Q2 2022 Applied UV Inc Earnings Call
Speaker 1: Good morning, ladies and gentlemen, and welcome to the Applied UV Second Quarter 2022 Financial Results Conference.
Good morning, ladies and gentlemen, and welcome to the second.
Quarter 2022 financial results conference call.
Speaker 1: At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Brett Maas at Hayden-Ior. Sir, the floor is open.
At this time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments. After the presentation. It is now my pleasure to turn the floor over to your host Brett Maas of Hayden IR, Sir sure as yours.
Speaker 2: Thank you. Once again, welcome to apply to UV Second Quarter 2022 earnings call. With me on the call today are John Andrews, Chief Executive Officer and Mike Rickio, Chief Financial Officer. As a reminder, all of the materials for today's live presentation are available on the company's investor relations website.
Thank you once again welcome to apply to <unk> second quarter 2022 earnings call with me on the call today are John Andrews, Chief Executive Officer, and Mike <unk>, Chief Financial Officer as a reminder, all materials for today's presentation are available on the company's Investor Relations website.
Speaker 2: Before we begin, please take a moment to read the forward-looking statements in our earnings press release. During today's call, we will make certain predictive statements that reflect our current views about future performance and financial results. We base these statements as certain assumptions and expectations on future events that are subject to risks and uncertainties. Our most recent form, 10-K, lists some of the most important risk factors that could cause actual results to differ from our predictions. With that, I'll turn the call to John Andrews. John , the floor is yours.
Before we begin please take a moment to read the forward looking statements in our earnings press release during today's call. We will make certain predictive statements that reflect our current views about future performance and financial results. We base. These statements of certain assumptions and expectations on future events, they're subject to risks and uncertainties. Our most recent Form 10-K with some of the most important risk factors that could cause actual.
To differ from our predictions with that I'll turn the call over to John Andrews, John the floor is yours.
Thank you Brett and good morning, everyone. It's a pleasure.
Speaker 3: Thank you, Brett. And good morning, everyone. It's a pleasure to be with you this morning to review the results of our second quarter and provide an update on our business.
Pleasure to be with you. This morning to review the results of our second quarter and provide an update on our business I'd like to start by thanking the entire applied UV team for delivering strong results I've mentioned, a confluence of factors, including inflationary uncertainty.
Speaker 3: I'd like to start by thanking the entire applied UV team for delivering strong results amidst a confluence of factors, including inflationary uncertainty.
Speaker 3: extended supply chain timelines, and overseas market shutdowns due to COVID and the war in Ukraine.
And its supply chain timeline.
Overseas market shutdowns due to COVID-19 and reward in Ukraine.
Speaker 3: Our team's hard work fueled by our high performance culture resulted in another quarter of solid growth, capping a strong first half of the year, and creating greater momentum going into the second half of the year.
Our team's hard work fuelled by a high performance culture.
So it's again another quarter of solid growth capping a strong first half of the year and creating greater momentum going into the second half of the year.
Speaker 3: Our financial results for the second quarter include record revenue of $5.9 million versus $1.9 million in the same quarter last year for a total increase of 213.5%.
Our financial results for the quarter include record revenue of $5 9 million versus $1 9 million in the same quarter last year for a total increase of 213, 5%.
Speaker 3: A portion of this growth was derived from acquisitions, primarily a recent acquisition at VisionMark. Importantly though, on a pro forma basis, we grew our revenue by 39.2%.
A portion of this growth was derived from acquisitions, primarily our recent acquisition of vision, Mark importantly, though on a pro forma basis, we grew our revenue by 39, 2%.
Speaker 3: We continued our investment in marketing, sales, engineering, and other growth initiatives in the second quarter, while at the same time following a disciplined capital allocation process.
We continued our investment in marketing sales engineering and other growth initiatives in the second quarter, while at the same time following a disciplined capital allocation process.
Speaker 3: We expect our operating margins excluding one-time expenses will improve as we take advantage of synergies between our operating subsidiaries. One-time expenses in the second quarter were approximately $739,000.
We expect our operating margins, excluding one time expenses will improve as we take advantage of synergies between our operating subsidiaries one time expenses in the second quarter were approximately $739000.
Speaker 3: Looking ahead, our backlog is considerably higher as compared to the same time last year, indicating a solid foundation for future growth.
Looking ahead, our backlog of considerably higher as compared to the same time last year, indicating a solid foundation for future growth.
Speaker 3: The opportunities for both our disinfection and hospitality segments remain robust.
The opportunities for both our disinfection and hospitality segments remain robust.
Speaker 3: As a reminder, the Disadfaction Segment includes the design, manufacturer, assembly, and distribution of air purification and pathogen elimination systems for use in food and beverage, agricultural, education, government, healthcare, and consumer markets.
As a reminder, the different section segment includes the design manufacture assembly and distribution of air purification and pathogen elimination systems for use in food and beverage agricultural education government healthcare and consumer markets. The hospitality segment includes the manufacturer.
