Q4 2022 Senestech Inc Earnings Call
Good afternoon, and welcome to the <unk> incorporated fourth quarter and fiscal year 2022 financial results conference call.
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I'd now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.
Thank you very much Gary and thank you all for joining us today to discuss enough teck's fourth quarter and fiscal year 2020 to financial results for the period ended December 31, 2022 with us on the call today are Joel front, the company's Chief Executive Officer, and Tom Chesterman, the company's achieved.
Financial officer at the conclusion of today's prepared remarks, we will open the call for a question and answer session.
Before we begin with prepared remarks, we submit for the record the following statement.
Statements made by the management team of NASDAQ During the course of this conference call may contain forward looking statements within the meaning of section 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities Exchange Act of 1934 as amended and such forward looking statements are made pursuant to.
The safe Harbor provisions of the private Securities Litigation Reform Act of 1995 forward looking statements describe future expectations plans results or strategies and are generally preceded by words, such as may future plan or planned will or should expected anti.
It's a page draft eventually or projected listeners are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances events or results to differ materially from those projected in the forward looking statements, including the risks that actual results may differ materially from those projected in the forward looking statements.
As a result of various factors and other risks identified in our filings with the Securities Exchange Commission.
All forward looking statements contained during this conference call speak only as the date in which they were made and are based on management's assumptions and estimates as of such date. The company does not undertake any obligation to publicly update any forward looking statements whether as the result of the receipt of new information the occurrence of future events or other.
[noise] wise with that said, let me turn the call over to Joel French Chief Executive Officer, So NASDAQ Joel. Please proceed.
Good afternoon. Good afternoon, everyone. Thank you all for joining us today.
Well I was briefly introduced on the third quarter conference call I am excited and honored to get a chance to speak with you all today for really the first time.
Following my appointment as CEO , just about four months ago, now I've taken quick and decisive steps to build off the considerable progress the company made during 2022 highlighted.
Highlighted by breaking $1 million in product sales up 77% from the year ago period.
As Contra pest was deployed in a number of key market verticals and the product line extension launch of the unique and innovative elevated eight system.
We need to build off this momentum to take contra pests to the next level. So how do we do that.
First my experiences anchored with extensive executive leadership in the Vectren Pest management industries, where I gained expertise in the development and manufacturing of EPA registered chemical control products.
Commercialization and sale of those products and leading large sales and service organizations.
Developing and commercializing Contra pest is a natural extension of that experience.
Further I have always had a passion and commitment to sustainable effective solutions to vector in pest control challenges.
Clearly contra pest fits right in with that passion.
It was one of the key drivers that attracted me to send those tech as we look to provide an exciting sustainable solution for management of animal pests, and a standalone or integrated pest management program.
As I said at the beginning tremendous progress was made last year, but.
But we need to accelerate and steepen the adoption curve.
The first initiative, we have undergone has been that redeployment and refocusing of the cuss. The companys direct sales efforts to enhance our customer acquisition capabilities, while also putting reps closer to the customers to benefit from the surge in acceptance of Contra pest during the past year.
We have named a chief revenue officer is a key step in that process.
We have expanded our field sales organization to seven reps each deployed by geography with leadership in both the eastern and western half of the U S.
Last year's revenue was largely driven by growth within existing customers, which speaks to having an effective product that delivers failure.
Going forward, we are placing a strong regional focus on new customer acquisition through an expanded commercial team and new depths of vertical industry knowledge get in front of decision makers.
The sales cycle and ultimately driving revenue.
We are also enhancing the customer experience by increasing product options awareness and education product options are extremely important that's why we introduced the elevated system last year provide an option specifically target targeted at roof rats.
Also why we have introduced different eight tank sizes.
So that a customer can choose the size that it is most appropriate to their unique needs whether it is starting a program addressing a large infestation or maintenance.
We are also exploring delivery systems that work in different bait stations, we offered to bait station formats, now, but others are well into the development stage.
Choices to fit your needs is the marketing tagline.
And in the coming weeks, we will be announcing new choices for all customers.
We are making improvements to our website as well, including the addition of chat bots on websites to accelerate customer education and acquisition and have launched a dedicated website for professional pest managers.
We will also be launching a 12 months pre pay subscription for e-commerce customers in order to make it as convenient and cost effective as we can for customers who seek better value.
