Q3 2023 SenesTech Inc Earnings Call
Good afternoon, and welcome to the <unk> reports third quarter fiscal year 2023 financial results conference call.
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I'd now like to turn the conference over to Robert Blum of Lytham Partners. Please go ahead.
Alright, Thank you very much and thank you all for joining us today to discuss <unk> third quarter 2023 financial results for the period ended September 30th 2023 with us on the call representing the company today is Joel fruition, the company's Chief Executive Officer, and Tom Chesterman, The company's Chief financial.
Sure.
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 <unk>. During the course of this conference call may contain forward looking statements within the meaning of section 27, a of the securities acts 1933 as amended and <unk>.
21 E of the Securities Exchange Act 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.
Your plan or planned will or should expected anticipates 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.
<unk> the risk 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 of 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 a result of the receipt of new information the occurrence of future events or otherwise with that said, let me turn the call over to Joel for Owens, Chief Executive Officer. So NASDAQ Joel. Please proceed.
Good afternoon, everyone.
Thank you all for joining us today.
The results of the third quarter highlight the progress we have made on the various initiatives implemented to drive sales improve our product quality and expand our product options.
Specifically, we accelerated our growth trajectory during the third quarter with a strong 44% year over year growth in revenues.
It is a new all time quarterly record of $360000.
Sales growth during the third quarter was led by increases in nearly every key vertical market, including agribusiness.
And sanctuaries and commercial late.
Lately. In addition, we have been seeing a surge in demand from residential homeowners associations.
This revenue growth coupled with a number of operational improvements such as improvements in our return on marketing investment within our ecommerce platform.
Help lead to an improvement of nearly $700000 in our net loss and adjusted EBITDA loss compared to the year ago period.
However, this is just the beginning because I believe our growth will further accelerate following the launch of the revolutionary devolves sulfate product.
Evolve as our all new soft based product that has similar efficacy to count surpassed.
But in a format that is easier to deploy that customers can use more efficiently in their integrated pest management programs and is offered at a competitive price to traditional real dentist sides.
As with Contra pest evolve targets the root cause of pest problems.
<unk> ability to rapidly reproduce.
The solution controls the population by controlling the fertility of rats in other words the birth rate.
Rather than relying solely on trying to keep up with the growing numbers of an infestation by so.
Managing the death rate.
If all of the active ingredient gossypol is derived from cat in seating and has a well documented record of efficacy affecting fertility in rats.
Compound interferes with the reproductive mechanisms in both male sperm count and motility.
And longer estrus cycles, and reduce follicles for females, thereby controlling their population.
Similar to a contract past the low gospel levels any Bob are designed for the body massive rats, so larger mammals would need to repeatedly and just a substantial amount over several weeks to see any effects.
Birds appear to be more tolerant of gospel as they have different intestinal tracts and modes of digestion.
It's important to point out the tremendous job our team has done in the development of this product.
Chief Technical Officer, Dan Pulaski and his team were able to develop evolve under the Epa's minimum risk rules also known as a twenty-five be exemption.
Levering leveraging this expedited pathway, we have been able to bring this innovative product to the market at a fraction of the time and investment it took to develop contra pest.
Dan and his team have published a white paper summarizing key data on our website as well as continuing to perform field tests and further feed and breathe laboratory tests.
The results are impressive.
Hey, Bob can be used anywhere rats are found simply place two to 12 pieces per location, an update based on ret activity activity levels.
We recommend that evolve be secured and tamper resistant bait stations in areas, where there's potential exposure to children and pets wildlife or other non target species.
Due to its off paid format and label evolve offers convenience and application options and can be broadcast scenarios such as agricultural fields in complexes.
Another key differentiator for Bob is that as price competitively to rodenticide alternatives as many of you know Contra pest is a premium based product that is often priced two to three times over rodenticide.
So, let's take a step back why us off base product when.
When the company first introduce contra pest, we needed to convince the pest control market of two things.
One the value of fertility control as a means of population control and to the applicability of our liquid bait into their procedures.
At this point there is growing acceptance of fertility control as part of integrated pest management.
But there's still resistance from pest management companies to alter their established practices of utilizing non liquid products.
The current contract pest delivery solutions, we have in the market ultimate isolate and elevate our all currently delivered in a liquid form as rents need to consume about 10% of their body weight and water every day.
It is palatable to the rats and keeps them coming back for more.
However, only about 5% of the current rodenticide market is a liquid formulation if even that much the remaining 95% is non liquid Bates.
To this point, we believe the launch of the evolve solution is expected to be a significant step in expanding <unk> reach within key market verticals include.
Including big box retailers.
e-commerce channels, and leading industry pest management professionals.
We have already received a number of preorders and expect to start shipping product next week.
And we are in negotiations with big box retailers in key e-commerce providers with a goal to develop partnerships that will dramatically increase the adoption of the above solution.
For example, we have initiated the process with Amazon with respect to Big box retailers, you already have shelf space for isolate it a group of Ace hardware stores. So we expect to move quickly into big box with Ebola.
But the competitive price point and a format. They are accustomed to we believe we have a recipe that will sets <unk> up for tremendous success in the future.
The introduction of a Bob continuous and ethics recent string of innovative product offerings.