Speaker 3: The hospitality segment includes the manufacturer of fine mirrors and furniture specifically for the hospitality
E mirrors and furniture, specifically for the hospitality industry.
Speaker 3: In this section, research and markets estimates the global market for air purification and pathogen elimination will reach 24 billion by 2030, with a compounded average growth rate exceeding 11%.
And disinfection research and markets estimates that the global market for air purification and pathogen elimination will reach $24 billion by 2030 with a compounded average growth rate exceeding 11%.
Speaker 3: Indair air quality is no longer nice to have as we now know that 90% of all COVID transmission is airborne person to person. Further, traditional HVAC systems neither exchange or purify the air sufficiently to mitigate risk nor eliminate airborne pathways.
And their air quality is no longer a nice to have as we now know that 90% of all.
Covid transmission was airborne person to person further traditional HVAC systems, neither exchange or pure a five year success sufficiently to mitigate risk nor eliminate airborne pathogens.
Speaker 3: Additionally, recent studies show that cognitive performance for K through 12 students improved with proper air quality. Our diverse portfolio of patented proprietary and research-backed air purification solutions address the growing demand for air purification and pathogen elimination across an ever-increasing set of use cases and verticals.
Recent studies show that cognitive performance for K through 12 students improve with proper air quality.
Our diverse portfolio of patented proprietary and research that air purification solutions address the growing demand for air purification and pathogen elimination across an ever increasing set of use cases and verticals.
Speaker 3: Our global use case penetration includes consumer, sports arenas, public spaces, winery, dairy, food preservation, education, cannabis, correctional facilities, dental, long term care, and hospital.
Mobile use case penetration includes consumer sports arenas public spaces winery dairy food preservation education candidates Correctional facility dental long term care and hospitals.
Speaker 3: In hospitality, the industry is showing clear signs of rebounding from the devastation of the pandemic-driven shutdowns in 2020.
In hospitality the industry is showing clear signs of rebounding from the devastation of the pandemic driven shutdowns in 2020 ACOG.
Speaker 3: According to Hotel Online, a B2B news platform, US hotel occupancy was nearly 70% for the week ending August 6th. And for the month of June , US hotel profitability per available room reached its highest level since October 2019.
According to hotel online <unk> news platform U S hotel occupancy with nearly 70% for the weekend in August six and for the month of June U S Hotel profitability per available room reached its highest level since October 2019.
Speaker 3: Hotels have brought back services and amenities, and the outlook is positive for sustained improvement and broadening opportunities for our hospitality office.
Hotels are brought back services and amenities and the outlook is positive for sustained improvement in broadening opportunities for our hospitality offerings.
Speaker 3: Turning to new business, our disinfection segment grew by nearly 90% in the second quarter. Some key wins in this segment include our European distribution partner Solarius placed a substantial order for Aerosight air purification systems, expanding our presence in the wine, cannabis and food preservation verticals in Europe .
Turning to new business, our disinfection segment grew by nearly 90% in the second quarter.
Key wins in this segment include our European distribution partners Celerity has placed a substantial order for Aero side Air purification systems.
Spanning our presence in the wine cannabis and food preservation verticals in Europe . So Laurie has been one of our European distributors of air side for more than eight years, selling air side to multiple verticals, including the aforementioned as well as hospitality and health care.
Speaker 3: Solarius has been one of our European distributors of Aeroside for more than eight years, selling Aeroside to multiple verticals, including the aforementioned, as well as hospitality and health.
<unk> another one of our trusted International partners was selected as the sole source provider of air side Air purification systems for government hospitals throughout the country of Pakistan.
Speaker 3: MS Novatek, another one of our trusted international partners, was selected as the sole source provider of airside air purification systems for government hospitals throughout the country of Pakistan.
Speaker 3: Aeroside provides a great value due to its filterless technology and environment-friendly properties, as well as its efficacy in pathogen elimination. Furthermore, we expect additional considerable demand for Aeroside in the coming months in Pakistan, Indonesia, and Vietnam.
<unk> provides a great value due to shelter less technology, an environment friendly properties as well as efficacy in pathogen elimination. Furthermore, we expect additional considerable demand for air side in the coming months, and Pakistan, Indonesia and Vietnam.
DAA International one of our U S distributor partners has been included in a multimillion dollar <unk>.
Speaker 3: DA International, one of our US distributor partners, has been included in a multimillion dollar EANS-II contract, which includes our suite of Aerosight Air Purification Solutions, and it's offering to 700 non-public schools throughout the state of Washington.
<unk> two contract, which includes our suite of those site nurture vacation solutions in its offering to 700 nonpublic schools throughout the state of Washington.
Speaker 3: This contract further demonstrates the growing demand in education for improved air quality. School closures have had a profound negative impact on students. Our products provide a pathway to keeping schools open and protecting teachers, students and staff. And as I cited earlier, Clean Air has been proven to improve cognitive capacity.
Contract further demonstrates the growing demand in education for improved air quality school closures have had a profound negative impact on students our products provide a pathway to keeping schools open and protecting teachers students and staff and as I cited earlier clean air has been proven to improve cognitive capacities.