The early results are promising on all of these initiatives.
For instance in December 2022 we announced the city of Los Angeles had ordered and have now deployed contract pest broadly at the Los Angeles Sue as part of their I P. M program with a deployment plan that is expected to exceed 250 base stations.
Overall, 22 zoos, including two of the top 10, Zeus and the United States are now using Contra pest, we expect another two of the top 10 to close this quarter.
Being a target market in their own right zoos and sanctuaries are the ultimate influence in all things animals. So this continues to be our focus segment for us.
We're also achieving initial success, having secured major contracts with government agencies, most recently with the county of Santa Clara.
After initial deployment the county of Santa Clara announced that it intended to expand deployment broadly throughout the county.
Most recently to Los Gatos.
I want to provide a little more detail here in this instance, Santa Clara County started a deployment and included their own intensive monitoring program to assure efficacy sustainability and safety.
After their review they concluded that Contra pest was appropriate for deployment deployment county wide and they are recommending it to their peers.
Overall, California continues to lead geographically with nearly a third of all product sales occurring in the state driven by tail winds from the recently implemented ecosystems Protection Act of 2021, which bans the use of commonly used second generation anticoagulant poisons under many circumstances.
As mentioned briefly the recent loss launch of the elevate system is expected to drive growth in key market verticals.
Including with agricultural customers to better meet their needs are addressing root, France that reside above ground, especially in the rafters, a barnes greenery and storage or manufacturing facilities.
Similar to the third quarter sales during the fourth quarter and poultry facilities continued to be hindered by the outbreak of avian influenza or bird flu, which has impacted poultry operators across the United States.
Is this subsides, we believe this will provide us with a tremendous addressable market opportunity.
Another important development recently in February 2023, New York State Department of Environmental Conservation approved Contra pest for general use removing restricted use pesticides from the label of Contra pest.
This expands the market for contour pest dramatically in New York as it no longer requires application by especially license pest control companies.
And eliminates restrictive handling and paperwork.
New York now becomes the 49th state to removed our U P label from country Pest Enjoins, Washington D. C. In major U S territories, using contra passed under the general use label Bell.
Validating years of effective and incidents free experience.
New York City, there's still evaluating tools for use in their overhaul of rent control strategies under the newly named rats are positioned.
We are part of that evaluation and are confident that New York City, we'll look to population control as a major part of their new IPM plan.
And just this week, we confirmed the various news reports that NASDAQ has been working with the Danish company trip to a bio.
On the development of biosynthetic trip to life, one of the active ingredients and Contra pest.
The reality is we have been working with trip to bio for quite some time on biosynthetic trip to life.
And have a letter of intent in place for its development and we will be working collaboratively to have it approved by the EPA.
Recent press in Europe about their advances as highlighted the efficacy and sustainability of country past as well as some of the benefits of a biosynthetic source of tripped the light.
From our perspective biosynthetic trip that led brings two very distinct advantages to country pest. One biosynthetic production is typically more consistent in its quality and availability.
Paired with botanically derived trip to life from China, our current stores.
Biosynthetic production is typically much less expensive than botanical purification.
Allowing us to lower the price of contra person and greatly expand our market domestically and internationally.
We look forward to this continued partnership and we will keep you apprised of our advancements.
With that overview, let me turn it over to Tom to review the financials.
Thank you Joel let me add my welcome and excited to have you join the team here at NASDAQ.
A reminder to our investors. The press release is available on our website in the Investor Relations section.
We expect to file our 10-K shortly so I'll just touch on some of the high points right now.
Revenue during 2022 was $1 million compared to $600000 in 2021.
Product sales, which exclude grant revenue were up 77%.
During the fourth quarter 2022 revenue was approximately 297000 compared to approximately 197 193000 in the year ago period, an increase of 54%.
Again product sales, which exclude grant revenue were up 76%.
And please note that the year ago period had approximately 24000 in grant revenue.
That first $1 billion is a milestone for any startup and it is particularly gratifying.
The growth rate has been excellent as well, but we see the current trajectory as the minimum performance and are acting to accelerate our growth to two X three X or even more.
Sales growth during the year in the fourth quarter legislation by strong performance in our company's E Commerce platform, which made up approximately 46% of 2020 through product sales as well as continued traction within zoos animal sanctuaries and pest management professionals.
Which both increased more than 100% during the fourth quarter.
