Q2 2021 Applied UV Inc Earnings Call

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Good day, ladies and gentlemen, my name is Kat and I will be or a conference facilitator today at this time I would like to welcome everyone to the Q2 2021 applied to the financial results Conference call.

At this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr. Kevin Mcgrath Investor Relations for applied UV. Thank you you may begin.

You Kat and good morning, everyone speaking on our call today will be <unk>, Chief Executive Officer, Mike, Rick <unk>, CFO, and Jim Doyle's CLO of applied UV.

During today's call, we will make certain predictive statements that reflect our current views about future performance and financial results.

Basis.

And certain assumptions and expectations on future events that are subject to risks and uncertainties.

And with that I would now like to turn the call over to Keith Sayiid, Our Chief Executive Officer Hugh.

Thank you Kevin good morning, and thanks to everyone for joining us.

Once again my pleasure together with my team to be with you. This morning to review the highlights of our second quarter performance.

Second quarter net sales increased by 11% to $1.9 million from $1.7 million in the second quarter of 2020, the net sales and financial results for the current periods reflect the impact of the after the acquisition of the manufacturer of Aerospace systems Akita Holdings that transaction closed on February.

28 February eight I'm, sorry, 2021.

Materials.

All net sales in 2020 presented were generated entirely from our <unk> subsidiary.

During the second quarter, we experienced an improvement in demand from the hospitality industry as the economy rebounded from the COVID-19 pandemic.

And as a result of <unk> revenues are slowly, but surely are returning to what it seems.

Like normal operating levels. This.

Its normal fee, albeit callison, some fits and starts with vaccination progress followed with setbacks at the end of the quarter, given the new variance and the drop off or plateauing no vaccination rates.

We also experienced some delays in fulfilling orders from one of our aluminum product lines due to the current constraints in the supply chain and logistics environment, mostly in shipping delays and container costs and availability.

We expect that these orders will be fulfilled in the second half of 2021.

Net loss for the second quarter of 2021 was $2.1 million or 23 per share compared to a net loss of 6000 or zero cents per share in the second quarter of 2020 net loss in the second quarter of 2021 was primarily due to an increase in SG&A costs to improve.

Operation expanded disinfection segment of our business and planning for additional inventory for second half.

Our liquidity remains strong with a cash balance of approximately $7 million.

On June 30th 2021.

At the end of the second quarter, we announced the closing.

Of an underwritten registered public offering of our series a accumulative.

Perpetual preferred stock raising gross proceeds of $13.8 million before deducting underwriting desk.

Discounts and other operating expenses.

As a result of this offering we continue to strengthen our balance sheet and cash position, which is expected to support our strategy and investing in innovation testing and growing growing through complementary acquisitions.

Now I'd like to talk about the growth trends, we see developing our market because some of the sales and operational highlights for the quarter.

Our access to markets with broadly improving domestically and globally, given very income vaccinations.

The increasingly to vaccination is the start of the second quarter, along with the easing of social restrictions provided further support for the global economic recovery.

We've seen minor delays and setbacks with the emergence of the variance globally and then pockets in North America, we expect to see steady improvement for our <unk> subsidiary for the balance of this year.

Our global commercial expansion initiatives Worcester aluminum business.

Leveraging both partnerships and distribution is beginning to gain measurable traction, particularly for our aerospace portfolio of air purification systems.

During the second quarter and continuing through the first two months of Q3, we announced significant installations of museums schools systems hospitals wineries and most recently the U S. Military base. We expect this momentum to continue as tested proven infection control protocols become standard.

In practice.

And our distribution capabilities continue to grow.

We're also continuing to invest in our growth initiatives.

And our global capabilities and innovation.

Self deployment education about the efficacy of the science and technology balanced safety continuous product testing and investment in our distribution infrastructure to leverage our position as the most innovative leader in this new and growing space.

Across the globe customers are increasingly learning about solutions with no byproduct.

Intended downstream consequences to better control pathogen spread in the air and on surfaces, while not compromising People's health with solutions.

Causing new health risks.

Looking beyond the pandemic, our long term position remains very solid and the world where air quality and infection risk awareness has reached new levels.