Speaker 3: Advanced Beauty College, one of the largest cosmetology schools in the state of California, having graduated over 50,000 students, selected and purchased our air purification solution for installation of both of its campuses. This sector, with more than 950,000 hair and nail salons, represents a large addressable market opportunity for.
Advanced Beauty College, one of the largest cosmetology schools in the state of California, having graduated over 50000 students selected and purchased our air purification solution for installation of both the midst campuses.
This sector with more than 950, <unk> inherent nail salons represents a large addressable market opportunity for us medley.
Speaker 3: Medline, North American Healthcare Distribution Partner for our Scientific Air Mobile Solutions, placed another large multi-unit follow-on over for our Patent S200 Mobile Air Purification System. This order is in further support of the Centers for Medicare and Medicaid Services Policy that was announced earlier in the year to ease visitation and long-term care facility.
Medline, our North American health care distribution partner for our scientific Air Mobile solutions placed another large multi unit follow on order for our patented S 200 mobile air purification system disorders in further support of the centers for Medicare and Medicaid services policy that was announced earlier in the year.
He's visitation in long term care facilities. This policy insurers that cost is not a barrier for long term care providers Chinese visitation restrictions and better protect their patients staff and visitors healthcare continues to be a key vertical market for us and Medline continues to be a strong partner.
Speaker 3: This policy ensures that cost is not a barrier for long-term care providers to ease visitation restrictions and better protect their patients staff and visitors.
Speaker 3: Healthcare continues to be a key vertical market for us, and the deadline continues to be a strong part.
Speaker 3: Another key healthcare win in the second quarter was with Mount Sinai Medical Center, where we are installing our patented lumicide service and drain UVC disinfection solutions, initially in 16 patient rooms. This initial installation supports a trial that is being conducted to further validate the independent research previously conducted by Visanova Lab...
Another key health care when in the second quarter was with Mount Sinai Medical Center, where we are installing our patented Luna side servicing drain UBC disinfection solutions. Initially in 16 patient rooms. This initial installation supports a trial that is being conducted further validates the independent research preview.
Conducted by doesn't Nova laboratories, Mount Sinai Premier globally recognized and respected teaching institution.
Speaker 3: Mount Sinai, the premier globally recognized and respected teaching institution, plans to publish the clinical results of the initial installation later this year.
Plans to publish the clinical results of the initial installation later this year, we expect favorable outcomes, which we believe will further validate the previously published independent results and position us for greater adoption of our surface and dray UBC disinfection solutions in additional health care and other facilities globally.
Speaker 3: We expect favorable outcomes, which we believe will further validate the previously published independent results and position us for greater adoption of our surface and drain UBC disinfection solutions in additional healthcare and other facilities globally to combat and eliminate surface transmitted viruses, such as monkey.
To combat and eliminate surface transmitted viruses such as multi products.
Speaker 3: Our hospitality segment grew by more than 300% in the second quarter, both organically from base business and as a result of our first quarter asset acquisition of vision.
Our hospitality segment grew by more than 300% in the second quarter, both organically from base business and our results of our first quarter asset acquisition of vision March <unk>.
Speaker 3: Vision Mark is a manufacturer with state of the art equipment in a 100,000 square foot Brooklyn, New York facility that manufacturers both wood and metal case goods for the hospitality and the
Vision, Mark as a manufacturer with state of the art equipment, and 100000 square foot Brooklyn, New York facility that manufactures both wood and metal case goods for the hospitality industry.
Speaker 3: This acquisition expands our product offering with the hospitality industry, as well as provides economies of scale as we integrate this facility into Munwer.
This acquisition expands our product offering with the hospitality industry as well as provide economies of scale as we integrate this facility into money works. It also provides us the ability to move our manufacturing base to the U S. A significant positive selling point as hotels are demanding more domestic manufacturing.
Speaker 3: It also provides us the ability to move our manufacturing base to the US, a significant positive selling point as hotels are demanding more domestic manufacturing experience byigated customers, the economy prospects.
Speaker 3: The cost differential between Chinese and domestic manufacturing has increased considerably, beauty tariffs and other factors leading hotel management to favor US-based manufacturing.
Cost differential between Chinese and domestic manufacturing has decreased considerably due to tariffs and other factors, leading hotel management to favor U S. Based manufacturing. Additionally, domestic manufacturing mitigate supply chain delays and allows the hotels to better manage project timelines and ultimately revenue generator.
Speaker 3: Additionally, domestic manufacturers mitigate supply chain delays and allows the hotels to better manage project timelines and ultimately revenue generation.
<unk>.
Speaker 3: Importantly, this acquisition allows us to leverage our legacy hospitalities, the relationships, and munworks. And as such, we have already developed a sales pipeline in excess of $10 million for hotels in Cleveland, Washington, D.C., Orlando, Boston, and Knoxville, which is only subject to sample room approvals, which we expect near term.