Sales into agriculture was significantly slowed by the avian bird flu.
As much of our initial efforts in this sector were focused on poultry.
While still waiting for the poultry market to recover we have now also moved many of our resources to grain and protein production.
We've seen that begin to bear fruit in this quarter and we expect it to continue.
Gross profit during 2022 was approximately $464000 or 46% of total revenue.
Compared to 42% of total revenue in 2021.
Net loss during 2022 was $9 7 million.
Compared with a net loss of $8 3 million for 2021.
Adjusted EBITDA loss, which is a non-GAAP measure of operating performance.
For 2022 was.
It was $8 5 million compared to $7.8 million.
In 2021.
Again looking at the fourth quarter adjusted EBITDA loss was $1 6 million compared to 2.2 in Q4 of 2021.
And finally cash at the end of December 2022.
Was approximately $4 $8 million.
Now, we do expect to be accessing the capital markets in 2023.
To do so we have a shelf registration on file.
Allow opportunistic financing.
We also have $5 billion in warrants that will expire if not exercised this year.
These tools, along with revenue growth and careful expense management should be sufficient for us to execute our plans this year and beyond.
With that.
Let me turn it back over to you Joel for any closing remarks, and then we'll take your questions Joel.
Thanks, Tom.
Let me just say that every day, there's more validation of controversy as effective sustainable and easy to use.
Academic studies field studies and customer feedback all agree successful pest management requires population control and Contra pest works to control pest populations.
King I pay them more effective.
We have taken swift actions to align the commercialization side of our efforts to significantly expand adoption.
And look forward to the future with tremendous optimism.
With that let me turn it back over to the operator for any questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
Our first question is from Avi Fisher with long cast advisors. Please go ahead.
Yeah, Hi, Joel Thanks for taking my call.
With with the with the general use label and New York State.
How is that going to change the way you're marketing, notably in New York City, and I asked because.
No I could envision all these co ops ringing Central Park.
<unk> been amenable to an open to and wanting to use this product because it's safe for the birds in Central Park et cetera, I Wonder if you have any sense of targeting.
Absolutely we believe that the general use as it has in other areas of the country, it's really going to open the market up to us simply.
Simply because now we don't have to rely on those that have the certifications and the credentials for restricted use.
So we have a a marketing campaign that is specifically directed at not only in New York City, but the whole state of New York, because Theres a lot of things in the agriculture business that we've been not been able to tap into there. So that that campaign has kicked off and.
We're already seeing some some really good feedback.
Feedback from it.
So within New York Youre, focusing at this point, primarily on the AG space not so much changing on the residential city space.
No no no we're focusing on New York City and in the residential and the HOA and I was just mentioning that in addition, the people forget that there's there's the AG business in New York that we haven't been able to do and of course agriculture is one of our biggest markets out there, but yeah were going full force forward.
With the New York City, and giving them everything that they need in order to.
Making a decision on using our products.
And what about this evaluation with the New York City Rats are any do you have any expectation on the timing of when you'll hear from them.
Nothing that we really can report on a you know we do know that they were enquiring about it in other areas of the country, where country pest has been used for a longer period of time.
So we are.
Waiting to hear.
Something for them and how to move forward.
I I think I personally I think theres, a lot of blacks and opportunity in.
Marketing directly to co ops that rang the park.
They are the homes of many power brokers in the city and I think you'll find it an audience there.
And just finally on should go buy it sounded like in your commentary. This is not a 2023 events, but I just wanted to confirm is this.
How soon can you start sourcing from them and how much flexibility does that give you on price.
Well, there's a lot of leg work to do.
With the EPA registration, but we we look at it is the 24 product and we're we're confident that we're going to be able to lower our cost of goods by using it.
Can you sort of estimate how much or too soon to say.
It's too soon to say right now there's a there's a number of things that are in play, but it would be substantial we wouldn't want to do this if it were just a small percentage.
Okay, alright, thanks for sharing I appreciate it.
You bet. Thank you.
Again, if you have a question. Please press Star then one.
Showing no further questions. This concludes the question and answer session I would like to turn the conference back over to Joel Freund for any closing remarks.
Thank you all for being.
Being here today and for.
The questions and for listening that's all I have right now Tom anything from you.
No nothing from me. Thank you all very much we'll talk to you next quarter.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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