Our differentiated value proposition as a leader in air and surface.

Section prevention technologies positions us a unique.

It's uniquely to capture these accelerating growth trends.

We will continue to be a leader in infection control and air purification.

And a step ahead of the competition by advancing our superior science of killing Sars Covid, two and all other pathogens living know byproducts, we continue to partner with Likeminded organization for innovation and speed to market and revenue.

Supporting testing of our Sterling portfolio of products against the most dangerous pathogens are volatile.

Other volatile organic compounds or V O.

In addition, we have.

Expanded safety safety training.

Safety testing of all their aluminum products with U L E T L and MRI labs across all relevant standards while.

Also continuously adding and maintaining all relevant regulatory certifications from entities such as the F D. A in EMEA.

The testing and safety initiatives initially began with surrogates of Covid due to lack of access to qualified labs.

Where the virus, but now we've successfully to Luna side surface product.

Against the Sars Covid two.

And we will be finishing testing of the aerospace line with MRI labs, among others as we are regaining access to the top labs in the U S, allowing us to invest in efficacy without any byproducts.

We stay true.

To being science space to validate the efficacy of our products and provide.

Important information to our customers and support our sales teams and partners worldwide worldwide.

Moving to some of our highlights of the second quarter, we're very pleased to see that the sales momentum in areas like business continues and we remain excited about the prospects for growth through the remainder of 2021 based on our current pipeline of commercial opportunities.

Progress has slowed.

The new Lockdowns and Covid variance.

<unk> has been a tremendous addition to our product portfolio.

And there are people are already a great asset to our team.

We believe there are other complementary adjacent technologies or companies that would enrich and expand our portfolio of disinfecting solutions and open new markets for us our thesis remains to focus on technologies and innovations that work and remove harmful pathogens from the environment without leaving behind byproducts.

Yeah.

Inorganic.

Growth remained tight.

High priority for the management team and we're encouraged by the quality of the synergies we've seen some of the potential acquisition candidates with.

We've engaged with during the second quarter, we continued to make progress with our Sterling and disinfecting system product lines, which today includes lumens side for persistent and automatic disinfection of hard surfaces.

About vanities, and restrooms above desks and countertops, plus the alumina side Dream, which we believe is the only device that automatically disinfect inside the pipe and the high contamination risk.

Trap.

As I mentioned earlier, both safety and independent scientific testing remain our top priority.

And during Q2, we confidently announced independent lab tests.

Firming that our alumina side ribbon killed C O V to COVID-19, the actual COVID-19 virus.

<unk> was designed to determine the alumina side driven effectiveness against the actual sorry, It's C O V two virus.

As opposed to the Covid, sorry to get tested and last year's pre IPO tests.

This was the best available data for.

Testing.

Hard surfaces.

We are and will continue to support additional testing of pathogens and validation and the variance in the air and on surfaces to provide added scientific validation and claims of Ireland, a viral and activation.

In conclusion, we're excited about the opportunities underway and development for our stair alumina business. We've made important advancements in the technical and safety attributes of our sterile lumen product portfolio that we believe differentiate us from the competition, we continue to see positive sales trends and increasing inquiries for both our arrow.

Syed and lymphocyte products for stared alumina from abroad from a broad set of customers in sectors on a global basis.

We believe that applied you'd be.

Has a clear strategy and is well positioned to drive revenue improve our margins and deliver sustainable value for our shareholders.

Yeah.

This concludes my prepared remarks. This morning, a cat would you. Please give any instructions for participants and we'll get started on Q&A. Please certainly thank you. The floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time. If your question has been answered you could remove yourself.

From the queue by pressing one how can ladies and gentlemen, Thats star one.

First question comes from Jeffrey Cohen from Ladenburg Thalmann.

Go ahead.

Oh, Hi, Karen how are you.

Good morning, Jeff how are you good things.

Good luck out there.

Forefront of interest for us very briefly firstly talk about the waters, a little bit and.

Some of the placements there I think it was accretion hungry and they talk about.

The average number of units on average one to read.

The market looks like.

I didn't catch the first part the first part of it talk about which part b.