Importantly, this acquisition allows us to leverage our legacy hospitality relationships among works and as such we have already developed a sales pipeline in excess of $10 million for hotels in Cleveland, Washington D. C. Orlando, Boston in Knoxville, which is only subject to sample room approvals, which.
We expect near term.
Speaker 3: With the growth we are experiencing forecasting, we expanded our executive management leadership team, having hired a seasoned VP of operations, to both manage this pipeline and further integrate our operation to increase our operating model.
With the growth we are experiencing forecasting we expanded our executive management leadership team, having hired a seasoned VP of operations for both manage this pipeline and further integrate our operation to increase our operating margins were.
Speaker 3: We are continuing to build ourselves pipelines for the disinfection segment, both domestically and in the...
We are continuing to build ourselves pipeline for the disinfection segment, both domestically and internationally domestically, we have invest in talent acquisition of proven sales executives growing our direct sales team by 100%.
Speaker 3: Dinesically, we have invested in talent acquisition, approving sales executives, growing our direct sales team by 100%.
Speaker 3: Internationally, efforts to expand our network of distributors to increase sales and product throughput continues. Our distribution channels include global leaders such as 360 BioPharma in Africa, Solarius in Europe , and Jaro in Latin America, among others. We continue to seek new distribution partners to grow our global distribution beyond our base of 64 distributor partners to enable us to cost-effectively increase our global customer footprint beyond the current 52 countries.
Internationally efforts to expand our network of distributors to increase sales and product throughput continues.
Distribution channels include global leaders, such as 360 Biopharma in Africa, <unk> in Euro and Giro in Latin America, among others. We continue to seek new distribution partners to grow our global distribution beyond our base of 64 distributor partners to enable us to cost effectively increased our global.
Footprint beyond the current 52 countries.
Speaker 3: We continue to make investments in marketing and launched an international multi-pronged targeted marketing program in the second quarter aimed at key vertical markets initially focused on cannabis, proof, preservation, and wine.
We continue to make investments in marketing and launched an international multi pronged targeted marketing program in the second quarter aimed at key vertical markets. Initially focused on candidates proves preservation and want.
Speaker 3: Our first campaign, which targets the Canada States, was launched in April to coincide with 420 World Canada State. The campaign included the redesigned and launched the Air Queen 420 website, as well as lead generation ads on several digital platforms. Since then, we have been awarded a significant order for our technology from true and fusion, one of the largest indoor cultivating companies in the US, and further expansion with them is expected in the coming months.
Our first campaign, which targets the cannabis space was launched in April to coincide with $4 20 World Cannabis day campaign included the redesigned and launched the airplane for 'twenty web site as well as lead generation ads on several digital platforms and since.
Since then we have been awarded a significant order for our technology from true infusion one of the largest indoor cultivating companies in the U S and further expansion with them is expected in the coming months sure infusion has deployed our air purification solution throughout its 79 facilities.
Speaker 3: True Infusion has deployed our air purification solution throughout its 79 facilities.
Speaker 3: Fungal-free air is an essential element in producing high-quality cannabis products.
The free air isn't it say central element in producing high quality cannabis products, we have an ideal solution for the cannabis market as our airplanes for 'twenty eradicates lethal powdery mildew, another borne pathogens to protect crops and the personnel working in the growing facilities.
Speaker 3: We have an ideal solution for the cannabis market as our error clean 420 eradicates lethal powdery mildew and other airborne pathogens to protect crops and the personnel working in the growing facility.
Speaker 3: In July , we exhibited in Berlin at Europe's largest cannabis trade show. At the event, we also hosted 24 of our global distributors who traveled to the event to participate in our cannabis training career.
In July we exhibited in Berlin at Europe's largest cannabis trade show at the event. We also hosted 24 of our global distributors, who travel to the event to participate in our cannabis training curriculum.
Speaker 3: We're also exhibiting our airplane 420 at the Cannabis Business Times Cannabis Conference in Las Vegas next week. Beyond cannabis, we have plans for a strong marketing push in the second half of 2022 with exhibits at another number of other conferences throughout the US and Europe .
We're also exhibiting our air clean $4 20 at the cannabis business Times candidates Congress conference in Las Vegas next week beyond candidates, we have plans for a strong marketing push in the second half of 2022 with exhibits at another number of other conferences throughout the U S and Europe .
Speaker 3: These include two that are focused on food preservation, defeating American Unite Conference in Philadelphia and August , and the global products and floral show in Orlando in October . Each of these conferences bring together buyers, thought leaders, and subject matter efforts from around the world making the conferences ideal for stale, late-generation.
These include two that are focused on prudent food preservation with feeding America and unite conference in Philadelphia market and the global products in Florida show in Orlando in October each of these conferences bring together buyers thought leaders and subject matter experts from around the world, making the conferences are deal for sales lead generation.
We will also be exhibiting at a large cannabis conference and Expo. The MJ did in Las Vegas. This November MJ <unk> co on attracts more than 35000 candidates executives and staff those from around the world who represent plant growing operations, making it a target rich environment for us to educate.