That were designed to provide customers with the effectiveness of fertility control in the format that fits their needs.
In July two.
2023, the isolate based system was launched as a more efficient and easier to use based system, which integrates both the tank and Trey as a single unit.
At present isolate represents nearly a third of all units sales despite only being introduced in late August.
Last year, the company introduced elevate and easily deployed system for mounting in the rafters, a barnes greenery ethics laws and storage and manufacturing facilities.
Year to date, nearly 5500 elevate systems were deployed in various agricultural settings.
Product innovation is key to our future success.
I am pleased with the tremendous progress we have made on this front.
To wrap things up before I turn it to Tom to run through the financials. We continue to execute on the three key imperatives I have outlined to drive success and Sonesta Tech with the goal of Steepening the adoption curve.
One we're delivering to our new and existing customers flawless products that work every time, while providing more product options that fit their needs with isolate recently launched evolve shipping shortly and the product development team that is already working with over 25 potential development progress projects in progress.
We are certainly achieving our objectives.
Two we will penetrate and grow our targeted markets with a structured sales force enhanced e-commerce platform and improve district distribution relationships. These distributors are focused on providing customers and partners value as part of their effective integrated pest management programs.
And three we will make better products concurrent with the introduction of isolate we have implemented an enhanced formulation that continuous product quality and a wide variety of environmental conditions, making great.
Rides in the area of continuous improvement.
I believe we are successfully executing on these imperatives, which should help steepen the adoption curve us that's tech products and drive long term value and sonesta.
With that overview, let me turn it over to Tom to review the financials Tom.
Thank you Joel as a reminder to our investors. The press release is available on our website in the Investor Relations section as we will be a recording of this presentation.
Further we expect to file our 10-Q later today, so I'll just touch on some of the high points right now.
Revenue during the third quarter was a new quarterly record of $360000 compared to $250000 in Q3 of 'twenty two.
An increase of 44%.
Sequentially revenue was up 18% compared to second quarter of 2023.
Sales growth during the third quarter was led by increases in nearly every key market vertical, including agribusiness zoos and sanctuaries in commercial applications.
Gross profit during the third quarter was approximately $176000 or 49% of total revenue compared to approximately $122000 or 49% of total revenue in Q3 of last year.
Net loss during Q3, 2023 was $1 $9 million compared with a net loss of $2 6 million for Q3 2022.
Adjusted EBITDA loss, which is a non-GAAP measure of operating performance for Q3 was $1 $7 million compared to $2 $4 million in Q3 of 2022.
Our current goal is to take a million dollars.
Out of the annual cash expenses, and we're well on our way to achieving that goal.
Cash at the end of September 2023 was $2 $1 million.
As I'm sure you all are aware, we have filed an S. One with the SEC to raise up to $7 $5 million.
In addition, we have warrants that are near enough. The money that we may be able to raise cash through the exercise of warrants.
Our goal is to raise enough cash to confidently execute our commercial plans, including the launch of a sulfate for a year or more.
With that let me turn it back over to Joel for remarks, and then we will take your questions Joel.
Thanks, Tom.
Oh humanity is currently responding to too many rodents is not working with many decades of effort and traditional responses the public health concerns and risks keep rising.
It's also a growing realization that there's too much collateral damage in this war in rodents as evidenced by California's adoption of the ecosystem Protection Act, which band under many circumstances to pour a major second generation anticoagulant rodenticides, commonly used in road in pest control.
These tail winds are all in our favor.
Most importantly, we are executing we are delivering against our success imperatives by selling better improving our products and offering customers more choices.
As we stated last quarter.
Alex that can be paradigm changing don't come along very often.
But when they do they have an opportunity to change the way things have been done for generations.
I believe we have the type of opportunity by leading the way in fertility control for animal pest populations.
Thank you all for your continued support and with that let me now turn it over for any questions.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble our roster.
Amy This is Robert here, while we wait to see if there's any questions from the live dollars here. We did have one emailed a question I wanted to make sure we get posed to management I guess to to jeweler. Tom here question is congratulations on your new product. It sounds like you are very excited by.
But from an investor standpoint, how big is it really.
I'll take that one Tom.
It is quite literally a game changer for one most of the pest control market prefers a non liquid product to best fit in their workflow.
But they understand the need to add fertility control to their service offerings.
Two this is truly consumer friendly products and can be sold on the shelves of your local hardware store agricultural supply store or your favorite E Commerce portal.
Three evolve may start with rats, but follow on products for other species can be pursued immediately.
And then finally, many other countries have similar expedited approvals to the Epa's twenty-five beat.
For example, we can start the process in Canada immediately.
This is particularly timely.
British Columbia has recently banned the use of second generation anticoagulant Rodenticides.
In California, and they definitely did neither fertility control to fill the gap. So from an investor standpoint. This means more press more revenue in a realistic shot at profitability by 2025.
Perfect Joel Thank you for that Amy I'll turn it back over to you.
Yeah.
As a reminder to ask a question you May Press Star then one on your telephone keypad.
This concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.
Thank you all for attending and we look forward to our Q4 results. After the first part of the year.
The conference has now concluded thank you for attending today's presentation.
That's correct.
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