Yeah some of the recent placements in some.

Oh <unk> okay.

Okay, Oh the winery.

So the.

We have actually.

Jim has been closest to it since we just got somebody returned from Napa with some direct feedback.

But essentially there there is a we believe a great vertical for us in the wineries both in Europe and here, Jim what can you expand on that please.

Yeah, absolutely yeah.

The one of the announcements I think you saw in Greece that.

$300000 projects. So some of these one year it can be quite large they tend to use our larger units are H D series.

Aero side for their cask rooms, and are starting to move out of just the castle and moat removal into the front, which is the tasting rooms with some of our a P. S series G. C. F series. So wineries as you probably know has been a foundational area pre COVID-19 that pre.

Pandemic for Aero side and continues to grow.

Through and into the future for us across the world.

Lots of growth in Europe, we're seeing growth in South Africa.

And then obviously good growth in France.

And in.

In the West coast of the United States.

Thanks, Jim.

The big finding that were.

Previous to Covid.

Part of the business model for these wineries has been the visiting rooms, and the ability with social distancing to previously if you had something there are people who are wary of.

The air but having the.

Visiting rooms clean of any smell or pathogens as well both makes you take.

Tasting experience and visiting feel better at less anxious as well in terms of spread.

Okay got it can you give us some sort of quarter to can you give us any revenue compositions.

<unk> contribution from him works or stir lumen.

I would say that yeah, there's probably.

Relatively even.

We were probably down towards the end of shutdowns started happening at the end of the quarter.

July was was that was was a slower month of Delta it was around the world.

Lot of holders of orders rather that were.

Coming in were held either for re tasking for vaccination.

Laid for later, but not lost.

And also in the on the <unk> side same thing with the hotels, it's been some openings in them closing, so but mostly openings in general outside of some of the specific areas here in the U S. And then South Africa when it got hit.

We had a lot of momentum.

Slowdown towards the end of the quarter, but that is starting to pick up.

People are addressing sort of spot fires on AR.

Instance, my instance, episodic basis.

Does that answer your question Europe.

Could you give us an update on axis are any update from the quarter as far as how.

The back half of the Europe might unreal.

Yes.

The access is actually designing their product.

Uh huh.

Much more elegant and sort.

Sort of hospital specific product for patient rooms, and they expect that Ah I don't believe it has a name yet.

Our product to be rolled out which is going to be sort of the run rate product to.

Hospitals.

In Q1 of next year.

Got it Okay, and then I guess lastly for US could you talk a little bit about their.

And announcements out of Vietnam.

Africa and.

Give us a sense of what quarter those are commitments may start.

But Vietnam.

I have already I believe received their units as for some hospitals in Vietnam. Those specific orders. So distributor there is very much focused on the health care vertical south.

South Africa is a farmer.

Company in general.

Distributor will serve the hospitality and health care and pharmaceutical space.

Their order their initial orders have totaled the first one was 100000 I believe in the second one was for almost Mike our CFO.

Well, obviously jumped on me and correct me, but a total of almost just about under $1 million is being or it has already been.

<unk> delivered on its way to South Africa.

And the majority of that.

Second order, which is close to I think Mike Checkmate 800000, plus is yodlee.

<unk> going to be kind of going to hit the hit our books anyway.

This third quarter is that right correct correct.

Okay.

Okay and can you clarify is that for.

The continent, there's still with a 360.

Or is it for our South Africa the country specifically.

Jim.

Oh, I'm, sorry, I'm sorry, yes. It is for all of Africa, a lot of their focus obviously is going to be and in South Africa is a south African company, but they do have exclusivity across the continent.

Got it.

Okay.

I think that those are for us thanks for taking the questions.

Youre welcome always.

Yeah.

At this time I would like to turn it back to management for any closing remarks go ahead Q.

Actually there are.

No closing remarks, I'd like to again, thank everyone for joining us. This morning, we look forward to closing.

Closing out we're halfway through the third quarter and closing out of this.

This quarter in very positive heading towards the end of the year. Thank you very much for coming in and listening to us and for your time.

Thanks, Scott. Thanks. Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

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