Speaker 3: We will also be exhibiting at a large cannabis conference and expo the MJBiz in Las Vegas this November . MJBizCon attracts more than 35,000 cannabis executives and staffers from around the world who represent plant growing operations, making it a target rich environment for us to educate industry professionals about our products and generate sales leads for important cannabis verticals.
<unk> professionals about our products and generate sales leads for important cannabis vertical and finally, we will be exhibiting at the European healthcare show Medica, a world Forum for medicine being held in Dusseldorf. This November Medicare is a globally, leading medical trade show that we'll host thousands of participants to learn about.
Speaker 3: And finally, we will be exhibiting at the European Health Care Show, Medica, a World Forum for Medicine, being held in Dusseldorf this November . Medica is a globally leading medical trade show that will host thousands of participants to learn about trending topics in healthcare, where our air and surface purification solutions have a strong set.
Trending topics in health care.
Air and surface purification solutions have a strong set.
Speaker 3: Beyond trade shows, another fact that of our reinvigorated marketing sales plan is the aggressive pursuit of a retail partner for distribution of our consumer line of products. We are encouraged by the progress we are making with several global retailers for securing placements online and in their brick and mortar location.
On trade shows and other facet of our reinvigorated marketing and sales plan is the aggressive pursuit of a retail partner for distribution of our consumer line of products. We are encouraged by the progress, we're making with several global retailers for securing placements online and in their direct and mortar locations.
Speaker 3: From an R&D perspective, we continue to make substantial improvements to our entire line of mobile and fixed air purification products, further differentiating our patented PCO and UVC carbon based systems from that of other technologies. In addition to the ongoing development of our IoT environment and systems, we also have plans to introduce several new products this year, including our Lumicide Surface and Drain UVC Disinfection Solution.
From an R&D perspective, we continue to make substantial improvements to our entire line of mobile and fixed air purification products further differentiating our tcl and UBC carbon based systems from lack of other technologies. In addition to the ongoing development of our Iot environment and systems. We also have plan.
To introduce several new products this year, including a lymphocyte surface and drain UV disinfection solutions.
Speaker 3: Recently, we were granted a patent related to our system that neutralizes pathogens on ATM service.
Recently, we were granted a patent related to our system that neutralizes pathogens on ATM services globally consumers interact with Atms on a daily basis and according to our internal research. There are about 470000 Atms in the U S alone.
Speaker 3: Globally, consumers interact with ATMs on a daily basis, and according to our internal research, there are about 470,000 ATMs in the US alone. Banks are seeking ways to reduce litigation risk by incorporating the use of the best fines available to protect consumers from contracting serious illnesses due to deadly surface pathogens found on ATMs.
They are seeking ways to reduce litigation risk by incorporating the use of the best science available to protect consumers contracted serious illnesses due to deadly surface pathogens found on Etfs.
Speaker 3: Receipt of this UVC surface pathogen elimination patent further strengthens the credibility of our disinfection capabilities, elevates our business profile, and adds value to our intellectual...
See the UBC surface pathogen elimination patent further strengthens the credibility of our disinfection capabilities elevates, our business profile and add value to our intellectual capital.
Speaker 3: Operationally, across both our business segments, we continue to analyze each of the points in our supply chain to tighten integration to optimize inventory, improve quality control, and mitigate against supply chain disruptions that are so prevalent in our world today. Lastly, with regard
Operationally across both our business segments, we continue to analyze each of the points in our supply chain to tight integration to optimize inventory improved quality coal and mitigate against supply chain disruptions that are so prevalent in our world today.
Lastly, with regard to corporate governments, we recently added two distinguished and highly experienced executives look T and Monica <unk> to our board of directors.
Speaker 3: We recently added two distinguished and highly experienced executives, Yos Mukki and Monica Wu to our boarder directors. Yos, who holds a PhD in computer sciences from the University of Illinois, has more than four decades of experience leading many of Indonesia's top financial institutions. And is a former Ernst & Young partner who led its business advisory and risk consulting practice. It's a strong track record of delivery and profitable growth for international recognized companies.
<unk>, who holds a Phd in computer Sciences from the University of Illinois has more than four decades of experience leading many of Indonesia is top financial institutions and is the former Ernst and young partner, who led its business advisory and risk consulting practice. He has a strong track record of delivering profitable growth for internationally.
Ignite conference Monica the season Fortune 100, Executive and Board member, who is known for the strategic inside she has gone through years of experience serving in a number of C. Suite level roles to include President of one 800 flowers. She has a proven ability to position new and existing companies for long term success.
Speaker 3: Monika is a season fortune 100 executive and board member who is known for the strategic insight she has gone through years of experience serving in a number of C-suite level roles to improve president of one eight other flops.
Speaker 3: She has a proven ability to position new and existing companies for long-term success and a extensive network of national and international senior level contracts in business, government, and non-prom.
An extensive network of national and international senior level contracting business government and nonprofit.
Speaker 3: Yoson monitor each compliment and broaden the expertise of our board, and we look forward to leveraging our expertise to help us continue our global market extent.
