently have and orders do you think there's other potential follow ons with that customer and then you know.
Maybe you could just kind of rank the multiple digester end markets by areas, where you see the highest potential for additional wins here over the next year or so between marine foodservice hospitality grocery et cetera.
Sure.
Okay. Let me, let me first address Carnival I think that as we look at completing the execution of what we originally contemplated with Carnival, we feel really good about where we are with that I think there is opportunity with carnival from my.
The perspective that there may be some of the airline or some of their ships at my time, they need a few extra digesters as capacity increases for those cruise ships.
But not but that is.
Can I have my Crystal ball for that relationship. There's also of course with the data analytics there is a continuing.
Opportunity to provide services and in transparency to carnival and other customers in the way that their supply chain works in their food work. So this ability to do that on an ongoing basis through our data analytics. We think is important and something that we're committed to growing that everyone because it.
So part of the solution to this problem.
At its inception.
We think we offer this solution at inception.
And.
At disposal from the standpoint of looking at the other verticals that are out there I mean, we've long talked about the fact that you're doing this with carnival establishes the fact that we have a solution that works on the ships and works on the water.
You also have an industry that has been flow to jump back and they're still working through that.
Other players in industry.
Our smartly and judiciously.
Managing their capital structure as you go forward there's opportunity there there is no doubt about that.
But when you look at the other verticals that I appreciate your question.
You know as we as we discussed today, we do see the opportunity in retail.
We do see the opportunity in health care.
Got some background as a retailer and I know the benefits that will come from managing net supply chain is.
You as you provide this solution in that sector. So I believe that there is opportunity there we see that.
Health care, obviously, there we've done deployments before in the healthcare Arena and we're encouraged by what we can do there and are excited to see their solution.
Go that direction as well.
Government.
Is another area that if I just kind of took the top 3 besides maritime I would say government is another 1 that's just logical you look at the.
The appropriate pressure and direction that were taking.
From a government perspective to be more environmentally conscious our solution works and it should work in those facilities. So those.
Those would be that would be the grouping that I might give you as the as the top story there.
Fair enough.
Yeah, No. That's very helpful. And then maybe just you can elaborate on that on the targeted deliverables and timelines potentially with the agreement with.
Cypress, maybe to kind of too early to tell at this point, but.
Just what are kind of the key focuses of that program that you've got there.
Yeah, I'd be glad to give you a little bit more color on that.
Really the area, where we are focused first has been on this area of the alternative uses for the fuel.
To take the S. R L.
And take that.
We were digging holes in the ground and bearing.
And converted not weighted but we as a society.
And converted to a fuel I mean that is a beautiful circular economy type of a story.
And to broaden the use of that.
Not only makes sense for us as a society because it encourages the use of this that we were all through in a way, but it makes sense for us as a company. Because you then have broadened your customer base for the product that you produce.
So.
With the effort in West, Virginia recently I talked about.
Build $3.68, and what it does but the other thing that is.
What it does is weird been deemed a manufacturing facility shall we man, we take municipal solid waste, we manufactured youll out of it so to broaden the mark the ability to do that fuel that's been a that's been a initial focus of loan shoppers as we worked on that together.
The other thing in kind of a next step in the process with them is the evaluation of additional projects in our pipeline.
We entered into this because we recognize the fact that as we look at the multiple additional projects that people have had brought our way we need to evaluate with you know which is the most economically viable where's the best market to do it.
Where can we best leverage some of this new technology for additional uses of our fuel and candidly. We don't have an in house capability of managing large scale construction project and we are determined to bring the resources to bear so that we use our resources.
Wisely as we build the next plan so they will help us with that.
So that's been that's a.
Little bit more information on what we're doing with them and that's the priority that we've been approaching to work with them there.
No that's great.
And maybe just the last 1 here would you be able to like quantify from Ottawa profitability and what do you think the impact on the.
Bill in West, Virginia would have in that current plant in Martinsburg and future potential plant in the state there and are there any other states you think.
You know whether it might be similar momentum with similar types of of help for you guys.
You know there are there are still a lot of moving parts with that so it's hard to specifically quantify it.
The thing that it does for you though is it allows you to address the different avenues.
Avenues of waste in a manner that reflects the market. So we were able to take the market approach to.
2 how we dispose of different streams of waste.
Sure.
With more confidence with more freedom than than we had before.
Other thing that is kind of the other non economic factor there that I think we can miss were not careful.
That it is such a cooperative working relationship with the state of West Virginia.
It states that his position in a key spot.
Our country develops energy policies and the fact that we have been able to work with the state of West Virginia and be recognized for what we are which is a a.
Manufacturing operation that's using.
Solid waste.
That's helpful. I appreciate the color. Thanks.
Okay again, if you have a question. Please press Star then 1 day next question is from Edward Woo with <unk> capital. Please go ahead.
Yeah has there been any inventory or component shortages that you've seen.
Yeah.
No.
Our team has really done a good job of managing their supply chain and even they got out in front of it. So I can't say that there have been shortages I can tell you there has been impact.
And we alluded to that in the script and in our filings.
We have seen stainless steel price you can go up and down.
That did have a bit of an impact on our margins.
Over the course of this quarter, but.
We've not been impacted by shortages, although we know they're out there and I just gave a lot of credit to our team for for looking down the road.
And.
In addressing that even while accelerating the rate of production on the carnival orders, So I rightly brag on them for what they've done there.
Ed.
Great well, thank you for answering my questions and wish you. Good luck. Thank you.
Thank you.
Question is from Stewart flank with Dylan capital. Please go ahead.
Hey, Tony and Brian Congrats on a great quarter.
Good day.
So my first question is I am looking at the balance sheet and I see 2 sets of restricted cash 1 under current assets and 1 under.
Total current assets could you comment on.
What they're for and at what point, if any they may be released into general cash for working capital.
So those 2 are all related to the in saga West Virginia bonds.
The non current portion as a bond reserve fund.
Those come back to us at the end of the bond.
Those that are up in the current assets are a mix of operational.
Bonds that are specific to.
Such items as taxes insurance.
As well as that is where they accumulate the payments that we make towards the interest and principal.
Okay.
I have 1 other question.
Is I'm looking at DNA.
A little over 2 million for the cord or is that something that you expect to be normalized over the next 4 quarters as it I think it may.
It may go higher or lower what's your thoughts on that.
1 of our goals is to keep it.
Reined in so that it's not as heavy as it has been in the past.
The second quarter was impacted by a solid waste assessments and property taxes.
You'd be up facility.
That is just a reality of the facility becoming operational.
As well as effective as.
July 1st under the Senate Bill, we will no longer be responsible for paying the solid waste tax going forward.
Historically, the state has treated us as a landfill and we've tested that.
And where we're moving forward from that so $2 million.
We bring another he'd be odd plant up.
Hard to say, where it will be.
Focus is to not.
Not increase it unduly without a reasonable return.
Alright, Thanks keep up the good work guys.
Thank you.
Showing no further questions I will now pass the call back to Tony Fuller for closing thoughts.
I want to I want to thank all of you.
Participating on today's call and for your interest in bio hijacked global.
We look forward to sharing our progress with you in future updates.
Thanks have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yes.
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