Q3 2021 Applied UV Inc Earnings Call

Good morning, My name is Holly and I will be your conference facilitator today at this time I would like to welcome everyone to the Q3 2021 applied <unk> financial results Conference call.

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

Session 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.

You may begin.

Thank you Holly and good morning, everyone welcome to our third quarter 2021 earnings conference call I'd like to remind you that our earnings call press release is available in the Investor Relations section of our website.

Www Dot <unk> dot com.

Before we begin please take a moment to read the forward looking statements in our earnings press.

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

We base these statements and certain assumptions and expectations on future events that are subject to risks and uncertainties.

Our most recent Form 10-K, and 10-Q lists some of the most important risk factors that could cause.

Cause actual results to differ from our predictions.

Speaking on our call today will be <unk>, Chief Executive Officer, and Mike Riccio CFO.

With that I'll turn the call over to queue.

Thank you Kevin and good morning, everyone. Once again, it's my pleasure to be with you. This morning to review the highlights of our third quarter performance third quarter net sales.

Increased by over 127% to approximately $3 5 million.

Approximately one 5 million.

In the past quarter.

In the third quarter in 2020 like so many companies globally, we experienced continuing logistics and transportation challenges in many regions.

Which resulted in delays in fulfilling customer orders in the second quarter.

As we shared with you in the last call we anticipated many of those orders.

We shipped to customers in the third quarter, while others expected to ship in the fourth quarter.

Net loss for the third quarter of 2021.

With approximately $1 million compared to a net loss of approximately $900000 last year in the third quarter of 2020.

The net loss in 2021 was due primarily to an increase in SG&A costs to improve future operation and expenses disinfection segment of our business.

Reviewing our Q3 2021 results against our Q2 2021 results.

We reported more than an 88.

<unk> increase in revenue and improvement in gross profit.

Our net loss for the third quarter of 2021 improved more than 49%.

Our net loss per share improved to negative 2014.

Inclusive of preferred dividends of $241500. This compares to a negative 23 net loss per share in Q2 of this year as we continue to drive sales and our momentum towards achieving profitable growth.

We ended the quarter with approximately $11 $7 million million dollars of cash.

Available on our balance sheet, we are optimistic about closing this year on a high note with a good momentum heading into 2022.

The strong volume momentum is expected to result in Q4, showing better year over year sales growth and what we've seen in Q3.

Continued improvement in some of the logistics issues and most importantly, we continued to benefit from the growing demand for air purification technology and solutions across a wide range of commercial health care and other large public facilities.

At the end of Q3 and very early in Q4, we announced two significant strategic acquisitions as a part of our plan to significantly grow our air purification product portfolio and expand our customer base.

At September 28, we closed the acquisition of <unk> Science and technology. The <unk> acquisition gave us the opportunity to consolidate all of our aerospace technologies stair alumina brand.

Hence our presence right.

In some major markets, including food distribution widen rates in the retail sector.

Because aerospace systems.

Our purpose built for perishable food processing and storage post harvest and transportation industries.

These industries faced the challenge of finding effective ways to reduce spoilage due to ethylene gas, which is often a major issue in wine beer and other beverage and food processing.

Alright.

Facilities Harley can you mute via the lines. Please.

Okay.

All lines are muted I'm showing it is coming from huge line.

Bacteria and microbes also Cogs mould aerospace destroyed.

<unk> product portfolio is well suited to address these issues, while also reducing the threat of pulmonary problems in respiratory infections and other diseases for employees.

As we previously stated CASM is expected to contribute approximately $5 million to $7 million annualized revenues and be immediately accretive to our earnings per share.

Following <unk>.

Which closed on September 28 of October 13th of this quarter, we announced the closing of the acquisition of scientific care management. We believe this acquisition is transformative for a number of reasons.

First a establishes us as the recognized leader in one of the largest verticals being healthcare.

Scientific care product.

Yeah.

Exclusively developed for health care facilities to address the growing need for effective safe airborne disinfection, particularly the persistent health challenges caused by hospital acquired infections or <unk>.

We're seeing the growing need and the key demand driver for effective and safe airborne disinfection.

With no harmful byproducts second scientific as flagship product, Yes, 400 is.

Mobile disinfection control unit.

All of our aerospace products can run 24, 7% and deliver what we look for target acquisition products capabilities.

The items are independently tested disinfection with no harmful byproducts.

Then this unit.

<unk> is simple to anchor our move while delivering the best homeroom clean air solution safely by just plugging into the wall outlet.

And finally it works.

While the room is occupied with humans.

Third scientific air has been in the market more than five years and developed an enviable customer and fan base among experts.