Yosef monitor each complement and broaden the expertise of our board and we look forward to leveraging their expertise to help us continue our global market expansion.
Speaker 3: Next, I'll turn the call over to Mike Riccio, our Chief Financial Officer, for a review of our financial results. Mike?
Next I will turn the call over to Rick <unk>, Our Chief Financial Officer for a review of our financial results Mike.
Thanks, John .
Speaker 4: Net sales for the second quarter of 2022 were 5.9 million, an increase of 4 million or 214 percent compared to 1.9 million for the second quarter of 2021.
Net sales for the second quarter of 2022 were $5 9 million.
An increase of $4 million or 214% compared to $1 9 million for the second quarter of 2021.
Speaker 4: This increase was attributable to both the disinfection segment, which increased by 819,000
This increase was attributable to both the disinfection segment, which increased by 819000.
Speaker 4: largely as a result of the strategic acquisitions of CETS and Scientific Air in the second half of 2021 and the hospitality segment, which increased by 3.2 million, primarily as a result of the fulfillment of orders that were delayed from the first quarter and the addition of orders fulfilled from the recent vision mark NYC acquisition.
Largely as a result of the strategic acquisitions of <unk> and scientific air in the second half of 2021, and the hospitality segment, which increased by $3 2 million, primarily as a result of the fulfillment of orders that were delayed from the first quarter and the addition of orders fulfilled from the recent vision Mark NYSE.
Acquisition.
Speaker 4: On a pro-forma basis, revenue was up 39.2% from 4.2 million in the second quarter of 2021 to 5.9 million in the second quarter of 2022.
On a pro forma basis revenue was up 39, 2% from $4 2 million in the second quarter of 2021 to $5 9 million in the second quarter of 2022.
Speaker 4: Gross profit increased by $771,000 or 145% to $1.3 million in the second quarter of 2022, up from $533,000 in the second quarter of 2021.
Gross profit increased by $771000 or 145% to $1 3 million in the second quarter of 2022 up from 533000 in the second quarter of 2021.
Speaker 4: The increase was driven by volume growth from both the disinfection and hospitality segments.
The increase was driven by volume growth from both the disinfection and hospitality segments.
Speaker 4: Gross profit as a percentage of sales decreased by 620 basis points from 28.3% in the second quarter of 2021 to 22.1% in the second quarter of 2022. Driven primarily by the initial cost required to complete projects that were in process and to integrate and absorb the vision mark NYC operation.
Gross profit as a percentage of sales decreased by 620 basis points from 28, 3% in the second quarter of 2021 to 22, 1% in the second quarter of 2022.
Driven primarily by the initial cost required to complete projects that were in process and integrate and absorb the vision Mark NYSE operations.
Speaker 4: As we continue to integrate our strategic acquisitions, we are focused on realizing cost synergies from the consolidation and streamlining of the manufacturing and distribution operations.
As we continue to integrate our strategic acquisitions, we are focused on realizing cost synergies from the consolidation and streamlining of the manufacturing and distribution operations.
Speaker 4: SGNA expense for the second quarter of 2022 increase to 4 million as we can as compared to 2.7 million in the prior quarter
SG&A expense for the second quarter of 2022 increased to $4 million.
As we can as compared to $2 7 million in the prior quarter.
Speaker 4: This increase was driven primarily by the expansion of the disinfection segment with the acquisition of Kesem Sayer, expansion of the hospitality segment with the Visionmark NYC acquisition.
This increase was driven primarily by the expansion of the disinfection segment with the acquisition of <unk> expansion of the hospitality segment with vision Mark NYSE acquisition.
Speaker 4: and higher corporate segment expenses due to increased consulting, legal accounting, and infrastructure costs related to the initial integration of the operations of our strategic acquisition.
And higher corporate segment expenses due to increased consulting legal accounting and infrastructure costs related to the initial integration of the operations of our strategic acquisitions.
Speaker 4: SG&A includes one-time costs of $739,000 related primarily to the integration of VisionMark NYC Operations and the establishment of Strategic Marketing Programs.
SG&A includes onetime costs of $739000 related primarily to the integration of vision, Mark NYSE operations and the establishment of strategic marketing programs.
Speaker 4: We anticipate efficiency gains in the coming year as we fully integrate our acquisitions and leverage synergies we're practicing.
We anticipate the efficiency gains in the coming year, as we fully integrate our acquisitions and leverage synergies where practical.
Speaker 4: Net loss for the second quarter of 2022 was $2.9 million compared to a net loss of $2.1 million for the second quarter of 2021.
Net loss for the second quarter of 2022 was $2 9 million.
Compared to a net loss of $2 1 million for the second quarter of 2021 the.
Speaker 4: The increase in net loss was mainly due to the increase in SG&A costs incurred in support of our business acquisitions and for the expansion of both the disinfection and hospitality sites.
The increase in net loss was mainly due to the increase in SG&A costs incurred in support of our business acquisitions.
And for the expansion of both the disinfection and hospitality segments.
Speaker 4: On a non-GAAP basis, adjusted EBITDA was a loss of $2.2 million for the second quarter of 2022, which compares to an adjusted EBITDA loss of $1.5 million in the year-ago quarter.
On a non-GAAP basis, adjusted EBITDA was a loss of $2 2 million for the second quarter of 2022, which compares to an adjusted EBITDA loss of $1 5 million in the year ago quarter.
Speaker 4: We use adjusted EBITDA to assist in analyzing our operating performance by removing the impact of certain key items that we believe do not directly reflect our underlying operation.
We use adjusted EBITDA to assist in analyzing our operating performance by removing the impact of certain key items that we believe do not directly reflect our underlying operations adjusted.
Speaker 4: Adjusted EBITDA is defined as operating profit or loss, excluding depreciation and amortization, and excluding stock based compensation, and loss on impairment of goodwill.
Adjusted EBITDA is defined as operating profit or loss, excluding depreciation and amortization and excluding stock based compensation and loss on impairment of goodwill.
Speaker 4: Lastly, we ended the quarter with approximately $3 million of unrestricted cash on our balance sheet. This compares to $7.1 million at the end of the first quarter.
Lastly, we ended the quarter with approximately 3 million.
$1 of unrestricted cash on our balance sheet. This compares to $7 1 million at the end of the first quarter.
Speaker 4: Cash used in operations during the first six months of 2022 was due in part to the integration of the VisionMark NYC acquisition, including costs to expedite completion of projects that were in process, and also due to an increase in inventory as we secured parts in advance of production in our disinfection segment to mitigate potential supply chain disruptions ahead of targeted marketing initiatives planned for the second half of 2022. I'll now turn the call back.
Cash used in operations during the first six months of 2022 was due in part to the integration of the vision market Marci acquisition.
<unk> cost to expedite completion of projects that were in process and also due to an increase in inventory.
We secured parts in advance of production in our disinfection segment to mitigate potential supply chain disruptions ahead of targeted marketing initiatives planned for the second half of 2022.
I'll now turn the call back to John for closing remarks.
Thank you Mike.
Speaker 3: Thank you, Mike.
Speaker 3: In summary, second quarter was a solid quarter with steady progress made towards executing operational initiatives to grow our business, integrate recent acquisitions, and increase awareness of our brand to drive future growth. The market opportunities in each of our two business segments are enormous and recently announced new business wins demonstrate that we are gaining momentum.
In summary, second quarter was a solid quarter with steady progress made towards executing operational initiatives to grow our business integrate recent acquisitions and increased awareness of our brand to drive future growth the market opportunities in each of our two business segments are enormous and recently announced new business wins.
Great that we are gaining momentum.
Speaker 3: We are increasingly encouraged by our progress and where we are headed. We look forward to updating you again during our third quarter call in November .
Recently encouraged by our progress and where we are headed we look forward to updating you again during our third quarter call in November . Thank you.
Speaker 3: Thank you again everyone for joining our call today. This concludes our prepared remarks. Operator, we can open the call for questions.
You again, everyone for joining our call today. This concludes our prepared remarks, operator, we can open the call for questions.
Speaker 1: 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.
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.
Speaker 1: We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while...
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Please hold while we pull for questions.
Thank you. Our first question is coming from Chip Moore with Epsilon.
Speaker 1: Thank you. Our first question is coming from Kip Moore with EF Hunt.
Hey, Thanks, guys.
Wanted to ask about the backlog.
Speaker 5: Like I asked about the backlog, you practice better being up nicely, just curious about composition, hospitality versus infection, and how we should think about revenue recognition there and any implications for margins.
It would've been up.
Nicely just curious about competition.
Fatality versus infection.
And how we should think about.
Revenue recognition, there and any implications for margins.
Near term.
Speaker 3: Yeah, I can jump in first, Mike. Relative to backlog between it.
Yes, I can jump in first Mike.
Relative to backlog between the business segments. The backlog is considerably higher for both segments. At this point in time versus this point in time last year and I'm talking in the hundreds of percent higher so considerably higher.
Speaker 3: business segments. The backlog is considerably higher for both segments at this point in time versus this point in time last year. And I'm talking in the hundreds of percent higher. So considerably higher. The margins that we're seeing on the disinfection side are tracking with our projections and Mike and talked about. And then Mike, you can talk more to the margins on the hospitality side and where you see those going. Sure. Yes, John mentioned.
The margins that we're seeing on the disinfection side are tracking with our projections and Mike can talk to that and then Mike you can talk more to the margins on the hospitality side, and where you see those going.
Sure.
Yeah, as John mentioned on the disinfection.
Speaker 4: side of the business, the margins are holding strong. On hospitality, as I explained, we had some expediting costs in this quarter.
Side of the business.
Our margins are holding strong on hospitality.
As I explained we had some excellent excellent expediting costs.
In this quarter and including.
Speaker 4: and including securing parts and overtime costs that drag down the margin for this quarter.
Securing parts and.
Overtime costs that dragged dragged down the margin for this quarter, but that pretty much I think theres just a few remaining projects.