Excellent performance data helps explain why these 400 will complement our aerospace product portfolio and give us the potential to expand our presence in some of the most prestigious healthcare institutions across the country by extending our clean air solution to the frontline personnel and delivering better patient experiences and outcomes.

Medical communities.

Finally, the acquisition of scientific aired comes with a strong relationship with one of the largest distributors of healthcare supplies in North America. This relationship provides a well established distribution channel.

Two large hospitals and healthcare facilities throughout the nation.

To further leverage that success of relationship as we look to further expand our penetration into the health care verticals.

From a financial perspective.

Previously said scientific air.

<unk> can contribute approximately $5 million to $7 million.

Annualized revenues and will be immediately accretive to our earnings per share.

As such when considering the combined revenue from these two acquisitions are expected to contribute approximately $10 million to $14 million.

Current annualized revenue run rate.

Although early in the process, we're making excellent progress on the integration of both <unk> and scientific care and aligning each functional domains of our subsidiaries that are alumina to better serve our customers.

This positions us for growth going forward contributing to cost synergies and more importantly, providing a much more elegant customer journey and a more complete solution set.

Collectively these acquisitions Creek.

Portfolio of patented air Disinfection purification technologies under the Sterling <unk> capable of addressing virtually every major.

Commercial market, including.

Hospitals, and assisted living facilities schools food processing post harvest facilities and as always are the large public spaces.

We believe there are complementary technologies.

Technologies.

Other complementary technologies or companies that would enrich and expand our portfolio.

Disinfecting solutions and open new market to us we.

We continued to care field carefully evaluate how to accelerate our growth strategy through a targeted and scalable M&A approach to build in existing.

Capabilities and potential growth areas all of this provides us.

With confidence about our expected performance in the fourth quarter and the 2022 will be another strong year for applied UV look forward to continuing to update all of you on our progress.

And with this concludes my remarks.

This morning, Holly ready to get going into any questions that arise.

Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.

We ask that while posing your question you. Please pickup your handset listening on speaker phone to provide optimum sound quality.

Please hold while we poll for questions.

Your first question for today is coming from Jeffrey Cohen with Ladenburg Jeffrey Your line is live.

Q how are you.

Good morning, Jeff good to hear from you.

Yes.

So sorry, I only caught.

Most of the call can you give us any indication.

Revenues for the quarter as far as composition or administer over quarter. Congratulations on the strong topline.

Thank you.

Mike do you want me to answer.

So that.

For the third quarter.

Roughly 50 50.

Our traditional hospitality business.

A little bit higher than maybe 50, 149, 51 being ochsner lumen.

Disinfection segment on the other business.

Okay got it.

We are segmenting, Oh, I am sorry, Geoff just to expand on that a team that we.

In the Q we.

Started.

Reporting since Theyre alumina is growing substantially.

So.

It's broken up a little bit better.

And there'll be passing.

The hospitality segment.

Infections.

Our growth engine.

Okay and was there any update on the.

The hospital markets or was there any update specifically on.

On <unk> side as far as placements and information regarding.

S skus being the commercial units or the.

Consumer units.

Okay.

You mean the breakout it.

It's still.

More than.

Almost 100% commercial.

So we're just waiting into the consumer.

A portion of the business.

If that's answering your question does it answer your question.

Yes.

That's helpful did you say anything about fourth quarter did you say anything about pull through or the order backlog for the balance of the year.

We did we did experience a little bit obviously of.

The logistics and getting goods out in the second quarter that slowed us down both of the Delta Varian spiking.

The.

Kind of crumbling.

Supply chain infrastructure.

The most of our problems in the second quarter were shipping.

<unk>.

So we realized we're realizing some of that backlog and it start it will start smoothing out going into.

I guess, we saw some of it in third quarter and will continue to see some of that pull through.

Think in the fourth quarter and also.

The beginning of the first quarter in.

2022.

Okay.

Yes can I just add sorry.

Sorry, Jeff can I say one thing this is Mike.

Yes.

In Q4, two youre going to see not only to continued improvement.

Hospitality.

And disinfection.

As it is today, but obviously you're going to see the impact of the Mark Kinzel Sam acquisition. So we're expecting.

Obviously, our largest quarter and youll start to see the.

Return on those investments that were just at Q had mentioned in his presentation.

I got a mic so youre, implying sequential growth by your statement and largest quarter over Q3 correct.

Yes.

Yes.

Okay.

Perfect that does it for me thank you very much.

Thank you Jeff.

Once again, if there are any questions or comments. Please press star one.

There are no questions in queue I would now like to turn the floor back over to queue.

Thank you very much Ali.

I'd like to thank everybody for my team, especially for terrific.

Third quarter, and especially our finance team for helping with the acquisitions and getting our Q out.

Which was.

He left.

And I wish everyone a happy Thanksgiving. Thank you.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.