Speaker 4: But that pretty much I think there's just a few remaining projects.
Speaker 4: and then we'll be able to then execute on the new pipeline.
And then we'll start we'll be able to then execute on the new pipeline.
Speaker 4: where the margins will get back into the normal level for our hospitality segment. So this quarter was kind of an aberration. Higher sales volume, as you can see, but slightly lower margins in hospitality, but that's pretty much behind us now.
The margins will get back into the normal level for our hospitality segment. So this was this quarter was kind of an aberration.
Higher sales volume as you can see.
Slightly lower margins in hospitality.
That's pretty much behind us now.
Got it okay. Thanks for that.
Speaker 5: Got it. Okay. Thanks for that. And then on SGNA, sort of the run rate, I guess if we take out the one-time ours, the quarter, is that a good way to think about that or there any more sort of acquisition costs, you know, near-term and then we think about screen lighting, you know, with a good sort of run rate on SGNA.lio S ???????? Rendee cream schale. organization call system trained in engineering education. System employee to continue to Sunlight major in searching,
And then on SG&A sort of the run rate.
Take out the one timers in the quarter is that a good way to think about that are there any more sort of acquisition costs.
Near term and then thinking about streamlining.
Good sort of run rate on SG&A, yes.
Speaker 4: Yeah, Chip, you can definitely take out the 739K. The actual, you know, that.
Yes, chip you could definitely take out the 739 K the actual that.
Speaker 4: That's a solid number and then there are additional one time calls.
That's a solid number and then there are additional one time costs.
Speaker 4: And barring additional acquisitions, that number is actually closer than 900 K. But I hesitate to use that number publicly only because it could be it could be repeated depending on if.
And barring additional acquisitions that number is actually closer to 900, K, but I hesitate to use that number publicly only because.
It could be it could be repeated depending on it.
Speaker 4: you know, depending on our strategy, you know, in the second half as it relates to potential acquisitions, but we're not really, right now we're focused on executing on the tremendous pipeline that we've built. And you're probably going to ask, I'll just tell you anyway, the use of the cash was really to be able to execute on that pipeline because we were finding the supply chain disruptions, you know, affecting us.
Depending on our strategy in the second half as it relates to potential acquisitions, but we're not really right now we're focused on executing on the tremendous pipeline that we've built and.
You're probably going to ask but I'll just tell you anyway. The use of the cash was really to to be able to execute on that pipeline because we were finding the supply chain disruptions affecting.
Affecting us so we secured.
Speaker 4: So we secured inventory for our targeted marketing.
Inventory.
We're basically for our targeted marketing launches.
Speaker 4: to fulfill the primarily disinfection side of the pipe.
To fulfill the.
Really the disinfection side of the pipeline and as I've mentioned in previous discussions we are looking to bring the manufacturer more onshore to avoid this occurrence, but for now we wanted to be safe to make sure that we were.
Speaker 4: And as I've mentioned in previous discussions, we are looking to bring the manufacturer more unsure to avoid this occurrence. But for now, we wanted to be safe to make sure that we were toyed for a strong second half. So.
<unk> for a strong second half so.
Speaker 4: Yeah, that would kind of answered a couple of questions there. Yeah, I appreciate that.
Yes.
Kind of answered a couple of questions there.
I appreciate that.
Speaker 5: And then just 1 more and I'll have to ask about it to see, you know, you got to file a claim to just curious. Steps there and any. Incremental costs there or or.
And then just one more.
You asked about IP did see.
You guys had filed a claim so just curious.
Steps there and any.
Incremental costs there or.
Speaker 5: not too expensive to defend the ice.
Not too.
Not too expensive to defend the IP.
Yes, John .
Speaker 6: Yeah, we don't see it being overly extremely expensive to defend the IP. And we think it's a very important.
Yes, we don't see it being overly expensive to defend the IP.
We think it's a very important.
Speaker 3: situation that we address as it infringes upon our trademark and potentially patents we think it's confusing to the market in our brand and so we decided to take those actions to protect our shareholders and to ensure that moving forward that the market confusion and our brands could protect it for the benefit again of our shareholders.
<unk> that we address as it infringes upon our trademarks and potentially patents, we think its confusing to the market and our brand and so we decided to take those actions to protect our shareholders and to ensure that moving forward the market confusion in our brands to protected for the benefit of.
All of our shareholders.
Understood Alright. Thanks.
Youre welcome.
Yeah.
Speaker 1: Once again, if there are any remaining questions or comments, please press star one on your phone at this time.
Once again, if there are any remaining questions or comments. Please press star one on your phone at this time.
Speaker 1: There is there appear to be no further questions in Q at this moment. Do you have any closing comments you wish to?
First there appear to be no further questions in queue. At this moment do you have any closing comments he wished to finish with.
Speaker 3: No, just to again, thank everyone for their time today and we look forward to speaking to you in November for our third quarter results.
No just to again, thank everyone for their time today, and we look forward to speaking to you.
In November for our third quarter results.
Speaker 1: Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day. Thank you for your participation.